<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SATELLINK COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
GEORGIA 4812 58-1850580
(State or other (Primary Standard Industrial (I.R.S. employer
jurisdiction of Classification Code Number) identification number)
incorporation or
organization)
1325 NORTHMEADOW PARKWAY
SUITE 120
ROSWELL, GEORGIA 30075
(770) 625-2599
(Address, including zip code, and telephone number, including area code, of
the registrant's principal executive offices)
DANIEL D. LENSGRAF
CHIEF FINANCIAL OFFICER
SATELLINK COMMUNICATIONS, INC.
1325 NORTHMEADOW PARKWAY
SUITE 120
ROSWELL, GEORGIA 30075
PHONE: (770) 625-2599
FACSIMILE: (770) 625-2651
(Name, address, including zip code and telephone number, including area code,
of agent for service)
---------------
COPIES TO:
M. HILL JEFFRIES, ESQ. JAMES WALKER IV, ESQ.
SCOTT D. DICKINSON, ESQ. TERRESA R. TARPLEY, ESQ.
ALSTON & BIRD LLP NELSON MULLINS RILEY & SCARBOROUGH,
ONE ATLANTIC CENTER L.L.P.
1201 WEST PEACHTREE STREET FIRST UNION PLAZA, SUITE 1400
ATLANTA, GEORGIA 30309-3424 999 PEACHTREE STREET, N.E.
PHONE: (404) 881-7000 ATLANTA, GEORGIA 30309-3464
FACSIMILE: (404) 881-7777 PHONE: (404) 817-6000
FACSIMILE: (404) 817-6050
---------------
Approximate date of commencement of proposed sale to public: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVENESS OF THE REGISTRATION STATEMENT.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AGGREGATE AMOUNT OF
REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $0.01 par value per share... $34,500,000 $10,178
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</TABLE>
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(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(o).
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 10, 1998
PROSPECTUS
SHARES
[SATELLINK COMMUNICATIONS, INC. LOGO]
SATELLINK COMMUNICATIONS
COMMON STOCK
Of the shares of common stock, par value $0.01 per share (the "Common
Stock"), offered hereby, shares are being offered by Satellink
Communications, Inc. (the "Company" or "Satellink"), and shares are being
offered by certain shareholders of the Company (the "Selling Shareholders").
See "Principal and Selling Shareholders." The Company will not receive any of
the proceeds from the sale of shares by the Selling Shareholders. See "Use of
Proceeds."
Prior to this offering (the "Offering"), there has been no public market for
the Common Stock. It currently is anticipated that the initial public offering
price of the Common Stock will be between $ and $ per share. See
"Underwriting" for information relating to the determination of the initial
public offering price. The Company has applied for the Common Stock to be
listed for quotation on The Nasdaq Stock Market's National Market (the "Nasdaq
National Market") under the symbol "STLK."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................... $ $ $ $
- --------------------------------------------------------------------------------
Total(3)..................... $ $ $ $
</TABLE>
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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $900,000 payable by the Company.
(3) The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to additional shares of Common Stock on the same terms and
conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ and the total Proceeds to Company will
be $ . See "Underwriting."
-----------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to
reject orders in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about , 1998.
-----------
J.C.Bradford&Co. Morgan Keegan & Company, Inc.
, 1998
<PAGE>
[DESCRIPTION OF U.S. MAP SHOWING THE COMPANY'S COVERAGE AREA]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Unless the context indicates otherwise,
all references to the "Company" or "Satellink" include Satellink
Communications, Inc. and its subsidiaries. Unless otherwise indicated, all
information contained herein (i) reflects the conversion of all outstanding
shares of Series A Convertible Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), and Series C Convertible Preferred Stock, par
value $0.01 per share (the "Series C Preferred Stock"), into Common Stock upon
the completion of the Offering, (ii) reflects a -for-one stock split to be
effected immediately prior to the effectiveness of the Offering and (iii)
assumes no exercise of the Underwriters' over-allotment option. The Company's
fiscal year ends on July 31, and references to particular fiscal years of the
Company refer to the twelve months ended on July 31 of the year indicated. See
the consolidated financial statements and the notes thereto.
THE COMPANY
Satellink provides paging and enhanced personal telecommunications services
to businesses and individuals in smaller metropolitan areas and major cities in
the southeastern and southwestern United States. The Company has provided
paging and voicemail services since 1988. In 1995, the Company began
development of its proprietary Satellink Telecommunications Application
Resource Network (the "STAR*Net") in anticipation of increased subscriber
demand for a broad spectrum of personal telecommunications services from a
single provider. The STAR*Net platform allows the Company to provide an
integrated suite of personal telecommunications services to businesses and
individuals in markets not generally targeted by major providers. The Company
intends to capitalize on its STAR*Net platform by marketing enhanced services
to its existing paging and voicemail subscriber base and by attracting new
subscribers who would otherwise use multiple providers to fulfill their
personal telecommunications needs.
Through the STAR*Net platform, which integrates carrier grade telephony
platform hardware with the Company's proprietary software, Satellink provides
its subscribers with single telephone number access to paging, voicemail, long
distance and "find me" services. The STAR*Net platform also allows the Company
to offer prepaid and postpaid long distance calling cards and inbound 1-800
service. The Company believes that the STAR*Net platform's scalable and
flexible architecture and relatively low cost of implementation give the
Company a competitive advantage by allowing it to quickly add and customize
services and offer enhanced services in smaller markets where the
implementation of a more expensive architecture is not economically justified.
The Company delivers paging services by broadcasting messages over: (i) FM
subcarrier frequencies that are leased by the Company in Georgia and Alabama
and that are linked with the CUE Paging Corporation ("CUE") nationwide FM
paging network, which reaches over 95% of the population of the United States
and Canada and covers 60,000 miles of interstate highway; (ii) Company-owned
VHF and UHF paging networks in Georgia and Louisiana; and (iii) VHF, UHF, 900
MHz and narrowband personal communications service ("PCS") paging networks
operated by third parties from which the Company purchases and resells local,
regional and nationwide service. The Company's use of the STAR*Net platform and
multiple message distribution networks in its market areas allows the Company
to offer to its customers an assortment of service and pricing options not
readily available from many of the Company's competitors.
Satellink's paging and voicemail subscriber base has increased through
internal growth and acquisitions from approximately 27,000 subscribers as of
July 31, 1995 to approximately 107,000 subscribers as of January 31, 1998 and
is expected to exceed 150,000 subscribers upon the completion of currently
pending acquisitions. Net monthly revenues have increased from $700,000 for the
month ended January 31, 1995 to $1.7 million for the month ended January 31,
1998.
3
<PAGE>
The Company's primary objective is to become a leading regional provider of
enhanced personal telecommunications services. The Company intends to achieve
its objective by pursuing the following strategies:
. Expand Subscriber Base Through Acquisitions. The Company intends to
increase its subscriber base and its opportunities to cross-market
STAR*Net services by identifying and acquiring other providers of
paging, voicemail and other personal telecommunications services. The
Company believes that it can generate cost savings through integration
of acquired companies, particularly from its increased purchasing power
for equipment and airtime. Any cost savings would effectively reduce the
multiple paid for acquired companies, thereby increasing the Company's
return on invested capital. The Company intends to continue to focus on
smaller acquisition condidates because it expects larger providers to
focus increasingly on internal growth and larger acquisitions, thereby
decreasing competition for smaller acquisition candidates.
. Cross-Market an Integrated Suite of Customized Services to Existing and
Acquired Subscribers. The Company intends to cross-market additional
STAR*Net services to its existing and acquired paging and voicemail
subscribers. The Company believes that its paging and voicemail
subscribers are mobile individuals who are likely to use additional
personal telecommunications services. The Company believes these
subscribers will be more likely to purchase these services from the
Company because: (i) the Company owns the subscribers' access numbers
and is able to offer them the ability to change service plans and
coverage areas without changing access numbers; (ii) the Company is able
to provide its subscribers with unified billing for a variety of
personal telecommunications services; and (iii) existing subscribers are
familiar with the Company and have purchased services from the Company
in the past.
. Expand the Suite of Customized Services. The Company intends to
continually develop new STAR*Net services. Current planned services
under development include Internet-based voicemail delivery and receipt,
local access voicemail between cities, text-to-speech playback of e-mail
messages, Internet e-mail pager notification and narrowband PCS connect.
The Company believes these services will, when combined with existing
STAR*Net service offerings, provide it with additional cross-marketing
opportunities to existing and new subscribers.
. Focus on Niche Markets. The Company believes that smaller metropolitan
markets throughout the Southeast and Southwest are underserved by larger
providers of personal telecommunications services. These smaller markets
are attractive to Satellink because management believes these markets
have reduced competition for personal telecommunications services,
limited availability of alternative services such as cellular telephones
and lower market penetration rates for personal telecommunications
services. Approximately 48% of the Company's paging subscribers utilize
regional or national paging services compared to approximately 33% of
total paging subscribers in the United States who use such services. The
Company believes this reflects its ability to serve mobile individuals
who require the broad, uninterrupted coverage area provided by the
Company. The Company intends to continue implementing its niche market
strategy by opening additional offices in smaller metropolitan markets,
acquiring other providers of paging, voicemail and other personal
telecommunications services in existing and additional markets and
utilizing its direct sales force in markets in Georgia, Alabama,
Louisiana and Texas.
The Company was incorporated under the laws of the State of Georgia on June
2, 1988. The mailing address of its principal executive office is 1325
Northmeadow Parkway, Suite 120, Roswell, Georgia 30075, and its telephone
number is (770) 625-2599.
4
<PAGE>
ACQUISITIONS
Acquisitions have contributed significantly to the Company's growth. The
following table provides a summary of acquisitions in which the Company
acquired or has agreed to acquire more than 5,000 subscribers. The Company has
paid or will pay aggregate consideration of approximately $27.0 million in
connection with these acquisitions.
<TABLE>
<CAPTION>
APPROXIMATE NUMBER OF
DATE SUBSCRIBERS
------------------------
NAME OF ACQUIRED COMPANY LOCATIONS ACQUIRED PAGING VOICEMAIL
- ------------------------ ---------------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Atlanta Voice Page, Atlanta February 1996 11,500 --
Inc....................
C.R., Inc. ............. Dallas May 1996 10,500 --
Message World........... Atlanta February 1997 -- 5,300
Premier Paging,
Inc./Premier Paging Baton Rouge and April 1998 10,000 --
of New Orleans, Inc.... New Orleans
Hyde's Stay in Touch, Shreveport, Monroe and May 1998 39,000 --
Inc.(1)................ Alexandria, Louisiana
</TABLE>
- --------
(1) The Company has entered into a definitive agreement to acquire Hyde's Stay
in Touch, Inc. ("Hyde's") and an affiliated company. This acquisition is
expected to be consummated in May 1998, subject to certain closing
conditions. See "Risk Factors -- Risk that Hyde's Acquisition May Not
Close."
In addition to the above acquisitions, since the commencement of the
Company's acquisition program in February 1996, the Company has consummated
five acquisitions for an aggregate consideration of $2.7 million, through which
it acquired a total of 6,600 paging subscribers. The Company is currently
engaged in preliminary discussions with several other acquisition candidates,
but it has no binding commitments to acquire any of such candidates. See "Risk
Factors -- Ability to Manage Growth; Acquisition Risks" and "Use of Proceeds."
THE OFFERING
Common Stock offered by the shares
Company............................
Common Stock offered by the Selling
Shareholders.......................
shares
Common Stock to be outstanding
after the Offering.................
shares(1)
Use of proceeds..................... To repay indebtedness and redeem Series D
Redeemable Preferred Stock, par value
$0.01 per share (the "Series D Preferred
Stock"). See "Use of Proceeds" and
"Certain Transactions."
Proposed Nasdaq National Market STLK
symbol.............................
- --------
(1) Reflects the conversion of all outstanding shares of Series A Preferred
Stock and Series C Preferred Stock into Common Stock on the closing date of
the Offering (the "Closing Date.") Excludes 1,192,477 shares of Common
Stock that will be subject to vested options and warrants and 118,017
shares of Common Stock that will be subject to outstanding but unvested
options on the Closing Date. See "Management -- Incentive Plan," "Shares
Eligible for Future Sale" and note 7 to consolidated financial statements.
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND ARPU)
The following table sets forth certain historical and pro forma consolidated
financial and operating data for the Company. This information should be read
in conjunction with "Use of Proceeds," "Selected Consolidated Financial and
Operating Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Company's consolidated financial statements and
notes thereto, including the unaudited pro forma consolidated financial
information, and the other financial information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
------------------------------------------ -------------------------------
PRO FORMA PRO FORMA
1995 1996 1997 1997(1) 1997 1998 1998(1)
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Service, rent and
maintenance revenues... $ 6,885 $ 9,839 $ 16,308 $ 20,478 $ 7,677 $ 9,481 $ 11,590
Product sales........... 526 975 1,264 2,508 578 637 1,233
--------- --------- --------- --------- --------- --------- ---------
Total revenues......... 7,411 10,814 17,572 22,986 8,255 10,118 12,823
Cost of products sold... (468) (960) (1,201) (2,443) (574) (556) (1,260)
--------- --------- --------- --------- --------- --------- ---------
Net revenues........... 6,943 9,854 16,371 20,543 7,681 9,562 11,563
--------- --------- --------- --------- --------- --------- ---------
Service, rent and
maintenance expenses... 2,718 3,879 6,542 7,149 3,189 3,598 3,795
Selling and marketing
expenses............... 1,222 1,602 2,314 2,635 1,081 1,432 1,568
General and
administrative
expenses............... 887 1,732 3,039 4,300 1,291 1,710 2,202
Engineering expenses.... 567 516 638 641 320 383 383
--------- --------- --------- --------- --------- --------- ---------
Operating expenses
before depreciation,
amortization and fixed
asset impairment and
one-time reengineering
charges................ 5,394 7,729 12,533 14,725 5,881 7,123 7,948
Depreciation and
amortization........... 845 1,204 2,242 3,324 1,016 1,392 1,922
Fixed asset impairment
and one-time
reengineering charges.. -- -- -- -- -- 1,534 1,534
--------- --------- --------- --------- --------- --------- ---------
Operating income
(loss)................. 704 921 1,596 2,494 784 (487) 159
Other income............ 90 91 90 151 41 96 216
Interest expense........ (704) (873) (1,564) (2,352) (699) (1,112) (1,455)
Accretion of stock
warrants(2)............ (643) (854) (1,773) (1,773) (887) (229) (229)
(Loss) income from joint
venture................ -- (96) 26 26 31 61 61
Minority interest....... -- (2) (3) (3) (3) (6) (6)
--------- --------- --------- --------- --------- --------- ---------
Loss before income tax
provision and
extraordinary item..... (553) (813) (1,628) (1,457) (733) (1,677) (1,254)
Income tax provision.... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Loss before
extraordinary item..... (553) (813) (1,628) (1,457) (733) (1,677) (1,254)
Extraordinary loss on
early retirement of
debt(3)................ -- (132) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net loss............... (553) (945) (1,628) (1,457) (733) (1,677) (1,254)
--------- --------- --------- --------- --------- --------- ---------
Preferred stock
dividends.............. 88 334 438 812 219 219 410
--------- --------- --------- --------- --------- --------- ---------
Net loss attributable to
common shareholders.... $ (641) $ (1,279) $ (2,066) $ (2,269) $ (952) $ (1,896) $ (1,664)
========= ========= ========= ========= ========= ========= =========
Allocation to Class A
Common Stock.......... $ (598) $ (1,205) $ (2,035) $ (2,235) $ (938) $ (1,894) $ (1,662)
Allocation to Class B
Common Stock.......... (43) (74) (31) (34) (14) (2) (2)
Basic and diluted net
loss per share (4):
Loss from extraordinary
item:
Class A Common Stock... $ -- $ (0.06) $ -- $ -- $ -- $ -- $ --
Class B Common Stock... -- (3.79) -- -- -- -- --
Net loss attributable
to common
shareholders:
Class A Common Stock... (0.27) (0.56) (0.90) (0.98) (0.41) (0.82) (0.72)
Class B Common Stock... (17.45) (36.68) (58.24) (63.96) (26.83) (53.42) (47.23)
Weighted average common
shares outstanding:
Class A Common Stock... 2,228,603 2,135,224 2,271,393 2,271,393 2,271,393 2,304,370 2,304,370
Class B Common Stock... 2,474 2,013 535 535 535 35 35
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
---------------------------------- --------------------------
PRO PRO
FORMA FORMA
1995 1996 1997 1997(1) 1997 1998 1998(1)
------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Adjusted net income(5).. $ 90 $ 186 $ 145 $1,123 $ 154 $ 86 $1,535
Cash provided by (used
in) operations......... 726 896 1,974 N/A 153 (14) N/A
EBITDA(6)............... 1,639 2,263 3,951 5,992 1,869 2,590 3,886
EBITDA margin(7)........ 23.6% 23.0% 24.1% 29.2% 24.3% 27.1% 33.6%
Units in service (end of
period)................ 27,271 65,418 95,172 129,407 74,971 106,801 142,671
Average revenues per
unit(8)................ $ 24.91 $ 17.72 $ 16.99 $ 15.35 $ 18.24 $ 15.78 $ 14.71
Capital expenditures.... $(1,528) $(1,911) $(3,647) N/A $(1,235) $ (3,432) N/A
</TABLE>
<TABLE>
<CAPTION>
AT JANUARY 31, 1998
---------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(1) ADJUSTED(9)
------- ------------ -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................... $ 304 $ 915 $
Property and equipment, net................... 10,399 10,899
Total assets.................................. 28,367 40,667
Long-term debt, less current maturities....... 23,441 30,941
Total shareholders' deficit................... (7,825) (7,825)
</TABLE>
- --------
(1) The pro forma statement of operations and other data give effect to the
Hyde's Acquisition and the issuance of $7.5 million and $4.5 million in
additional debt and Series D Preferred Stock (and warrants related thereto)
respectively to finance the Hyde's Acquisition (collectively, the
"Transactions"), as if each had occurred at the beginning of the period
presented, and the pro forma balance sheet data give effect to the
Transactions as if each had occurred at January 31, 1998. The pro forma
financial information does not purport to represent what the Company's
results of operations would have been if the Transactions had in fact
occurred on such dates, nor does it purport to indicate the future
financial position or results of future operations of the Company. The pro
forma adjustments are based on currently available information and certain
assumptions that management believes to be reasonable.
(2) Represents a non-cash expense, calculated pursuant to a formula based on
the Company's EBITDA, associated with the put feature of warrants (the
"Creditanstalt Warrants") issued by the Company to Creditanstalt-Bankverein
("Creditanstalt"), as agent for the lenders under the Company's credit
arrangements (the "Credit Facility"). The put feature of the Creditanstalt
Warrants will be canceled on the Closing Date.
(3) As a result of early retirement of debt in fiscal 1996, the Company
recorded a loss of $132,000, net of income taxes.
(4) Basic and diluted net loss per share under the two class method are
computed separately for holders of Class A and Class B Common Stock using
the weighted average number of shares of Class A and Class B Common Stock
outstanding. Net loss attributable to Class A and Class B shareholders is
allocated based on the extent to which each class shares in the Company's
(loss) income. The Company's Class A and Class B common shareholders
receive dividends at a ratio of 1:65. See "Capitalization."
(5) Represents net income excluding fixed asset impairment and one-time
reengineering charges, accretion of stock warrants and extraordinary item.
Adjusted net income for fiscal 1996 excludes $145,000 related to a one-time
charge to write off purchased research and development.
(6) EBITDA represents earnings before interest, taxes, depreciation,
amortization, fixed asset impairment and one-time reengineering charges,
accretion of stock warrants and extraordinary item. EBITDA is a measure of
financial performance that is often used in the personal telecommunications
industry to compare companies on the basis of liquidity, capital resources
and leverage and to determine a company's ability to service debt. EBITDA
also is one of the financial measurements used to determine whether the
Company is in compliance with its covenants under the Credit Facility.
However, EBITDA should not be considered in isolation or as an alternative
to net loss, income from operations, cash flows from operating activities
or any other measure of performance under generally accepted accounting
principles ("GAAP"). Further, EBITDA may be calculated differently by
different companies within the personal telecommunications industry. Thus,
EBITDA as presented herein may not be comparable to EBITDA or other
similarly titled measures reported by other companies. EBITDA for fiscal
1996 excludes $145,000 related to a one-time charge to write off research
and development.
(7) EBITDA margin is calculated by dividing EBITDA by net revenues.
(8) Average revenues per unit ("ARPU") equals the average net revenues for a
given period divided by the average number of units in service during such
period. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations --Overview."
(9) Adjusted to reflect the effect of the Transactions and the sale of
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $ per share (the midpoint of the price range set
forth on the cover page of this Prospectus) and the application of the
estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."
7
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information contained in this
Prospectus, prospective investors should consider the following factors
carefully in evaluating an investment in the Common Stock offered hereby. This
Prospectus contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management
for future operations, and projections of revenues and other financial items
that are based on the beliefs of, assumptions made by and information
currently available to the Company's management. Forward-looking statements
are identified by the use of words such as "expects," "estimates,"
"anticipates," "believes," "intends," "plans" and similar expressions and
variations thereof. The cautionary statements set forth in this "Risk Factors"
section and elsewhere in this Prospectus identify important factors with
respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
expressed in or implied by such forward-looking statements.
ABILITY TO MANAGE GROWTH; ACQUISITION RISKS
Demands in managing continued growth, including difficulties in predicting
the growth in network usage and required capacity, could have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that the Company's systems, procedures,
controls and existing space will be adequate to support expansion of the
Company's operations. The Company has experienced substantial growth in
revenue and personnel in recent years. The Company's growth has placed
significant demands on all aspects of the Company's business, including its
administrative, technical and financial personnel and systems. Additional
expansion by the Company may further strain the Company's management,
financial and other resources. The Company's future operating results will
substantially depend on the ability of its officers and key employees to
manage changing business conditions and to implement and improve its
technical, administrative, financial control and reporting systems. If the
Company is unable to respond to and manage changing business conditions, then
the quality of the Company's services, its ability to retain key personnel and
its results of operations could be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business -- Growth Strategy" and "Management."
The Company continually evaluates acquisition opportunities, and a
significant portion of the Company's recent growth has been accomplished
through acquisitions. Acquisitions involve numerous risks, including
difficulties in the assimilation of the operations, services, products and
personnel of the acquired company, the diversion of management's attention
from other business concerns, the entrance into markets in which the Company
has little or no prior experience and the potential loss of key employees and
subscribers of the acquired company. Acquisitions may also result in
potentially dilutive issuances of equity securities, the incurrence of
additional debt, the assumption of known and unknown liabilities, the write-
off of amortization expenses related to goodwill and other intangible assets,
all of which could have a material adverse effect on the Company's business,
financial condition and results of operations. If assumptions prove to be
incorrect and the potential liabilities ultimately exceed established
reserves, the Company's business, financial condition and results of
operations could be materially adversely affected. In the future, the Company
may take charges in connection with acquisitions. There can be no assurance
that the costs and expenses incurred will not exceed the estimates upon which
such charges are based. The Company is unable to predict whether any
prospective acquisition will occur or the likelihood that any acquisition will
be completed. See "Business -- Acquisitions."
TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SERVICES
The Company's future success will depend in significant part on its ability
to anticipate industry standards, continue to apply advances in technologies,
enhance its current services, develop and introduce new services in a timely
fashion, enhance its software and the STAR*Net platform and compete
successfully with products and services based on evolving or new technologies.
The market for the Company's services is characterized by rapid technological
change, frequent new product introductions and evolving industry standards.
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The Company expects development and introduction of new products and
services, along with enhancements to existing products and services, will
compete with the services offered by the Company. Among the new and evolving
technologies with which the Company expects to compete are notebook computers
equipped with sound cards, fax modems and cellular modems, portable Internet
appliances which would allow connection to the Internet over wireless networks
and personal digital assistants with enhanced communications features. The
Company intends to introduce additional services in 1998, several of which are
described in this Prospectus. Development of these services has required and
will require the implementation of new technologies and the integration of
these technologies into the STAR*Net platform. Several of the Company's
competitors have developed and introduced services that are functionally
identical to the STAR*Net services that the Company currently offers and
intends to offer. For example, products currently exist which provide text-to-
voice e-mail conversion and "find me" services, and several competitors have
developed single number services for all of their communications devices.
There can be no assurance that the Company's current and future STAR*Net
services will meet with market acceptance or will compete effectively with the
services that are currently offered or that will be offered by the Company's
competitors. There can be no assurance that the Company will be successful in
developing and marketing service enhancements or new services that respond to
these or other technological changes or evolving industry standards, that the
Company will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of its services, or that
its new services, and the enhancements thereto, will adequately meet the
requirements of the marketplace and achieve market acceptance. Delays in the
introduction of new services, the inability of the Company to develop such new
services or the failure of such services to achieve market acceptance could
have a material adverse effect on the Company's business, financial condition
and results of operation. See "Business -- Industry," " -- Services" and "--
Proprietary Rights and Technology."
RISKS ASSOCIATED WITH THE STAR*NET ROLLOUT
The Company has limited experience in developing and marketing STAR*Net
services. Additionally, the Company has limited experience in establishing new
networks and replacing existing networks using the STAR*Net technology. There
can be no assurance that the Company will be successful in developing and
marketing STAR*Net services, establishing new networks or replacing existing
networks in a timely and cost-effective manner. The Company may experience
unexpected delays or problems, including system errors or failures, in
developing and marketing STAR*Net services or establishing new networks using
the STAR*Net technology. Additionally, the Company may experience
difficulties, including service interruption or failure, in transferring
subscribers from existing networks to the STAR*Net platform. Significant delay
or difficulty in establishing the STAR*Net platform or in developing and
marketing STAR*Net services could have a material adverse effect on the
Company's business, financial condition and results of operations.
RISKS THAT HYDE'S ACQUISITION MAY NOT CLOSE
The Company has entered into a definitive agreement (the "Hyde's Agreement")
with Hyde's and the sole stockholder of Hyde's pursuant to which the Company
has agreed to purchase all of the outstanding capital stock of Hyde's (the
"Hyde's Acquisition"). The obligations of the Company and Hyde's to consummate
the Hyde's Acquisition are subject to the satisfaction or waiver (to the
extent permitted) of the following conditions: (i) the representations and
warranties of each of Satellink and Hyde's contained in the Hyde's Agreement
shall be true and correct as of the closing date of the Hyde's Acquisition;
(ii) each of Satellink and Hyde's shall have performed in all material
respects all of the agreements, covenants, acts and undertakings to be
performed by it pursuant to the Hyde's Agreement; (iii) each of Satellink and
Hyde's shall have received customary closing documents, including, without
limitation, an opinion of the other party's counsel, dated as of the closing
date, as to certain matters; (iv) the absence of any law or order or any
action taken by any court, governmental or regulatory authority prohibiting,
restricting or making illegal the consummation of the Hyde's Acquisition; (v)
there shall not have occurred any material adverse effect with respect to
Hyde's or any condition which is reasonably likely to result in a material
adverse effect with respect to Hyde's subsequent to December 31, 1997; and
(vi) the Federal Communications Commission (the " FCC") shall have approved
the assignment to Satellink of licenses held by Hyde's and such approval shall
be in full force and effect. The pro forma financial information
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included herein assumes consummation of the Hyde's Acquisition as contemplated
by the Hyde's Agreement. However, there can be no assurance that all of the
conditions precedent to the Hyde's Acquisition can or will be satisfied or
waived by the appropriate party or that such conditions precedent will be
satisfied or waived on a timely basis. See "Use of Proceeds," "Business --
Acquisitions" and "Index to Consolidated Financial Statements."
RISKS ASSOCIATED WITH JOINT VENTURES
FM Concepts, Ltd. ("FM Concepts") is a joint venture owned equally by the
Company, certain affiliates of C.R., Inc. ("C.R.") and Cape Fear Paging of
North Carolina, Inc. ("Cape Fear"). FM Concepts was formed to develop an FM
pager (the "FM Concepts Pager") for use by the Company, C.R. and Cape Fear.
The Company does not control FM Concepts, and there can be no assurance that
FM Concepts will use its resources in a manner consistent with the Company's
strategies. Although the Company has expended significant resources in the
development of the FM Concepts Pager, the FM Concepts Pager is at an
experimental stage, and there can be no assurance that it will ever reach the
production stage. There can also be no assurance that the FM Concepts Pager
will function in accordance with design specifications or that subscribers
will view it as an attractive alternative to traditional pagers or competing
FM pagers. FM Concepts intends to outsource the production of the FM Concepts
Pager to a third party manufacturer; however, there can be no assurance that
FM Concepts will successfully identify a suitable manufacturer or that any
manufacturer will be able to produce the FM Concepts Pager according to design
specifications in a cost-effective manner. See "Business -- Proprietary Rights
and Technology" and "-- Pagers."
The Company currently purchases FM radio pagers from FM Concepts, L.L.C.
("FM Concepts II"), a joint venture that is owned equally by the Company and
Cape Fear. FM Concepts II and CUE have been licensed by Nokia Oy AB ("Nokia")
to manufacture and distribute pagers using Nokia's FM paging technology
throughout North America. FM Concepts II has contracted with Infotelcom, a
French producer, to manufacture FM pagers for distribution in North America.
The Company believes that its participation in the FM Concepts II joint
venture combined with the outsourcing of production of FM pagers allows it to
obtain FM pagers at a more favorable cost than if it purchased such pagers
directly from a third party manufacturer. FM Concepts II is not controlled by
the Company, and, therefore, there can be no assurance that FM Concepts II
will utilize its resources in a manner consistent with the Company's
strategies. See "Business -- Pagers."
COMPETITION
The telecommunications services industry is intensely competitive, rapidly
evolving and subject to rapid technological change. The Company expects
competition to increase in the future. Many of the Company's current and
potential competitors have longer operating histories, greater name
recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. Competition from these competitors could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company attempts to differentiate itself from its competitors by
offering an integrated suite of telecommunications services. Other providers
currently offer each of the individual services and certain combinations of
the services offered by the Company. For example, Premiere Technologies, Inc.
("Premiere Technologies") offers bundled telecommunications services which are
similar to those offered by the Company. Octel Communications Corporation
("Octel") and Microsoft Corporation ("Microsoft") recently announced a service
called "Unified Messenger," which places all voicemail, e-mail and fax
messages in a single mailbox accessible by computer or telephone. The
Company's nationwide mobile communications services and features compete with
services provided by companies such as AT&T Corp. ("AT&T"), MCI Communications
Corp. ("MCI") and Sprint Corp. ("Sprint") as well as smaller interexchange
long distance providers. The Company's voicemail services compete with
voicemail services provided by AT&T, certain regional Bell operating companies
("RBOCs") and other service bureaus as well as by equipment manufacturers,
such as Octel, Northern Telecom, Inc. ("NorTel"), Siemens Business
Communications Systems, Inc. ("Siemens"), Centigram
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Communications Corporation ("Centigram"), Boston Technology, Inc. ("Boston
Technology") and Digital Sound Corporation ("Digital Sound"). The Company's
paging services compete primarily with those offered by Paging Network, Inc.
("PageNet"), the world's largest provider of paging services, AirTouch
Communications, Inc. ("AirTouch"), Arch Communications, Inc. ("Arch"),
MobileMedia Communications, Inc. ("MobileComm"), SkyTel Corporation
("SkyTel"), a subsidiary of Mobile Telecommunications Technologies Corp.
("MTEL"), PageMart, Inc. ("PageMart") and Metrocall, Inc. ("Metrocall"). The
Company expects that other parties will develop and implement information and
telecommunications service platforms similar to its platform, thereby
increasing competition for the Company's services. See "Business --
Competition."
On February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996, as amended (the "1996 Act"), which allows the
RBOCs, as is the case with other local exchange carriers ("LECs"), to provide
long distance telephone service between Local Access and Transport Areas
("LATAs"). The 1996 Act will likely significantly increase competition for
long distance services. The new legislation also grants the FCC the authority
to deregulate other aspects of the telecommunications industry, which may in
the future, if authorized by the FCC, facilitate the offering of an integrated
suite of information and telecommunications services by the RBOCs in
competition with the Company. Such increased competition could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Legislative Matters" and "-- Government
Regulation."
Telecommunications companies compete for consumers primarily based on price,
with major long distance carriers and paging companies conducting extensive
advertising campaigns to capture market share. There can be no assurance that
a decrease in the rates charged for communications services by the major long
distance carriers, major paging companies or other competitors, whether caused
by general competitive pressures or the entry of the RBOCs and other LECs into
the bundled telecommunications market, would not have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company expects that the information and telecommunications
services markets will continue to attract new competitors and new
technologies, possibly including alternative technologies that are more
sophisticated and cost effective than the Company's technology. See "Business
- -- Competition."
UNCERTAINTY OF MARKET ACCEPTANCE OF PERSONAL TELECOMMUNICATIONS SERVICES
The Company's future success depends upon the market acceptance of its
existing and future personal telecommunications products and services.
Personal telecommunications services integrate the functionality of telephones
and computers and thus represent a departure from standards for information
and telecommunications services. Market acceptance of personal
telecommunications products and services generally requires that individuals
and enterprises accept a new way of exchanging information. The Company
believes that broad market acceptance of its personal telecommunications
products and services will depend on several factors, including ease of use,
price, reliability, access and quality of service, system security, product
functionality and the effectiveness of marketing and distribution efforts.
There can be no assurance that the Company's personal telecommunications
products and services will achieve broad market acceptance or that such market
acceptance will occur at the rate which the Company currently anticipates. A
decline in the demand for, or the failure to achieve broad market acceptance
of, the Company's personal telecommunications product and services would have
a material adverse effect on the Company's business, financial condition and
results of operations. See "-- Technological Change; Dependence on New
Services" and "Business -- Industry" and "-- Services."
DEPENDENCE ON SWITCHING FACILITIES AND THE STAR*NET PLATFORM; DAMAGE, FAILURE
AND DOWNTIME
There can be no assurance that a fire, act of sabotage, technical failure,
natural disaster or a similar event would not cause the failure of all or a
portion of the Company's network or any of its switching facilities or
STAR*Net platforms, thereby resulting in an interruption of the Company's
services. Such an interruption could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
currently maintains switching facilities and STAR*Net platforms in Atlanta,
Albany, Augusta, Cordele, Macon, Savannah and Valdosta, Georgia; Birmingham,
Alabama; Baton Rouge and New Orleans,
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Louisiana; and Dallas, Texas. The Company's network service operations are
dependent upon its ability to protect the equipment and data at its switching
facilities and STAR*Net platforms against potential damage that may be caused
by fire, power loss, technical failures, unauthorized intrusion, natural
disasters, sabotage and other similar events. The Company has implemented
monitored security systems, controlled access and automated data backup
procedures, uninterruptable power supply systems and automated system trouble
alerts. See "Business -- Paging Infrastructure" and "-- The STAR*Net
Platform."
LIMITATIONS OF CUE PAGING NETWORK
The Company's FM subcarrier paging network is located in Alabama and Georgia
and is linked with the CUE nationwide FM subcarrier paging network, through
which the Company delivers nationwide FM paging service. Accordingly, the
Company is dependent upon CUE for continued maintenance and development of its
nationwide FM subcarrier paging network. CUE is under no contractual
obligation to upgrade or further develop the network to accommodate new
technologies or subscribers beyond its current capabilities. The Company
estimates that the CUE network is currently operating at approximately 60% of
capacity and, assuming the continuation of historical growth rates on the CUE
network, that sufficient capacity is available to accommodate the Company's FM
subscriber growth for the next five years. There can be no assurance, however,
that the Company's estimate of the CUE network capacity or its projection of
the Company's subscriber growth are accurate. If CUE fails to maintain its
nationwide network, fails to upgrade or further develop the network or if the
Company's estimates of network capacity or projections of subscriber growth
are inaccurate, the Company may experience a material adverse effect on its
business, financial condition and results of operations. See "-- Technological
Change; Dependence on New Services" and "Business -- Paging Infrastructure."
LIMITATIONS OF FM PAGING TECHNOLOGY
There can be no assurance that the Company's potential or existing
subscribers will accept the inherent limitations of the FM Concepts Pager or
that a third party will not develop a superior FM pager to which the Company
does not have access at competitive prices. The cost of pagers varies, based
in part on their messaging capability and whether they utilize traditional or
FM paging technology. FM radio pagers currently used by the Company are
designed to scan the entire FM band in search of paging broadcasts and
currently only receive numeric messages. The FM pagers currently purchased by
the Company are more expensive and approximately 50% larger than traditional
pagers. Reduced acceptance of FM pagers or increased competition from FM and
traditional pager providers could have a material adverse effect on the
Company's business, financial condition and results of operations. See "--
Technological Change; Dependence on New Services," "-- Risks Associated with
Joint Ventures," "-- Limited Protection of Proprietary Rights and Technology,"
"Business -- Pagers" and "-- Proprietary Rights and Technology."
FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY
RESULTS
The Company's operating results may vary significantly in the future.
Certain factors that may cause the Company's future operating results to vary
include, without limitation: (i) the timing of new service announcements; (ii)
market acceptance of new and enhanced versions of the Company's services;
(iii) potential acquisitions; (iv) competitive pricing pressures; (v) changes
in legislation and regulation that may affect the competitive environment for
the Company's communications services; and (vi) general economic and seasonal
factors. Quarterly revenues are difficult to forecast because the market for
the Company's existing and planned services is rapidly evolving. The Company's
expense levels are based, in part, on its expectations as to future revenues.
If revenue levels are below expectations, the Company may be unable or
unwilling to reduce expenses proportionately and operating results would
likely be adversely affected. As a result, the Company believes that period-
to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Due to all of the foregoing factors, it is likely that in some future quarter
or quarters the Company's operating results will be below the expectations of
public market analysts and investors. In such event, the market price of the
Company's Common Stock will likely be materially adversely affected. See "--
Ability to Manage Growth; Acquisition Risks" and "-- Risks Associated with the
STAR*Net Rollout."
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DEPENDENCE ON KEY MANAGEMENT AND PERSONNEL
The Company's success is largely dependent upon its executive officers and
other key personnel, the loss of one or more of whom could have a material
adverse effect on the Company. The Company also believes that to be successful
it must hire and retain highly qualified engineering, product development and
marketing personnel. Competition in the recruitment of highly qualified
engineering and product development personnel in the information and
telecommunications services industry is intense. Additionally, turnover in
marketing personnel is high, and the Company may not be able to recoup its
investment in a marketing representative before that person leaves the
Company. The inability of the Company to locate, hire and retain such
personnel may have a material adverse effect on the Company. No assurance can
be given that the Company will be able to retain its key employees or that it
will be able to attract qualified personnel in the future. See "Management"
and "Business -- Employees."
YEAR 2000 RISKS
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips using dates that have been stored
as two digits rather than four (e.g., "98" for 1998). On January 1, 2000, any
clock or date recording mechanism, including date sensitive software, which
uses only two digits to represent the year may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures
or miscalculations causing disruption of operations, including, among other
things, a temporary inability to process transactions, send invoices or
perform similar tasks.
The Company has assessed the Year 2000 issue with respect to the software
used by the Company in providing its services and with respect to its
computerized information and operating systems. Based on discussions with its
current software vendors and an internal assessment of its in-house computer
systems, the Company believes that it has completed substantially all
modifications to its affected software programs and computerized systems and
that minimal additional work is required to finalize these modifications. The
Company expects to fully complete all Year 2000 modifications by early 1999,
leaving adequate time to assess and correct any significant issues that may
materialize. Management does not believe that the remaining costs to resolve
the Company's Year 2000 issues will be material to the Company's results of
operations. Management has applied a substantial amount of judgment in
arriving at this assessment; consequently, there can be no assurance that this
assessment of the remaining costs to be incurred to remediate all Year 2000
issues will prove to be accurate, and actual results could differ materially
from such assessment.
The Company is also discussing the Year 2000 issue with its significant
customers and suppliers to determine the extent to which the Company is
vulnerable to those third parties' failures to remediate their own Year 2000
issues. The Company is not yet certain as to the extent to which the computer
software and business systems of its customers and suppliers are Year 2000
compliant. If systems of third parties on which the Company's systems rely are
not timely converted or if such conversions are incompatible with the
Company's systems, or if the Company fails to timely complete the remaining
modifications to its own systems, the Year 2000 issue could have a material
adverse effect on the Company's business, financial condition and results of
operations.
RISK OF SOFTWARE FAILURES OR ERRORS
The software developed and utilized by the Company in providing its services
may contain undetected errors. Although the Company tests its software prior
to placing the software on its network, there can be no assurance that errors
will not be found in the software after the software is placed into use. Any
such errors may result in: (i) partial or total failure of the Company's
network; (ii) additional and unexpected expenses to fund further product
development or to add programming personnel to complete a development project;
and (iii) loss of revenues because of the inability of subscribers to use the
network or the cancellation by subscribers of their service with the Company,
any of which could have a material adverse effect on the Company's business,
financial condition and results of operation. See "-- Dependence on Switching
Facilities and the STAR*Net Platform; Damage, Failure and Downtime," "Business
- -- Paging Infrastructure," "-- Technical Support" and "-- Proprietary Rights
and Technology."
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DEPENDENCE UPON TELECOMMUNICATIONS PROVIDERS; NO GUARANTEED SUPPLY
Other than certain local and regional paging networks, the Company does not
own a transmission network and, accordingly, depends on MCI and other
facilities-based and non-facilities based carriers for transmission of its
subscribers' long distance calls and the majority of its paging data. These
long distance telecommunications and paging services generally are procured
pursuant to supply agreements for terms of up to three years, subject to
earlier termination in certain events. Certain of these agreements provide for
minimum purchase requirements. Further, the Company is dependent upon LECs for
call origination and termination. The Company's ability to maintain and expand
its business depends, in part, on its ability to continue to obtain
telecommunications services on favorable terms from long distance and paging
carriers and the cooperation of both interexchange carriers and LECs in
originating and terminating service for its subscribers in a timely manner.
The partial or total loss of the ability to initiate or terminate calls would
result in a loss of revenues by the Company and could lead to a loss of
subscribers, which could have a material adverse effect on the Company's
business, financial condition and results of operation. See "Business --
Paging Infrastructure."
RISK OF LOSS FROM RETURNED TRANSACTIONS; FRAUD; BAD DEBT; THEFT OF SERVICES
From time to time, persons have gained unauthorized access to the Company's
network and obtained services without rendering payment to the Company by
unlawfully using the access numbers and personal identification numbers
("PINs") of authorized users. No assurance can be given that future losses due
to unauthorized use of access numbers and PINs will not be material. The
Company attempts to manage these risks through its internal controls and
billing system. The STAR*Net platform is designed to prohibit a single access
number and PIN from establishing multiple simultaneous connections to the
platform, and the Company establishes preset spending limits for each
subscriber. Although the Company believes that its risk management and bad
debt reserve practices are adequate, there can be no assurance that the
Company's risk management practices or reserves will be sufficient to protect
the Company from unauthorized or returned transactions or thefts of services
which could have a material adverse effect on the Company's business,
financial condition and results of operations.
REGULATION
STAR*Net Services
Various regulatory factors affect the Company's financial performance and
its ability to compete. The Company is subject to regulation by the FCC and to
entry and rate regulation by various state public service and public utility
commissions ("PUCs") and is otherwise affected by regulatory decisions, trends
and policies made by these agencies. FCC rules currently require interexchange
carriers to permit resale of their transmission services. FCC rules also
require most LECs to provide all interexchange carriers with equal access to
local exchange facilities for purposes of origination and termination of local
and long distance calls. In the unlikely event that either or both of these
requirements are eliminated, the Company could be adversely affected.
Moreover, the underlying carriers that provide services to the Company or that
originate or terminate the Company's traffic may increase rates or experience
disruptions in service due to factors outside the Company's control, which
could cause the Company to experience increases in its costs for
telecommunications services or disruptions in transmitting its subscribers'
local and long distance calls. See "Business -- Government Regulation."
In order to provide intrastate long distance service, the Company
generally is required to obtain certification from state PUCs, to register
with such state PUCs or to be found exempt from registration by such state
PUCs. The Company's facilities do not prevent subscribers from using the
facilities to make long distance calls in any state, including states in which
the Company currently is not authorized to provide intrastate
telecommunications services and operator services. Regulatory action against
the Company by one or more state PUCs resulting from the availability of long
distance telecommunications and operator services through the Company's
facilities in states where the Company is not authorized to provide such
services could have a material adverse effect on the Company's business,
financial condition and results of operations.
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The 1996 Act is intended to increase competition in the long distance and
local telecommunications markets. The 1996 Act opens competition in the local
services market and, at the same time, contains provisions intended to protect
new competitors from unfair competition by incumbent LECs, including the
RBOCs. The 1996 Act allows RBOCs to provide long distance service outside of
their local service territories but bars them from immediately offering in-
region inter-LATA long distance services until certain conditions are
satisfied. An RBOC must apply to the FCC to provide in-region inter-LATA long
distance services and must satisfy a set of pro-competitive criteria intended
to ensure that RBOCs open their own local markets to competition before the
FCC will approve such application. The FCC has approved the applications of
certain RBOCs to provide in-region inter-LATA long distances services.
Moreover, as a result of the 1996 Act, the Company may experience increased
competition from others, including the RBOCs. In addition, the Company may be
subject to additional regulatory requirements and fees resulting from the
implementation of the 1996 Act, including universal service assessments,
access charge assessments, payphone compensation surcharges, local number
portability and cost recovery assessments. See "Business -- Legislative
Matters."
Paging Operations
Federal Regulation. The Company's paging operations are subject to
regulation by the FCC under the Federal Communications Act of 1934, as amended
(the "Communications Act"). The FCC has granted the Company licenses to use
the radio frequencies necessary to conduct its paging operations. Licenses
issued by the FCC to the Company set forth the technical parameters for each
station, such as location, frequency, signal strength, tower height, etc.,
under which the Company is authorized to operate.
License Grant and Renewal. The FCC licenses granted to the Company are for
varying terms of up to 10 years, at the end of which license renewal
applications must be filed with and granted by the FCC. The Company holds
various FCC radio licenses which are used in connection with its paging
operations. The license expiration dates for these licenses are staggered,
with only a portion of the licenses expiring in any particular calendar year.
Licensees in the paging service normally enjoy a "renewal expectancy," unless
it can be demonstrated by a competitor that the licensee has not operated the
station in conformance with the FCC's rules, or that the licensee has not
provided adequate service to the public. Such challenges have been rare, and
the vast majority of license renewal applications are granted in the normal
course. Although the Company is unaware of any circumstances which could
prevent the grant of its license renewal applications, no assurance can be
given that any of the Company's license renewal applications will be free of
competing applications or will be granted by the FCC. Furthermore, the FCC has
the authority to restrict the operations of licensed radio facilities or,
following a hearing pursuant to the Communications Act, to revoke or
involuntarily modify radio licenses. To date, none of the Company's licenses
have ever been revoked or modified involuntarily.
FCC Regulatory Developments. The FCC has enacted regulations regarding
auctions for the award of radio licenses. Pursuant to such rules, the FCC may,
at any time, require auctions for new or existing services prior to the award
of any license. Accordingly, there can be no assurance that the Company will
be able to procure additional frequencies, or expand existing paging networks
into new service areas.
In March 1994, the FCC adopted rules pursuant to which the FCC auctions
licenses for blocks of spectrum on a "market area basis." The winner of the
license is given the right to use a certain frequency or group of frequencies
throughout a defined geographic area (such as a Rand-McNalley Basic Trading
Area ("BTA") or Major Trading Area ("MTA")), and can construct and operate
transmitters throughout this market area without FCC licensing of individual
stations. In some cases, existing users of the designated frequencies must be
protected from interference or furnished with alternative means of
communications. The FCC has completed auctions to license various radio
services on a market area basis, including narrowband PCS or two-way paging,
broadband PCS, and the first phase of the 800 MHz trunked specialized mobile
radio auction, which concluded in December 1997. In these auctions, successful
bidders have made significant auction payments in order to obtain spectrum.
15
<PAGE>
With respect to its paging operations, the Company may choose to
participate in the market area licensing auctions for paging services. The
first auction for the 900 MHz paging bands is tentatively scheduled for the
third quarter of calendar year 1998. The lower paging bands, e.g., the
exclusive 150 and 450 MHz frequencies, are likely to be auctioned in 1999. The
Company believes that most bidders in the auctions will be larger carriers,
with significant resources to build out large regional systems. The FCC is
currently not proposing to auction the shared private carrier paging
frequencies licensed under its rules.
On February 8, 1996, the FCC announced a freeze on the acceptance of
applications for new or modified transmitter facilities in paging services.
This freeze was temporarily lifted to permit the filing of expansion
applications by incumbent paging carriers. With respect to applications to
expand paging systems licensed on exclusive paging frequencies, the FCC has
indicated that it will not process any expansion application filed after July
31, 1996; and that any pending application which is mutually exclusive with
another pending application, due to the possibility of harmful electrical
interference, will be dismissed. However, with respect to shared paging
channels, licensed under the FCC's rules, e.g., 462.850 MHz, the FCC is
permitting incumbent licensees to file expansion applications without
restriction. Thus, while the Company may be licensed on a particular shared
frequency at a particular site in Georgia, it could expand its paging system
throughout the southeastern United States, or elsewhere. Such flexibility is
not currently available to the Company for its paging system licensed on
exclusive frequencies under the FCC's rules. Currently, the only method for
expanding its paging system licensed under the FCC's rules is through
acquisition of existing stations, with FCC approval, which the Company did
during the first quarter of calendar year 1998.
The FCC has fully implemented its rules regarding the classification of
the services offered by paging carriers as either Commercial Mobile Radio
Services ("CMRS") or Private Mobile Radio Services ("PMRS"). Previously,
paging licensees had been classified either as "common carriers" or "private
carrier paging carriers." Pursuant to the FCC's rules, which aim to reduce the
disparities in the regulatory treatment of similar mobile services, the
Company's paging services are classified as CMRS, since the radio facilities
are interconnected to the public switched telephone network and service is
provided to the general public on a for-profit basis. The Company believes
that such parity will remove certain regulatory advantages which private
carriers, such as itself, enjoyed under the previous regulatory scheme. It
should be noted that certain disparities still exist between the exclusive
frequencies and the shared frequencies licensed under the FCC's rules, which
can affect the Company's ability to respond to subscriber demands in a timely
manner. In particular, the Company generally cannot expand its exclusive
paging channel coverage except by acquisition of another carrier's station on
the same channel or by being a winning bidder in the upcoming paging auctions.
These auctions will feature "overlay" licenses, with the winning bidder being
required to protect existing licensees within the designated service area. If
the Company is the successful bidder for its areas of interest, it will be
able to expand the coverage of its existing operations without further FCC
approval, within the licensed market areas. If instead, the Company is not the
successful bidder, then it will be unable to expand its existing coverage
unless it obtains the permission of the winning bidder. However, the winning
bidder would have to protect the Company's existing coverage areas from
interference.
Separate and distinct from the Company's paging facilities discussed above
is the Company's FM subcarrier paging system. While the FCC requires carriers,
such as the Company, to file applications prior to initiating service on
"leased subcarrier facilities of broadcast stations," such applications are
not barred by the FCC's freeze on applications for paging channels. Thus, it
would be possible for the Company to expand its FM subcarrier paging system,
should the need arise.
The 1996 Act may affect the Company's paging business. Some aspects of the
new statute could have a beneficial effect on the Company's paging business.
For example, proposed federal guidelines regarding antenna siting issues may
potentially remove local and state barriers to the construction of
communications facilities (although such restrictions are now being litigated
in the courts and debated in Congress), and efforts to increase competition in
the local exchange and interexchange industries may reduce the cost to the
Company of acquiring necessary communications services and facilities. On the
other hand, some provisions relating to
16
<PAGE>
common carrier interconnection, pay phone rates, enhanced 911 (E-911),
telephone number portability, equal access, the assignment of new area codes,
universal service fund and telephone relay service fund contributions, resale
requirements and auction authority may place additional burdens upon the
Company or subject the Company to increased competition.
Paging carriers are indirectly affected by Federal Aviation Administration
("FAA") regulations to the extent that proposed antenna sites may require
prior FAA approval. In those circumstances where antenna structure clearance
is required, the FCC will not grant an application for new or modified
facilities until such clearance is obtained from the FAA. Under the FCC's
rules, the tower owner is generally the entity that is required to secure such
approval.
The FCC has recently issued stricter guidelines with respect to radio
frequency (RF) radiation hazards. Generally, most paging facilities will be
categorically exempt, provided the base station and antenna system meet
certain criteria governing power and antenna height. In those circumstances
where the base station does not meet the criteria for exemption, it may be
necessary for the Company to modify its facility or relocate to another
antenna structure. If an exclusive paging channel is involved, the Company's
choices for relocation will be limited to certain sites within its service
area, since the Company may not expand its composite interference contour.
With respect to the shared paging frequencies the Company will be free to
relocate upon the receipt of FCC approval. See "Business -- Government
Regulation."
LIMITED PROTECTION OF PROPRIETARY RIGHTS AND TECHNOLOGY
The Company relies primarily on a combination of intellectual property laws
and contractual provisions to protect its proprietary rights and technology.
These laws and contractual provisions provide only limited protection of the
Company's proprietary rights and technology. Despite the Company's efforts to
protect its proprietary rights and technology, unauthorized parties may
attempt to copy aspects of the Company's software or services or to obtain and
use information that the Company regards as proprietary. Although the Company
is not aware of any current or previous infringement on its proprietary rights
and technology, there can be no assurance that the Company's means of
protecting its proprietary rights and technology will be adequate or that the
Company's competitors will not independently develop similar technology. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights to as great an extent as the laws of the United States See
"Business -- Proprietary Rights and Technology."
RISKS OF INFRINGEMENT CLAIMS
Many patents, copyrights and trademarks have been issued in the general
areas of information and telecommunications services and personal
telecommunications. In the ordinary course of its business, third parties may
claim that the Company's current or future products or services infringe the
patent, copyright or trademark rights of such third parties. No assurance can
be given that actions or claims alleging patent, copyright or trademark
infringement will not be brought against the Company with respect to current
or future products or services or that, if such actions or claims are brought,
the Company will ultimately prevail. Any such claiming parties may have
significantly greater resources than the Company to pursue litigation of such
claims. Any such claims, whether with or without merit, could be time
consuming, distract management's attention, result in costly litigation, cause
delays in introducing new or improved products and services, require the
Company to enter into royalty or licensing agreements, or cause the Company to
discontinue use of the challenged technology, tradename or service mark at
potentially significant expense to the Company associated with the marketing
of a new name or the development or purchase of replacement technology, all of
which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Proprietary
Rights and Technology."
TRANSACTIONS WITH RELATED PARTIES
The Company has in the past entered into agreements and arrangements with
certain officers, directors and shareholders of the Company involving loans of
funds, grants of options and warrants and acquisitions of
17
<PAGE>
businesses. Certain of these transactions may have been made on terms more
favorable to officers, directors and shareholders than could have been
obtained from an unaffiliated party. The Company requires that all material
transactions between the Company and its officers, directors or other
affiliates must (i) be approved by a majority of the disinterested members of
the Board of Directors of the Company and (ii) be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties. See
"Certain Transactions."
CONCENTRATION OF STOCK OWNERSHIP; VOTING CONTROL BY DIRECTORS AND EXECUTIVE
OFFICERS
On the Closing Date the present directors, executive officers and their
respective affiliates will beneficially own 2,835,423 shares (approximately
%) of the Company's Common Stock, including options and warrants that are
exercisable as of the Closing Date. In addition, the present directors,
executive officers and their respective affiliates hold options to acquire
98,467 shares of Common Stock that are not exercisable within 60 days of the
Closing Date, which together with shares currently beneficially owned would
represent approximately % of the Common Stock outstanding after completion
of the Offering, giving effect to the exercise of those options. As a result,
these shareholders, voting together, will be able to control or exercise
significant influence over all matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. Such concentration of ownership also may have the effect of
delaying or preventing a change in control of the Company. Purchasers in the
Offering will become minority shareholders of the Company and will be unable
to control the management or business policies of the Company. See "Principal
and Selling Shareholders" and "Description of Capital Stock -- Certain
Provisions of the Articles, Bylaws and the Georgia Code."
ABSENCE OF PRIOR PUBLIC MARKET; OFFERING PRICE DETERMINED BY AGREEMENT;
VOLATILITY OF MARKET PRICE
Prior to this Offering, there has been no public market for the Common
Stock, although the Company has applied for listing of the Common Stock on the
Nasdaq National Market in connection with this Offering. The initial public
offering price of the Common Stock will be determined solely by negotiations
among the Company and the Underwriters and will not necessarily be related to
the Company's book value, net worth or any other established criteria of value
and may not be indicative of the market price for shares of Common Stock after
the Offering. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price for the Common
Stock. From time to time after the Offering, there may be significant
volatility in the market price for the Common Stock, and there can be no
assurance that the market price of the Common Stock will not decline below the
initial public offering price. The stock market has from time to time
experienced significant price and volume fluctuations, which have particularly
affected the market prices of the stocks of high technology companies, and
which may be unrelated to the operating performance of particular companies.
Factors such as actual or anticipated operating results, growth rates, changes
in estimates by analysts, market conditions in the industry, announcements by
competitors, regulatory actions and general economic conditions will vary from
period to period. As a result of the foregoing, the Company's operating
results and prospects from time to time may be below the expectations of
public market analysts and investors. Any such event would likely result in a
material adverse effect on the price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
A substantial number of outstanding shares of Common Stock, as well as
shares of Common Stock issuable upon exercise of outstanding options or
warrants, are or will be eligible for future sale in the public market
pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"). Sales of such shares in the public market, or the
perception that such sales may occur, could adversely affect the market price
of the Common Stock or impair the Company's ability to raise additional
capital in the future through the sale of equity securities.
Immediately following the completion of the Offering, there will be
outstanding shares of Common Stock ( shares if the Underwriters' over-
allotment option is exercised in full) and options and warrants to purchase an
additional 1,310,494 shares of Common Stock. The shares of Common Stock
offered hereby ( shares if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable without
18
<PAGE>
restriction under the Securities Act by persons other than "affiliates" of the
Company. Of the remaining shares of Common Stock that will be outstanding
upon the completion of the Offering, shares will be eligible for immediate
sale in the public market without restriction, and an additional shares
will become eligible for sale, subject to the provisions of Rule 144,
beginning 90 days after the date of this Prospectus. Beginning 180 days after
the date of this Prospectus (or earlier with the written consent of J.C.
Bradford & Co.), additional shares will be available for immediate sale in
the public market, subject to the provisions of Rule 144, upon the expiration
of certain lock-up agreements between the Underwriters and the Company's
directors and executive officers, the Selling Shareholders and certain other
shareholders of the Company (the "Lock-Up Agreements").
The Company has entered into registration rights agreements with several
shareholders, option holders and warrant holders (collectively, the
"Registration Rights Holders") pursuant to which the Company is obligated to
register shares of Common Stock on behalf of the Registration Rights Holders.
Pursuant to certain demand registration rights, certain of the Registration
Rights Holders are entitled to demand at any time that the Company file a
registration statement and register up to an aggregate of 1,648,659 shares of
Common Stock. Additionally, pursuant to certain piggyback registration rights,
the Registration Rights Holders are entitled to include up to an aggregate of
1,904,659 shares of Common Stock in any registration statement (other than a
registration statement on Form S-4 or Form S-8) filed by the Company
subsequent to the Offering. All of the Registration Rights Holders will be
prevented, however, from exercising any registration rights for a period of
180 days after the completion of the Offering as a result of the Lock-Up
Agreements. If, following the expiration of the 180-day lock-up period, the
Company were required to file a registration statement upon demand of any
Registration Rights Holder or include shares of Common Stock pursuant to the
exercise of piggyback registration rights in a registration statement
otherwise filed by the Company, all of such registered shares generally would
then be eligible for immediate sale in the public market.
The Company intends to file a Registration Statement on Form S-8 as soon as
practicable after the completion of the Offering to register 1,000,000 shares
of Common Stock, of which 118,017 shares are subject to outstanding but
unvested options, that are available for issuance pursuant to the Company's
1997 Long-Term Incentive Plan (the "Plan"). All of such registered shares also
generally would then be eligible for immediate sale in the public market
unless such sale is contractually restricted. See "Certain Transactions,"
"Shares Eligible for Future Sale" and "Underwriting."
DILUTION
The initial public offering price is substantially higher than the tangible
book value per share of the outstanding Common Stock. Investors purchasing
shares of Common Stock in the Offering therefore will incur immediate and
substantial dilution, and existing shareholders will receive a material
increase in the tangible book value per share of their shares of Common Stock.
At an initial public offering price of $ per share (the midpoint of the
price range set forth on the cover page of this Prospectus), the immediate
dilution to new investors would be $ per share. In addition, investors
purchasing shares of Common Stock in the Offering will incur additional
dilution to the extent outstanding options and warrants are exercised. See
"Dilution."
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE ARTICLES, BYLAWS AND THE
GEORGIA CODE
The Board of Directors of the Company may issue preferred stock without
shareholder action. The existence of this "blank check" preferred stock could
render more difficult or discourage an attempt to obtain control of the
Company by means of a tender offer, merger, proxy contest or otherwise.
Additionally, effective as of the first annual meeting of shareholders held
after the completion of the Offering, the Board of Directors will be divided
into three classes of directors, with directors to be elected for staggered
three year terms. Such staggered terms may delay the ability of the Company's
shareholders to change control of the Company through the replacement of
directors and therefore inhibit the shareholders' ability to obtain the
maximum value for their shares of Common Stock that might otherwise be
realized. The Company is subject to certain provisions of the Georgia Business
Corporation Code, as amended (the "Georgia Code"), which relate to business
combinations
19
<PAGE>
with interested shareholders. In addition to considering the effects of any
action on the Company and its shareholders, the Company's Restated Articles of
Incorporation (the "Articles") permit the Board of Directors and the
committees and individual members thereof to consider the interests of various
constituencies, including employees, customers, suppliers and creditors of the
Company, communities in which the Company maintains offices or operations and
other factors which such directors deem pertinent in carrying out and
discharging the duties and responsibilities of such positions and in
determining what is believed to be in the best interests of the Company. See
"Management -- Board of Directors" and "Description of Capital Stock --
Certain Provisions of the Articles, Bylaws and the Georgia Code."
20
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company at an assumed initial public offering price of
$ per share (the midpoint of the price range set forth on the cover page of
this Prospectus) are estimated to be approximately $ million (approximately
$ million if the Underwriters' over-allotment option is exercised in full)
after deducting estimated underwriting discounts and Offering expenses payable
by the Company. The Company will not receive any proceeds from the sale of the
shares offered by the Selling Shareholders. See "Principal and Selling
Shareholders."
The Company currently intends to use approximately $ million of the net
proceeds to repay outstanding indebtedness under the Company's Credit Facility
with Creditanstalt which indebtedness totaled $25.4 million at March 31, 1998.
The Credit Facility carries a variable interest rate based on, at the
Company's election: (i) Creditanstalt's prime rate less an incentive pricing
spread (the "Incentive Pricing Spread") based on certain financial ratios of
the Company; or (ii) LIBOR plus the Incentive Pricing Spread. The Company has
historically utilized the Credit Facility for working capital and to finance
acquisitions. As of March 31, 1998, the outstanding balance under the Credit
Facility accrued interest at a rate of %. During the past 12 months, the
Company borrowed approximately $ million under the Credit Facility which
was used to acquire five companies and for capital expenditures and general
corporate purposes
The Company expects to use approximately $ million of the net proceeds to
redeem all shares of its Series D Preferred Stock outstanding prior to the
Offering. Such shares of Series D Preferred Stock were issued in April 1998 to
finance a portion of the purchase price of Premier Paging, Inc. and Premier
Paging of New Orleans, Inc. (collectively, "Premier Paging"). Additionally,
the issuance and sale of shares of Series D Preferred Stock increased the
Company's available borrowings under the Credit Facility from $30.0 million to
$40.0 million. On the Closing Date, the Company will amend its Articles to
eliminate the Series D Preferred Stock. See "Certain Transactions."
The anticipated reduction in amounts outstanding under the Credit Facility
will increase the availability of bank credit for general business purposes,
including acquisitions of businesses, products or technologies of strategic
importance to the Company. The Company currently is engaged in preliminary
discussions with other potential acquisition candidates. Although it has no
binding commitments to acquire any of such other potential candidates,
management believes that the Company may acquire one or more of these
candidates in the future by using available borrowings under the Credit
Facility. There can be no assurance that the Company will complete any
acquisitions on terms favorable to the Company, if at all. To the extent that
the Hyde's Acquisition is not completed, the unused Offering proceeds that
would have been used to repay indebtedness incurred under the Credit Facility
to finance the Hyde's Acquisition may be used to make other acquisitions or
for other general corporate purposes as determined by management in its
discretion. See "Risk Factors -- Ability to Manage Growth, Acquisition Risks,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Acquisitions."
DIVIDEND POLICY
The Company presently intends to employ all available funds for the
expansion of its business and, therefore, does not anticipate declaring or
paying cash dividends on the Common Stock in the foreseeable future. The
Company has not paid cash dividends on its Common Stock in the past, and the
payment of cash dividends, if any, in the future will depend upon the
Company's earnings, financial condition, capital requirements, cash flow, long
range plans and such other factors as the Board of Directors of the Company
may deem relevant at that time. Additionally, the terms of the Credit Facility
prohibit the Company, without the prior written consent of the Company's
lenders, from paying cash dividends in any fiscal year in an amount exceeding
the lesser of 25% of the Company's excess cash flow (as defined in the Credit
Facility) for the immediately preceding fiscal year or $350,000.
21
<PAGE>
CAPITALIZATION
The following table sets forth the indebtedness and capitalization of the
Company at January 31, 1998: (i) on a historical basis; (ii) on a pro forma
basis to reflect the Hyde's Acquisition and the issuance of $7.5 million and
$4.5 million in additional debt and Series D Preferred Stock (and warrants
related thereto), respectively, to finance the Hyde's Acquisition; and (iii)
on a pro forma as adjusted basis to reflect an increase in authorized shares
of Common Stock to 50,000,000 shares, the conversion of all issued and
outstanding shares of Series A Preferred Stock and Series C Preferred Stock
into shares of Common Stock, the sale by the Company of shares of the
Common Stock offered hereby and the application of the estimated net proceeds
therefrom to repay indebtedness and redeem Series D Preferred Stock as
described in "Use of Proceeds." On the Closing Date, the Company will amend
its Articles to redesignate the Class A Common Stock, Class B Common Stock and
Series B Preferred Stock as Common Stock, Non-Voting Common Stock and Non-
Voting Preferred Stock, respectively, and to eliminate the Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock. The following
table should be read in conjunction with "Selected Consolidated Financial and
Operating Data," "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and notes thereto, including the unaudited pro forma consolidated
financial information, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT JANUARY 31, 1998
------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt (including current portion of
long-term debt)................................ $ 428 $ 428 $
------- ------- ----
Long-term debt.................................. $23,441 $30,941 $
Stock warrants................................ 4,576 4,671
Series C Redeemable Convertible Preferred
Stock, $0.01 par value; 3,500 shares
authorized, issued and outstanding, actual
and pro forma; 0 shares authorized, issued
and outstanding, pro forma as adjusted....... 3,500 3,500
Series D Redeemable Preferred Stock, $0.01 par
value; 0 shares authorized, issued and
outstanding, actual; 4,500 shares authorized,
issued and outstanding, pro forma; 0 shares
authorized, issued and outstanding, pro forma
as adjusted.................................. -- 4,405
Shareholders' equity:
Series A Convertible Preferred Stock, $0.01
par value; 7,500 shares authorized and 7,360
shares issued and outstanding, actual and pro
forma; 0 shares authorized, issued and
outstanding, pro forma as adjusted........... -- --
Series B Convertible Preferred Stock, $0.01
par value; 30,000 shares authorized and 0
shares issued and outstanding................ -- --
Class A Common Stock, $0.01 par value;
5,000,000 shares authorized and 2,349,521
shares issued and outstanding, actual and pro
forma; 50,000,000 shares authorized and
shares issued and outstanding, pro
forma as adjusted(1)......................... 23 23
Class B Common Stock, $0.01 par value; 20,000
shares authorized and 0 shares issued and
outstanding, actual and pro forma; 0 shares
authorized, issued and outstanding, pro forma
as adjusted.................................. -- --
Additional paid-in capital.................... 2,476 2,476
Stock warrants................................ -- --
Accumulated deficit........................... (10,324) (10,324)
------- ------- ----
Total shareholders' deficit................. (7,825) (7,825)
------- ------- ----
Total capitalization...................... $24,120 $36,120 $
======= ======= ====
</TABLE>
- --------
(1) Excludes 270,717 shares of Common Stock that were subject to outstanding
options and warrants at April 3, 1998 at a weighted average exercise price
of $5.12 per share. See "Management -- Incentive Plan," "Shares Eligible
for Future Sale" and note 7 to consolidated financial statements.
22
<PAGE>
DILUTION
As of January 31, 1998, the net tangible book value of the Company was
approximately $(20,488,000), or $(8.72) per share of Common Stock. "Net
tangible book value per share" is defined as the book value of tangible assets
of the Company less all liabilities, divided by the number of issued and
outstanding shares of Common Stock. After giving effect to the Transactions,
the conversion of all outstanding shares of Series A Preferred Stock and
Series C Preferred Stock into Common Stock and the sale by the Company of the
shares of Common Stock offered hereby at an assumed initial public
offering price of $ per share and after deducting the estimated
underwriting discounts and Offering expenses payable by the Company, the pro
forma net tangible book value of the Company as of January 31, 1998, would
have been approximately $ or $ per share. This represents an immediate
increase in net tangible book value of $ per share to existing shareholders
and an immediate dilution in net tangible book value of $ per share to
purchasers of shares of Common Stock in the Offering. The following table
illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $
----
Net tangible book value before the Offering.................. $(8.72)
Increase per share attributable to new shareholders..........
------
Pro forma net tangible book value per share ...................
----
Dilution per share to new shareholders......................... $
====
</TABLE>
The following table sets forth, as of January 31, 1998, on a pro forma basis
giving effect to the conversion of the Series A Preferred Stock and Series C
Preferred Stock into Common Stock, the number of shares of Common Stock
acquired from the Company, the total consideration paid and the average price
per share paid by existing shareholders and new investors, assuming the sale
of shares of Common Stock hereby at an assumed initial public offering
price of $ per share.
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
----------------- ----------------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders.......... 3,561,771 % $6,393,104 % $1.79
New investors..................
--------- ------ ----------- -------
Total........................ 100.0% $ 100.0%
========= ====== =========== =======
</TABLE>
The foregoing tables do not take into account the exercise of outstanding
options and warrants to acquire 1,174,860 shares of Common Stock. Assuming
that all such options and warrants were exercised and that the full amount of
cash consideration was received therefrom, dilution per share to new investors
would be $ . See "Management -- Incentive Plan," "Certain Transactions --
Non-Voting Preferred Stock Warrant Issuance" and note 7 to consolidated
financial statements.
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND ARPU)
The following table sets forth selected historical and pro forma
consolidated financial and operating information of the Company. The selected
historical consolidated financial data as of and for the fiscal years ended
July 31, 1995, 1996 and 1997 and the six months ended January 31, 1998 have
been derived from the consolidated financial statements of the Company
included in this Prospectus, which have been audited by Arthur Andersen LLP,
independent public accountants. The selected historical consolidated financial
data as of and for the years ended July 31, 1993 and 1994 have been derived
from audited consolidated financial statements of the Company that are not
included in this Prospectus. The selected historical consolidated financial
data for the six months ended January 31, 1997 have been derived from
unaudited consolidated financial statements of the Company and, in the opinion
of management, include all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of such information. Operating
results for the six months ended January 31, 1998 are not necessarily
indicative of the results that may be expected for the entire fiscal year. The
selected historical and pro forma consolidated financial data are qualified by
reference to, and should be read in conjunction with, the Company's
consolidated financial statements and the notes thereto, including the
unaudited pro forma consolidated financial information, included in this
Prospectus, as well as "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
YEARS ENDED JULY 31, SIX MONTHS ENDED JANUARY 31,
---------------------------------------------------------------- -------------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1997 1998 1998(1)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Service, rent and
maintenance
revenues........... $ 5,012 $ 5,980 $ 6,885 $ 9,839 $ 16,308 $ 20,478 $ 7,677 $ 9,481 $ 11,590
Product sales....... 367 449 526 975 1,264 2,508 578 637 1,233
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total revenues..... 5,379 6,429 7,411 10,814 17,572 22,986 8,255 10,118 12,823
Cost of products
sold............... (320) (416) (468) (960) (1,201) (2,443) (574) (556) (1,260)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net revenues....... 5,059 6,013 6,943 9,854 16,371 20,543 7,681 9,562 11,563
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Service, rent and
maintenance
expenses........... 2,019 2,335 2,718 3,879 6,542 7,149 3,189 3,598 3,795
Selling and
marketing
expenses........... 723 801 1,222 1,602 2,314 2,635 1,081 1,432 1,568
General and
administrative
expenses........... 822 842 887 1,732 3,039 4,300 1,291 1,710 2,202
Engineering
expenses........... 482 453 567 516 638 641 320 383 383
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating expenses
before
depreciation,
amortization and
fixed asset
impairment and one-
time reengineering
charges............ 4,046 4,431 5,394 7,729 12,533 14,725 5,881 7,123 7,948
Depreciation and
amortization....... 613 713 845 1,204 2,242 3,324 1,016 1,392 1,922
Fixed asset
impairment and one-
time
reengineering charges.. -- 297 -- -- -- -- -- 1,534 1,534
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating income
(loss)............. 400 572 704 921 1,596 2,494 784 (487) 159
Other income........ 62 144 90 91 90 151 41 96 216
Interest expense.... (576) (523) (704) (873) (1,564) (2,352) (699) (1,112) (1,455)
Accretion of stock
warrants(2)........ (140) (350) (643) (854) (1,773) (1,773) (887) (229) (229)
(Loss) income from
joint venture...... -- -- -- (96) 26 26 31 61 61
Minority interest... -- -- -- (2) (3) (3) (3) (6) (6)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Loss before income
tax benefit and
extraordinary
item............... (254) (157) (553) (813) (1,628) (1,457) (733) (1,677) (1,254)
Income tax benefit.. 41 -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Loss before
extraordinary
item............... (213) (157) (553) (813) (1,628) (1,457) (733) (1,677) (1,254)
Extraordinary gain
(loss) on early
retirement of debt(3).. 68 -- -- (132) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net loss........... (145) (157) (553) (945) (1,628) (1,457) (733) (1,677) (1,254)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Preferred stock
dividends.......... 88 88 88 334 438 812 219 219 410
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net loss
attributable to
common
shareholders....... $ (233) $ (245) $ (641) $ (1,279) $ (2,066) $ (2,269) $ (952) $ (1,896) $ (1,664)
========= ========= ========= ========= ========= ========= ========= ========= =========
Allocation to Class
A Common Stock.... $ (215) $ (226) $ (598) $ (1,205) $ (2,035) $ (2,235) $ (938) $ (1,894) $ (1,662)
Allocation to Class
B Common Stock.... (18) (19) (43) (74) (31) (34) (14) (2) (2)
Basic and diluted
net loss per
share(4):
Gain (loss) from
extraordinary
item:
Class A Common
Stock............ $ 0.03 $ -- $ -- $ (0.06) $ -- $ -- $ -- $ -- $ --
Class B Common
Stock............ 1.86 -- -- (3.79) -- -- -- -- --
Net loss
attributable to
common
shareholders:
Class A Common
Stock............ (0.10) (0.10) (0.27) (0.56) (0.90) (0.98) (0.41) (0.82) (0.72)
Class B Common
Stock............ (6.34) (6.57) (17.45) (36.68) (58.24) (63.96) (26.83) (53.42) (47.23)
Weighted average
common shares
outstanding:
Class A Common
Stock............ 2,203,873 2,239,578 2,228,603 2,135,224 2,271,393 2,271,393 2,271,393 2,304,370 2,304,370
Class B Common
Stock............ 2,821 2,821 2,474 2,013 535 535 535 35 35
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
--------------------------------------------------------- -----------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1996 1997 1997(1) 1997 1998 1998(1)
------ -------- -------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Adjusted net income
(loss)(5).............. $ (73) $ 193 $ 90 $ 186 $ 145 $1,123 $ 154 $ 86 $ 1,535
Cash provided by (used
in) operations......... 461 971 726 896 1,974 N/A 153 (14) N/A
EBITDA(6)............... 1,075 1,726 1,639 2,263 3,951 5,992 1,869 2,590 3,886
EBITDA margin(7)........ 21.2% 28.7% 23.6% 23.0% 24.1% 29.2% 24.3% 27.1% 33.6%
Units in service (end of
period)................ 15,313 19,179 27,271 65,418 95,172 129,407 74,971 106,801 142,671
Average revenues per
unit(8)................ $28.67 $ 29.05 $ 24.91 $ 17.72 $ 16.99 $ 15.35 $ 18.24 $ 15.78 $ 14.17
Capital expenditures.... $ (517) $ (971) $ (1,528) $ (1,911) $ (3,647) N/A $ (1,235) $ (3,432) NA
Cash dividends and
distributions(9)....... (128) (100) (77) (334) (450) N/A (243) (263) N/A
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
------------------------------------------------- -----------------------------
PRO FORMA
1993 1994 1995 1996 1997 1997 1998 1998(1)
-------- -------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working (deficit)
capital................ ...... $ (1,001) $ (635) $ (184) $ (607) $ (1,218) $ 93 $ 303 $ 915
Property and equipment,
net.................... ...... 2,476 2,895 3,773 5,906 8,753 6,706 10,399 10,899
Total assets............ ...... 3,980 4,778 5,870 17,935 25,122 18,524 18,524 40,667
Long-term debt, less
current maturities..... ...... 3,349 3,792 5,826 12,278 18,411 13,667 23,441 30,941
Total shareholders'
deficit................ ...... (1,840) (1,785) (3,131) (4,180) (6,029) (4,973) (7,825) (7,825)
</TABLE>
- --------
(1) The pro forma statement of operations and other data give effect to the
Transactions as if each had occurred at the beginning of the period
presented, and the pro forma balance sheet data give effect to the
Transactions as if each had occurred at January 31, 1998. The pro forma
financial information does not purport to represent what the Company's
results of operations would have been if the Transactions had in fact
occurred on such dates, nor does it purport to indicate the future
financial position or results of future operations of the Company. The pro
forma adjustments are based on currently available information and certain
assumptions that management believes to be reasonable.
(2) Represents a non-cash expense, calculated pursuant to a formula based on
the Company's EBITDA, associated with the put feature of the Creditanstalt
Warrants. The put feature of the Creditanstalt Warrants will be canceled
on the Closing Date.
(3) As a result of early retirement of debt in fiscal 1993 and fiscal 1996,
the Company recorded a gain of $68,000 in fiscal 1993 and a loss of
$132,000 in fiscal 1996, net of income taxes.
(4) Basic and diluted net loss per share under the two class method are
computed separately for holders of Class A and Class B Common Stock using
the weighted average number of shares of Class A and Class B Common Stock
outstanding. Net loss attributable to Class A and Class B shareholders is
allocated based on the extent to which each class shares in the Company's
(loss) income. The Company's Class A and Class B common shareholders
receive dividends at a ratio of 1:65. See "Capitalization."
(5) Represents net income excluding fixed asset impairment and one-time
reengineering charges, accretion of stock warrants and extraordinary item.
Adjusted net income for fiscal 1996 excludes $145,000 related to a one-
time charge to write off purchased research and development.
(6) EBITDA represents earnings before interest, taxes, depreciation,
amortization, fixed asset impairment and one-time reengineering charges,
accretion of stock warrants and extraordinary item. EBITDA is a measure of
financial performance that is often used in the personal
telecommunications industry to compare companies on the basis of
liquidity, capital resources and leverage and to determine a company's
ability to service debt. EBITDA also is one of the financial measurements
used to determine whether the Company is in compliance with its covenants
under the Credit Facility. However, EBITDA should not be considered in
isolation or as an alternative to net loss, income from operations, cash
flows from operating activities or any other measure of performance under
GAAP. Further, EBITDA may be calculated differently by different companies
within the personal telecommunications industry. Thus, EBITDA as presented
herein may not be comparable to EBITDA or other similarly titled measures
reported by other companies. EBITDA for fiscal 1996 excludes $145,000
related to a one-time charge to write off purchased research and
development.
(7) EBITDA margin is calculated by dividing EBITDA by net revenues.
(8) ARPU equals the average net revenues for a given period divided by the
average number of units in service during such period. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
(9) Consists of cash paid as dividends on the Company's preferred stock. No
dividends have been paid on the Company's Common Stock. See "Dividend
Policy."
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management
for future operations, and projections of revenue and other financial items
that are based on the beliefs of, assumptions made by and information
currently available to the Company's management. Forward-looking statements
are identified by the use of words such as "expects," "estimates,"
"anticipates," "believes," "intends," "plans" and similar expressions and
variations thereof. The cautionary statements set forth in the "Risk Factors"
section and elsewhere in this Prospectus identify important factors with
respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
expressed in or implied by such forward-looking statements. The following
discussion should be read in connection with the discussion set forth in "Risk
Factors" and with the consolidated financial statements and the notes thereto
included elsewhere in this Prospectus.
OVERVIEW
Satellink provides paging and enhanced telecommunications services to
businesses and individuals in smaller metropolitan areas and major cities in
the southeastern and southwestern United States. The Company delivers its
services through its STAR*Net platform, which is accessible from and provides
access to a variety of devices, including pagers, telephones and computers.
The STAR*Net platform is modular and scalable, which allows the Company to
quickly customize its services to meet the needs of its subscribers and expand
system capacity.
Satellink's revenues consist of: (i) service, rent and maintenance revenues;
and (ii) product sales. Service, rent and maintenance revenues consist
primarily of recurring revenues from paging and voicemail services. The
Company bills the fixed portion of the fees it charges for paging and
voicemail services in advance and bills usage-related fees in arrears. The
majority of the Company's revenues are recurring in nature (approximately
92.9%, 91.0%, 92.8% and 93.7% for fiscal 1995, 1996 and 1997 and for the six
month period ended January 31, 1998, respectively) and are derived from
periodic (usually monthly) fixed and usage-related fees charged to paging and
voicemail subscribers. While a subscriber continues to use the Company's
services, operating results benefit from a recurring revenue stream with
minimal requirements for incremental selling expenses. Service, rent and
maintenance revenues are recognized during the periods in which the services
are provided. Product sales revenues include the revenues derived from the
sale of pagers and other subscriber equipment and accessories and are
recognized during the periods in which sales occur. Net revenues include
service, rent and maintenance revenues and product sales revenues less the
cost of products sold. The Company's total revenues have increased from
approximately $5.4 million for fiscal 1993 to approximately $17.6 million for
fiscal 1997 and were approximately $10.1 million for the six months ended
January 31, 1998. The cost of products sold, which consists of the cost of
subscriber equipment sold, has increased from approximately $320,000 for
fiscal 1993 to approximately $1.2 million for fiscal 1997. Net revenues have
increased from approximately $5.1 million for fiscal 1993 to approximately
$16.4 million for fiscal 1997. Net revenues for the six months ended January
31, 1998 were approximately $9.6 million.
Service, rent and maintenance expenses include: subcarrier, tower and
satellite channel lease cost; data delivery telephone costs; third party
carriers' airtime expense; and network maintenance expense. Selling and
marketing expenses include salaries, commissions, travel and administrative
costs for the Company's sales force and related marketing and advertising
expenses. General and administrative expenses include expenses associated with
executive management, accounting, billing, customer service, office
telephones, office rents and maintenance and employee benefits. Engineering
expenses include costs associated with technical support personnel and
information services. The Company has experienced a decline in total average
operating expenses per unit in service (operating expenses per unit before
depreciation, amortization, restructuring and other one-time charges, and
accretion of stock warrants) from $22.93 for fiscal 1993 to $12.95 for fiscal
1997. Operating expenses per unit in service was $11.76 for the six months
ended January 31, 1998.
26
<PAGE>
Depreciation is calculated on a straight line basis over periods ranging
from five to 20 years depending on the nature of the asset. Amortization is
calculated on a straight-line basis over periods ranging from five to 30
years.
Other income consists primarily of income from late fees, finance charges
and income derived from the sale of used subscriber equipment.
Interest expense consists primarily of interest paid under the Credit
Facility and, to a lesser extent, interest paid in connection with unsecured
promissory notes issued by the Company to finance certain acquisitions.
Accretion of stock warrants is a non-cash expense associated with the put
feature of the Creditanstalt Warrants. The expense has been calculated using a
formula based on the Company's EBITDA. The put feature of the Creditanstalt
Warrants is canceled upon completion of a qualified initial public offering of
Common Stock which yields net proceeds to the Company of at least $10.0
million.
Income (loss) from joint venture includes the net income of FM Concepts II,
a joint venture that is owned equally by the Company and Cape Fear. FM
Concepts II purchases and resells Infotelcom FM pagers. The Company accounts
for FM Concepts II under the equity method of accounting.
Minority interest represents the minority owner's share of the income or
loss associated with the operations of DirectLink Communications, L.L.C.
("Direct Link"). Direct Link provides personal telecommunications services to
consumers through a retail location in Duluth, Georgia. Until January 1998,
the general manager of Direct Link held 15% of the membership interest in
Direct Link. In February 1998, the Company acquired the 15% interest. The
Company will not report a minority interest associated with Direct Link after
fiscal 1998.
ARPU equals the average net revenues for a given period divided by the
average number of units in service during such period. ARPU for fiscal 1993,
1994, 1995, 1996 and 1997 and for the six months ended January 31, 1998 was
$28.67, $29.05, $24.91, $17.72, $16.99 and $15.78, respectively. The downward
trend is the result of the acquisitions of paging companies which primarily
provide local service, a shift in product mix and increasing competitive
pressures. At July 31, 1993, local, regional and nationwide subscribers as a
percentage of total subscribers equaled 15.4%, 63.4% and 21.1%, respectively.
At January 31, 1998, local, regional, nationwide and voicemail subscribers as
a percentage of total subscribers equaled 40.1%, 30.2%, 18.2% and 11.5%,
respectively.
EBITDA represents earnings before interest, taxes, depreciation,
amortization, fixed asset impairment and one-time reengineering charges,
accretion of stock warrants and extraordinary item. EBITDA is a measure of
financial performance that is often used in the personal telecommunications
industry to compare companies on the basis of liquidity, capital resources and
leverage and to determine a company's ability to service debt. EBITDA also is
one of the financial measurements used to determine whether the Company is in
compliance with its covenants under the Credit Facility. However, EBITDA
should not be considered in isolation or as an alternative to net loss, income
from operations, cash flows from operating activities or any other measure of
performance under GAAP. Further, EBITDA may be calculated differently by
different companies within the personal telecommunications industry. Thus,
EBITDA as presented herein may not be comparable to EBITDA or other similarly
titled measures reported by other companies.
27
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentage of net revenues represented by
certain items in the Company's statements of operations for the periods
indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED JULY 31, JANUARY 31,
---------------------- ------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Service, rent and maintenance revenues.... 99.2% 99.8% 99.6% 99.9% 99.2%
Product sales............................. 7.6 9.9 7.7 7.5 6.7
------ ------ ------ ----- -----
Total revenues........................... 106.8 109.7 107.3 107.4 105.9
Cost of products sold..................... (6.8) (9.7) (7.3) (7.4) (5.9)
------ ------ ------ ----- -----
Net revenues............................. 100.0 100.0 100.0 100.0 100.0
------ ------ ------ ----- -----
Service, rent and maintenance expenses.... 39.1 39.4 40.0 41.5 37.6
Selling and marketing expenses............ 17.6 16.3 14.1 14.1 15.0
General and administrative expenses....... 12.8 17.6 18.6 16.8 17.9
Engineering expenses...................... 8.2 5.2 3.9 4.2 4.0
------ ------ ------ ----- -----
Operating expenses before depreciation,
amortization, and
fixed asset impairment and one-
time reengineering charges............... 77.7 78.5 76.6 76.6 74.5
Depreciation and amortization............. 12.2 12.2 13.7 13.2 14.6
Fixed asset impairment and one-time
reengineering charges.................... -- -- -- -- 16.0
------ ------ ------ ----- -----
Operating income (loss)................... 10.1 9.3 9.7 10.2 (5.1)
Other income.............................. 1.3 0.9 0.5 0.5 1.0
Interest expense.......................... (10.1) (8.8) (9.6) (9.1) (11.6)
Accretion of stock warrants............... (9.3) (8.7) (10.8) (11.5) (2.4)
(Loss) income from joint venture.......... -- (1.0) 0.2 0.4 0.6
Minority interest......................... -- -- -- -- (0.1)
------ ------ ------ ----- -----
Loss before income tax provision and
extraordinary item....................... (8.0) (8.3) (10.0) (9.5) (17.5)
Income tax provision...................... -- -- -- -- --
------ ------ ------ ----- -----
Loss before extraordinary item............ (8.0) (8.3) (10.0) (9.5) (17.5)
Extraordinary loss on early retirement of
debt..................................... -- (1.3) -- -- --
------ ------ ------ ----- -----
Net loss................................. (8.0) (9.6) (10.0) (9.5) (17.5)
------ ------ ------ ----- -----
Preferred stock dividends................. (1.3) (3.4) (2.6) (2.9) (2.3)
------ ------ ------ ----- -----
Net loss attributable to common
shareholders............................. (9.2) (13.0) (12.6) (12.4) (19.8)
====== ====== ====== ===== =====
EBITDA.................................... 23.6 23.0 24.1 24.3 27.1
</TABLE>
SIX MONTHS ENDED JANUARY 31, 1998 COMPARED TO SIX MONTHS ENDED JANUARY 31,
1997
Total Revenues. Total revenues increased $1.8 million, or 22.6%, to $10.1
million for the six months ended January 31, 1998 from $8.3 million for the
six months ended January 31, 1997. This increase was primarily due to an
increased number of subscribers resulting from internal growth and
acquisitions. Total subscribers increased 32,000, or 42.7%, to 107,000 at
January 31, 1998 from 75,000 at January 31, 1997. Of this increase in
subscribers, 61.6% resulted from internal growth and 38.4% resulted from
acquisitions. During the period from February 1, 1997 through January 31,
1998, the Company completed five acquisitions which added 11,900 subscribers.
Product sales increased $59,000, or 10.2%, to $637,000 for the six months
ended January 31, 1998 from $578,000 for the six months ended January 31,
1997, but decreased as a percentage of net revenues to 6.7% for the six months
ended January 31, 1998 from 7.5% for the six months ended January 31, 1997.
The increase in product sales was related to subscriber base growth while the
decline in product sales as a percentage of net revenues reflects increased
voicemail and other services revenues which do not require subscriber
equipment.
28
<PAGE>
Cost of Products Sold. Cost of products sold decreased $18,000, or 3.1%, to
$556,000 for the six months ended January 31, 1998 from $574,000 for the six
months ended January 31, 1997. The gross margin on products sold increased to
12.7% for the six months ended January 31, 1998 from 0.7% for the six months
ended January 31, 1997. The decrease in cost of products sold and the increase
in gross margin were primarily attributable to lower product costs associated
with the changing mix of products sold and declining prices for subscriber
equipment.
Service, Rent and Maintenance Expenses. Service, rent and maintenance
expenses increased $409,000, or 12.8%, to $3.6 million for the six months
ended January 31, 1998 from $3.2 million for the six months ended January 31,
1997. This increase reflects an increase in airtime expense paid to third
party service providers associated with subscriber base growth and related
increased telephone expense. Telephone expense increased due to additional
telephone facilities and increased voicemail usage. Service, rent and
maintenance expenses decreased as a percentage of net revenues to 37.6% for
the six months ended January 31, 1998 from 41.5% for the six months ended
January 31, 1997. The decrease in service, rent and maintenance expenses as a
percentage of net revenues reflects economies of scale as the subscriber base
has grown.
Selling and Marketing Expenses. Selling and marketing expenses increased
$351,000, or 32.5%, to $1.4 million for the six months ended January 31, 1998
from $1.1 million for the six months ended January 31, 1997. This increase
reflects sales staff compensation related to increased sales activity and
advertising. Selling and marketing expenses increased as a percentage of net
revenues to 15.0% for the six months ended January 31, 1998 from 14.1% for the
six months ended January 31, 1997.
General and Administrative Expenses. General and administrative expenses
increased $419,000, or 32.5%, to $1.7 million for the six months ended January
31, 1998 from $1.3 million for the six months ended January 31, 1997. This
increase reflects higher office costs and customer service staffing levels
associated with subscriber base growth. This increase also relates to costs
incurred by the Company in connection with the introduction of new STAR*Net
products. For these reasons, general and administrative expenses also
increased as a percentage of net revenues to 17.9% for the six months ended
January 31, 1998 from 16.8% for the six months ended January 31, 1997.
Engineering Expenses. Engineering expenses increased $63,000, or 19.7%, to
$383,000 for the six months ended January 31, 1998 from $320,000 for the six
months ended January 31, 1997. This increase reflects higher staffing levels
and costs associated with upgrading the Company's information systems and
capabilities and the introduction of new STAR*Net products.
EBITDA. EBITDA increased $721,000, or 38.6%, to $2.6 million for the six
months ended January 31, 1998 from $1.9 million for the six months ended
January 31, 1997. As a percentage of net revenues, EBITDA increased to 27.1%
for the six months ended January 31, 1998 from 24.3% for the six months ended
January 31, 1997.
Depreciation and Amortization. Depreciation and amortization increased
$376,000, or 37.0%, to $1.4 million for the six months ended January 31, 1998
from $1.0 million for the six months ended January 31, 1997. This increase
reflects an increase in pagers, switches and other depreciable assets
associated with the increased subscriber base and increased amortization
related to acquired intangible assets.
Operating Income (loss). Operating income (loss) decreased $1.3 million, or
162.1%, to $(487,000) for the six months ended January 31, 1998 from $784,000
for the six months ended January 31, 1997. This decrease reflects a $1.5
million one-time charge for the write-down of traditional paging terminals
removed from service in connection with the Company's implementation of its
STAR*Net platform, write-off of assets associated with the Company's previous
billing system which was replaced and a write-off of reengineering cost
previously capitalized. Excluding the one-time charge, operating income would
have been $1.0 million for the six months ended January 31, 1998, a 33.5%
increase over the six months ended January 31, 1997.
29
<PAGE>
Other Income. Other income increased $55,000, or 134.1%, to $96,000 for the
six months ended January 31, 1998 from $41,000 for the six months ended
January 31, 1997. This increase was related to increased sales of used
subscriber equipment as the Company accepted more used units as trade-ins and
resold such units. This increase also reflects increased late fees associated
with the larger subscriber base.
Interest Expense. Interest expense increased $413,000, or 59.1%, to $1.1
million for the six months ended January 31, 1998 from $699,000 for the six
months ended January 31, 1997. This increase primarily reflects an increase in
the average level of debt outstanding due to acquisitions completed during the
second half of fiscal 1997 and, to a lesser extent, higher bank lending rates
during the six months ended January 31, 1998.
Accretion of Stock Warrants. Accretion of stock warrants expense decreased
$658,000, or 74.2%, to $229,000 in six months ended January 31, 1998 from
$887,000 for the six months ended January 31, 1997.
Income (Loss) From Joint Venture. Income from joint venture increased
$30,000, or 96.8%, to $61,000 for the six months ended January 31, 1998 from
$31,000 for the six months ended January 31, 1997. This increase was related
to a decrease in wholesale prices for FM pagers that was not passed on from FM
Concepts II to the Company.
Minority Interest. Minority interest expense increased $3,000 to $6,000 for
the six months ended January 31, 1998 from $3,000 for the six months ended
January 31, 1997. This increase was related to increased profits at Direct
Link.
Net Loss. Net loss increased $944,000, or 128.8%, to $1.7 million for the
six months ended January 31, 1998 from $733,000 for the six months ended
January 31, 1997. This increase reflects the factors described above.
Excluding the effect of the accretion of stock warrants and the one-time
charge for the write-down of traditional paging terminals removed from service
in connection with the Company's implementation of its STAR*Net platform and
the write-off of assets associated with the Company's previous billing system
which was replaced, net income decreased $68,000, or 44.2%, to $86,000 for the
six months ended January 31, 1998 from $154,000 for the six months ended
January 31, 1997.
FISCAL YEAR ENDED JULY 31, 1997 COMPARED TO FISCAL YEAR ENDED JULY 31, 1996
Total Revenues. Total revenues increased $6.8 million, or 63.0%, to $17.6
million for fiscal 1997 from $10.8 million for fiscal 1996. This increase was
primarily due to an increased number of subscribers resulting from internal
growth and acquisitions. Total subscribers increased 30,000, or 46.2%, to
95,000 at July 31, 1997 from 65,000 at July 31, 1996. Of this increase in
subscribers, 63.0% resulted from internal growth and 37.0% resulted from
acquisitions. Results for fiscal 1997 include twelve months of operations of
C.R. and Atlanta Voice Page, Inc. ("AVP"), which were acquired in February and
June, 1996, respectively, through which the Company added 22,000 paging
subscribers. Also during fiscal 1997, the Company completed five smaller
acquisitions through which it added 11,900 subscribers. Results of operations
of the acquired companies were included from the various acquisition dates.
Product sales increased $289,000, or 29.6%, to $1.3 million for fiscal 1997
from $1.0 million for fiscal 1996. This increase was related to subscriber
base growth. Product sales decreased as a percentage of net revenues to 7.7%
for fiscal 1997 from 9.9% for fiscal 1996. The decline in product sales as a
percentage of net revenues reflects increased voicemail and other services
revenues which do not require subscriber equipment.
Cost of Products Sold. Cost of products sold increased $241,000, or 25.1%,
to $1.2 million for fiscal 1997 from $1.0 million for fiscal 1996. This
increase was associated with continued subscriber base growth. Gross margin on
products sold increased to 5.0% for fiscal 1997 from 1.5% for fiscal 1996.
This increase was primarily attributable to lower product costs associated
with the changing mix of products sold and declining prices for subscriber
equipment.
Service, Rent and Maintenance Expenses. Service, rent and maintenance
expenses increased $2.7 million, or 68.7%, to $6.5 million for fiscal 1997
from $3.9 million for fiscal 1996. This increase reflects an increase in
airtime expense paid to third party service providers and an increase in
subcarrier and tower lease expenses
30
<PAGE>
primarily associated with the acquisitions of C.R. and AVP. Results of
operations for C.R. and AVP are reflected for all of fiscal 1997 but only the
last two months and six months, respectively, of fiscal 1996. Telephone
expense increased as a result of additional telephone facilities and increased
voicemail usage. Service, rent and maintenance expenses increased as a
percentage of net revenues to 40.0% for fiscal 1997 from 39.4% for fiscal
1996. The increase in service, rent and maintenance expenses as a percentage
of net revenues reflects increases in telephone and airtime costs as a
percentage of net revenues.
Selling and Marketing Expenses. Selling and marketing expenses increased
$712,000, or 44.4%, to $2.3 million for fiscal 1997 from $1.6 million for
fiscal 1996. This increase reflects sales staff compensation related to
increased sales activity and advertising, both of which resulted in subscriber
base growth. Selling and marketing expenses decreased as a percentage of net
revenues to 14.1% for fiscal 1997 from 16.3% for fiscal 1996.
General and Administrative Expenses. General and administrative expenses
increased $1.3 million, or 75.5%, to $3.0 million for fiscal 1997 from $1.7
million for fiscal 1996. This increase reflects higher staffing levels
associated with the subscriber base growth, as well as higher office costs.
General and administrative expenses increased as a percentage of net revenues
to 18.6% for fiscal 1997 from 17.6% for fiscal 1996.
Engineering Expenses. Engineering expenses increased $122,000, or 23.6%, to
$638,000 for fiscal 1997 from $516,000 for fiscal 1996. This increase reflects
higher staffing levels associated with the subscriber base growth and related
systems.
EBITDA. EBITDA increased $1.7 million, or 74.6%, from $2.3 million for
fiscal 1996 to $4.0 million for fiscal 1997. As a percentage of net revenues,
EBITDA increased from 23.0% for fiscal 1996 to 24.1% for fiscal 1997.
Depreciation and Amortization. Depreciation and amortization increased $1.0
million, or 86.2%, to $2.2 million for fiscal 1997 from $1.2 million for
fiscal 1996. This increase reflects an increase in depreciable assets
associated with the increased subscriber base and increased amortization
related to acquired intangible assets.
Operating Income. Operating income increased $675,000, or 73.3%, to $1.6
million for fiscal 1997 from $921,000 for fiscal 1996.
Other Income. Other income decreased $1,000, or 1.1%, to $90,000 for fiscal
1997 from $91,000 for fiscal 1996.
Interest Expense. Interest expense increased $692,000, or 79.4%, to $1.6
million for fiscal 1997 from $872,000 for fiscal 1996. This increase primarily
reflects an increase in the average level of debt outstanding because of
acquisitions during fiscal 1997 and the second half of fiscal 1996 and, to a
lesser extent, higher bank lending rates during fiscal 1997.
Accretion of Stock Warrants. Accretion of stock warrants expense increased
$919,000, or 107.6%, to $1.8 million for fiscal 1997 from $854,000 for fiscal
1996.
Income (Loss) From Joint Venture. Income from joint venture increased
$122,000 to $26,000 for fiscal 1997 from ($96,000) for fiscal 1996. This
increase represents the Company's share of income earned through the resale of
FM pagers by FM Concepts II. Additionally, during fiscal 1996, FM Concepts II
recognized a charge for research and development of $436,000, of which the
Company's share was $145,000.
Minority Interest. Minority interest expense increased $300 to $2,800 for
fiscal 1997 from $2,500 for fiscal 1996.
Net Loss. Net loss increased $684,000, or 72.5%, to $1.6 million for fiscal
1997 from $944,000 for fiscal 1996. This increase reflects the factors
described above. Excluding the effect of the accretion of stock warrants and a
$132,000 extraordinary charge on early retirement of debt for fiscal 1996, net
income increased $103,000, or 245.2%, to $145,000 for fiscal 1997 from $42,000
for fiscal 1996.
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<PAGE>
FISCAL YEAR ENDED JULY 31, 1996 COMPARED TO FISCAL YEAR ENDED JULY 31, 1995
Total Revenues. Total revenues increased $3.4 million, or 45.9%, to $10.8
million for fiscal 1996 from $7.4 million for fiscal 1995. This increase was
primarily due to an increased number of subscribers resulting from
acquisitions and internal growth. Total subscribers increased 38,000, or
139.9%, to 65,000 at July 31, 1996 from 27,000 at July 31, 1995. Of this
increase, 57.9% resulted from acquisitions and 42.1% resulted from internal
growth. Results for fiscal 1996 include the operations of C.R. and AVP, which
were acquired in February and June 1996, respectively, and through which the
Company added 22,000 paging subscribers. The Company did not complete any
acquisitions during fiscal 1995. Product sales increased $449,000, or 85.4%,
to $975,000 for fiscal 1996 from $526,000 for fiscal 1995. Product sales
increased as a percentage of net revenues to 9.9% for fiscal 1996 from 7.6%
for fiscal 1995. The increase in product sales as a percentage of net revenues
reflects a shift in product mix from voicemail services to paging services.
Cost of Products Sold. Cost of products sold increased $492,000, or 105.1%,
to $960,000 for fiscal 1996 from $468,000 for fiscal 1995. This increase was
primarily attributable to increased product sales associated with subscriber
base growth. Gross margin on products sold decreased to 1.5% for fiscal 1996
from 11.0% for fiscal 1995. This decrease was primarily attributable to price
decreases designed to encourage increased sales.
Service, Rent and Maintenance Expenses. Service, rent and maintenance
expenses increased $1.2 million, or 42.7%, to $3.9 million for fiscal 1996
from $2.7 million for fiscal 1995. This increase reflects an increase in
airtime expense paid to third party service providers and an increase in
subcarrier and tower lease expenses primarily associated with the acquisitions
of C.R. and AVP. Results of operations for C.R. and AVP are reflected in the
last two months and six months, respectively, of fiscal 1996. Telephone
expense increased due to additional telephone facilities and increased
voicemail usage associated with the C. R. acquisition. Service, rent and
maintenance expense increased as a percentage of net revenues to 39.4% for
fiscal 1996 from 39.1% for fiscal 1995. The increase in service, rent and
maintenance expense as a percentage of net revenues reflects an increase in
third party airtime expense as a percentage of net revenues and a lower profit
margin on product sales.
Selling and Marketing Expenses. Selling and marketing expenses increased
$380,000, or 31.1%, to $1.6 million for fiscal 1996 from $1.2 million for
fiscal 1995. This increase reflects sales staff compensation related to
increased sales activity and advertising, both of which resulted in subscriber
base growth. Selling and marketing expenses decreased as a percentage of net
revenues to 16.3% for fiscal 1996 from 17.6% for fiscal 1995.
General and Administrative Expenses. General and administrative expenses
increased $845,000, or 95.3%, to $1.7 million for fiscal 1996 from $887,000
for fiscal 1995. This increase reflects additions to senior management and
higher staffing levels associated with subscriber base growth, as well as
higher office costs. General and administrative expenses increased as a
percentage of net revenues to 17.6% for fiscal 1996 from 12.8% for fiscal
1995.
Engineering Expenses. Engineering expenses decreased $51,000, or 9.0%, to
$516,000 for fiscal 1996 from $567,000 for fiscal 1995. This decrease reflects
lower staffing levels primarily due to a vacancy in the position of manager of
management information systems for the majority of fiscal 1996.
EBITDA. EBITDA increased $624,000, or 38.1%, to $2.3 million for fiscal 1996
from $1.6 million for fiscal 1995. As a percentage of net revenues, EBITDA
decreased to 23.0% for fiscal 1996 from 23.6% for fiscal 1995.
Depreciation and Amortization. Depreciation and amortization increased
$359,000, or 42.5%, to $1.2 million for fiscal 1996 from $845,000 for fiscal
1995. This increase reflects a greater number of pagers associated with the
increased subscriber base and increased amortization related to acquired
intangible assets.
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Operating Income. Operating income increased $217,000, or 30.8%, to $921,000
for fiscal 1996 from $704,000 for fiscal 1995. This increase reflects
increased net revenues, partially offset by increased general and
administrative expenses.
Other Income. Other income increased $1,000, or 1.1%, to $91,000 for fiscal
1996 from $90,000 for fiscal 1995.
Interest Expense. Interest expense increased $168,000, or 23.9%, to $872,000
for fiscal 1996 from $704,000 for fiscal 1995. This increase primarily
reflects a decrease in the average level of debt outstanding due to the
repayment of debt following the issuance of 3,500 shares of Series C Preferred
Stock in November 1995 and, to a lesser extent, lower bank lending rates
during fiscal 1996.
Accretion of Stock Warrants. Accretion of stock warrants expense increased
$211,000, or 32.8%, to $854,000 for fiscal 1996 from $643,000 for fiscal 1995.
Income (Loss) From Joint Venture. Loss from joint venture was ($96,000) for
fiscal 1996. As the Company began reporting the equity interest in FM Concepts
II in November 1995, there was no equity income or loss for fiscal 1995.
During fiscal 1996, FM Concepts II recognized a charge for research and
development of $436,000, of which the Company's share was $145,000, which was
partially offset by the Company's share of income earned through the resale of
FM pagers by FM Concepts II.
Minority Interest. Minority interest expense was $2,500 for fiscal 1996,
reflecting the Company's initial investment in Direct Link during fiscal 1996.
Net Loss. Net loss increased $391,000, or 70.7%, to $944,000 for fiscal 1996
from $553,000 for fiscal 1995. This increase reflects the factors described
above. Excluding the effect of the accretion of stock warrants charge and a
$132,000 extraordinary charge on early retirement of debt for fiscal 1996, net
income decreased $48,000 to $42,000 for fiscal 1996 from $90,000 for fiscal
1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its primary cash requirements from borrowings under the
Credit Facility and cash flows from operations. Borrowings under the Company's
Credit Facility have been used to fund acquisitions, capital expenditures and
general corporate requirements. The Company had outstanding borrowings under
the Credit Facility of $5.7 million, $12.6 million, $18.8 million and $23.8
million as of July 31, 1995, 1996 and 1997 and January 31, 1998, respectively.
As of March 31, 1998, the Company had outstanding borrowings under the Credit
Facility of $25.4 million. The Credit Facility was increased in March 1998 to
$40 million from $25 million. The Credit Facility carries a variable rate of
interest based on, at the Company's election: (i) Creditanstalt's prime rate
plus 2%; or (ii) LIBOR plus 4%. The Credit Facility is secured by
substantially all of the Company's assets.
The Company's cash balances were $46,000, $525,000 and $193,000 at July 31,
1995, 1996 and 1997, respectively, and $256,000 at January 31, 1998. Net cash
provided by operating activities was $726,000, $896,000 and $2.0 million for
the years ended July 31, 1995, 1996 and 1997, respectively, and $(14,000) for
the six months ended January 31, 1998.
Net cash used in investing activities was $1.7 million, $11.0 million and
$8.0 million for the years ended July 31, 1995, 1996 and 1997, respectively,
and $4.3 million for the six months ended January 31, 1998. Investing
activities during fiscal 1995 included $1.5 million net purchases of property
and equipment and a $120,000 investment in the FM Concepts II joint venture.
Investing activities during fiscal 1996 included $9.0 million for the
purchases of businesses, $1.9 million net purchases of property and equipment
and $158,000 of further investment in the FM Concepts II joint venture.
Investing activities during fiscal 1997 included $4.4 million for the
purchases of businesses, and $3.6 million net purchases of property and
equipment. Investing
33
<PAGE>
activities during the six months ended January 31, 1998 included $590,000 for
the purchases of businesses, $3.7 million net purchases of property and
equipment and $56,000 of further investment in the FM Concepts II joint
venture.
Net cash provided by financing activities was $1.0 million, $10.6 million
and $5.7 million for the years ended July 31, 1995, 1996 and 1997,
respectively, and $4.4 million for the six months ended January 31, 1998.
Included in cash provided from financing activities for fiscal 1995 was $1.6
million of proceeds from issuance of long-term debt and $200,000 of proceeds
from subscriptions receivable partially offset by $707,000 for the purchase
and retirement of Common Stock, $77,000 of dividends on Series A Preferred
Stock and Series C Preferred Stock and $36,000 of other financing activities.
Included in cash provided by financing activities for fiscal 1996 was $7.2
million of proceeds from the issuance of long-term debt, $3.5 million proceeds
from the issuance of Series A Preferred Stock and Series C Preferred Stock,
$250,000 of proceeds from the issuance of Common Stock and $42,000 of other
financing activities partially offset by $334,000 of dividends on Series A
Preferred Stock and Series C Preferred Stock. Included in cash provided by
financing activities for fiscal 1997 was $6.2 million of proceeds from
issuance of long-term debt partially offset by $450,000 of dividends on Series
A Preferred Stock and Series C Preferred Stock and $60,000 of other financing
activities. Included in net cash provided by financing activities in the six
months ended January 31, 1998 was $4.5 million of proceeds from issuance of
long-term debt and $100,000 of proceeds from the issuance of Common Stock
partially offset by $263,000 of dividends on Series A Preferred Stock and
Series C Preferred Stock .
The Company had a working capital (deficit) of $(164,000) at July 31, 1995,
$(607,000) at July 31, 1996, $(1.2 million) at July 31, 1997 and $304,000 at
January 31, 1998.
On April 3, 1998, the Company issued $4.5 million of Series D Preferred
Stock, a portion of the proceeds of which was used to finance a portion of the
$4.3 million purchase price (the "Premier Acquisition") of Premier Paging. The
Premier Acquisition was also financed with an unsecured four year note in the
principal amount of $860,000. The note bears interest at 9% per year. The
remaining proceeds from the sale of the Series D Preferred Stock, together
with borrowings under the Credit Facility, will be used to finance a portion
of the estimated $12 million purchase price of Hyde's. The Series D Preferred
Stock pays a monthly coupon of 8.5% per annum.
The Company intends to repay a portion of amounts outstanding under the
Credit Facility and redeem the Series D Preferred Stock with the net proceeds
of the Offering. While there can be no assurance, the Company estimates that
the proceeds of the Offering, funds to be provided by operations and funds
available under the Credit Facility will be sufficient to meet the Company's
anticipated needs for working capital for the next twelve months. This
estimate is a forward-looking statement that is subject to risks and
uncertainties. Actual results and working capital needs could differ
materially from those estimated due to a number of factors, including the use
of such proceeds to fund acquisitions and the factors discussed under "Risk
Factors." In addition, acquisitions may require additional debt and equity
financing. The Company has no present plans to make any other significant
capital expenditures.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), which establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
general purpose financial statements. This statement is effective for periods
beginning after December 15, 1997. The adoption of SFAS 130 is not expected to
have an impact on the Company's financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about operating segments in interim financial reports issued to stockholders.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. This Statement is effective
for financial statements for periods beginning after December 15, 1997. The
adoption of SFAS 131 is not expected to have a material impact on the
Company's financial statements.
34
<PAGE>
BUSINESS
GENERAL
Satellink provides paging and enhanced personal telecommunications services
to businesses and individuals in smaller metropolitan areas and major cities
in the southeastern and southwestern United States. The Company has provided
paging and voicemail services since 1988. In 1995, the Company began
development of its proprietary STAR*Net platform in anticipation of increased
subscriber demand for a broad spectrum of personal telecommunications services
from a single provider. The STAR*Net platform allows the Company to provide an
integrated suite of personal telecommunications services to businesses and
individuals in markets not generally targeted by major providers. The Company
intends to capitalize on its STAR*Net platform by marketing enhanced services
to its existing paging and voicemail subscriber base and by attracting new
subscribers who would otherwise use multiple providers to fulfill their
personal telecommunications needs.
Through the STAR*Net platform, which integrates carrier-grade telephony
platform hardware with the Company's proprietary software, Satellink provides
its subscribers with single telephone number access to paging, voicemail, long
distance and "find me" services. The STAR*Net platform also allows the Company
to offer prepaid and postpaid long distance calling cards and inbound 1-800
service. The Company believes that the STAR*Net platform's scalable and
flexible architecture and relatively low cost of implementation give the
Company a competitive advantage by allowing it to quickly add and customize
services and offer enhanced services in smaller markets where the
implementation of a more expensive architecture is not economically justified.
The Company delivers paging services by broadcasting messages over: (i) FM
subcarrier frequencies that are leased by the Company in Georgia and Alabama
and that are linked with the CUE nationwide FM paging network, which reaches
over 95% of the population of the United States and Canada and covers 60,000
miles of interstate highway; (ii) Company-owned VHF and UHF paging networks in
Georgia and Louisiana; and (iii) VHF, UHF, 900 MHz and narrowband PCS paging
networks owned by third parties from which the Company purchases and resells
local, regional and nationwide service. The Company's use of the STAR*Net
platform and multiple message distribution networks in its market areas allows
the Company to offer to its customers an assortment of service and pricing
options not readily available from many of the Company's competitors.
Satellink's paging and voicemail subscriber base has increased through
internal growth and acquisitions from approximately 27,000 subscribers as of
July 31, 1995 to approximately 107,000 subscribers as of January 31, 1998 and
is expected to exceed 150,000 subscribers upon the completion of currently
pending acquisitions. Net monthly revenues have increased from $700,000 for
the month ended July 31, 1995 to $1.7 million for the month ended January 31,
1998.
INDUSTRY
Recent technological developments in the paging industry include new paging
services such as "confirmation" or "response" paging, narrowband PCS voice
paging, two-way paging and notebook and sub-notebook computer wireless data
applications. Industry sources estimate that there were approximately 43.1
million pagers in service in the United States at December 31, 1996, which
were serviced by over 2,000 licensed paging companies. Of these paging
companies, the ten largest serve approximately 80% of the total paging
subscribers in the United States. From 1990 through 1996, the number of pagers
in service in the United States grew at a compound annual rate of 27.0% and
the number of pagers in service is projected to grow at a compound annual rate
of approximately 9.0% from 1996 through 2001. Factors contributing to this
growth include: (i) declining costs of service; (ii) increasing consumer
awareness of the benefits of mobile communications; (iii) introduction of new
or enhanced paging equipment and services; and (iv) expanding channels of
distribution.
Recent technological developments in the wireless communications industry
have allowed providers to offer new and enhanced services. For example, PCS
providers are currently offering a variety of personal telecommunications
services, many of which are similar to the Company's services. According to a
1998 Price
35
<PAGE>
Waterhouse survey, total PCS subscribers in the United States are projected to
grow from less than 1 million in 1997 to approximately 45 million by 2001.
These subscribers will use services provided through several different types
of PCS technology, including time division multiple access, code division
multiple access and newly developed PCS technologies using the 1910 MHz to
1930 MHz band. Current PCS-based service offerings include advanced paging and
messaging for voice and data, including two-way messaging and facsimile
transmission, next-generation mobile telephone service and two-way voice, data
and video communications. Future PCS-based service offerings are expected to
include personal digital assistants, portable facsimile machines, wireless
replacements for portions of the wireline telephone network and other kinds of
short-range communications.
The Company believes that future developments in the paging and wireless
communications industry will include: (i) technological improvements that
permit increased service and applications to a wider market on a cost-
effective basis; (ii) consolidation of smaller, single-market operators into
larger, multi-market paging companies; and (iii) increased numbers of pagers
in service, as a result of general expansion into consumer and retail markets.
GROWTH STRATEGY
The Company's primary objective is to become a leading regional provider of
enhanced personal telecommunications services. The Company intends to achieve
its objective by pursuing the following strategies:
. Expand Subscriber Base Through Acquisitions. The Company intends to
increase its subscriber base and its opportunities to cross-market
STAR*Net services by identifying and acquiring other providers of
paging, voicemail and other personal telecommunications services. The
Company believes that it can generate cost savings through integration
of acquired companies, particularly from its increased purchasing power
for equipment and airtime. Any cost savings would effectively reduce the
multiple paid for acquired companies, thereby increasing the Company's
return on invested capital. The Company intends to continue to focus on
smaller acquisition candidates because it expects larger providers to
focus increasingly on internal growth and larger acquisitions, thereby
decreasing competition for smaller acquisition candidates.
. Cross-Market an Integrated Suite of Customized Services to Existing and
Acquired Subscribers. The Company intends to cross-market additional
STAR*Net services to its existing and acquired paging and voicemail
subscribers. The Company believes that its paging and voicemail
subscribers are mobile individuals who are likely to use additional
personal telecommunications services. The Company believes these
subscribers will be more likely to purchase these services from the
Company because: (i) the Company owns the subscribers' access numbers
and is able to offer them the ability to change service plans and
coverage areas without changing access numbers; (ii) the Company is able
to provide its subscribers with unified billing for a variety of
personal telecommunications services; and (iii) existing subscribers are
familiar with the Company and have purchased services from the Company
in the past.
. Expand the Suite of Customized Services. The Company intends to
continually develop new STAR*Net services. Current planned services
under development include Internet-based voicemail delivery and receipt,
local access voicemail between cities, text-to-speech playback of e-mail
messages, Internet e-mail pager notification and narrowband PCS connect.
The Company believes these services will, when combined with existing
STAR*Net service offerings, provide it with additional cross-marketing
opportunities to existing and new subscribers.
. Focus on Niche Markets. The Company believes that smaller metropolitan
markets throughout the Southeast and Southwest are underserved by larger
providers of personal telecommunications services. These smaller markets
are attractive to Satellink because management believes these markets
have reduced competition for personal telecommunications services,
limited availability of alternative services such as cellular telephones
and lower market penetration rates for personal telecommunications
services. Approximately 48% of the Company's paging subscribers utilize
36
<PAGE>
regional or national paging services compared to approximately 33% of
total paging subscribers in the United States who use such services. The
Company believes this reflects its ability to serve mobile individuals
who require the broad, uninterrupted coverage area provided by the
Company. The Company intends to continue implementing its niche market
strategy by opening additional offices in smaller metropolitan markets,
acquiring other providers of paging, voicemail and other personal
telecommunications services in existing and additional markets and
utilizing its direct sales force in markets in Georgia, Alabama,
Louisiana and Texas.
ACQUISITIONS
Acquisitions have contributed significantly to the Company's growth. The
following table provides a summary of acquisitions in which the Company
acquired or has agreed to acquire more than 5,000 subscribers. The Company has
paid or will pay an aggregate consideration of approximately $27.0 million in
connection with these acquisitions.
<TABLE>
<CAPTION>
APPROXIMATE NUMBER
OF SUBSCRIBERS
DATE --------------------
NAME OF ACQUIRED COMPANY LOCATIONS ACQUIRED PAGING VOICEMAIL
- ------------------------ ---------------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Atlanta Voice Page, Atlanta February 1996 11,500 --
Inc. ..................
C.R., Inc............... Dallas May 1996 10,500 --
Message World........... Atlanta February 1997 -- 5,300
Premier Paging,
Inc./Premier Paging Baton Rouge and April 1998 10,000 --
of New Orleans, Inc.... New Orleans
Hyde's Stay in Touch, Shreveport, Monroe and May 1998 39,000 --
Inc.(1)................ Alexandria, Louisiana
</TABLE>
- --------
(1) The Company has entered into a definitive agreement to acquire Hyde's.
This acquisition is expected to be consummated in May 1998, subject to
certain closing conditions. See "Risks Factors -- Risk that Hyde's
Acquisition May Not Close."
In addition to the above acquisitions, since the commencement of the
Company's acquisition program in February 1996, the Company has consummated
five acquisitions for aggregate consideration of $2.7 million, through which
it acquired a total of 6,600 paging subscribers. The Company is currently
engaged in preliminary discussions with several other acquisition candidates,
but it has no binding commitments to acquire any of such candidates. See "Risk
Factors -- Ability to Manage Growth; Acquisition Risks" and "Use of Proceeds."
37
<PAGE>
SERVICES
The Company provides an integrated suite of paging, voicemail and enhanced
personal telecommunications services. A subscriber can select any single
service or combination of services, all of which can be accessed through a
single local or 1-800 access number. The following table summarizes each
current and planned service offering.
SERVICE OFFERING DESCRIPTION
CURRENT SERVICES
STAR*Paging Satellink provides local, regional or national
paging service at a variety of price points
through traditional, FM and third party
networks. Unlike traditional paging technology,
FM paging technology utilizes existing FM radio
station transmitters to reach 95% of the
population of the United States and Canada.
STAR*Message The Company provides subscribers with an
outsourced voicemail solution that allows
subscribers to avoid the capital investment
necessary to establish their own standalone
voicemail system.
STAR*FindMe Satellink can provide a subscriber with a
personal local or 1-800 number that serves as a
single point of access from which callers can
select various messaging options or attempt to
locate the subscriber at up to four
predetermined phone numbers.
STAR*Calling A subscriber can place worldwide long distance
calls from the United States while accessing
the STAR*Net voicemail box, thereby allowing
the customer to return a voicemail message,
listen to additional voicemail messages and
make additional calls without redialing an
access number or PIN. Additionally, a
subscriber can use prepaid or traditional
calling cards to place long distance calls.
One number services The STAR*Net platform, combined with the
Company's flexibility in network choice, allows
a subscriber to change coverage area or type of
service without changing the subscriber's local
or 1-800 access number.
STAR*Toll Free A subscriber can establish a single 1-800
number from which the subscriber can forward
calls to a different number at a cost that is
generally lower than that charged by
traditional 1-800 providers.
SERVICES UNDER DEVELOPMENT
STAR*MeetMe Without special equipment or operator
assistance, a subscriber would be able to
initiate a conference call from any telephone
in which up to 16 individuals could
participate.
STAR*Web A subscriber would be able to access paging,
voicemail or e-mail messages through the
Internet.
Local access voicemail A subscriber would be able to leave messages
for other subscribers in networked cities
without dialing a long distance number.
Text-to-speech playback A subscriber would be able to access Internet
or LAN e-mail messages via the subscriber's
voicemail.
Internet e-mail pager
notification
A subscriber would be able to receive a paging
message to notify the subscriber of the receipt
of Internet e-mail messages.
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PAGING INFRASTRUCTURE
The Company operates multiple paging distribution networks and has reseller
and other arrangements with third parties which enable the Company to
distribute its multiple service offerings in ways that address the needs of a
variety of subscribers. The majority of these services utilize the Company's
FM and traditional paging networks and traditional paging networks owned and
operated by third party carriers. A portion of these services also utilize the
CUE FM paging network, which allows the Company to reach over 95% of the
population of the United States and Canada and covers 60,000 miles of
interstate highway.
FM Network
The Company's FM network operates by broadcasting on the sideband of FM
radio stations in Georgia and Alabama. The Company has entered into agreements
with over 30 FM radio stations pursuant to which the stations agree to
transmit paging messages on a 57 KHz subcarrier concurrently with their
regular radio broadcasts. Because most FM radio stations have significantly
higher power output and taller towers than traditional paging transmitters,
the Company is able to deliver messages over its FM network using fewer
transmitters than would be necessary to cover the same geographic area with a
traditional paging network. This allows the Company to enter a new local
market by installing injecting a 57 KHz subcarrier into an existing FM radio
station rather than building a network of paging towers equipped with low-
powered traditional paging transmitters.
Paging messages broadcast over the Company's FM network are broadcast from
all 30 radio stations. The Company's pagers are programmed to scan the FM
frequency spectrum to locate a station broadcasting the Company's 57 KHz
paging signal, allowing subscribers to move within the coverage area without
interruption of paging service. The Company's FM network is linked to a
national FM network operated by CUE and made up of over 500 FM radio stations
throughout the United States and Canada. The CUE network reaches over 95% of
the population of the United States and Canada and covers 60,000 miles of
interstate highway. Numeric paging messages are broadcast over the CUE network
through a relay system whereby the Company transmits a paging message to CUE's
main terminal which then transmits the message to a satellite which, in turn,
retransmits the message either to all participating FM stations for nationwide
subscribers or to selected FM stations for regional subscribers. The Company
offers regional, nationwide and North American paging through the CUE network,
and CUE bills the Company for paging distribution depending on the coverage
provided. Additionally, the Company pays a co-operative advertising fee to CUE
based on the number of Company pagers connected to the CUE network. See "Risk
Factors -- Limitations of CUE Paging Network."
Traditional Paging Networks
The Company has developed traditional paging networks in Georgia and
Louisiana. The traditional paging network broadcasts messages on specified
frequencies, including 462.850 MHz, 462.825 MHz and 152.240 MHz. These
messages are broadcast from Company-owned transmitters located principally in
the metropolitan Atlanta area and southern Louisiana. Such transmitters are
mounted on radio towers owned by third parties who lease tower space to the
Company and other broadcasters of radio and other transmissions. Each Company-
owned transmitter is operated pursuant to an FCC-issued license. See "--
Government Regulation."
Third Party Carrier Network
In addition to maintaining its own traditional paging network, the Company's
switching facilities are networked to traditional regional and nationwide
paging networks owned and operated by third parties, including PageNet,
Preferred Networks, Inc. ("Preferred Network"), A+ Network, Inc. ("A+
Network"), BestCom and others. Paging data is transferred from the Company's
switch to the third party network, which then transmits the data over its
network. The Company has entered into a nationwide resale agreement with
PageNet pursuant to which the Company can resell PageNet airtime anywhere in
the United States. Under this reseller agreement, the Company can access new
paging markets by installing the STAR*Net platform to receive incoming calls
and forward such calls to the PageNet network for broadcast. The Company is
also a party to a national reseller agreement with SkyTel pursuant to which
the Company can resell SkyTel's one-way and two-way nationwide paging
services.
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THE STAR*NET PLATFORM
Incoming calls to the Company's subscribers are received by either a
traditional switching platform or by the STAR*Net platform. Traditional
switching platforms, such as a Zetron platform, provide only for the delivery
of paging and voicemail messages. The STAR*Net platform allows the Company not
only to deliver paging and voicemail messages in the same manner as a
traditional platform, but also to relay incoming data to a variety of
distribution mechanisms, such as switched 1-800 service and, in the future,
the Internet. Further, the STAR*Net platform allows incoming calls to access
trunk lines from which a subscriber can place long-distance calls or
conference calls. The STAR*Net platform also combines with the Company's one
number capability to allow it to switch a subscriber from one service to
another or one network to another without issuing a new telephone number to
the subscriber. Accordingly, the Company can switch a subscriber between
paging networks with different coverage areas or between paging networks with
less paging traffic, which often results in more reliable and timely message
delivery, without changing the subscriber's access number.
The STAR*Net platform is a software-driven system that utilizes carrier
grade telephony platform hardware combined with the Company's proprietary
software. A STAR*Net platform is generally located in each of the Company's
markets, thereby providing access to the Company's multiple message
distribution networks. Customers in market areas where a separate STAR*Net
platform has not been installed may still obtain access to the broad range of
personal telecommunications services available through the STAR*Net platform
through 1-800 access numbers that connect into a STAR*Net platform. Because
the STAR*Net platform relies on readily available and relatively inexpensive
hardware components, the Company is able to enter new markets without the
substantial capital investment associated with traditional switching
equipment. Additionally, the Company believes that the flexible and scalable
architecture of the STAR*Net platform will allow it to be easily modified to
accommodate new services without replacing or materially modifying the
existing hardware. In addition to functioning as part of the Company's
network, the STAR*Net platform can be customized to meet the specific needs of
a subscriber, such as: (i) a school system that implements an automated system
through which students can access grades and teacher comments, register for
courses or be notified directly of their grades through an autodialed
telephone message; or (ii) a small business that needs an integrated voicemail
system but cannot afford the capital investment associated with a traditional
voicemail system.
The Company currently maintains switching facilities and STAR*Net platforms
in Atlanta, Albany, Augusta, Cordele, Macon, Savannah and Valdosta, Georgia;
Birmingham, Alabama; Baton Rouge and New Orleans, Louisiana; and Dallas,
Texas. The Company's network service operations are dependent upon its ability
to protect the equipment and data at its switching facilities against
potential damage that may be caused by fire, power loss, technical failures,
unauthorized intrusion, natural disasters, sabotage and other similar events.
The Company has therefore implemented monitored security systems, controlled
access, automated data backup procedures, uninterrupted power supply systems
and automated system trouble alerts.
SALES, MARKETING AND CUSTOMER SERVICE
Historically, the Company has relied on its direct sales force to obtain
paging and voicemail customers. The Company's sales and marketing strategy
incorporates a multi-channel distribution system that utilizes the following
distribution channels to access different market segments: (i) the Company's
direct sales staff that concentrates on business accounts; (ii) Company-
employed database telemarketing sales staff which uses computerized lead
management and professional telemarketing techniques to identify primarily
small businesses and professionals as potential subscribers; and (iii) Company
retail stores that are designed to sell higher ARPU products and services to
the consumer market. As of January 31, 1998, the Company employed 50 sales
representatives, including the Company's direct sales staff, telemarketing
professionals and sales representatives who call on retailers.
The Company's sales representatives are typically recent college graduates
who attend a weeklong training program administered by the Company's senior
marketing personnel. Sales representatives are compensated
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through salary plus a commission generally based on the first month's
recurring revenue generated by each new subscriber. See "Risk Factors --
Dependence on Key Management and Personnel."
In connection with the development of the STAR*Net platform and rollout of
STAR*Net services, the Company has commenced an intensive program designed to
educate its sales representatives about STAR*Net services and to encourage
them to cross-market these services to existing paging and voicemail
subscribers. In the future, this program will be incorporated into the
Company's ongoing training program. The sales representatives will initially
focus on cross-marketing STAR*Net services to larger, multi-unit subscribers.
The Company also intends to hire additional outside sales representatives for
the Company's retail outlets to focus on marketing STAR*Net services to multi-
unit subscribers. At the same time, the Company intends to market STAR*Net
services to individual and small business subscribers through billing inserts
and telemarketing. Because sales representatives are compensated based on the
first month's recurring revenue generated by each subscriber, the Company
believes its sales representatives are encouraged to promote and cross-sell
STAR*Net services that generate higher monthly recurring revenue.
The Company maintains a customer service center in Roswell, Georgia. This
center employs 18 full-time customer service personnel who are available via a
toll-free call daily from 8:00 a.m. until midnight. Additionally, customer
service calls received between midnight and 8:00 a.m. are forwarded via paging
message to on-call customer service personnel, who return the service call
within 30 minutes of receipt of the paging message. Customer service personnel
are trained to educate and assist Satellink's subscribers in the use of the
Company's services and to resolve billing and technical issues. The Company's
customer service center can accommodate an additional eight full-time customer
service representatives.
SUBSCRIBERS
Satellink markets its services to large and small businesses and, to a
lesser extent, individuals who require advanced, high-volume personal
telecommunications services. Approximately 48% of the Company's paging
subscribers utilize regional or national paging services, compared to
approximately 33% of total paging subscribers in the United States that use
such services. The Company believes this reflects its focus on mobile
individuals who require the broad, uninterrupted coverage area provided by the
Company. These subscribers have traditionally included truck drivers and other
small business operators and employees, professionals, medical personnel,
sales and service providers, construction and trades people, and real estate
brokers and developers. Additionally, paging and voicemail service is
increasingly being adopted by individuals for private, nonbusiness uses such
as communicating with family members and friends. The Company also believes
that its focus on business and high-volume individual subscribers results in
increased revenues, reduced subscriber turnover and provides an attractive
base to which to market additional personal telecommunications services.
PAGERS
The majority of the Company's paging services are delivered through either:
(i) numeric display pagers, which permit a subscriber to receive a telephone
number or other numeric coded information and to store several such numeric
messages that the customer can recall when desired; or (ii) alphanumeric
display pagers, which allow the subscriber to receive and store text messages.
The Company utilizes pagers for traditional paging subscribers that are
manufactured by Motorola, NEC, Panasonic and other manufacturers. The Company
utilizes Infotelcom numeric pagers for FM paging subscribers. Certain
traditional pagers are among the smallest available and have time and date
stamping capability and average battery life of five weeks. Infotelcom pagers
are more expensive and approximately 50% larger than many traditional pagers
and have an average battery life of five weeks; however, these pagers do not
have time and date stamping capability.
The Company is seeking to address the limitations of the Infotelcom pager
through its participation in a joint venture which is developing a new FM
pager, the FM Concepts Pager, which is expected to be 25% smaller than the
Infotelcom pager and have similar capabilities to those of many popular
traditional pagers. The
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Company plans to introduce the FM Concepts Pager during the first quarter of
fiscal 1999 and believes the FM Concepts Pager can be produced at
approximately 75% of the cost of its current FM pager. These cost savings can
be passed on to new subscribers, thereby making FM paging a more cost-
effective alternative for new subscribers. There can be no assurance that the
Company's potential or existing subscribers will accept the inherent
limitations of the FM Concepts Pager or that a third party will not develop a
superior FM pager to which the Company does not have access at competitive
prices. Reduced acceptance of FM pagers or increased competition from FM pager
providers could have a material adverse effect on the Company's business,
financial condition and results of operations. See "-- Proprietary Rights and
Technology" and "Risk Factors -- Risks Associated with Joint Ventures."
The Company's business subscribers either lease or buy their pagers, and its
individual subscribers buy their pagers. Both business and individual
subscribers then subscribe for either local, regional, multi-regional or
nationwide service. Contracts with large unit volume subscribers are typically
for two to three year terms, while contracts with smaller volume subscribers
generally have one year terms with annual renewals. The volume discounts on
lease costs and service fees are typically offered to large unit volume
subscribers. Annual loss protection allows subscribers who lease pagers to
limit their costs of replacement upon loss or destruction of the pager.
Maintenance services are offered to subscribers who own their own pagers.
The Company purchases a variety of models of traditional pagers from
Motorola and certain other manufacturers and sells or leases these pagers to
its customers. Traditional pagers are capable of receiving a signal on a
single frequency and are capable of receiving alphanumeric messages. The cost
of different model pagers varies based on the model's messaging capability and
whether it is a traditional or FM radio pager. The Company and most of its
competitors sell pagers without a significant markup. The absence of a markup
inhibits the Company's ability to compete on the basis of price. Accordingly,
the cost at which the Company is able to obtain pagers directly relates to the
price at which the Company is able to sell pagers and generate recurring
revenues from providing services to the purchasers of such pagers.
PROPRIETARY RIGHTS AND TECHNOLOGY
In 1995, the Company began development of the STAR*Net platform in
anticipation of increased demand for a broad spectrum of personal
telecommunications services from a single provider. The STAR*Net platform
utilizes off-the-shelf servers, typically produced by Compaq Computer
Corporation or Hewlett-Packard Company, augmented by commercially available
add-ons such as telephony hardware produced by Dialogic Corporation. The
STAR*Net platform's proprietary software is written in "C" and was developed
by a team of Company and independent contractor programmers. See "-- The
STAR*Net Platform" and "Risk Factors -- Technological Change; Dependence on
New Services" and "-- Risk of Software Failures or Errors."
The Company is participating in a joint venture which is developing a new FM
pager, the FM Concepts Pager. The FM Concepts Pager is being developed by FM
Concepts, a joint venture which is equally owned by the Company, certain
affiliates of C.R. and Cape Fear. Although the Company has expended
significant resources in the development of the FM Concepts Pager, the FM
Concepts Pager is at an experimental stage, and there can be no assurance that
it will ever reach the production stage. Additionally, there can be no
assurance that, once produced, the FM Concepts Pager will function in
accordance with design specifications or that subscribers will view it as an
attractive alternative to traditional pagers or competing FM pagers. FM
Concepts intends to outsource the production of the FM Concepts Pager to a
third party manufacturer; however, there can be no assurance that FM Concepts
will successfully identify a suitable manufacturer or that any manufacturer
will be able to produce the FM Concepts Pager according to design
specifications and/or in a cost-effective manner. FM Concepts is a joint
venture controlled equally by the Company, C.R. and Cape Fear, accordingly,
there can be no assurance that the Company will be able to influence FM
Concepts or utilize FM Concepts's resources in a manner consistent with the
Company's strategies. See "Risk Factors -- Risks Associated with Joint
Ventures"
The Company intends to use the FM Concepts Pager to reduce its dependence on
Infotelcom pagers produced under license by FM Concepts II. FM Concepts II and
CUE have been licensed by Nokia to
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manufacture and distribute pagers using Nokia's FM paging technology
throughout North America. FM Concepts II has contracted with Infotelcom, a
French manufacturer, to produce FM pagers for distribution in North America.
The Company believes that its participation in the FM Concepts II joint
venture combined with the outsourcing of production of FM pagers allows it to
obtain FM pagers at a more favorable cost than if it purchased such pagers
directly from a third party manufacturer. Because FM Concepts II is a joint
venture controlled equally by the Company and Cape Fear, there can be no
assurance that the Company will be able to influence the activities of FM
Concepts II or utilize FM Concepts II's resources in a manner consistent with
the Company's strategies. See "Risk Factors -- Risks Associated with Joint
Ventures" and "-- Limitations of FM Paging Technology."
The Company's ability to compete is dependent in part upon its proprietary
technology, particularly its newly-developed STAR*Net platform and FM Concepts
Pager. The Company relies primarily on a combination of intellectual property
laws and contractual provisions to protect its proprietary rights and
technology. These laws and contractual provisions provide only limited
protection of the Company's proprietary rights and technology. The Company's
proprietary rights and technology include confidential information and trade
secrets which the Company attempts to protect through confidentiality and
nondisclosure agreements. The Company typically attempts to protect its
confidential information and trade secrets through these contractual
provisions for the term of the applicable agreement and, to the extent
permitted by applicable law, for some negotiated period of time following
termination of the agreement, typically one to two years at a minimum.
Despite the Company's efforts to protect its proprietary rights and
technology through intellectual property laws and contractual provisions,
there can be no assurance that others will not be able to copy or otherwise
obtain and use the Company's proprietary technology without authorization, or
independently develop technologies that are similar or superior to the
Company's technology. However, the Company believes that, due to the rapid
pace of technological change in the information and telecommunications service
industry, factors such as the technological and creative skills of its
personnel, new product developments, frequent product enhancements and the
timeliness and quality of support services are more important to establishing
and maintaining a competitive advantage in the industry. See "Risk Factors --
Limited Protection of Proprietary Rights and Technology."
Many patents, copyrights and trademarks have been issued in the general
areas of information and personal telecommunications services. In the ordinary
course of its business third parties may claim that the Company's current or
future products or services infringe the patent, copyright or trademark rights
of such third parties. Although the Company believes that any such claims will
not adversely impact its business, there can be no assurance that such claims
will not be successful or that the existence or threat of such claims will not
have an adverse effect on the Company's business, financial condition and
results of operations.
TECHNICAL SUPPORT
Satellink's technical support and development personnel are responsible for
developing, testing and supporting proprietary software applications, as well
as creating and improving enhanced system features and services. The Company's
technical support and development strategy is to focus its efforts on
enhancing its proprietary software and integrating its software with readily
available software and hardware when feasible. Satellink continually develops
software and periodically introduces major and minor enhancements of its
software.
The Company's technical support and development personnel developed the
STAR*Net platform over a three-year period using off-the-shelf hardware and
proprietary software. These personnel continuously evaluate and develop new
applications for and additions to the STAR*Net platform in order to fulfill
the actual or anticipated needs of subscribers and to respond to technological
and marketplace developments. There can be no assurance, however, that the
Company's personnel will be able to successfully identify such needs or
developments or develop and implement new technologies or applications in
response thereto.
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As of January 31, 1998, Satellink had seven employees and four independent
contractors in technical support and development positions. In addition to
developing and monitoring the STAR*Net platform, this technical support and
development team continuously monitors and performs necessary improvements to
the Company's billing systems and messaging systems and network connections to
determine if software or hardware modifications are necessary. Satellink's
technical support and development personnel also engage in joint development
efforts with the Company's strategic partners and vendors, including, but not
limited to the development of the FM Concepts Pager.
COMPETITION
The Company believes that its focus on business and high-volume individual
subscribers distinguishes the Company from larger providers, many of whom
focus on selling their services to a larger number of lower-volume
subscribers. The Company believes it has identified a market niche in smaller
metropolitan markets throughout the Southeast and Southwest that it believes
are underserved by larger providers of personal telecommunications services.
However, the information and telecommunications services industry is intensely
competitive, rapidly evolving and subject to rapid technological change. The
Company expects competition to increase in the future. Many of the Company's
current and potential competitors have longer operating histories, greater
name recognition, larger customer bases and substantially greater financial,
personnel, marketing, engineering, technical and other resources than the
Company. Competition from these competitors could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company attempts to differentiate itself from its competitors by
offering an integrated suite of telecommunications services. Other providers
currently offer each of the individual services and certain combinations of
the services offered by the Company. For example, Premiere Technologies offers
bundled telecommunications services which are similar to those offered by the
Company. Octel and Microsoft recently announced a service called "Unified
Messenger," which places all voicemail, e-mail and fax messages in a single
mailbox available by computer or telephone. The Company's nationwide mobile
communications services and features compete with services provided by
companies such as AT&T, MCI and Sprint as well as smaller interexchange long
distance providers. The Company's voicemail services compete with voicemail
services provided by AT&T, certain RBOCs and other service bureaus as well as
by equipment manufacturers, such as Octel, Nortel, Siemens, Centigram, Boston
Technology and Digital Sound. The Company's paging services compete primarily
with those offered by PageNet, the world's largest provider of paging
services, AirTouch, Arch, MobileComm, SkyTel, PageMart and Metrocall. The
Company expects that other parties will develop and implement information and
telecommunications service platforms similar to its platform, thereby
increasing competition for the Company's services.
In addition, on February 8, 1996, President Clinton signed into law the 1996
Act, which allows the RBOCs, as is the case with other LECs, to provide long
distance telephone service between LATAs and will likely significantly
increase competition for long distance services. The new legislation also
grants the FCC the authority to deregulate other aspects of the
telecommunications industry, which in the future may, if authorized by the
FCC, facilitate the offering of an integrated suite of information and
telecommunications services by the RBOCs in competition with the Company. Such
increased competition could have a material adverse effect on the Company's
business, financial condition and results of operations. See "-- Legislative
Matters."
Telecommunications companies compete for consumers primarily based on price,
with major long distance carriers and paging companies conducting extensive
advertising campaigns to capture market share. There can be no assurance that
a decrease in the rates charged for communications services by the major long
distance carriers, major paging companies or other competitors, whether caused
by general competitive pressures or the entry of the RBOCs and other LECs into
the bundled telecommunications market, would not have a material
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adverse effect on the Company's business, financial condition and results of
operations. The Company expects that the information and telecommunications
services markets will continue to attract new competitors and new
technologies, possibly including alternative technologies that are more
sophisticated and cost effective than the Company's technology.
LEGISLATIVE MATTERS
The 1996 Act was intended to increase competition in the long distance and
local telecommunications markets. The 1996 Act opens competition in the local
services market and, at the same time, contains provisions intended to protect
consumers and businesses from unfair competition by incumbent LECs, including
the RBOCs. The 1996 Act allows RBOCs to provide long distance service outside
of their local service territories but bars them from immediately offering in-
region inter-LATA long distance services until certain conditions are
satisfied. An RBOC must apply to the FCC to provide in-region inter-LATA long
distance services and must satisfy a set of pro-competitive criteria intended
to ensure that RBOCs open their own local markets to competition before the
FCC will approve such application. Further, while the FCC has final authority
to determine whether an RBOC application is granted, the FCC must consult with
the Department of Justice to determine if, among other things, the entry of
the RBOC would be in the public interest, and with the relevant state to
determine that the pro-competitive criteria have been satisfied. The Company
is unable to determine how the FCC will rule on any such applications.
The 1996 Act provides a framework for the Company and other long distance
carriers to compete with LECs by reselling local telephone service, by
interconnecting to LEC network facilities at various points in the network, or
by building new local service facilities. In the future, the Company may
decide to lease unbundled network elements, which could also be used as a
platform to provide access to the Company's services, or to build local
service facilities. The Company's decision to enter the local services market
is dependent on the economic viability of the options and on the regulatory
environment, which will likely vary by state.
GOVERNMENT REGULATION
The Company provides telecommunications services. Consequently, the Company
is subject to extensive federal and state regulation in the United States.
Various international authorities may also seek to regulate the services
provided by Satellink.
Tariffs and Detariffing. The Company is classified by the FCC as a non-
dominant carrier for its domestic interstate and international common carrier
telecommunications services. Common carriers that provide domestic interstate
and international telecommunications services must maintain tariffs on file
with the FCC describing rates, terms and conditions of service. While the
tariffs of non-dominant carriers, such as the Company, are subject to FCC
review, they are presumed to be lawful upon filing with the FCC. Currently,
the Company either has applied for and received, or is in the process of
applying for and receiving, all necessary authority from the FCC to provide
domestic interstate and international telecommunications services.
In October 1996, the FCC issued an order detariffing long distance services
which prohibited non-dominant long distance carriers from filing tariffs for
domestic, interstate, long distance services in the future. The FCC's
scheduled detariffing rules were to become effective September 22, 1997. The
detariffing rules were appealed by several parties, and in February 1997, the
U.S. Court of Appeals for the District of Columbia Circuit issued a temporary
stay preventing the rules from taking effect pending judicial review. The
Company is currently unable to predict what impact the outcome of the FCC's
detariffing proceeding will have on the Company.
Local Interconnection and Resale. In August 1996, the FCC adopted an order
(the "Interconnection Order") which established a minimum set of rules
relating to the manner in which all telecommunications carriers would be able
to interconnect with the LECs' networks. The Interconnection Order addressed
several important interconnection issues, including unbundled network element
purchase, resale discounts, and negotiation and arbitration procedures between
LECs and long distance carriers.
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Several states, companies, associations and other entities appealed the
Interconnection Order. On July 18, 1997, the U.S. Court of Appeals for the
Eighth Circuit overturned many of the rules established by the FCC's
Interconnection Order governing, among other things, the pricing of
interconnection, resale and unbundled network elements. The Court's decision
substantially limits the FCC's jurisdiction and expands the state regulators'
jurisdiction to set and enforce rules governing the development of local
competition.
The FCC and other parties have appealed the Court's ruling to the U.S.
Supreme Court, and the Supreme Court has agreed to hear the appeal. The case
is expected to be argued before the Supreme Court in the Fall of 1998, and the
Court is expected to issue a decision in the spring of 1999. The Company is
unable to predict what impact the Court's decision will have on its ability to
offer competitive local service, and no assurance can be given that the
Court's decision will not have a material adverse effect on the Company's
business, financial condition and results of operation.
Federal Regulation. The Company's paging operations are subject to
regulation by the FCC under the Communications Act. The FCC has granted the
Company licenses to use the radio frequencies necessary to conduct its paging
operations. Licenses issued by the FCC to the Company set forth the technical
parameters for each station, such as location, frequency, signal strength and
tower height under which the Company is authorized to operate.
License Grant and Renewal. The FCC licenses granted to the Company are for
varying terms of up to 10 years. At the end of such terms, license renewal
applications must be filed with and granted by the FCC. The Company holds
various FCC radio licenses which are used in connection with its paging
operations. The license expiration dates for these licenses are staggered,
with only a portion of the licenses expiring in any particular calendar year.
Licensees in the paging services industry normally enjoy a license "renewal
expectancy," unless it can be demonstrated by a competitor that the licensee
has not operated the station in conformance with the FCC's rules, or that the
licensee has not provided adequate service to the public. Such challenges have
been rare, and the vast majority of license renewal applications are granted
in the normal course. Although the Company is unaware of any circumstance
which could prevent the grant of its license renewal applications, no
assurance can be given that any of the Company's license renewal applications
will be free of competing applications or will be granted by the FCC.
Furthermore, the FCC has the authority to restrict the operations of licensed
radio facilities or, following a hearing pursuant to the Communications Act,
to revoke or involuntarily modify radio licenses. To date, none of the
Company's licenses have ever been revoked or modified involuntarily.
FCC Regulatory Developments. The FCC has enacted regulations regarding
auctions for the award of radio licenses. Pursuant to such rules, the FCC may,
at any time, require auctions for new or existing services prior to the award
of any license. Accordingly, there can be no assurance that the Company will
be able to procure additional frequencies, or expand existing paging networks
into new service areas.
In March 1994, the FCC adopted rules pursuant to which the FCC auctions
licenses for blocks of spectrum on a "market area basis." The winner of the
license is given the right to use a certain frequency or group of frequencies
throughout a defined geographic area (such as a BTA or MTA and can construct
and operate its transmitters throughout this market area without FCC licensing
of individual stations. In some cases, existing users of the designated
frequencies must be protected from interference or furnished with alternative
means of communications. The FCC has completed auctions to license various
radio services on a market area basis, including narrowband PCS or two-way
paging, broadband PCS, and the first phase of the 800 MHz trunked specialized
mobile radio auction, which concluded in December 1997. In these auctions,
successful bidders have made significant auction payments in order to obtain
spectrum.
With respect to its paging operations, the Company may chose to participate
in the market area licensing auctions for paging services. The first auction,
for the 900 MHz paging bands is tentatively scheduled for the third quarter of
calendar year 1998. The lower paging bands, e.g., the exclusive 150 and 450
MHz frequencies, are likely to be auctioned in 1999. The Company believes that
most bidders in the auctions will be larger carriers,
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with significant resources to build out large regional systems. The FCC is
currently not proposing to auction the shared private carrier paging
frequencies licensed under its rules .
On February 8, 1996, the FCC announced a freeze on the acceptance of
applications for new or modified transmitter facilities in paging services.
This freeze was temporarily lifted to permit the filing of expansion
applications by incumbent paging carriers. With respect to applications to
expand paging systems licensed on exclusive paging frequencies, the FCC has
indicated that it will not process any expansion application filed after July
31, 1996; and that any pending application which is mutually exclusive with
another pending application, due to the possibility of harmful electrical
interference, will be dismissed. However, with respect to shared paging
channels, licensed under the FCC's rules, e.g., 462.850 MHz, the FCC is
permitting incumbent licensees to file expansion applications without
restriction. Thus, while the Company may be licensed on a particular shared
frequency at a particular site in Georgia, it could expand its paging system
throughout the southeastern United States, or elsewhere. Such flexibility is
not currently available to the Company for its paging system licensed on
exclusive frequencies under the FCC's rules. Currently, the only method for
expanding its paging system licensed under the FCC's rules is through
acquisition of existing stations, with FCC approval, which the Company did
during the first quarter of calendar year 1998.
The FCC has fully implemented its rules regarding the classification of the
services offered by paging carriers as either CMRS or PMRS providers.
Previously, paging licensees had been classified either as common carriers or
private carrier paging carriers. Pursuant to the FCC's rules, which aim to
reduce the disparities in the regulatory treatment of similar mobile services,
the Company's paging services are classified as CMRS, since the radio
facilities are interconnected to the public switched telephone network and
service is provided to the general public on a for-profit basis. The Company
believes that such parity will remove certain regulatory advantages which
private carriers, such as itself, enjoyed under the previous regulatory
scheme. Certain disparities still exist between the exclusive frequencies and
the shared frequencies licensed under the FCC's rules, which can affect the
Company's ability to respond to subscriber demands in a timely manner. In
particular, the Company generally cannot expand its exclusive paging channel
coverage except by acquisition of another carrier's station on the same
channel or by the winning bidder in the upcoming paging auctions. These
auctions will feature "overlay" licenses, with the winning bidder being
required to protect existing licensees within the designated service area. If
the Company is the successful bidder for its areas of interest, it will be
able to expand the coverage of its existing operations without further FCC
approval, within the licensed market areas. If instead, the Company is not the
successful bidder, then it will be unable to expand its existing coverage
unless it obtains the permission of the winning bidder. However, the winning
bidder would have to protect the Company's existing coverage areas from
interference.
Separate and distinct from the Company's paging facilities discussed above
is the Company's FM sub-carrier paging system. While the FCC requires
carriers, such as the Company, to file applications prior to initiating
service on leased subcarrier facilities of broadcast stations, such
applications are not barred by the FCC's freeze on applications for paging
channels. Thus, it would be possible for the Company to expand its FM
subcarrier paging system, should the need arise.
The 1996 Act may affect the Company's paging business. Some aspects of the
new statute could have a beneficial effect on the Company's paging business.
For example, proposed federal guidelines regarding antenna siting issues may
potentially remove local and state barriers to the construction of
communications facilities (although such restrictions are now being litigated
in the courts and debated in Congress), and efforts to increase competition in
the local exchange and interexchange industries may reduce the cost to the
Company of acquiring necessary communications services and facilities. On the
other hand, some provisions relating to common carrier interconnection, pay
phone rates, enhanced 911 (E-911), telephone number portability, equal access,
the assignment of new area codes, universal service fund and telephone relay
service fund contributions, resale requirements and auction authority may
place additional burdens upon the Company or subject the Company to increased
competition.
47
<PAGE>
Paging carriers are indirectly affected by FAA regulations to the extent
that proposed antenna sites may require prior FAA approval. In those
circumstances where antenna structure clearance is required, the FCC will not
grant an application for new or modified facilities until such clearance is
obtained from the FAA. Under the FCC's rules, the tower owner is generally the
entity that is required to secure such approval.
The FCC has recently issued stricter guidelines with respect to radio
frequency ("RF") radiation hazards. Generally, most paging facilities will be
categorically exempt, provided the base station and antenna system meet
certain criteria governing power and antenna height. In those circumstances
where the base station does not meet the criteria for exemption, it may be
necessary for the Company to modify its facility or relocate to another
antenna structure. If an exclusive paging channel is involved, the Company's
choices for relocation will be limited to certain sites within its service
area, since the Company may not expand its composite interference contour.
With respect to the shared paging frequencies, the Company will be free to
relocate upon the receipt of FCC approval, which could take some time.
Universal Service Reform. On May 8, 1997, the FCC released an order
establishing a significantly expanded federal telecommunications subsidy
regime. For example, the FCC established new subsidies for schools and
libraries with an annual cap of $2.25 billion and for rural health care
providers with an annual cap of $400 million. Providers of interstate
telecommunications service, such as the Company, as well as certain other
entities, must make contributions to the federal programs. The Company's
contribution to schools, libraries, and rural health care funds will be based
on its gross end user revenues for intrastate, interstate, and international
telecommunications services. The Company's contribution to other federal
subsidy funds will be based upon its gross end user revenues for interstate
and international telecommunications services. Several parties have appealed
the May 8, 1997 Order, and those appeals have been consolidated in the U.S.
Court of Appeals for the Fifth Circuit. No assurance can be given that the
FCC's ultimate universal service contribution requirements will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
Access Charge Reform. On May 16, 1997, the FCC released an Access Charge
Reform Order, which revised rules governing the interstate switched access
charge rate structure of price cap LECs. The new rules are intended to
eliminate implicit subsidies and to establish rate structures that better
reflect the manner in which costs are incurred. The new rules substantially
increase the costs that price cap LECs recover through monthly, non-traffic
sensitive access charges and substantially decrease the costs that price cap
LECs recover through traffic sensitive access charges. The manner in which the
FCC implements its approach to lowering access charge levels will have an
effect on the prices the Company pays for originating and terminating
interstate traffic. Portions of the Access Charge Reform Order have been
appealed. In light of the uncertainty regarding ultimate disposition of the
Access Charge Reform proceeding by the FCC and the courts, the Company is
unable to predict what impact the FCC's revised access charge scheme will have
on its access charge cost structure.
Payphone Compensation. In September 1996, the FCC issued an order adopting
rules to implement the 1996 Act's requirements establishing "a per call
compensation plan to ensure all payphone service providers are fairly
compensated for each and every completed call using their payphone." This
order included a specific fee to be paid to each payphone service provider by
long distance carriers and intra-LATA toll providers (including LECs) on all
"dial around" calls, including debit card and calling card calls. On July 1,
1997, the U.S. Court of Appeals for the D.C. Circuit overturned some of the
FCC rules for the implementation plan.
On October 7, 1997, the FCC issued a second order, revising the per-call,
compensation amount to be paid to payphone service providers. Specifically,
the FCC decreased the compensation amount to $0.284 per call. The Company
began paying this per-call amount on October 7, 1997. This compensation amount
will remain in effect until October 6, 1999, when a market-based rate will
become effective. Although the Company expects to incur additional costs to
receive "dial around" calls that originate from payphones, the FCC has
permitted long distance carriers, such as the Company, to pass such costs
through to their customers.
48
<PAGE>
State Regulation. Most PUCs require carriers that wish to provide intrastate
common carrier services to be authorized to provide such services. The Company
either has applied for and received, or is in the process of applying for and
receiving, all necessary authorizations to provide intrastate long distance
services.
The Company is generally not subject to price regulation or to rate of
return regulation for its intrastate services. In most states, however, the
Company is required to file tariffs setting forth the terms, conditions and
prices for its intrastate services. In some state jurisdictions, the tariff
can list a rate range for intrastate services. The Company may be subject to
additional regulatory burdens in some states, such as compliance with quality
of service requirements or remittance of contributions to support state
sponsored universal service. The Company's ability to incur long-term
indebtedness is subject to prior PUC approval in some state jurisdictions. In
addition, some state PUCs regulate the issuance of securities and the transfer
of control of entities subject to their jurisdiction. These state regulations
may have attached to the Company's recent acquisitions. Currently, the Company
is reviewing whether and to what extent additional regulatory compliance is
required in this regard. See "Risk Factors -- Regulation."
PROPERTIES
The Company's corporate headquarters occupy approximately 10,000 square feet
of office space in Roswell, Georgia under a lease expiring in November 2001.
The Company's main network switching center, along with its Atlanta sales
force, occupies approximately 7,000 square feet of office space in Roswell,
Georgia under a lease expiring in November 2001. The Company also occupies
office space for sales and network operation in Birmingham, Alabama; Albany,
Cordele and Valdosta, Georgia; Baton Rouge and New Orleans, Louisiana; and
Dallas, Texas. The Company believes that its current space is sufficient to
meet its present needs and does not anticipate any difficulty securing
additional space, as needed, on terms acceptable to the Company.
EMPLOYEES
At January 31, 1998, the Company had 129 employees, of whom 14 were
technical support personnel, 71 were sales and marketing personnel, seven were
technical support and development personnel and 44 were managerial and
administrative employees. Except for the Company's 401(k) Plan, the Company
does not have any collective bargaining, employment, pension or compensation
arrangements with any of its employees. The Company considers its relations
with its employees to be good. See "Management."
LEGAL PROCEEDINGS
The Company is not a party to any legal proceeding that it believes would
have a material adverse effect on its business, financial condition or results
of operations.
49
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company and their ages as of
March 31, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jerry W. Mayfield............. 51 Chairman of the Board, President and Chief
Executive Officer
David C. Massey............... 50 Senior Vice President -- Sales & Marketing
and Director
Robert P. Poche............... 42 Senior Vice President -- Systems &
Technology and Director
James O. Carpenter............ 48 Director
Marc A. Comeaux............... 43 Director
Robert D. Gage, IV............ 43 Director
Gordon E. Kaiser.............. 54 Director
Stiles A. Kellett, Jr. ....... 54 Director
Daniel D. Lensgraf............ 35 Senior Vice President -- Finance &
Administration, Chief Financial Officer
and Secretary
</TABLE>
Jerry W. Mayfield has been Chairman of the Board, President and Chief
Executive Officer of the Company since May 1994. Mr. Mayfield served as
Executive Vice President of the Company from the time of its formation in 1988
until May 1994 and has been a director of the Company since its formation.
From 1984 until 1986, Mr. Mayfield served as Chief Executive Officer of
Rainbow Chevron Corporation, an oilfield services company in Lafayette,
Louisiana, and from 1970 to 1984, Mr. Mayfield was a partner in the New
Orleans, Louisiana office of Arthur Andersen LLP. Mr. Mayfield is a Certified
Public Accountant.
David C. Massey has been Senior Vice President -- Sales & Marketing of the
Company since February 1993 and a director of the Company since December 1995.
Mr. Massey has primary responsibility for the Company's sales and marketing
programs, including the supervision of all sales representatives. Mr. Massey
is a Certified Public Accountant.
Robert P. Poche has been Senior Vice President -- Systems & Technology since
the Company's formation in 1988 and was elected a director of the Company in
1995. Mr. Poche has primary responsibility for the Company's technical support
and development programs and was instrumental in the development of the
STAR*Net platform. Mr. Poche is a licensed registered professional engineer.
James O. Carpenter has been a director of the Company since its formation in
1988. Since 1987, Mr. Carpenter has been the Managing Partner of Rock Lake
Planting Company, Inc., a Mississippi-based agriculture concern. Mr. Carpenter
is a Certified Public Accountant.
Marc A. Comeaux has been a director of the Company since its formation in
1988. Since January 1996, Mr. Comeaux has been President of Acadia Fine Foods,
Inc., a restaurant operator in Alpharetta, Georgia. From May 1994 through
December 1995, Mr. Comeaux was President of Teledata Solutions, Inc., a
consulting firm. Mr. Comeaux served as President and Chief Executive Officer
of the Company from 1988 until May 1994.
Robert D. Gage, IV has been a director of the Company since its formation in
1988. Mr. Gage has been President and Chief Executive Officer of the Port
Gibson Bank, Port Gibson, Mississippi for more than five years.
Gordon E. Kaiser has been a director of the Company since April 1990. Mr.
Kaiser has been President and Chief Executive Officer of CUE, an owner of a
nationwide FM paging network for more than five years. Mr. Kaiser is an
attorney and was formerly a partner in Gowling & Henderson, Toronto, Canada.
50
<PAGE>
Stiles A. Kellett, Jr. has been a director of the Company since December
1995. Mr. Kellett has been Chairman of the Board of Directors of Kellett
Investment Corp. since 1995. From 1978 to 1995, Mr. Kellett served as Chairman
of the Board of Directors of Convalescent Services, Inc., a long-term health
care company in Atlanta, Georgia. Mr. Kellett also serves as a director of
WorldCom, Inc. and Mariner Health Group, Inc.
Daniel D. Lensgraf has been Senior Vice President -- Finance &
Administration, Chief Financial Officer and Secretary of the Company since
August 1995. From May 1992 until August 1995, Mr. Lensgraf was employed as a
Senior Associate in the Corporate Finance Group of Creditanstalt.
Directors of the Company are elected at the annual meeting of shareholders.
Executive officers of the Company are appointed at the first meeting of the
Board of Directors after each annual meeting of shareholders. Directors and
executive officers are elected to serve until they resign, are removed or
otherwise are disqualified to serve, or until their successors are elected and
qualified. The Company is not party to any employment agreements with its
executive officers.
BOARD OF DIRECTORS
The Company's Board of Directors (the "Board") is comprised of eight members
who, beginning with the Company's first annual meeting of shareholders
following the Offering, will be divided into three classes, which will be as
nearly equal in number as possible. The directors in each class will be
elected by the shareholders for a term of three years and until their
successors are elected and qualified. The term of office of one of the classes
of directors will expire each year, and a new class of directors will be
elected by the shareholders each year at the annual meeting of shareholders.
The composition of the three classes of directors will be determined by a vote
of the Company's shareholders at the first annual meeting of shareholders
following the Offering. See "Description of Capital Stock -- Certain
Provisions of the Articles, Bylaws and the Georgia Code."
Pursuant to a Stockholders Agreement (the "Stockholders Agreement") dated
August 1, 1988 by and between the Company and certain of its shareholders, the
shareholders party thereto have agreed to vote the Common Stock held by them
for the election of Messrs. Mayfield, Comeaux and the president of CUE
(currently Mr. Kaiser) to the Board of Directors. The shareholders party
thereto have also agreed to vote the Common Stock held by them for the
election of Messrs. Gage and Carpenter to the Board of Directors so long as
Messrs. Gage, Carpenter, Ira Carpenter, Jr. and Charles R. Carpenter own, in
the aggregate, at least 20% of the voting stock of the Company. Pursuant to
the Kellett Agreement (as defined in "-- Compensation Committee Interlocks and
Insider Participation" below), the Company agreed to cause its management to
nominate Mr. Kellett and use its best efforts to cause Mr. Kellett's election
to the Board of Directors. The Stockholders Agreement and the Kellett
Agreement will terminate on the Closing Date, and there will be no further
voting arrangements with respect to the election of directors.
COMPENSATION OF DIRECTORS
Prior to the completion of the Offering, each director who is not an
employee of the Company receives fees of $750 and $500 for each meeting of the
Board of Directors and each committee thereof, respectively, attended in
person. Following the completion of the Offering, the Board intends to begin
paying each director who is not an employee of the Company an annual fee of
$ as well as fees of $ and $ for each meeting of the Board of
Directors and committee thereof, respectively, attended in person. Directors
are reimbursed for their out-of-pocket expenses incurred in connection with
their service on the Board of Directors. In addition, following the completion
of the Offering, directors may receive discretionary grants of options to
purchase shares of Common Stock pursuant to the Plan. See "-- Incentive Plan."
MEETINGS AND COMMITTEES
The Board of Directors conducts its business through meetings of the full
Board and through committees of the Board, including the Audit Committee (the
"Audit Committee") and the Compensation Committee (the "Compensation
Committee").
51
<PAGE>
The Audit Committee is responsible for reviewing with the Company's
independent accountants their audit plan, the scope and results of their audit
engagement and the accompanying management letter, if any, reviewing the scope
and results of the Company's internal auditing procedures, consulting with the
independent accountants and management with regard to the Company's accounting
methods and the adequacy of its internal accounting controls, approving
professional services provided by the independent accountants, reviewing the
independence of the independent accountants, and reviewing the range of the
independent accountants' audit and non-audit fees. The Audit Committee is
comprised of James O. Carpenter (Chairman), Marc A. Comeaux and Gordon E.
Kaiser, none of whom served as an officer or employee of the Company during
fiscal 1997.
The Compensation Committee is responsible for establishing the compensation
of executive officers and for administering and interpreting the Company's
Plan. The Compensation Committee consists of Stiles A. Kellett, Jr.
(Chairman), James O. Carpenter and Robert D. Gage, IV, none of whom served as
an officer or employee of the Company during fiscal 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On November 17, 1995, the Company issued and sold 2,000 shares of Series C
Preferred Stock to Mr. Kellett and an affiliate of Mr. Kellett for an
aggregate purchase price of $2.0 million. In connection with the sale of the
Series C Preferred Stock, the Company entered into a letter agreement with Mr.
Kellett (the "Kellett Agreement") pursuant to which the Company agreed to
cause its management to nominate Mr. Kellett to serve on the Board and to use
its best efforts to cause Mr. Kellett's election to the Board until the
earlier to occur of: (i) Mr. Kellett and his affiliates cease to own at least
50% of the 2,000 shares of Series C Preferred Stock acquired by him and his
affiliate (or shares of Common Stock issued upon the conversion thereof); or
(ii) the consummation of an initial public offering of Common Stock resulting
in proceeds to the Company of at least $10.0 million. The Kellett Agreement
will terminate according to its terms on the Closing Date. Pursuant to the
terms and conditions of the designation of the Series C Preferred Stock, on
the Closing Date each issued and outstanding share of Series C Preferred Stock
will be converted into 209.67115 shares of Common Stock without further action
on the part of the Company or the holders of the Series C Preferred Stock. It
is expected that Mr. Kellett will continue to serve as a director of the
Company at least until the first election of directors by the shareholders
following the Offering. See "Certain Transactions -- Series C Preferred Stock
Issuance."
On April 3, 1998, the Company issued and sold 1,500 shares of Series D
Preferred Stock to an affiliate of Mr. Kellett for $1.5 million. Pursuant to
the terms of the Series D Preferred Stock, all outstanding shares of Series D
Preferred Stock will be redeemed on the Closing Date through proceeds realized
from the Offering. See "Certain Transactions -- Series D Preferred Stock and
Related Warrant Issuance."
52
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the compensation paid by the Company for
services rendered for fiscal 1997 by the Company's Chief Executive Officer and
the Company's other executive officers whose total salary and bonus for fiscal
1997 exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- --------------------
SECURITIES ALL OTHER
NAME AND FISCAL UNDERLYING COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(#) TION(2)
------------------ ------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Jerry W. Mayfield........... 1997 $172,000 $10,000 -- $3,445
Chairman of the Board,
President and Chief
Executive Officer
David C. Massey............. 1997 121,000 8,000 -- 2,425
Senior Vice President --
Sales & Marketing
Robert P. Poche............. 1997 121,000 8,000 -- 2,425
Senior Vice President --
Systems & Technology
Daniel D. Lensgraf.......... 1997 110,000 8,000 -- 1,100
Senior Vice President --
Finance & Administration,
Chief Financial Officer and
Secretary
</TABLE>
- --------
(1) Consists of a discretionary bonus paid to the Named Executive Officers
based on the Company's performance during fiscal 1997.
(2) Represents contributions by the Company under its 401(k) Profit Sharing
Plan on behalf of the Named Executive Officers.
53
<PAGE>
Stock Option Grants
The Company did not grant any stock options or stock appreciation rights
during fiscal 1997.
Option Values as of July 31, 1997
The following table sets forth information concerning the stock options held
by each of the Named Executive Officers as of July 31, 1997. No options were
exercised, and no stock appreciation rights were exercised or outstanding,
during fiscal 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT JULY 31, 1997 OPTIONS AT JULY 31, 1997(1)
------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Jerry W. Mayfield....... -- -- -- --
David C. Massey......... -- -- -- --
Robert P. Poche......... -- -- -- --
Daniel D. Lensgraf...... 21,667 43,333
</TABLE>
- --------
(1) There was no public trading market for the Common Stock at July 31, 1997.
Accordingly, these values have been calculated based on an assumed initial
public offering price of $ per share, less the applicable exercise
price. See "Principal and Selling Shareholders."
INCENTIVE PLAN
The Plan was adopted by the Board of Directors of the Company on September
18, 1997 and was approved by the Company's shareholders on December 18, 1997.
The purpose of the Plan is to promote the success, and enhance the value, of
the Company by linking the personal interests of key employees, officers and
directors to those of the shareholders, and by providing such persons with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain the
services of persons upon whose judgment, interest and special effort the
successful conduct of its operation largely is dependent. The Plan authorizes
the granting of awards to key employees, officers and directors of the Company
or its subsidiaries in the following forms: (i) options (both incentive stock
options and non-qualified stock options) to purchase shares of stock; (ii)
stock appreciation rights; (iii) performance shares; (iv) restricted stock;
and (v) other stock-based awards. The Plan authorizes the issuance of up to
1,000,000 shares of Common Stock, and options for the purchase of 118,017 of
such shares have been granted and are outstanding.
401(K) PLAN
The Company sponsors a defined contribution plan (the "401(k) Plan") for
eligible employees of the Company under Section 401(k) of the Internal Revenue
Code of 1986, as amended. Participants may contribute up to 15% of their
annual salaries to the 401(k) Plan, subject to certain limitations. All
contributions made by an employee are fully vested and are not subject to
forfeiture. The Company may make discretionary matching contributions to the
401(k) Plan on behalf of all eligible employees. During fiscal 1997, the
Company made matching contributions equal to 40% of the eligible contribution
made by each employee to the 401(k) Plan.
54
<PAGE>
CERTAIN TRANSACTIONS
NON-VOTING PREFERRED STOCK WARRANT ISSUANCE
In connection with the Credit Facility, the Company issued the Creditanstalt
Warrants for the purchase of 13,325 shares of Non-Voting Preferred Stock or
914,810 shares of Common Stock (the "Warrant Shares"), at the election of
Creditanstalt, at a weighted average price of $0.08 per share of Common Stock.
The Creditanstalt Warrants are exercisable from time to time on or before
December 3, 2005. The Creditanstalt Warrants provide that, subject to certain
conditions and exceptions, the holder of the Creditanstalt Warrants (the
"Warrant Holder") may not exercise Creditanstalt Warrants to purchase shares
of Common Stock if the purchase of such shares, when aggregated with shares of
Common Stock previously issued pursuant to the Creditanstalt Warrants or
issued upon conversion of Non-Voting Preferred Stock issued pursuant to the
Creditanstalt Warrants, would exceed 4.99% of the aggregate number of shares
of Common Stock outstanding as of the time of the exercise of the
Creditanstalt Warrants. The Creditanstalt Warrants further provide that in no
event shall any Creditanstalt Warrants be exercisable for shares of Common
Stock or Non-Voting Preferred Stock which, when aggregated with all other
shares of Common Stock and Non-Voting Preferred Stock then held by
Creditanstalt or its affiliates, would, upon issuance, represent in excess of
24.99% of the total shareholders' equity of the Company, including all series
of Preferred Stock, determined in accordance with GAAP. The Creditanstalt
Warrants provide the Warrant Holder with certain rights with respect to the
registration of the Creditanstalt Warrants and the Warrant Shares under the
Securities Act, subject to certain terms and conditions. See "Description of
Capital Stock -- Preferred Stock" and "Shares Eligible for Future Sale --
Registration Rights."
SERIES C PREFERRED STOCK ISSUANCE
On November 17, 1995, the Company issued and sold 1,000 shares of Series C
Preferred Stock to Creditanstalt, an aggregate of 2,000 shares to Stiles A.
Kellett, Jr. and an affiliate of Mr. Kellett and 500 shares to an unaffiliated
accredited investor (the "Series C Investors") for aggregate cash
consideration of $3.5 million (the "Series C Issuance"). See "Management --
Compensation Committee Interlocks and Insider Participation." Pursuant to the
terms and conditions of the Series C Preferred Stock, on the Closing Date each
issued and outstanding share of Series C Preferred Stock will be converted
into 209.67115 shares of Common Stock without further action on the part of
the Company or the Series C Investors. The terms of the Series C Preferred
Stock provide the Series C Investors with certain rights with respect to the
registration under the Securities Act of the Series C Preferred Stock or the
Common Stock issuable upon conversion of the Series C Preferred Stock, subject
to certain terms and conditions. See "Shares Eligible for Future Sale --
Registration Rights."
SERIES D PREFERRED STOCK AND RELATED WARRANT ISSUANCE
On April 3, 1998, the Company issued and sold an aggregate of 4,500 shares
of Series D Preferred Stock for $1,000 per share. Of such shares, 1,000 were
issued to Creditanstalt, 1,500 were issued to an affiliate of Mr. Kellett, 300
were issued to Mr. Carpenter, 200 were issued to Mr. Gage, 100 were issued to
each of CUE and Mr. Poche and 500 were issued to an affiliate of Messrs.
Mayfield, Massey and Lensgraf. Pursuant to the terms of the Series D Preferred
Stock, all outstanding shares of Series D Preferred Stock will be redeemed on
the Closing Date through proceeds realized from the Offering. The issuance and
sale of the Series D Preferred Stock to directors and executive officers of
the Company was approved by the shareholders of the Company. See "Use of
Proceeds."
In connection with the Series D Issuance, the Company issued warrants to
purchase an aggregate of 126,000 shares of Common Stock (or, with respect to
Creditanstalt and at the election of Creditanstalt, 430.769 shares of Non-
Voting Preferred Stock) at a price of $6.00 per share (the "Series D
Warrants"). In the event the Company does not redeem the Series D Preferred
Stock by June 30, 1998, December 31, 1998, December 31, 1999 and December 31,
2000, the aggregate number of shares of Common Stock subject to the Series D
Warrants increases to 189,000, 252,000, 315,000 and 378,000, respectively (or,
with respect to Creditanstalt, 646.1535, 861.5379,
55
<PAGE>
1,076.9225 and 1,292.3070 shares Non-Voting Preferred Stock, respectively).
The Series D Warrants are exercisable at any time or from time to time on or
prior to April 3, 2008. The Series D Warrants provide that, subject to certain
conditions and exceptions, the holder of the Series D Warrants (the "Series D
Warrant Holder") may not exercise Series D Warrants to purchase shares of
Common Stock if the purchase of such shares, when aggregated with shares of
Common Stock previously issued pursuant to the Series D Warrants or issued
upon conversion of Non-Voting Preferred Stock issued pursuant to the Series D
Warrants, would exceed 4.99% of the aggregate number of shares of Common Stock
outstanding as of the time of the exercise of the Series D Warrants. The
Series D Warrants further provide that in no event shall any Series D Warrant
be exercisable for shares of Common Stock or Non-Voting Preferred Stock which,
when aggregated with all other shares of Common Stock and Non-Voting Preferred
Stock then held by Creditanstalt or its affiliates, would, upon issuance,
represent in excess of 24.99% of the total shareholders' equity of the
Company, including all series of Preferred Stock, determined in accordance
with GAAP. The terms of the Series D Warrants provide the Series D Warrant
Holders with certain rights with respect to the registration under the
Securities Act of the shares issuable upon exercise of the Series D Warrants,
subject to certain terms and conditions. See "Shares Eligible For Future Sale
- -- Registration Rights."
OTHER TRANSACTIONS
Since 1988, the Company has maintained an ongoing relationship with CUE
pursuant to which the Company's FM subcarrier paging network is linked with
the CUE nationwide FM paging network. In April 1988, the Company issued and
sold 313,365 shares of Common Stock to CUE at a price of $0.96 per share of
Common Stock. In April 1991, the Company issued and sold 950 shares of Series
A Preferred Stock, which are convertible into 61,750 shares of Common Stock,
to CUE at a price of $1.54 per share of Common Stock. Additionally, since
April 1990, Mr. Gordon E. Kaiser, President and Chief Executive Officer of
CUE, has served as a director of the Company. As of April 3, 1998, CUE owned
approximately 8.4% of the outstanding Common Stock of the Company on a fully
diluted basis. CUE from time to time provides the Company with various paging
services, consisting principally of airtime and network services for the
purpose of providing regional and nationwide paging. The amounts paid by the
Company to CUE for such services during fiscal 1995, 1996 and 1997 and for the
six months ended January 31, 1998 were $1.7 million, $2.5 million, $4.2
million and $2.1 million, respectively. The Company will periodically have
outstanding affiliated receivables and payables related to the timing of
payments for such services.
Creditanstalt is a lender and agent for the lenders under the Company's
$40.0 million Credit Facility. As of March 31, 1998, total indebtedness under
the Credit Facility was $25.4 million. The amounts paid by the Company to
Creditanstalt, as agent for the lenders, under the Credit Facility for fiscal
1995, 1996 and 1997 and for the six months ended January 31, 1998 were
$700,000, $1.0 million, $1.6 million and $600,000, respectively. The Company
intends to use $ million of the net proceeds to repay outstanding
indebtedness under the Credit Facility. See "Use of Proceeds."
Certain of the transactions described above may be on terms more favorable
to officers, directors and principal shareholders than they could obtain in a
transaction with an unaffiliated party. The Company has adopted a policy
requiring that all material transactions between the Company and its officers,
directors or other affiliates must (i) be approved by a majority of the
disinterested members of the Board of Directors of the Company and (ii) be on
terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
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<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 3, 1998, and as adjusted to reflect
the sale of the Common Stock offered hereby, by: (i) each director of the
Company who beneficially owns Common Stock; (ii) each Named Executive Officer
of the Company; (iii) all directors and executive officers of the Company as a
group; (iv) each person known to the Company to beneficially own more than 5%
of the Common Stock; and (v) each of the Selling Shareholders. Unless
otherwise indicated, all shares of Common Stock are owned directly and the
indicated person has sole voting and investment power. All share amounts
assume the automatic conversion of all issued and outstanding shares of Series
A Preferred Stock and Series C Preferred Stock into shares of Common Stock on
the Closing Date and the redemption of all issued and outstanding shares of
Series D Preferred Stock on the Closing Date.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED NUMBER OF OWNED AFTER
PRIOR TO OFFERING(1) SHARES OFFERING
----------------------- ----------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ------------ ------------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Creditanstalt American Corporation(2)........... 1,152,481 24.8
Jerry W. Mayfield(3)............................ 454,612 9.8
Kellett Partners, L.P. and Stiles A.
Kellett, Jr.(4)................................ 442,533 9.5
David C. Massey(5).............................. 417,266 9.0
CUE Paging Corporation and Gordon E.
Kaiser(6)...................................... 386,699 8.4
Robert D. Gage, IV(7)........................... 370,742 8.0
James O. Carpenter(8)........................... 341,676 7.4
Marc A. Comeaux(9).............................. 248,426 5.4
Robert P. Poche(10)............................. 117,336 2.5
Daniel D. Lensgraf(11).......................... 56,133 1.2
All directors and executive officers as a group
(9 persons).................................... 2,835,423 60.0
</TABLE>
- --------
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares that such person or group has the
right to acquire within 60 days after April 3, 1998 with respect to which
such person has or shares voting or investment power. For purposes of
computing the percentages of outstanding shares held by each person or
group of persons, shares which such person or group has the right to
acquire within 60 days after such date are deemed to be outstanding for
purposes of computing the percentage for such person or group but are not
deemed to be outstanding for the purpose of computing the percentage of
any other person or group. See "Use of Proceeds."
(2) Includes 914,810 shares of Common Stock issuable upon exercise of the
Creditanstalt Warrants and 28,000 shares of Common Stock issuable upon
exercise of the Series D Warrants. The address of Creditanstalt is 245
Park Avenue, New York, New York 10167.
(3) Includes 5,600 shares of Common Stock issuable upon exercise of the Series
D Warrants. Mr. Mayfield's address is 1325 Northmeadow Parkway, Suite 120,
Roswell, Georgia 30075.
(4) Includes 400,533 shares of Common Stock held by Kellett Partners, L.P., of
which Mr. Kellett is the General Partner, and 42,000 shares of Common
Stock issuable upon exercise of the Series D Warrants. The address of
Kellett Partners, L.P. and Mr. Kellett is 200 Galleria Parkway, Suite
1800, Atlanta, Georgia 30395.
(5) Includes 24,916 shares of Common Stock held in trust for Mr. Massey's
children and as to which Mr. Massey disclaims beneficial ownership and
5,600 shares of Common Stock issuable upon exercise of the Series D
Warrants. Mr. Massey's address is 1325 Northmeadow Parkway, Suite 120,
Roswell, Georgia 30076.
(6) Includes 383,899 shares of Common Stock held by CUE Paging Corporation, of
which Mr. Kaiser is the President and Chief Executive Officer, and 2,800
shares of Common Stock issuable upon exercise of the Series D Warrants.
The address of CUE Paging Corporation is 5 Corporate Park, Suite 100,
Irvine, California 92609.
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(7) Includes 183,394 shares of Common Stock held by Gage Partners, of which
Mr. Gage is the General Partner, and 5,600 shares of Common Stock
issuable upon exercise of the Series D Warrants. Mr. Gage's address is
Post Office Box 608, Port Gibson, Mississippi 39150.
(8) Includes 8,400 shares of Common Stock issuable upon exercise of the
Series D Warrants. Mr. Carpenter's address is Post Office Box 608, Port
Gibson, Mississippi 39150.
(9) Includes 35,718 shares of Common Stock held on behalf of Mr. Comeaux's
mother-in-law and as to which Mr. Comeaux disclaims beneficial ownership.
Mr. Comeaux's address is 3640 Schooner Ridge Drive, Alpharetta, Georgia
30202.
(10) Includes 2,800 shares of Common Stock issuable upon exercise of the
Series D Warrants.
(11) Includes 2,800 shares of Common Stock issuable upon exercise of the
Series D Warrants. Additionally, Mr. Lensgraf holds unvested options to
purchase 21,667 shares of Common Stock, which options will vest on the
Closing Date; such shares are included in the shares shown as
beneficially owned after the Offering but are not included in the shares
shown as beneficially owned prior to the Offering.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's capital stock currently is divided into two classes of Common
Stock, designated Class A Common Stock, par value $0.01, and Class B Common
Stock, par value $0.01, and four series of Preferred Stock, designated Series
A Convertible Preferred Stock, par value $0.01, Series B Convertible Preferred
Stock, par value $0.01, Series C Convertible Preferred Stock, par value $0.01,
and Series D Convertible Preferred Stock, par value $0.01. On the Closing
Date, the Class A Common Stock will be redesignated as Common Stock, par value
$0.01, the Class B Common Stock will be redesignated as Non-Voting Common
Stock, par value $0.01, and the Series B Preferred Stock will be redesignated
as Non-Voting Preferred Stock, par value $0.01. In addition, each outstanding
share of Series A Preferred Stock will be converted into 65 shares of Common
Stock, each outstanding share of Series C Preferred Stock will be converted
into 209.67115 shares of Common Stock and each outstanding share of Series D
Preferred Stock will be redeemed using a portion of the net proceeds from the
Offering. Accordingly, no information regarding the terms, the Series A
Preferred Stock, the Series C Preferred Stock or the Series D Preferred Stock
is provided below.
As of the completion of the Offering, the authorized capital stock of the
Company will consist of 50,000,000 shares of Common Stock, 20,000 shares of
Non-Voting Common Stock and 48,500 shares of Preferred Stock. Of the 48,500
shares of Preferred Stock, 30,000 shares have been designated by the Board of
Directors as Non-Voting Preferred Stock.
The following summary is subject to and qualified in its entirety by the
provisions of the Company's Articles and Bylaws (the "Bylaws") and by the
provisions of applicable law.
COMMON STOCK
Shares of Common Stock and Non-Voting Common Stock are identical in all
respects and for all purposes except that holders of Non-Voting Common Stock
shall not be entitled to vote except with respect to those matters as to which
the Georgia Code expressly confers voting rights upon non-voting shares.
Holders of Common Stock are entitled to one vote per share on all matters on
which the holders of Common Stock are entitled to vote. Holders of Common
Stock and Non-Voting Common Stock have no preemptive, conversion, redemption
or sinking fund rights. In the event of a liquidation, dissolution or winding
up of the Company, holders of Common Stock and Non-Voting Common Stock are
entitled to share ratably in the assets of the Company, if any, remaining
after the payment of all debts and liabilities of the Company and the
liquidation preference of any outstanding class or series of Preferred Stock.
The outstanding shares of Common Stock and None-Voting Common Stock are, and
the shares of Common Stock offered by the Company hereby when issued will be,
fully paid and nonassessable. The rights, preferences and privileges of
holders of Common Stock and Non-Voting Common Stock are subject to the Non-
Voting Preferred Stock and any series of Preferred Stock which the Company may
issue in the future as described below.
PREFERRED STOCK
The Board of Directors has the authority, pursuant to the Articles, to issue
the Preferred Stock in one or more series and to fix the price, rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series without further vote
or action by the shareholders. The issuance of Preferred Stock by the Board of
Directors could adversely affect the rights of holders of Common Stock.
The issuance of Preferred Stock may have the effect of delaying, deferring
or preventing a change in control of the Company without further action by the
shareholders and may adversely affect the voting and other rights of the
holders of Common Stock. Other than the Creditanstalt Warrants, there are
currently no agreements or understandings regarding the issuance of Preferred
Stock which agreements or understandings will survive the consummation of the
Offering, and the Board of Directors has no present intention of issuing any
shares of Preferred Stock except for shares of Non-Voting Preferred Stock that
may be issued upon exercise of the Creditanstalt Warrants.
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The Board of Directors has designated the Non-Voting Preferred Stock solely
for the purpose of fulfilling the Company's obligations under the
Creditanstalt Warrants. The designation of the Non-Voting Preferred Stock does
not restrict the Company from issuing additional securities of any kind,
including shares of Preferred Stock of any class, series or designation,
provided, that issuances of Non-Voting Preferred Stock shall be limited to
issuance upon exercise of the Creditanstalt Warrants. Dividends and other
distributions, payable in cash or other property, shall be paid on the Non-
Voting Preferred Stock equally, ratably and on a parity with such dividends
and other distributions paid on the Common Stock, as when and such dividends
and other distributions are declared by the Board of Directors, as though the
Common Stock and Non-Voting Preferred Stock were one and the same class.
Holders of Non-Voting Preferred Stock are not entitled to vote or give consent
to or on any matter submitted to the Company's shareholders except as
specifically provided by the Georgia Code. Upon liquidation of the Company,
the Non-Voting Preferred Stock is entitled to a preference of $0.01 per share
prior to any payment on the Common Stock or any class or series of stock
ranking junior to the Non-Voting Preferred Stock. Each share of Non-Voting
Preferred Stock is convertible into 65 shares of Common Stock. See "Certain
Transactions -- Non-Voting Preferred Stock Warrant Issuance."
CERTAIN PROVISIONS OF THE ARTICLES, BYLAWS AND THE GEORGIA CODE
The Company's Articles and Bylaws as of the Closing Date will contain, and
the Georgia Code currently contains, certain provisions, described below, that
could delay, defer or prevent a change in control of the Company that a
shareholder may deem to be in such shareholder's best interest.
Number, Term and Removal of Directors. The Company's Articles and Bylaws
will provide that the Company's Board of Directors shall be comprised of three
to 11 members, as determined from time to time by resolution of the Board of
Directors. At the first annual meeting of shareholders held after completion
of the Offering, the Board of Directors will be divided into three classes of
approximately equal numbers of directors. Each class of directors will serve
for a term of three years, and the shareholders will elect one new class of
directors each year. Any director may be removed from office but only for
cause and only by the affirmative vote of the holders of at least 75% of all
classes of stock entitled to vote in the election of directors. Any vacancies
on the Board of Directors for any reason, including vacancies resulting from
an increase in the number of directors, may be filed only by the Board of
Directors, acting by the affirmative vote of two-thirds of the total number of
directors then remaining in office. Any director appointed to fill a vacancy
shall be elected for the unexpired term of the predecessor in office and until
the successor is elected and qualified, except that when a directorship is to
be filled by reason of an increase in the number of directors, the term of
such director shall expire at the next election of directors by the
shareholders and upon the election and qualification of the successor.
Call of and Notices Relating to Shareholder Meetings; Actions by Written
Consent of Shareholders. The Company's Bylaws will provide as of the Closing
Date that special meetings of shareholders or special meetings in lieu of
annual meetings of shareholders may be called at any time by the Board of
Directors, the Chairman of the Board or the President, or any holder or
holders of 25% or more of the votes entitled to be cast on the issue or issues
to be considered at the proposed special meeting. Meetings of the shareholders
are to be held at such time and place and on such date as specified in the
notice of the meeting. Notice of annual or special shareholders' meetings
shall be given not less than 10 nor more than 60 days before the date of the
meeting, and notice of any special meeting of shareholders shall state the
purpose or purposes for which the meeting is called. Actions required to be
taken at a shareholders' meeting may be taken without a meeting if the action
is taken by persons who would be entitled to vote at a meeting shares having
voting power to cast not less than the minimum number (or numbers, in the case
of voting by groups) of votes that would be necessary to authorize or take
such action at a meeting at which all shareholders entitled to vote were
present and voted. The action must be evidenced by one or more written
consents describing the action taken, signed by the shareholders entitled to
take action without a meeting and delivered to the Company for inclusion in
the minutes or filing with the corporate records.
Georgia Business Combination Statute. Pursuant to the Bylaws, as of the
Closing Date, the Company will be subject to the provisions of the Georgia
Code prohibiting various "business combinations" involving
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"interested shareholders" for a period of five years after the shareholder
becomes an interested shareholder of the Company. Such provisions prohibit any
business combination with an interested shareholder unless either (i) prior to
such time, the Board of Directors approves either the business combination or
the transaction by which such shareholder became an interested shareholder,
(ii) in the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder became the beneficial owner
of at least 90% of the outstanding voting stock of the Company which was not
held by directors, officers, affiliates thereof, subsidiaries or certain
employee stock option plans of the Company, or (iii) subsequent to becoming an
interested shareholder, such shareholder acquired additional shares resulting
in such shareholder owning at least 90% of the outstanding voting stock of the
Company and the business combination is approved by a majority of the
disinterested shareholders' shares not held by directors, officers, affiliates
thereof, subsidiaries or certain employee stock options plans of the Company.
Under the relevant provisions of the Georgia Code, a "business combination" is
defined to include, among other things, (i) any merger, consolidation, share
exchange or any sale, transfer or other disposition (or series of related
sales or transfers) of assets of the Company having an aggregate book value of
10% or more of the Company's net assets (measured as of the end of the most
recent fiscal quarter), with an interested shareholder of the Company or any
other corporation which is or, after giving effect to such business
combination, becomes an affiliate of any such interested shareholder, (ii) the
liquidation or dissolution of the Company, (iii) the receipt by an interested
shareholder of any benefit from any loan, advance, guarantee, pledge, tax
credit or other financial benefit from the Company, other than in the ordinary
course of business and (iv) certain other transactions involving the issuance
or reclassification of securities of the Company which produce the result that
5% or more of the total equity shares of the Company, or of any class or
series thereof, is owned by an interested shareholder. An "interested
shareholder" is defined by the Georgia Code to include any person or entity
that, together with its affiliates, beneficially owns or has the right to own
10% or more of the outstanding voting shares of the Company, or any person
that is an affiliate of the Company and has, at any time within the preceding
two-year period, been the beneficial owner of 10% or more of the outstanding
voting shares of the Company. The restrictions on business combinations shall
not apply to any person who was an interested shareholder before the adoption
of the Bylaw which made the provisions applicable to the Company nor to any
persons who subsequently become interested shareholders inadvertently,
subsequently divest sufficient shares so that the shareholder ceases to be an
interested shareholder and would not, at any time within the five-year period
immediately before a business combination involving the shareholder, have been
an interested shareholder but for the inadvertent acquisition.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Common Stock.
Sales of substantial amounts of shares of the Common Stock in the public
market following the Offering, or the perception that such sales could occur,
could adversely affect the market price of the Common Stock prevailing from
time to time and could impair the Company's ability to raise capital in the
future through sales of its equity securities at a time and price which it
deems appropriate.
On the Closing Date, assuming no exercise of outstanding options or
warrants, the Company will have shares of Common Stock outstanding. The
shares of Common Stock sold in the Offering will be freely tradeable
without restriction or further registration under the Securities Act, except
that any shares purchased by "affiliates" of the Company, as that term is
defined in Rule 144 of the Commission ("Affiliates"), may generally only be
sold in compliance with Rule 144. The remaining shares of Common Stock are
"restricted securities" as defined in Rule 144. Restricted securities may be
sold in the public market only if they are registered under the Securities Act
or if they qualify for an exemption from registration such as that provided by
Rule 144 or Rule 701 of the Commission.
SALES OF RESTRICTED SECURITIES
On the Closing Date, subject to the provisions of Rule 144, shares of
Common Stock will be eligible for immediate sale in the public market pursuant
to Rule 144(k) and an additional shares will become eligible for sale,
subject to the provisions of Rule 144, beginning 90 days after the date of
this Prospectus. Beginning 180 days after the date of this Prospectus (or
earlier with the written consent of J.C. Bradford & Co.) additional shares
will be available for immediate sale in the public market, subject to the
provisions of Rule 144, upon the expiration of the Lock-Up Agreements between
the Underwriters and the directors, executive officers, Selling Shareholders
and certain other shareholders of the Company. See "--Lock-Up Agreements."
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned restricted securities for at least one year,
including a person who may be deemed an Affiliate of the Company, is entitled
to sell, within any three-month period, a number of shares of Common Stock
equal to the greater of 1% of the outstanding Common Stock (approximately
shares after giving effect to the Offering) and the average weekly reported
trading volume of the Common Stock during the four calendar weeks preceding
such sale. Sales under Rule 144 are subject to certain restrictions relating
to manner of sale, notice and availability of current public information about
the Company. In addition, under Rule 144(k), a person who is not an Affiliate
and has not been an Affiliate at any time during the 90 days preceding a sale,
and who has beneficially owned shares for at least two years, would be
entitled to sell such shares immediately following the Offering without regard
to the volume limitations, manner of sale provisions or notice or other
requirements of Rule 144.
OPTIONS
As of April 3, 1998, options and warrants to purchase an aggregate of
1,310,494 shares of Common Stock were outstanding. Of such shares of Common
Stock, will be eligible for sale beginning 90 days after the date of this
Prospectus, subject to the provisions of Rule 144 and Rule 701 of the
Securities and Exchange Commission (the "Commission"). An additional
shares of Common Stock that are subject to currently outstanding options and
warrants will become eligible for sale upon the expiration of the Lock-Up
Agreements beginning 180 days after the date of this Prospectus, subject to
the provisions of Rule 144 and Rule 701.
The Company intends to file a Registration Statement on Form S-8 as soon as
practicable after the completion of the Offering to register 1,000,000 shares
of Common Stock, of which 118,017 shares are subject to outstanding but
unvested options, that are available for issuance pursuant to the Plan. All of
such registered shares also generally would then be eligible for immediate
sale in the public market, subject to Lock-Up Agreements, if applicable, and
compliance with certain provisions of Rule 144 by Affiliates.
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LOCK-UP AGREEMENTS
The directors, executive officers, Selling Shareholders and certain other
shareholders of the Company have agreed with the Underwriters, pursuant to the
Lock-Up Agreements, not to directly or indirectly, without the prior written
consent of J.C. Bradford & Co., (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock which may be
deemed beneficially owned by them), or (ii) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Common Stock for a period of 180 days
after the date of this Prospectus. Notwithstanding the foregoing, the Lock-Up
Agreements permit, during the 180-day lock-up period, (i) transfers made by
gift, provided the donee thereof agrees in writing to be bound by the terms of
the Lock-Up Agreement, (ii) transfers to the transferor's affiliates, as such
term is defined by Rule 405 under the Securities Act, provided any such
transferee agrees to be bound by the terms of the Lock-Up Agreement and
(iii) transfers made with the prior written consent of J.C. Bradford & Co.
Additionally, each party to a Lock-Up Agreement has agreed that during the
180-day lock-up period, such party will not make any demand for, or exercise
any right with respect to, the registration of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock without the prior written consent of J.C. Bradford & Co.
REGISTRATION RIGHTS
Non-Voting Preferred Stock Registration Rights
The Creditanstalt Warrants provide that, upon the written demand of any
Warrant Holder at any time from time to time after the earlier of: (i) six
months following the consummation of the Offering; or (ii) December 3, 1998
requesting that the Company effect the registration under the Securities Act
of Creditanstalt Warrants or shares of Common Stock or Non-Voting Preferred
Stock issuable upon the exercise of Creditanstalt Warrants (the "Warrant
Shares"), the Company shall give written notice of such demand to all other
Warrant Holders. If the Company receives requests for the registration of at
least an aggregate of 1,000 Creditanstalt Warrants or Warrant Shares (or if
less than an aggregate of 1,000 Creditanstalt Warrants or Warrant Shares are
outstanding, the remainder of Warrant Shares not registered under the
Securities Act), the Company shall file a registration statement under the
Securities Act for the registration of the Creditanstalt Warrants or Warrant
Shares, as appropriate (a "Demand Registration"). The Company is obligated to
effect up to three Demand Registrations on behalf of the Warrant Holders.
The Creditanstalt Warrants further provide that if, at any time after
December 3, 1995, the Company proposes to register any of its securities under
the Securities Act (except pursuant to a registration statement filed on Form
S-8 or S-4 or such other form as shall be prescribed under the Securities Act
for substantially similar purposes), it will give written notice to all
holders of Creditanstalt Warrants and Warrant Shares of its intention to
register such securities. Upon the written request of any Warrant Holder given
within 10 days of the Company's notice of registration, the Company shall use
its reasonable best efforts to effect the registration of the Creditanstalt
Warrants and/or the Warrant Shares which it shall have been so requested to
register by including such Creditanstalt Warrants and/or Warrant Shares in the
proposed registration statement. If the proposed registration is for an
underwritten public offering, only Creditanstalt Warrants or Warrant Shares
which are to be included in the underwriting may be included in such
registration, and the Company shall have the right to designate the managing
underwriter(s) in any such underwritten public offering, provided that, (i)
the Company shall use its best efforts to cause the managing underwriter(s) to
include the Creditanstalt Warrants or Warrant Shares in the underwriting; and
(ii) if the managing underwriter(s) advises the Warrant Holders and all other
persons seeking to include securities of the Company held by them in such
registration statement ("Other Security Holders") in writing that the total
amount of securities which they and the Company and any Other Security Holders
intend to include in such offering is sufficiently large to materially and
adversely affect the success of such offering, the amount of securities to be
offered shall be reduced.
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Series C Preferred Stock Registration Rights
The agreement relating to the Series C Issuance (the "Series C Purchase
Agreement") provides that, upon the written demand of any Series C Investor at
any time from time to time after the earlier of: (i) six months following the
consummation of the Offering; or (ii) November 17, 2000 requesting that the
Company effect the registration under the Securities Act of shares of Series C
Preferred Stock or Common Stock issuable upon conversion of such shares of
Series C Convertible Stock ("Series C Shares"), the Company shall give written
notice of such demand to all other Series C Investors. If the Company receives
requests for the registration of at least an aggregate of at least one-fifth
of the Series C Shares (or if less than an aggregate of one-fifth of are
outstanding, the remainder of Series C Shares not registered under the
Securities Act), the Company shall file a registration statement under the
Securities Act for the registration of the Series C Shares (a "Series C Demand
Registration"). The Company is obligated to effect not more than two Series C
Demand Registrations on behalf of the Series C Investors.
The Series C Purchase Agreement further provides that if, at any time after
November 17, 1995, the Company proposes to register any of its securities
under the Securities Act (except pursuant to a registration statement filed on
Form S-8 or S-4 or such other form as shall be prescribed under the Securities
Act for substantially similar purposes), it will give written notice to all
Series C Investors of its intention to register such securities. Upon the
written request of any Series C Investor given within 10 days of the Company's
notice of registration, the Company shall use its reasonable best efforts to
effect the registration of the Series C Shares which it shall have been so
requested to register by including such Series C Shares in the proposed
registration statement. If the proposed registration is for an underwritten
public offering, only Series C Shares which are to be included in the
underwriting may be included in such registration, and the Company shall have
the right to designate the managing underwriter(s) in any such underwritten
public offering, provided that, (i) the Company shall use its best efforts to
cause the managing underwriter(s) to include the Series C Shares in the
underwriting; and (ii) if the managing underwriter(s) advises the Series C
Investors and all other persons seeking to include securities of the Company
held by them in such registration statement ("Other Security Holders") in
writing that the total amount of securities which they and the Company and any
Other Security Holders intend to include in such offering is sufficiently
large to materially and adversely affect the success of such offering, the
amount of securities to be offered shall be reduced.
Series D Preferred Stock Registration Rights
The agreement relating to the Series D Issuance (the "Series D Purchase
Agreement") further provides that if, at any time after April 3, 1998, the
Company proposes to register any of its securities under the Securities Act
(except pursuant to a registration statement filed on Form S-8 or S-4 or such
other form as shall be prescribed under the Securities Act for substantially
similar purposes), it will give written notice to all of its intention to
register such securities. Upon the written request of any Series D Warrant
Holder given within 10 days of the Company's notice of registration, the
Company shall use its reasonable best efforts to effect the registration of
the shares issuable upon exercise of the Series D Warrants (the "Series D
Warrant Shares") which it shall have been so requested to register by
including such Series D Warrant Shares in the proposed registration statement.
If the proposed registration is for an underwritten public offering, only
Series D Warrant Shares which are to be included in the underwriting may be
included in such registration, and the Company shall have the right to
designate the managing underwriter(s) in any such underwritten public
offering, provided that, (i) the Company shall use its best efforts to cause
the managing underwriter(s) to include the Series D Warrant Shares in the
underwriting; and (ii) if the managing underwriter(s) advises the Series D
Warrant Holders and all other persons seeking to include securities of the
Company held by them in such registration statement in writing that the total
amount of securities which they and the Company and any other security holders
intend to include in such offering is sufficiently large to materially and
adversely affect the success of such offering, the amount of securities to be
offered shall be reduced.
Breckenridge Registration Rights
Since 1995, the Company has maintained an ongoing relationship with The
Breckenridge Group, Inc. ("Breckenridge"), an Atlanta-based investment banking
firm. Breckenridge has advised the Company on
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significant acquisitions consummated since February 1996. In July 1997, in
consideration of Breckenridge's agreement to forgive the cash payment of
outstanding advisory fees and to advise the Company on future acquisitions,
the Company issued options to purchase an aggregate of 130,000 shares of
Common Stock to principals of Breckenridge. The Breckenridge Options provide
for an exercise price of $4.78 per share and are exerciseable in full at any
time on or prior to May 31, 2002. The exercise price of the Breckenridge
Options was based on recent sales prices for shares of Common Stock in arms'
length transactions and the issuance of the Breckenridge Options was approved
by the Board.
The Breckenridge Options provide that if, at any time prior to May 31, 2002,
the Company proposes to register any of its securities under the Securities
Act (except pursuant to a registration statement filed on Form S-8 or S-4 or
such other form as shall be prescribed under the Securities Act for
substantially similar purposes), other than in connection with an underwritten
initial public offering which produces gross proceeds to the Company in excess
of $30,000,000, it will give written notice to all holders of Breckenridge
Options of its intention to register such securities. Upon the written request
of any holder of Breckenridge Options given within 20 business days of the
Company's notice of registration, the Company shall use its reasonable best
efforts to effect the registration of the shares of Common Stock issuable upon
exercise of the Breckenridge Options (the "Breckenridge Shares") which it
shall have been so requested to register by including such shares of Common
Stock in the proposed registration statement. If the proposed registration is
for an underwritten public offering, only Breckenridge Shares which are to be
included in the underwriting may be included in such registration, and the
Company shall have the right to designate the managing underwriter(s) in any
such underwritten public offering, provided that, (i) the Company shall use
its best efforts to cause the managing underwriter(s) to include the
Breckenridge Shares in the underwriting; and (ii) if the managing
underwriter(s) advises the holders of Breckenridge Options and all other
persons seeking to include securities of the Company held by them in such
registration statement ("Other Security Holders") in writing that the total
amount of securities which they and the Company and any Other Security Holders
intend to include in such offering is sufficiently large to materially and
adversely affect the success of such offering, the amount of securities to be
offered shall be reduced. See "Risk Factors -- Shares Eligible for Future
Sale."
65
<PAGE>
UNDERWRITING
Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the underwriters named below (the "Underwriters"), acting
through J.C. Bradford & Co. and Morgan Keegan & Company, Inc., as
representatives of the several Underwriters (the "Representatives"), have
agreed, severally, to purchase from the Company and the Selling Shareholders
the number of shares of Common Stock set forth below opposite their respective
names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------- ---------
<S> <C>
J.C. Bradford & Co.................................................
Morgan Keegan & Company, Inc.......................................
---
Total............................................................
===
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions contained therein, to purchase all shares of Common Stock
offered hereby, if any of such shares are purchased.
The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the public at the initial public offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain other dealers. After the Offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company and
the Selling Shareholders that the Underwriters do not intend to confirm sales
to accounts over which they exercise discretionary authority.
The Offering of the shares of Common Stock is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.
The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to
additional shares of Common Stock to cover over-allotments, if any. To the
extent that the Underwriters exercise this option, each of the Underwriters
will have a firm commitment to purchase approximately the same percentage
thereof which the number of shares of Common Stock to be purchased by it shown
in the table above bears to the total number of shares in such table, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters will sell such additional
shares on the same terms as those on which the shares are being offered.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been determined by negotiation among the
Company, the Selling Shareholders and the Representatives. In determining such
price, consideration was given to, among other things, the financial and
operating history and trends of the Company, the experience of its management,
the position of the Company in its industry, the Company's prospects and the
Company's financial results. Additionally, consideration was given to the
status of the securities markets, market conditions for new offerings of
securities and the prices of similar securities of comparable companies.
66
<PAGE>
The Company, its executive officers and directors, the Selling Shareholders
and certain other of its shareholders have agreed with the Representatives,
subject to certain exceptions, not to offer to sell or otherwise dispose of
any shares of Common Stock, options or warrants to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock for a
period of 180 days from the date of this Prospectus without the prior written
consent of J.C. Bradford & Co., except that the Company may issue shares in
connection with the exercise of stock options granted pursuant to the Plan.
See "Shares Eligible for Future Sale -- Lock-Up Agreements."
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments that the Underwriters or any such
controlling persons may be required to make in respect thereof.
In connection with the Offering, the Underwriters and other persons
participating in the Offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Common Stock. Specifically, the
Underwriters may over-allot in connection with the Offering, creating a short
position in the Common Stock for their own account. To cover over-allotments
or to stabilize the price of the Common Stock, the Underwriters may bid for,
and purchase, shares of Common Stock in the open market. The Underwriters may
also impose a penalty bid whereby they may reclaim selling concessions allowed
to an underwriter or a dealer for distributing Common Stock in the Offering,
if the Underwriters repurchase previously distributed Common Stock in
transactions to cover their short position, in stabilization transactions or
otherwise. Finally, the Underwriters may bid for, and purchase, shares of
Common Stock in market making transactions. These activities may stabilize or
maintain the market price of Common Stock above market levels that may
otherwise prevail. The Underwriters are not required to engage in these
activities and may end any of these activities at any time.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby and certain other
legal matters will be passed upon for the Company by Alston & Bird llp,
Atlanta, Georgia. Certain legal matters related to the Offering will be passed
upon for the Underwriters by Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia.
EXPERTS
The historical financial statements of the Company as of July 31, 1996 and
1997 and January 31, 1998 and for each of the three years in the period ended
July 31, 1997 and for the six months ended January 31, 1998, AVP and C.R. as
of December 31, 1995 and for the year then ended, and Message World as of
December 31, 1996 and for the year then ended included in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The historical financial statements of Hyde's as of December 31, 1997 and
1996, and for each of the years then ended included in the Prospectus have
been audited by James N. Rachel, independent auditor, as indicated in his
report with respect thereto, and are included herein in reliance upon his
authority as an expert in giving said report.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration
67
<PAGE>
Statement and the exhibits and schedules thereto, as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is hereby made to the Registration
Statement, including the exhibits and schedules filed or incorporated as a
part thereof. Statements contained herein concerning the provisions of any
document are necessarily summarized and in each instance reference is made to
the copy of the document filed as an exhibit or schedule to the Registration
Statement. Each such statement is qualified in its entirety by reference to
the copy of the applicable documents filed with the Commission.
After effectiveness of the Registration Statement, the Company will file
periodic reports and other information with the Commission under the
Securities Exchange Act of 1934, as amended. The Registration Statement,
including the exhibits and schedules thereto, and the periodic reports and
other information filed in connection therewith, may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Seven World Trade Center, New York, New York 10048 and
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy and information statements and other information may be found
on the Commission's site address, http://www.sec.gov. Copies of such material
also can be obtained from the Company upon request.
68
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
<TABLE>
<S> <C>
Report of Independent Public Accountants.................................. F-3
Consolidated Financial Statements:
Consolidated Balance Sheets as of July 31, 1996 and 1997 and January 31,
1998................................................................... F-4
Consolidated Statements of Operations for the Years Ended July 31, 1995,
1996, and 1997 and for the Six Months Ended January 31, 1997 and 1998.. F-6
Consolidated Statements of Shareholders' Equity (Deficit) for the Years
Ended July 31, 1995, 1996, and 1997 and for the Six Months Ended
January 31, 1998....................................................... F-7
Consolidated Statements of Cash Flows for the Years Ended July 31, 1995,
1996, and 1997 and for the Six Months Ended January 31, 1997 and 1998.. F-8
Notes to Consolidated Financial Statements................................ F-9
ATLANTA VOICE PAGE, INC.
Report of Independent Public Accountants.................................. F-24
Financial Statements:
Balance Sheet as of December 31, 1995................................... F-25
Statement of Operations for the Year Ended December 31, 1995............ F-26
Statement of Shareholders' Equity for the Year Ended December 31, 1995.. F-27
Statement of Cash Flows for the Year Ended December 31, 1995............ F-28
Notes to Financial Statements............................................. F-29
C.R., INC.
Report of Independent Public Accountants.................................. F-32
Financial Statements:
Balance Sheet as of December 31, 1995................................... F-33
Statement of Operations for the Year Ended December 31, 1995............ F-34
Statement of Shareholders' Equity for the Year Ended December 31, 1995.. F-35
Statement of Cash Flows for the Year Ended December 31, 1995............ F-36
Notes to Financial Statements............................................. F-37
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
MESSAGE WORLD ----
<S> <C>
Report of Independent Public Accountants.................................. F-41
Financial Statements:
Balance Sheet as of December 31, 1996................................... F-42
Statement of Operations for the Year Ended December 31, 1996............ F-43
Statement of (Accumulated Deficit) Retained Earnings for the Year Ended
December 31, 1996...................................................... F-44
Statement of Cash Flows for the Year Ended December 31, 1996............ F-45
Notes to Financial Statements............................................. F-46
HYDE'S STAY IN TOUCH, INC.
Independent Auditor's Report.............................................. F-49
Financial Statements:
Balance Sheets as of December 31, 1997 and 1996......................... F-50
Statements of Income for the Year Ended December 31, 1997 and 1996...... F-51
Statements of Retained Earnings for the Year Ended December 31, 1997 and
1996................................................................... F-52
Statements of Cash Flows for the Year Ended December 31, 1997 and 1996.. F-53
Notes to Financial Statements............................................. F-54
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Financial Information.................... F-60
Unaudited Pro Forma Consolidated Balance Sheet as of January 31, 1998..... F-61
Unaudited Pro Forma Consolidated Statement of Operations for the Six
Months Ended
January 31, 1998......................................................... F-63
Unaudited Pro Forma Consolidated Statement of Operations for the Year
Ended July 31, 1997...................................................... F-66
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Satellink Communications, Inc.:
We have audited the accompanying consolidated balance sheets of SATELLINK
COMMUNICATIONS, INC. (a Georgia corporation) AND SUBSIDIARIES as of July 31,
1996 and 1997 and January 31, 1998 and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for each of the
three years in the period ended July 31, 1997 and the six months ended January
31, 1998. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Satellink
Communications, Inc. and subsidiaries as of July 31, 1996 and 1997 and January
31, 1998 and the results of their operations and their cash flows for each of
the three years in the period ended July 31, 1997 and the six months ended
January 31, 1998 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
March 27, 1998
F-3
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND 1997 AND JANUARY 31, 1998
<TABLE>
<CAPTION>
JULY 31,
------------------------ JANUARY 31,
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents. $ 524,708 $ 193,346 $ 255,861
Accounts receivable, net
of allowance for doubtful
accounts of $198,911,
$445,028 and $403,350 as
of July 31, 1996 and 1997
and January 31, 1998,
respectively............. 2,143,173 2,698,481 3,801,322
Other receivables......... 44,746 147,470 235,633
Inventory................. 165,564 268,201 283,576
Prepaid expenses and other
current assets........... 276,135 362,053 391,013
----------- ----------- -----------
Total current assets.... 3,154,326 3,669,551 4,967,405
----------- ----------- -----------
PROPERTY AND EQUIPMENT (Note
2):
Paging systems and
equipment................ 6,863,669 8,973,493 11,337,792
Computer and terminal
equipment................ 2,003,412 3,745,525 3,085,452
Furniture and fixtures.... 188,377 297,686 387,194
Leasehold improvements.... 81,063 107,766 108,966
----------- ----------- -----------
9,136,521 13,124,470 14,919,404
Less accumulated
depreciation............. (3,230,160) (4,371,932) (4,520,142)
----------- ----------- -----------
Property and equipment,
net.................... 5,906,361 8,752,538 10,399,262
----------- ----------- -----------
OTHER LONG TERM ASSETS:
Goodwill, net of
accumulated amortization
of $56,257, $288,718, and
$448,000 as of July 31,
1996 and 1997 and January
31, 1998, respectively
(Note 2)................. 6,584,173 9,447,098 9,695,292
Other intangible assets,
net of accumulated
amortization of
$1,112,743, $1,697,281,
and $1,436,345 as of July
31, 1996 and 1997 and
January 31, 1998,
respectively (Note 2).... 2,064,229 2,999,874 2,967,988
Investments in joint
ventures (Note 4)........ 193,085 219,627 337,082
Other..................... 33,074 33,291 0
----------- ----------- -----------
Total other long term
assets................. 8,874,561 12,699,890 13,000,362
----------- ----------- -----------
Total assets............ $17,935,248 $25,121,979 $28,367,029
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND 1997 AND JANUARY 31, 1998
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long term debt
(Note 6)............................. $ 811,749 $ 917,326 $ 428,000
Accounts payable and accrued liabili-
ties (Note 2)........................ 1,792,340 2,434,295 2,851,585
Customer deposits..................... 395,506 372,140 247,468
Deferred revenues..................... 661,785 1,076,248 1,092,874
Accrued dividends on preferred stock.. 99,447 88,047 43,887
----------- ----------- -----------
Total current liabilities........... 3,760,827 4,888,056 4,663,814
----------- ----------- -----------
LONG-TERM DEBT, less current maturities
(Note 6)............................... 12,278,139 18,410,822 23,441,212
----------- ----------- -----------
STOCK WARRANTS (Note 7)................. 2,573,615 4,346,722 4,575,596
----------- ----------- -----------
MINORITY INTEREST....................... 2,522 5,351 11,022
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 10)
SERIES C REDEEMABLE CONVERTIBLE PRE-
FERRED STOCK (Note 8):
$0.01 par value; 3,500 shares
authorized; 3,500 shares issued and
outstanding at July 31, 1996 and 1997
and January 31, 1998; entitled to a
maximum of $1,000 per share plus
accrued dividends in liquidation,
dissolution, or windup of the
Company.............................. 3,500,000 3,500,000 3,500,000
SHAREHOLDERS' EQUITY (DEFICIT) (NOTE 7):
Series A convertible preferred stock
$.01 par value; 7,500 shares
authorized, 7,360 shares issued and
outstanding at July 31, 1996 and 1997
and January 31, 1998, entitled to a
maximum of $290 per share plus
accrued dividends in liquidation,
dissolution, or windup of the
Company.............................. 74 74 74
Series B convertible preferred stock,
$.01 par value; 0, 30,000 and 30,000
shares authorized at July 31, 1996
and 1997 and January 31, 1998,
respectively, 0 shares issued and
outstanding.......................... -- -- --
Common stock, $.01 par value:
Class A voting, 5,000,000 shares
authorized, 2,236,553, 2,271,393,
and 2,349,521 shares issued and
outstanding at July 31, 1996 and
1997 and January 31, 1998,
respectively........................ 22,366 22,714 23,495
Class B nonvoting, 20,000 shares
authorized, 1,071.32, 535.65, and 0
shares issued and outstanding at
July 31, 1996 and 1997 and January
31, 1998, respectively.............. 10 5 --
Additional paid in capital............ 2,159,641 2,376,621 2,475,845
Accumulated deficit................... (6,361,946) (8,428,386) (10,324,029)
----------- ----------- -----------
Total shareholders' equity
(deficit).......................... (4,179,855) (6,028,972) (7,824,615)
----------- ----------- -----------
Total liabilities and shareholders'
equity (deficit)................... $17,935,248 $25,121,979 $28,367,029
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-5
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JULY 31, 1995, 1996 AND 1997
AND FOR THE SIX MONTHS ENDED JANUARY 31, 1997 AND 1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
------------------------------------ ------------------------
1995 1996 1997 1997 1998
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Service, rent and main-
tenance revenues...... $6,885,352 $ 9,839,199 $16,308,042 $7,676,578 $ 9,480,557
Product sales.......... 525,615 975,144 1,264,418 577,833 637,266
---------- ----------- ----------- ---------- -----------
Total revenues....... 7,410,967 10,814,343 17,572,460 8,254,411 10,117,823
Cost of products sold.. (468,473) (959,575) (1,201,271) (574,225) (555,935)
---------- ----------- ----------- ---------- -----------
Net revenues......... 6,942,494 9,854,768 16,371,189 7,680,186 9,561,888
OPERATING EXPENSES:
Service, rent and main-
tenance............... 2,717,621 3,878,639 6,541,774 3,189,023 3,598,094
Selling and marketing.. 1,222,030 1,602,467 2,313,930 1,080,652 1,431,693
General and administra-
tive.................. 886,671 1,732,122 3,039,390 1,291,254 1,709,863
Engineering............ 566,962 515,599 638,387 319,497 382,606
Depreciation and amor-
tization.............. 845,160 1,204,478 2,241,518 1,015,933 1,392,526
Fixed asset impairment
and one-time
reengineering charges. -- -- -- -- 1,533,996
---------- ----------- ----------- ---------- -----------
Total operating
expenses............ 6,238,444 8,933,305 14,774,999 6,896,359 10,048,778
---------- ----------- ----------- ---------- -----------
OPERATING INCOME (LOSS). 704,050 921,463 1,596,190 783,827 (486,890)
---------- ----------- ----------- ---------- -----------
OTHER INCOME (EXPENSE):
Other income........... 89,689 91,413 89,808 40,927 96,004
Interest expense....... (703,766) (872,673) (1,564,067) (698,698) (1,112,287)
Accretion of stock war-
rants (Note 7)........ (643,000) (854,350) (1,773,107) (886,554) (228,874)
(Loss) income from
joint venture (Note
4).................... -- (95,715) 26,123 30,729 60,999
Minority interest...... -- (2,522) (2,829) (3,203) (5,673)
---------- ----------- ----------- ---------- -----------
(1,257,077) (1,733,847) (3,224,072) (1,516,799) (1,189,831)
---------- ----------- ----------- ---------- -----------
LOSS BEFORE INCOME TAX
BENEFIT AND
EXTRAORDINARY ITEM..... (553,027) (812,384) (1,627,882) (732,972) (1,676,721)
INCOME TAX BENEFIT...... -- -- -- -- --
---------- ----------- ----------- ---------- -----------
LOSS BEFORE
EXTRAORDINARY ITEM..... (553,027) (812,384) (1,627,882) (732,972) (1,676,721)
EXTRAORDINARY LOSS ON
EARLY RETIREMENT OF
DEBT, net of taxes of
approximately $88,000.. -- 132,130 -- -- --
---------- ----------- ----------- ---------- -----------
NET LOSS................ (553,027) (944,514) (1,627,882) (732,972) (1,676,721)
---------- ----------- ----------- ---------- -----------
PREFERRED STOCK
DIVIDENDS.............. 88,320 334,295 438,558 218,922 218,922
---------- ----------- ----------- ---------- -----------
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS.... $ (641,347) $(1,278,809) $(2,066,440) $ (951,894) $(1,895,643)
========== =========== =========== ========== ===========
Allocation of earnings
to:
Class A................ $ (598,188) $(1,204,953) $(2,035,280) $ (937,540) $(1,893,759)
Class B................ (43,159) (73,856) (31,160) (14,354) (1,884)
BASIC AND DILUTED NET
LOSS PER SHARE (NOTE
2):
Loss from extraordinary
item:
Class A................ $ -- $ (0.06) $ -- $ -- $ --
Class B................ -- (3.79) -- -- --
Net loss attributable
to common sharehold-
ers:
Class A................ (0.27) (0.56) (0.90) (0.41) (0.82)
Class B................ (17.45) (36.68) (58.24) (26.83) (53.42)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Class A................ 2,228,603 2,135,224 2,271,393 2,271,393 2,304,370
Class B................ 2,474 2,013 535 535 35
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JULY 31, 1995, 1996 AND 1997 AND FOR THE SIX MONTHS ENDED
JANUARY 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
----------------------------------
CLASS A CLASS B SERIES A PAID IN ACCUMULATED
------------------ -------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------- ------ ------ -------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, July 31, 1994 . 2,347,852 $23,479 2,821 $ 28 7,360 $ 74 $2,615,355 $ (4,441,790) $(1,802,854)
Net loss attributable
to common
shareholders.......... -- -- -- -- -- -- -- (641,347) (641,347)
Purchase and retirement
of common stock....... (257,549) (2,576) (750) (7) -- -- (704,262) -- (706,845)
--------- ------- ------ ----- -------- ------- ---------- ------------ -----------
BALANCE, July 31, 1995.. 2,090,303 20,903 2,071 21 7,360 74 1,911,093 (5,083,137) (3,151,046)
Net loss attributable
to common
shareholders.......... -- -- -- -- -- -- -- (1,278,809) (1,278,809)
Issuance of Class A
common stock.......... 81,250 813 -- -- -- -- 249,187 -- 250,000
Adjustment for
conversion of Class B
to Class A common
stock................. 65,000 650 (1,000) (11) -- -- (639) -- --
--------- ------- ------ ----- -------- ------- ---------- ------------ -----------
BALANCE, July 31, 1996.. 2,236,553 22,366 1,071 10 7,360 74 2,159,641 (6,361,946) (4,179,855)
Net loss attributable
to common
shareholders.......... -- -- -- -- -- -- -- (2,066,440) (2,066,440)
Adjustment for
conversion of Class B
to Class A common
stock................. 34,840 348 (536) (5) -- -- (343) -- --
Issuance of stock
options (Note 7)...... -- -- -- -- -- -- 217,323 -- 217,323
--------- ------- ------ ----- -------- ------- ---------- ------------ -----------
BALANCE, July 31, 1997.. 2,271,393 22,714 535 5 7,360 74 2,376,621 (8,428,386) (6,028,972)
Net loss attributable
to common
shareholders.......... -- -- -- -- -- -- -- (1,895,643) (1,895,643)
Adjustment for
conversion of Class B
to Class A common
stock................. 34,795 348 (535) (5) -- -- (343) -- --
Exercise of stock
options (Note 7)...... 43,333 433 -- -- -- -- 99,567 -- 100,000
--------- ------- ------ ----- -------- ------- ---------- ------------ -----------
BALANCE, January 31,
1998................... 2,349,521 $23,495 -- $ -- 7,360 $ 74 $2,475,845 $(10,324,029) $(7,824,615)
========= ======= ====== ===== ======== ======= ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 1995, 1996 AND 1997
AND FOR THE SIX MONTHS ENDED JANUARY 31, 1997 AND 1998
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
-------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ------------ ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss............... $ (553,027) $ (944,514) $(1,627,882) $ (732,972) $(1,676,721)
Adjustments to
reconcile net loss to
net cash provided by
(used in) operating
activities:
Minority interest...... -- 2,522 2,829 3,203 5,673
(Income) loss from
joint venture......... -- 95,715 (26,123) (30,729) (60,999)
Depreciation and
amortization.......... 845,160 1,204,478 2,241,518 1,015,933 1,392,526
Extraordinary loss on
early retirement of
debt.................. -- 132,130 -- -- -
Asset Impairment....... -- -- -- -- 1,533,996
Accretion of stock
warrants.............. 643,000 854,350 1,773,107 886,554 228,874
Changes in operating
assets and
liabilities:
Accounts receivable... (309,274) (970,305) (425,434) (357,474) (1,102,841)
Other receivables..... (5,316) 54,509 (82,724) 21,841 (88,163)
Net investment in
sales type leases.... 9,000 -- -- -- -
Prepaid expenses and
other current as-
sets................. (72,706) (125,206) (85,918) (98,370) (28,960)
Other assets.......... 59,912 (291,312) (462,137) (63,238) (526,899)
Accounts payable and
accrued liabilities.. (10,091) 730,900 641,955 (433,275) 417,290
Customer deposits..... 37,462 47,180 (23,366) (6,870) (124,672)
Deferred revenues..... 81,484 105,453 48,576 (51,665) 16,626
----------- ------------ ----------- ----------- -----------
Total adjustments.... 1,278,631 1,840,414 3,602,283 885,910 1,662,541
----------- ------------ ----------- ----------- -----------
Net cash provided by
(used in) operating
activities.......... 725,604 895,900 1,974,401 152,938 (14,270)
----------- ------------ ----------- ----------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of
businesses, net of
cash acquired......... -- (8,949,546) (4,386,230) -- (590,000)
Purchases of property
and equipment, net.... (1,528,398) (1,910,553) (3,647,266) (1,235,165) (3,654,741)
Investment in joint
venture............... (120,331) (158,469) (419) (305,377) (56,456)
----------- ------------ ----------- ----------- -----------
Net cash used in in-
vesting activities.. (1,648,729) (11,018,568) (8,033,915) (1,540,542) (4,301,197)
----------- ------------ ----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance
of preferred stock.... -- 3,500,000 -- -- -
Proceeds from
subscriptions
receivable............ 200,000 -- -- -- -
Payment of preferred
stock dividends....... (77,000) (334,295) (449,958) (243,348) (263,082)
Proceeds from issuance
of long term debt,
net................... 1,578,445 7,185,388 6,238,260 984,015 4,541,064
Proceeds from issuance
of common stock....... -- 250,000 -- -- 100,000
Purchase and retirement
of common stock....... (706,845) -- -- -- -
Other financing
activities............ (36,036) -- (60,150) 181,134 -
----------- ------------ ----------- ----------- -----------
Net cash provided by
financing activi-
ties................ 958,564 10,601,093 5,728,152 921,801 4,377,982
----------- ------------ ----------- ----------- -----------
NET INCREASE (DECREASE)
IN PERIOD.............. 35,439 478,425 (331,362) (465,803) 62,515
CASH AT BEGINNING OF
PERIOD................. 10,844 46,283 524,708 524,708 193,346
----------- ------------ ----------- ----------- -----------
CASH AT END OF YEAR..... $ 46,283 $ 524,708 $ 193,346 $ 58,905 $ 255,861
=========== ============ =========== =========== ===========
CASH PAID FOR INTEREST.. $ 600,047 $ 632,729 $ 1,412,766 $ 700,400 $ 741,663
=========== ============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-8
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS OPERATIONS
Satellink Communications, Inc. (the "Company" or "Satellink") (a Georgia
corporation), formerly Satellink Paging Inc., is a communications company
providing local, regional, and nationwide paging, voicemail, and other
enhanced telecommunications services. The Company has provided paging and
voicemail services since 1988.
The Company has a distribution agreement with CUE Paging Corporation
("CUE"), a nationwide satellite paging company presently offering service in
over 500 cities throughout the United States and Canada, to construct and
operate regional paging systems utilizing FM subcarrier technology in the
states of Georgia and Alabama. At January 31, 1998, CUE owned approximately
14% and 13% of the Company's Class A Common Stock and Series A Preferred
Stock, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company, its wholly owned subsidiary, Satellink Paging, LLC and its
majority owned subsidiary, DirectLink Communications, L.L.C. ("Direct Link")
(Notes 5 and 13). All significant intercompany accounts and transactions have
been eliminated in consolidation. The consolidated statement of operations for
the six months ended January 31, 1997 is unaudited and, in the opinion of
management of the Company, includes all normal recurring adjustments necessary
for a fair presentation of the results for the interim period. The results of
operations for the six months ended January 31, 1997 are not necessarily
indicative of the results to be expected for the full year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all short-term highly liquid investments with an
original maturity of three months or less to be cash equivalents. Cash and
cash equivalents are stated at cost, which approximates fair value.
LONG-LIVED ASSETS
In 1995, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and cost in excess of net assets acquired related to those assets
to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. The effect of adopting SFAS No. 121 was not
material.
The Company periodically reviews the values assigned to long-lived assets
such as property and equipment, goodwill and other intangible assets to
determine whether any impairment exists. Management believes that the long-
lived assets in the accompanying consolidated balance sheets are appropriately
valued.
F-9
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for renewals and
improvements are capitalized, and replacements, maintenance, and repairs that
do not improve or extend the lives of the respective assets are expensed as
incurred. Depreciation is provided on a straight-line basis over the remaining
estimated useful lives, as follows:
<TABLE>
<S> <C>
Paging equipment........................................... 5 years
Paging systems............................................. 10 to 20 years
Computers and terminal equipment........................... 5 to 10 years
Furniture and fixtures..................................... 5 to 10 years
Leasehold improvements..................................... 5 to 10 years
</TABLE>
In the six months ended January 31, 1998 the Company implemented a new
communications platform, the Satellink Telecommunications Application Resource
Network ("STAR*Net"). In conjunction with such implementation, the existing
platform including associated equipment has been removed or is expected to be
removed as a part of the conversion to the new STAR*Net system. Accordingly,
the Company recognized a loss totaling $833,996 related to the impairment of
the existing equipment, which is in the process of being replaced. The Company
estimated the fair value of the existing equipment, based upon the Company's
intention to dispose of the equipment. The remaining net book value of the
impaired assets is immaterial.
GOODWILL
The excess of cost over the fair market value of the identifiable assets
acquired ("goodwill") is being amortized on a straight-line basis over a
period of 30 years.
OTHER INTANGIBLE ASSETS
Other intangible assets, net of accumulated amortization, as of July 31,
1996 and 1997 and January 31, 1998, consisted of the following:
<TABLE>
<CAPTION>
AS OF
AS OF JULY 31, JANUARY 31,
---------------------
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Acquired subscriber bases.................. $1,190,333 $1,991,236 $2,049,934
Affiliate fees............................. 268,518 468,941 455,278
Noncompete agreements...................... 374,812 255,139 186,797
Debt issuance costs........................ 230,566 230,476 201,076
FCC licenses............................... -- 54,082 75,497
---------- ---------- ----------
$2,064,229 $2,999,874 $2,967,988
========== ========== ==========
</TABLE>
Acquired subscriber bases related to the Company's acquisitions are
amortized on a straight-line basis over five years. Affiliate fees are
amortized on a straight-line basis over periods ranging from 10 to 20 years.
Federal Communications Commission ("FCC") licenses are amortized on a
straight-line basis over a period of 10 years.
In connection with the Company's acquisitions (Note 3), certain shareholders
of the sellers have entered into noncompete agreements with the Company.
Amounts assigned to noncompete agreements are being amortized on a straight-
line basis over three to five years in accordance with the terms of the
related agreements.
F-10
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has incurred debt issuance costs in connection with its long-
term debt (Note 6). These costs are capitalized and are amortized to interest
expense using the effective interest method over the term of the related debt.
On November 2, 1997, the Emerging Issues Task Force of the FASB reached a
consensus on Issue No. 97-13, "Accounting for Costs Incurred in Connection
with a Consulting Contract or an Internal Project that Combines Business
Process Reengineering and Information Technology" ("EITF 97-13"). EITF 97-13
requires that the cost of business process reengineering activities, whether
done internally or by third parties, is expensed as incurred. EITF 97-13 also
applies when business process reengineering activities are part of a project
to acquire, develop, or implement internal-use software. During the six months
ended January 31, 1998, the Company adopted EITF 97-13. The Company has
recorded the cumulative effect of adopting EITF 97-13 as a non-cash charge
related to reengineering costs previously capitalized, which totaled $700,000.
INCOME TAXES
The Company utilizes the liability method of accounting for income taxes, as
set forth in SFAS No. 109, "Accounting for Income Taxes." Under the liability
method, deferred taxes are determined based on the difference between the
financial and tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities as of July 31, 1996 and 1997, and
January 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
AS OF
AS OF JULY 31, JANUARY 31,
---------------------
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Accounts payable.......................... $ 810,585 $1,228,568 $1,521,269
Accounts payable-related parties (Note
11)...................................... 340,872 355,602 368,666
Accrued interest.......................... 196,167 347,470 285,905
Accrued professional fees................. 153,332 30,000 16,458
Other accrued liabilities................. 291,384 472,655 659,287
---------- ---------- ----------
$1,792,340 $2,434,295 $2,851,585
========== ========== ==========
</TABLE>
REVENUE RECOGNITION AND DEFERRED REVENUES
The Company's revenues consist of: (i) service, rent, and maintenance
revenues; and (ii) product sales. Service, rent, and maintenance revenues
consist primarily of recurring revenues received from paging and voicemail
services. The Company bills the fixed portion of the fees it charges for
paging and voicemail services in advance and bills usage-related fees in
arrears.
The Company's policy is to record revenue at the time the service is
provided. Deferred revenues represent advance billings for recurring charges
to customers. The deferred revenues relating to recurring charges are
recognized when earned, primarily in the following month.
F-11
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ADVERTISING
The Company expenses all advertising costs as incurred. The Company incurred
and expensed advertising costs in the approximate amounts of $214,000,
$206,000, $284,000, and $152,000 during the years ended July 31, 1995, 1996
and 1997 and for the six months ended January 31, 1998, respectively.
BASIC LOSS PER SHARE
During 1997, the Company adopted Statement of Financial Accounting Standards
('SFAS") No. 128, "Earnings Per Share." SFAS No. 128 establishes accounting
standards for calculating earnings per share. All share and per share
information presented in these financial statements has been calculated in
accordance with this statement.
Earnings per share is presented using the two class method. Earnings
attributable to each class of common stock are allocated between each class of
stock based on the extent to which each class shares in the Company's
earnings. The Company's Class A and Class B common shareholders share in
dividends at a 1:65 ratio. All convertible preferred stock, options, and
warrants currently outstanding are antidilutive for all periods presented.
On February 4, 1998, the Securities and Exchange Commission released Staff
Accounting Bulletin ("SAB") No. 98 "Computation of Earnings Per Share." SAB
No. 98 requires the retroactive inclusion of nominal issuances of common stock
and common stock equivalents in earnings per share calculations for all
periods presented and precludes the use of treasury stock method for these
issuances. Management believes that all issuances of common stock and stock
options have been made at the current market value at the time of issuance and
that there have been no nominal issuances.
CREDIT RISK
The Company's accounts receivable potentially subject the Company to credit
risk, as collateral is generally not required. The Company's risk of loss is
limited due to advance billings to customers for services and the ability to
terminate access on delinquent accounts. The concentration of credit risk is
mitigated by the large number of customers comprising the customer base. The
carrying amount of the Company's receivables approximates their fair value.
REGULATION
Various regulatory factors affect the Company's financial performance and
its ability to compete. The Company is subject to regulation by the FCC and by
various state public service and public utility commissions, and is otherwise
affected by regulatory decisions, trends and policies made by these agencies.
3. ACQUISITIONS
During the years ended July 31, 1996 and 1997, and the six months ended
January 31, 1998, Satellink made the acquisitions set forth below. The
acquisitions have been accounted for as purchases in accordance with APB No.
16, and accordingly the purchase price has been allocated to the assets
acquired based on the estimated fair values as of the acquisition dates. The
excess of the cost over the estimated fair value of the net tangible assets
acquired has been allocated to goodwill and certain identifiable intangible
assets.
ATLANTA VOICE PAGE, INC. ("AVP")
Effective February 2, 1996, Satellink acquired substantially all of the
assets of AVP under the terms of an asset purchase agreement. The acquired
assets consisted primarily of local paging subscribers, a paging system,
pagers and spare parts, accounts receivable, and furniture and fixtures. The
purchase price was approximately $3,200,000 before recording certain
acquisition expenses and adjustments and was financed through the Company's
term loan and revolving credit facility.
F-12
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
C.R., INC. ("CR")
Effective May 31, 1996, Satellink acquired substantially all of the assets
of CR under the terms of an asset purchase agreement. The acquired assets
consisted primarily of regional and nationwide paging subscribers, a CUE
paging regional affiliate agreement, notes receivable, deposits, equipment,
and furniture and fixtures. The purchase price was approximately $5,700,000
before recording certain acquisition expenses and adjustments and was financed
through the Company's term loan and revolving credit facility.
MESSAGE WORLD ("MW")
Effective February 1, 1997, Satellink acquired substantially all of the
assets of MW under the terms of an asset purchase agreement. The acquired
assets consisted primarily of local voicemail subscribers, a voicemail system,
pagers and spare parts, accounts receivable, and furniture and fixtures. The
purchase price was approximately $1,400,000 before recording certain
acquisition expenses and adjustments and was financed through the Company's
term loan and revolving credit facility.
CALL ONE, INC. ("CALL")
Effective February 15, 1997, Satellink acquired substantially all of the
assets of Call under the terms of an asset purchase agreement. The acquired
assets consisted primarily of voice mail subscribers. The purchase price was
approximately $250,000 before recording certain acquisition expenses and
adjustments and was financed through the Company's term loan and revolving
credit facility.
SATELINK PAGING, INC. ("SPI")
Effective May 23, 1997, Satellink acquired all of the outstanding capital
stock of SPI under the terms of a stock purchase agreement. Subsequent to the
acquisition, SPI was merged into Satellink Paging, LLC. The acquired assets
consisted primarily of local paging subscribers, a paging terminal and
transmitter, pagers and spare parts, accounts receivable, an FCC license, and
furniture and fixtures. The purchase price was approximately $1,650,000 before
recording certain acquisition expenses and adjustments and was financed
through the Company's term loan and revolving credit facility.
FAST COMMUNICATIONS, INC. ("FAST")
Effective May 23, 1997, Satellink acquired substantially all of the assets
of Fast under the terms of an asset purchase agreement. The acquired assets
consisted primarily of local paging subscribers, a paging terminal, pagers and
spare parts, accounts receivable, an airtime credit from a paging carrier, and
furniture and fixtures. The purchase price was approximately $330,000 before
recording certain acquisition expenses and adjustments and was financed
through the Company's term loan and revolving credit facility.
THE DREXLER COMPANY, INC. D/B/A FLINT RIVER PAGING ("FLINT")
Effective May 23, 1997, Satellink acquired substantially all of the assets
of Flint under the terms of an asset purchase agreement. The acquired assets
consisted primarily of local paging subscribers, a paging terminal, pagers and
spare parts, accounts receivable, an FCC license, and furniture and fixtures.
The purchase price was approximately $125,000 before recording certain
acquisition expenses and adjustments and was financed through the Company's
term loan and revolving credit facility.
RADIOFONE OF GEORGIA, INC. ("RADIOFONE")
Effective September 10, 1997, Satellink acquired substantially all of the
assets of Radiofone under the terms of an asset purchase agreement. The
acquired assets consisted primarily of local subscribers, a paging terminal,
F-13
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
an FCC license, pagers, and furniture and fixtures. The purchase price was
approximately $190,000 before recording certain acquisition expenses and was
financed through the Company's term loan and revolving credit facility.
WALL COMMUNICATIONS, INC. D/B/A SATELLITE PAGING COMPANY ("WALL")
Effective October 1, 1997, Satellink acquired substantially all of the
assets of Wall under the terms of an asset purchase agreement. The acquired
assets consisted primarily of paging subscribers, a Regional Affiliate
Agreement with CUE, pagers, and furniture and fixtures. The purchase price was
approximately $400,000 before recording certain acquisition expenses and was
financed through the Company's revolving credit facility.
The following unaudited pro forma information has been prepared assuming
that the acquisitions occurred at the beginning of the year of acquisition and
the year immediately preceding. The unaudited pro forma information is
presented for informational purposes only and may not be indicative of the
results of operations as they would have been had the acquisitions been
consummated at the beginning of the respective periods, nor is the information
necessarily indicative of the results of operation which may occur in the
future operations of the combined entities.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED JULY 31, ENDED
------------------------- JANUARY 31,
1995 1996 1997 1998
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Pro forma revenues................... $12,930 $17,104 $19,554 $10,206
Pro forma income before extraordinary
item................................ (1,437) (1,640) (1,956) (1,688)
Pro forma net loss attributable to
common shareholders.. (1,525) (2,107) (2,394) (1,907)
Allocation of earnings to:
Class A............................ (1,423) (1,985) (2,358) (1,905)
Class B............................ (102) (122) (36) (2)
Pro forma earnings per share:
Class A............................ $ (0.64) $ (0.93) $ (1.04) $ (0.83)
Class B............................ (51.09) (61.11) (71.81) (3.81)
</TABLE>
4. INVESTMENT IN JOINT VENTURE
On May 25, 1995, the Company entered into a joint venture agreement with CR
(which was subsequently acquired in June 1996) (Note 3) and an additional
paging company to form and operate a third-party supplier, FM Concepts, Ltd.
("FM Concepts"). Under the terms of the agreement, the Company was obligated
to make capital contributions to FM Concepts totaling $250,000.
In conjunction with the CR acquisition, FM Concepts was reorganized and
contributed all of its assets with the exception of its pager development
project to FM Concepts, L.L.C. The Company's ownership percentage in both FM
Concepts and FM Concepts L.L.C. was 33.3%. As a result of the acquisition, the
Company acquired an additional 16.7% ownership interest in FM Concepts L.L.C.,
bringing its ownership percentage to 50% at July 31, 1997.
Due to the terms of the joint venture agreement, the Company's 50% ownership
interest does not grant the Company control over the operations of the joint
venture; however, it does exercise significant influence. Accordingly, the
Company accounts for its investments in FM Concepts and FM Concepts L.L.C.
using the equity method of accounting. Accordingly, the Company's net
investment has been reported as investment in joint ventures in the
accompanying consolidated balance sheets. The Company has adjusted the
investment account balance according to its pro rata ownership percentage.
F-14
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. INVESTMENT IN DIRECT LINK
On December 1, 1995, the Company acquired 60% of the membership interests of
Direct Link for $21,300. This acquisition increased the Company's ownership
percentage in Direct Link to 85%. The consolidated financial statements
include the accounts of Direct Link. The minority interest represents the 15%
separate ownership in Direct Link.
The Company also agreed to make additional investments in Direct Link in the
form of a promissory note not to exceed $400,000. The promissory note will
bear interest at the prime rate plus 2%. As of July 31, 1997 and January 31,
1998, the aggregate amount outstanding under the promissory note totaled
$380,799 which is eliminated in consolidation.
6. LONG-TERM DEBT
Long-term debt at July 31, 1996 and 1997 and January 31, 1998 consisted of
the following:
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
-----------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
$8,000,000 note payable to bank, variable
interest rate (9.83% at January 31, 1998),
net of unamortized discount of $226,182,
$188,892, and $166,182 at July 31, 1996
and 1997 and January 31, 1998,
respectively, payable in quarterly
installments;principal due in full on
March 31, 2002; secured by all of the
assets of Satellink Paging, LLC and a
pledge of 100% of the Company's ownership
interest in Satellink Paging, LLC......... $ 5,273,818 $ 7,811,018 $ 7,833,818
$17,000,000 revolving credit facility,
variable interest rate (9.83% at January
31, 1998); interest only with principal
payable in full on March 31, 2002; secured
by all of the assets of Satellink Paging,
LLC and a pledge of 100% of the Company's
ownership interest in Satellink Paging,
LLC....................................... 7,350,092 10,957,394 16,007,394
Notes payable to sellers, interest at 8%
(Note 3)................................. $ 465,978 $ 559,736 $ 28,000
----------- ----------- -----------
13,089,888 19,328,148 23,869,212
Less current portion...................... 811,749 917,326 428,000
----------- ----------- -----------
$12,278,139 $18,410,822 $23,441,212
=========== =========== ===========
</TABLE>
Following are maturities of long-term debt as of January 31, 1998 for each
of the next five years ending on July 31:
<TABLE>
<S> <C>
Six months ending July 31, 1998.............................. $ 428,000
1999......................................................... 1,600,000
2000......................................................... 1,700,000
2001......................................................... 2,200,000
2002......................................................... 17,941,212
-----------
Total.................................................... $23,869,212
===========
</TABLE>
The fair values of long-term debt, including current maturities, at July 31,
1996 and 1997 and January 31, 1998 approximate the carrying values due to the
variable rates of the instruments.
F-15
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In March 1997, the Company amended its term loan and revolving credit
facility (the "New Credit Facility") with Creditanstalt-Bankverein
("Creditanstalt"), providing for maximum borrowings of $25,000,000. The New
Credit Facility was divided into a $17,000,000 revolving line of credit (the
"Revolver") and an $8,000,000 term note (the "Term Note"). The Revolver and
Term Note are both due in full on March 31, 2002 and bear interest, at the
Company's option, at either a Eurodollar interest rate option, as defined,
plus 4% or the prime rate plus 2%.
Under the most restrictive covenants of the New Credit Facility, the Company
must maintain a ratio of operating cash flow to interest expense, as defined,
and achieve specified levels of earnings under the terms of the agreement. As
of January 31, 1998, the Company was in compliance with these debt covenants.
7. EQUITY
COMMON STOCK
During 1996, the Company amended its Articles of Incorporation and increased
the number of authorized shares of Class A Common Stock to 5,000,000 shares
and approved the conversion of all outstanding shares of Class B Common Stock
into Class A Common Stock. As of January 31, 1998, 2,071 shares of Class B
Common Stock had been converted into 134,635 shares of Class A Common Stock.
There are no remaining shares of Class B Common Stock outstanding.
During June 1997, the Company's board of directors approved a 64-for-1 share
dividend to shareholders of record as of June 30, 1997. All share information
has been restated to give effect to the stock dividend.
CONVERTIBLE PREFERRED STOCK
During September 1991, the Company sold 7,360 shares of Series A Convertible
Preferred Stock (the "Series A Preferred Stock") for $100 per share and
received proceeds of $736,000. The Series A Preferred Stock carries a 12% cash
coupon, which is paid monthly. In the event of liquidation of the Company,
holders of Series A Preferred Stock are entitled to $100 plus accrued
dividends and cumulative premium at $38 per annum not to exceed $190 per
share. Each share of Series A Preferred Stock is callable by the Company any
time following the third anniversary of the original issue date, as defined,
and is convertible into 65 shares of Class A Common Stock of the Company.
During 1996, the Company amended its Articles of Incorporation and increased
the number of authorized shares of Series B Convertible Preferred Stock
("Series B Preferred Stock") to 30,000 shares. The Series B Preferred Stock is
nonvoting, and the holders will receive dividends equal to those paid to the
holders of the Company's Common Stock when such dividends are declared. In the
event of liquidation of the Company, holders of Series B Preferred Stock are
entitled to the identical privileges as the holders of the Company's Common
Stock. Each share of Series B Preferred Stock is convertible into 65 shares of
Class A Common Stock.
STOCK WARRANTS
In connection with the Company's original financing agreement with
Creditanstalt, the Company issued a warrant to Creditanstalt to purchase
either 776,815 shares of Class A Common Stock or 11,951 shares of Series B
Preferred Stock at an exercise price of $.01 per share. The cost of the
proceeds from the term loan and facility was allocated between long-term debt
and stock warrants. The estimated $450,000 fair market value of the stock
warrants at the date of grant was included in long-term liabilities in the
accompanying consolidated balance sheets. Due to the Company increasing its
line of credit in 1995, Creditanstalt was issued an additional warrant to
purchase 124,865 shares of Class A Common Stock or 1,921 shares of Series B
Preferred Stock at an exercise
F-16
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
price of $.01 per share. The estimated $94,682 fair market value of the stock
warrant at the date of grant was included in long-term liabilities in the
accompanying consolidated balance sheets. During June 1996, the Company
amended its credit agreement. In connection with the amendment, the Company
issued additional warrants to purchase 27,040 and 21,645 shares of either
Class A Common Stock at exercise prices of $.01 per share and $3.08 per share,
respectively, or 416 and 333 shares of Series B Preferred Stock at exercise
prices of $.01 per share and $200 per share, respectively. The estimated
$68,180 fair value of the stock warrants at the date of grant was included in
long-term liabilities in the accompanying consolidated balance sheets. The
debt discounts are being amortized to interest expense over the term of the
term loan and facility. The difference between the estimated fair market value
of the stock warrants at the issue date and their estimated redemption prices
will be accreted as a direct charge to earnings over the term of the facility
and term loan. During fiscal 1995, 1996, and 1997 and the six months ended
January 31, 1998, the Company recorded incremental warrant accretion expense
in the amount of $643,000, $854,350, $1,773,107, and $228,874, respectively,
to reflect the increase in the estimated redemption price of the stock
warrants. In addition to the warrant issuances noted above, the Company
retired 585 warrants and repurchased 34,970 warrants from Creditanstalt during
fiscal year 1996.
The Company may be required to repurchase the unexercised warrants over the
period from November 17, 2001 through December 3, 2006 at a price per share
which values the Company's equity at ten times operating cash flows for the
most recent 12-month period less debt, as defined in the warrant agreement.
The warrants represent rights to purchase approximately 23% of the Company's
outstanding capital stock.
Upon the completion of an initial public offering, the right to put the
warrants back to the Company for cash is contractually eliminated.
STOCK OPTIONS
On August 1, 1995, the Company granted an option to an employee to purchase
65,000 shares of the Company's Class A Common Stock at an exercise price of
$2.31 per share (the estimated fair value at the date of grant). The option
has a term of five years and vests ratably over a period of three years.
During fiscal 1997, the Company granted an option to an outside consultant
to purchase 130,000 shares of the Company's Class A Common Stock at an
exercise price of $4.78 per share (the estimated fair value at the date of
grant). The option was in consideration for services provided regarding the
Company's acquisitions and has been recorded in additional paid-in capital in
the accompanying consolidated balance sheets based on the estimated fair value
of the services received. The option has a term of five years and vested
immediately.
During the six months ended January 31, 1998, the Company granted options to
employees to purchase 108,383 shares of the Company's Class A Common Stock at
an exercise price of $6.00 per share (the estimated fair value at the date of
grant). The options have terms of ten years and vest ratably over a period of
three years.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123
During 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which defines a fair value-based method of accounting for
employee stock options or similar equity instrument and encourages all
entities to adopt that method of accounting for all of their employee stock
compensation plans. However, it also allows an entity to continue to measure
compensation cost for those plans using the method of accounting prescribed by
APB 25, "Accounting for Stock Issued to Employees" ("APB 25"). Entities
electing to remain with the accounting methodology required by APB 25 must
make pro forma disclosures of net income and earnings per share as if the fair
value-based method of accounting defined in SFAS No. 123 were used.
The Company has elected to account for its stock-based compensation plans
under APB 25, under which the Company has recognized no compensation cost.
However, the Company has computed, for pro forma
F-17
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
disclosure purposes, the estimated fair value of all options for shares of the
Company's Common Stock granted to employees during the years ended July 31,
1996 and 1997 and the six months ended January 31, 1998 using the Black-
Scholes option-pricing model as allowed under by SFAS No. 123 and based on the
following assumptions:
<TABLE>
<CAPTION>
JULY 31, JULY 31, JANUARY 31,
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Risk free interest rate.................. 6.27% 6.27%-6.52% 5.80%-6.52%
Expected dividend yield.................. 0% 0% 0%
Expected lives........................... Five years Five years Five years
Expected volatility...................... 0% 0% 0%
</TABLE>
The total fair value of the options granted during the years ended July 31,
1996 and 1997 and the six months ended January 31, 1998 was computed as
$39,435, $169,686, and $165,399, respectively, which would be amortized over
the vesting period of the options. If the Company had accounted for these
options in accordance with SFAS No. 123, the Company's reported pro forma net
loss attributable to common shareholders and earnings per share for the years
ended July 31, 1996 and 1997 and for the six months ended January 31, 1998
would have been as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED JULY 31, JANUARY 31,
------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net loss attributable to common
shareholders:
As reported
Class A......................... $(1,204,953) $(2,035,280) $(1,893,759)
Class B......................... (73,856) (31,160) (1,884)
----------- ----------- -----------
Total......................... $(1,278,809) $(2,066,440) $(1,895,643)
=========== =========== ===========
Pro forma
Class A......................... $(1,217,279) $(2,215,532) $(1,920,529)
Class B......................... (74,675) (33,739) (1,922)
----------- ----------- -----------
Total......................... $(1,291,954) $(2,249,271) $(1,922,451)
=========== =========== ===========
Basic net loss per share
attributable to common
shareholders, per share:
As reported
Class A......................... $ (0.56) $ (0.90) $ (0.82)
Class B......................... (36.69) (58.24) (53.83)
Pro forma
Class A......................... (0.57) (0.98) (0.83)
Class B......................... (37.10) (63.06) (54.91)
</TABLE>
F-18
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the transactions under the Company's stock
option plan:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
OF PRICE
OPTIONS PER SHARE
------- ---------
<S> <C> <C>
Outstanding at July 31, 1995.............................. -- $--
Granted................................................. 65,000 2.31
-------
Outstanding at July 31, 1996.............................. 65,000 2.31
Granted................................................. 130,000 4.78
-------
Outstanding at July 31, 1997.............................. 195,000 3.96
Granted................................................. 108,383 6.00
Exercised............................................... (43,333) 2.31
-------
Outstanding at January 31, 1998........................... 260,050 5.08
=======
</TABLE>
At July 31, 1997 and January 31, 1998, respectively, there were 195,000 and
260,050 options outstanding with a weighted average remaining contractual life
of 3.33 and 4 years, respectively, and a weighted average exercise price of
$3.96 and $5.08, respectively. There were 173,333 and 165,215 options
exercisable at a weighted average exercise price of $4.17 and $4.58 per share
as July 31, 1997 and January 31, 1998, respectively. The weighted average
grant date fair value of options granted during the year ended July 31, 1997
and for the six months ended January 31, 1998 was $1.31 and $1.53,
respectively.
8. REDEEMABLE CONVERTIBLE PREFERRED STOCK
During November 1995, the Company sold 3,500 shares of Series C Redeemable
Preferred Stock (the "Series C Preferred Stock") for $1,000 per share and
received proceeds of $3,500,000. The Series C Preferred Stock carries a 10%
cash coupon, which is paid monthly. Each share of Series C Preferred Stock may
be converted (subject to antidilution provisions), at the holders' option, at
any time into approximately 209.67 shares of the Company's Class A Common
Stock or 3.23 shares of Series B Convertible Preferred Stock. The Series C
Preferred Stock is redeemable (at the original purchase price plus accrued
dividends) on November 17, 2002. The Company paid dividends in the amounts of
$70, $100, and $50 per share during the years ended July 31, 1996 and 1997 and
the six months ended January 31, 1998, respectively.
9. INCOME TAXES
The Company recorded no federal or state income tax benefit for each of the
three years ended July 31, 1997 and the six months ended January 31, 1998 due
to the level of pre-tax losses incurred in recent years.
The reconciliation of the effective income tax rate to the federal statutory
tax rate is as follows:
<TABLE>
<CAPTION>
YEARS ENDED JULY 31, SIX MONTHS ENDED
--------------------------
1995 1996 1997 JANUARY 31, 1998
------ ------ ------ ----------------
<S> <C> <C> <C> <C>
Federal income tax statutory
rate........................... (34)% (34)% (34)% (34)%
Effect of net operating loss
carryforward and valuation
allowance...................... 38 38 38 38
State income tax, net of Federal
benefit........................ (4) (4) (4) (4)
------ ------ ------ ---
Effective income tax rate....... 0 % 0 % 0 % 0 %
====== ====== ====== ===
</TABLE>
F-19
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax assets (liabilities) are comprised of the following as of July
31, 1996 and 1997 and January 31, 1998:
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards... $ 1,886,268 $ 2,084,978 $ 2,903,302
Bad debt reserve................... 79,564 143,480 114,576
Other.............................. 51,072 57,339 76,782
----------- ----------- -----------
2,016,904 2,285,797 3,094,660
Deferred tax liabilities:
Accelerated depreciation........... (873,057) (1,239,386) (1,749,111)
----------- ----------- -----------
Total net deferred tax asset
before valuation allowance...... 1,143,847 1,046,411 1,345,549
----------- ----------- -----------
Less valuation allowance........... (1,143,847) (1,046,411) (1,345,549)
----------- ----------- -----------
Total net deferred taxes......... $ 0 $ 0 $ 0
=========== =========== ===========
</TABLE>
The increase in the valuation allowance for the six months ended January 31,
1998 was $299,138, related to additional operating loss carryforwards. The
decrease in the valuation allowance for the years ended July 31, 1996 and 1997
was $8,704 and $97,436 related to changes in certain temporary differences,
net of additional operating loss carryforwards.
As of July 31, 1997 and January 31, 1998, the Company had net operating loss
carryforwards, which expire at various dates through 2010, of approximately
$5,212,000 and $7,258,000, respectively. The issuance of stock by the Company
may result in an "ownership change" as defined by the Tax Reform Act of 1986.
Therefore, the unused net operating loss carryforwards could be subject to
limitation. Also, the net operating loss carryforwards used to offset any
taxes calculated, as alternative minimum tax, could be less than the regular
net operating loss carryforwards. Based on pretax losses incurred in recent
years, management has established a valuation allowance against the entire net
deferred tax asset balance. Management believes that through various tax
planning strategies and the Company's overall business plan that the Company
will generate sufficient future taxable income to realize the deferred tax
assets; however, at this time, insufficient objective information exists to
conclude that realization is more likely than not. In the event the planned
initial public offering of Common Stock is completed (Note 13), and the net
proceeds are used to reduce long-term debt and related interest expense, it is
likely that all or a significant portion of the valuation allowance will be
reversed at that time.
The Company made no tax payments during the years ended July 31, 1995, 1996
and 1997, and the six months ended January 31, 1998.
10. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES
OPERATING LEASES
The Company leases office space, antenna sites, and subcarrier frequencies
under noncancelable operating leases expiring on various dates through 2001.
The majority of the subcarrier frequency leases have additional renewal terms
ranging from 10 to 14 years at the option of either party. Because the
Company's operations are dependent upon the availability of antenna sites and
subcarrier frequencies, management expects that most leases will be renewed or
replaced by other leases. The Company recorded lease expense of approximately
$473,000, $757,000, $846,000, and $566,000 for the years ended July 31, 1995,
1996 and 1997 and for the six months ended January 31, 1998, respectively,
related to these operating leases.
F-20
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Minimum future payments under noncancelable operating leases as of January
31, 1998 for each of the next five years ending July 31 are as follows:
<TABLE>
<S> <C>
Six months ending July 31, 1998.................................. $ 458,000
1999............................................................. 692,000
2000............................................................. 546,000
2001............................................................. 266,000
2002............................................................. 45,000
----------
$2,007,000
==========
</TABLE>
LEGAL PROCEEDINGS
The Company is subject to lawsuits arising in the ordinary course of
business. In the opinion of management, the ultimate resolution of these
pending legal proceedings will not have a material adverse effect on the
Company's business or financial condition.
DEPENDENCE UPON TELECOMMUNICATIONS PROVIDERS -- NO GUARANTEED SUPPLY
Other than certain local and regional paging networks, the Company does not
own a transmission network and, accordingly, depends on MCI Communications
Corporation and other facilities-based and non-facilities based carriers for
transmission of its subscribers' long distance calls and the majority of its
paging data. These long distance telecommunications and paging services
generally are procured pursuant to supply agreements for terms of up to three
years, subject to earlier termination in certain events. Certain of these
agreements provide for minimum purchase requirements. Further, the Company is
dependent upon local exchange carriers ("LECs") for call origination and
termination. The Company's ability to maintain and expand it business depends,
in part, on its ability to continue to obtain telecommunications services on
favorable terms from long distance and paging carriers and the cooperation of
both interexchange carriers and LECs in originating and terminating service
for its subscribers in a timely manner. The partial or total loss of the
ability to initiate or terminate calls would result in a loss of revenues by
the Company and could lead to a loss of subscribers, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISK OF LOSS FROM RETURNED TRANSACTIONS, FRAUD, BAD DEBT, AND THEFT OF
SERVICES
From time to time, persons have gained unauthorized access to the Company's
network and obtained services without rendering payment to the Company by
unlawfully using the access numbers and personal identification numbers
("PINs") of authorized users. No assurance can be given that future losses due
to unauthorized use of access numbers and PINs will not be material. The
Company attempts to manage these risks through its internal controls and
billing system. The STAR*Net platform is designed to prohibit a single access
number and PIN from establishing multiple simultaneous connections to the
platform, and the Company establishes preset spending limits for each
subscriber. Although the Company believes that its risk management and bad
debt reserve practices are adequate, there can be no assurance that the
Company's risk management practices or reserves will be sufficient to protect
the Company from unauthorized or returned transactions or thefts of services
which could have a material adverse effect on the Company's business,
financial condition and results of operations.
DEPENDENCE ON SWITCHING FACILITIES AND THE STAR*NET PLATFORMS; DAMAGE,
FAILURE, AND DOWNTIME
There can be no assurance that a fire, act of sabotage, technical failure,
natural disaster, or a similar event would not cause the failure of all or a
portion of the Company's network or any of its switching facilities or
F-21
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STAR*Net platforms, thereby resulting in an interruption of the Company's
services. Such an interruption could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
currently maintains switching facilities and STAR*Net platforms in Atlanta,
Albany, Augusta, Cordele, Macon, Savannah and Valdosta, Georgia; Birmingham,
Alabama; Baton Rouge and New Orleans, Louisiana; and Dallas, Texas. The
Company's network service operations are dependent on its ability to protect
the equipment and data at its switching facilities and STAR*Net platforms
against potential damage that may be caused by fire, power loss, technical
failures, unauthorized intrusion, natural disasters, sabotage and other
similar events. The Company has implemented monitored security systems,
controlled access and automated data backup procedures, uninterruptable power
supply systems and automated system trouble alerts.
LIMITATIONS OF CUE PAGING NETWORK
The Company's FM subcarrier paging network is located in Alabama and Georgia
and is linked with the CUE nationwide FM subcarrier paging network, through
which the Company delivers nationwide FM paging service. Accordingly, the
Company is dependent upon CUE for continued maintenance and development of its
nationwide FM subcarrier paging network. CUE is under no contractual
obligation to upgrade or further develop the network to accommodate new
technologies or subscribers beyond its current capabilities. The Company
estimates that the CUE network is currently operating at approximately 60% of
capacity and, assuming the continuation of historical growth rates on the CUE
network, that sufficient capacity is available to accommodate the Company's FM
subscriber growth for the next five years. There can be no assurance, however,
that the Company's estimate of the CUE network capacity or its projection of
the Company's subscriber growth are accurate. If CUE fails to maintain its
nationwide network, fails to upgrade or further develop the network or if the
Company's estimates of network capacity or projections of subscriber growth
are inaccurate, the Company may experience a material adverse effect on its
business, financial condition and results of operations.
11. RELATED-PARTY TRANSACTIONS
The Company pays CUE monthly amounts for regional and nationwide airtime
charges, various telephone charges, and co-op advertising fees. Approximately
$1,681,920, $2,513,000, $4,244,000, and $2,135,865 was paid to CUE for the
years ended July 31, 1995, 1996, 1997 and the six months ended January 31,
1998, respectively, and has been recorded in services, rent and maintenance in
the accompanying consolidated statements of operations. Approximately
$356,000, $341,000, and $369,000 was payable to CUE and is included in
accounts payable and accrued liabilities in the accompanying consolidated
balance sheets as of July 31, 1996 and 1997 and January 31, 1998,
respectively.
The Company purchases pagers from FM Concepts. Approximately $1,421,000,
$1,512,000, and $910,000 was paid to FM Concepts for the years ended July 31,
1996 and 1997 and the six months ended January 31, 1998, respectively and has
been recorded in property and equipment in the accompanying consolidated
balance sheets. Approximately $112,000, $0, and $0 was payable to FM Concepts
at July 31, 1996 and 1997 and January 31, 1998, respectively, and is included
in the accompanying consolidated balance sheets.
12. RETIREMENT PLAN
Effective April 1, 1995, the Company adopted a 401(k) retirement plan
covering substantially all employees, which provides for discretionary
employer-matching contributions. The Company contributed $0, $9,500, $20,600,
and $0 during the years ended July 31, 1995, 1996 and 1997, and the six months
ended January 31, 1998, respectively.
F-22
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSEQUENT EVENTS (UNAUDITED)
On January 1, 1998, the Company acquired 15% of the common stock of Direct
link. This acquisition increased the Company's ownership percentage in Direct
Link to 100%.
On March 11, 1998, the Company increased its Revolver from $25 million to
$30 million with an additional increase to $40 million contingent on the
Company raising at least $3 million on terms that are satisfactory to the
lenders. The Company paid $150,000 for the increase in the Revolver.
Effective April 1, 1998, the Company acquired substantially all of the
assets of Premiere Paging, Inc. and Premiere Paging of New Orleans, Inc. under
the terms of an asset purchase agreement. The acquired assets consisted
primarily of local subscribers, paging terminals, FCC licenses, pagers, and
furniture and fixtures. The purchase price was approximately $4,000,000 before
recording certain acquisition expenses and was financed through the Company's
Term Note and Revolver.
On April 9, 1998, the Company entered into an agreement to acquire Hyde's
Stay in Touch, Inc. The estimated purchase price is approximately $12,000,000.
On April 3, 1998, the Company sold 4,500 shares of Series D Convertible
Preferred Stock ("Series D Preferred Stock") together with 126,000 detachable
stock warrants with an exercise price of $6.00 per share and received
aggregate proceeds of $4.5 million. The proceeds were allocated $4,405,000 to
the Series D Preferred Stock and $45,000 to the stock warrants based on their
relative fair values at the date of issuance. The Series D Preferred Stock
carries an 8.5% cash coupon, which is payable monthly. The securities may be
redeemed at the purchaser's option any time after the first anniversary of the
closing date. The Company may call the Series D Preferred Stock for redemption
any time after the first anniversary of the closing date but will be required
to redeem the Series D Preferred Stock in conjunction with an initial public
offering. The stock warrants are exercisable immediately and expire in 2008.
The Company is in the process of registering with the Securities and
Exchange Commission shares of its Class A Common Stock, which will be renamed
Common Stock upon the completion of the initial public offering. There can be
no assurance that this initial public offering will be completed.
F-23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Atlanta Voice Page, Inc.:
We have audited the accompanying balance sheet of ATLANTA VOICE PAGE, INC.
(a Georgia corporation) as of December 31, 1995 and the related statement of
operations, shareholders' deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Atlanta Voice Page, Inc.
as of December 31, 1995 and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 9, 1998
F-24
<PAGE>
ATLANTA VOICE PAGE, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................. $ 37,963
Accounts receivable.............................................. 94,940
Inventory........................................................ 21,332
----------
Total current assets........................................... 154,235
----------
PROPERTY AND EQUIPMENT, at cost:
Paging systems and equipment..................................... 701,699
Computer and terminal equipment.................................. 272,006
Office equipment................................................. 51,703
Furniture and fixtures........................................... 4,648
----------
1,030,056
Less accumulated depreciation.................................... (595,804)
----------
Property and equipment, net.................................... 434,252
----------
OTHER ASSETS:
Goodwill......................................................... 13,049
Intangible assets, net of accumulated amortization of $161,667... 3,333
Deposits......................................................... 1,585
----------
Total other assets............................................. 17,967
----------
$ 606,454
==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 4).................... $ 317,493
Accounts payable and accrued liabilities......................... 37,732
Line of credit (Note 3).......................................... 27,000
Deferred revenues................................................ 106,894
Customer deposits................................................ 19,754
----------
Total current liabilities...................................... 508,873
----------
LONG-TERM DEBT, less current maturities (Note 4)................... 222,618
----------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' DEFICIT:
Common stock, $.10 par value:
Voting, 10,000,000 shares authorized, 1,000,000 shares issued
and outstanding................................................ 100,000
Accumulated deficit............................................. (225,037)
----------
Total shareholders' deficit.................................... (125,037)
----------
$ 606,454
==========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-25
<PAGE>
ATLANTA VOICE PAGE, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
REVENUES:
Service, rent and maintenance revenues............................ $ 962,315
Product sales..................................................... 248,264
---------
Total revenues.................................................. 1,210,579
---------
OPERATING EXPENSES:
Services, rent and maintenance.................................... 127,397
Selling and marketing............................................. 161,490
General and administrative........................................ 287,116
Depreciation and amortization..................................... 210,598
Cost of products sold............................................. 330,973
---------
Total operating expenses........................................ 1,117,574
---------
OPERATING INCOME.................................................... 93,005
---------
OTHER INCOME (EXPENSE):
Other income...................................................... 181
Interest expense.................................................. (95,241)
---------
(95,060)
---------
NET LOSS............................................................ $ (2,055)
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-26
<PAGE>
ATLANTA VOICE PAGE, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
------------------
SHARES AMOUNT DEFICIT TOTAL
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994........... 1,000,000 $100,000 $(222,982) $(122,982)
Net loss........................... 0 0 (2,055) (2,055)
--------- -------- --------- ---------
BALANCE, December 31, 1995........... 1,000,000 $100,000 $(225,037) $(125,037)
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
F-27
<PAGE>
ATLANTA VOICE PAGE, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................ $ (2,055)
--------
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization..................................... 210,598
Gain on sale of property and equipment............................ (95)
Changes in operating assets and liabilities:
Accounts receivable.............................................. (70,519)
Inventory........................................................ (21,332)
Other assets..................................................... 32
Accounts payable and accrued liabilities......................... 13,087
Customer deposits................................................ (2,031)
Deferred revenues................................................ 106,894
--------
Total adjustments............................................... 236,634
--------
Net cash provided by operating activities....................... 234,579
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment........................ 61,001
Purchases of property and equipment................................. (182,496)
--------
Net cash used in investing activities........................... (121,495)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt............................ 165,454
Payments on long-term debt.......................................... (271,968)
--------
Net cash used in financing activities........................... (106,514)
--------
NET INCREASE IN CASH................................................. 6,570
CASH AT BEGINNING OF YEAR............................................ 31,393
--------
CASH AT END OF YEAR.................................................. $ 37,963
========
INTEREST PAID........................................................ $ 90,329
========
</TABLE>
The accompanying notes are an integral part of this statement.
F-28
<PAGE>
ATLANTA VOICE PAGE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION AND BUSINESS OPERATIONS
Atlanta Voice Page, Inc. (the "Company") (a Georgia corporation) is a
communications company providing local, regional, and nationwide voice paging
services to approximately 15,000 subscribers. The Company operates its own
local paging systems utilizing FM subcarrier technology and purchases regional
and nationwide airtime from PageNet, Porta-Phone, and MobileComm.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION AND DEFERRED REVENUES
The Company's policy is to recognize revenue at the time the service is
provided. Deferred revenues represent advance billings and collections for
charges from new and existing customers. The deferred revenues related to the
charges are recognized when earned, primarily in the following month.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to include cash on hand and
temporary cash investments purchased with an original maturity of three months
or less.
FAIR VALUE OF FINANCIAL INVESTMENTS
As of December 31, 1995, the estimated fair value of the Company's financial
instruments approximates their carrying value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for renewals and
improvements are capitalized, and replacements, maintenance, and repairs,
which do not improve or extend the lives of the respective assets, are
expensed as incurred. Depreciation is provided on a straight-line basis over
the remaining estimated useful lives, as follows:
<TABLE>
<S> <C>
Paging equipment................................................. 5 years
Paging systems................................................... 15 years
Computer and terminal equipment.................................. 3 years
Office equipment................................................. 2 years
Furniture and fixtures........................................... 5 years
</TABLE>
As of December 31, 1995, depreciation expense totaled $200,598 and is
included in depreciation and amortization in the accompanying statement of
operations.
F-29
<PAGE>
ATLANTA VOICE PAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
INVENTORIES
Inventory consists of pagers held for sale. Inventory is valued at the lower
cost or market (determined on a first-in, first-out basis).
INTANGIBLE ASSETS
The Company was formed in 1991 when its original shareholder purchased the
assets and assumed all of the liabilities of Atlanta Voice Page, a division of
Comlite Systems Inc. ("Comlite"). Consideration provided for this purchase was
primarily debt of the Company, collateralized by the assets of the Company.
The assets purchased consisted primarily of local paging subscribers, a paging
system, pagers and spare parts, accounts receivable, and furniture and
fixtures. The assets purchased were recorded at their estimated fair value at
the acquisition date. The excess cost over the fair market value of the assets
acquired ("goodwill") is being amortized on a straight-line basis over a 15-
year period. The other intangible assets purchased relate to service contracts
acquired in 1991 and are being amortized on a straight-line basis over five
years.
The Company periodically reviews the carrying values assigned to goodwill
and other intangible assets based on expectations of future cash flows and
operating income generated by the underlying tangible assets in determining
whether intangible assets are recoverable.
LONG-LIVED ASSETS
Long-lived assets are evaluated regularly for other than temporary
impairment. If circumstances suggest that the asset values may be impaired, an
assessment of the assets' estimated fair value is performed and an impairment
loss is recognized in income from operations in the amount at which the
assets' carrying value exceeds the assets' estimated fair value. As of
December 31, 1995, none of the companies long-lived assets were considered to
be impaired.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 1995 consisted of
the following:
<TABLE>
<S> <C>
Accounts payable................................................. $13,045
Accrued payroll.................................................. 10,950
Accrued payroll taxes............................................ 10,604
Other accrued liabilities........................................ 3,133
-------
$37,732
=======
</TABLE>
INCOME TAXES
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be taxed as an S corporation. In lieu of corporate
income taxes, the shareholders of an S corporation are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision
or liability for federal income taxes has been included in these financials.
3. LINE OF CREDIT
The Company maintains a line of credit with maximum borrowings of $50,000.
The line of credit is payable on demand, otherwise it matures June 8, 1996. It
bears interest at prime plus 2% (10.5% at December 31, 1995), which is payable
monthly. The outstanding balance at December 31, 1995 was $27,000.
F-30
<PAGE>
ATLANTA VOICE PAGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT
Long-term debt at December 31, 1995 consisted of the following:
<TABLE>
<S> <C>
Notes payable to Associated Capital, various interest rates (rang-
ing from 11.8% to 14.5% at December 31, 1995); principal and in-
terest payable in monthly installments; secured by the assets
purchased;maturing at various dates through January 1999......... $286,485
Note payable to Satellink Communications, Inc., interest at 8%;
principal and interest due in full on May 15, 1996............... 110,000
Note payable to shareholder, interest at 11%; principal and inter-
est payable in 60 monthly installments; maturing August 2000..... 102,981
Note payable to First of America Trust Company, interest at 10%;
principal and interest payable in 37 monthly installments; matur-
ing May 1998..................................................... $ 40,645
--------
540,111
Less current portion.............................................. 317,493
--------
$222,618
========
</TABLE>
Scheduled future maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1996................................................................ $317,493
1997................................................................ 121,677
1998................................................................ 59,671
1999................................................................ 24,170
2000 and thereafter................................................. 17,100
--------
$540,111
========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases office space under a noncancelable operating lease
expiring on November 30, 1996. The Company recorded lease expenses of
approximately $14,485 in 1995, related to this operating lease. The future
minimum payment due in 1996 under this lease was $13,672 at December 31, 1995.
6. SUBSEQUENT EVENT
Effective February 1, 1996, Satellink Communications, Inc. acquired
substantially all of the assets of the Company under the terms of an asset
purchase agreement. The assets sold consisted primarily of local paging
subscribers, a paging system, pagers and spare parts, accounts receivable, and
furniture and fixtures. The sale price was approximately $3,200,000 before
recording certain acquisition expenses and adjustments.
F-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of C.R., Inc.:
We have audited the accompanying balance sheet of C.R., INC. (a Texas
corporation) as of December 31, 1995 and the related statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C.R., Inc. as of December
31, 1995 and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 9, 1998
F-32
<PAGE>
C.R., INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................... $ 30,056
Accounts receivable, net of allowance for doubtful account of
$110,138....................................................... 670,300
Note receivable from Nations Link (Note 3)...................... 52,274
Inventory....................................................... 38,477
Other receivables............................................... 24,692
Prepaid expenses and other current assets....................... 10,814
-----------
Total current assets.......................................... 826,613
-----------
PROPERTY AND EQUIPMENT, at cost:
Paging systems equipment........................................ 1,588,023
Furniture and fixtures.......................................... 143,606
Leasehold improvements.......................................... 9,061
-----------
1,740,690
Less accumulated depreciation................................... (1,441,125)
-----------
Property and equipment, net................................... 299,565
-----------
OTHER ASSETS:
Acquired customer base, net of accumulated amortization of
$17,719........................................................ 35,437
Other intangible assets, net of accumulated amortization of
$37,500........................................................ 40,500
Other........................................................... 5,487
-----------
Total other assets............................................ 81,424
-----------
$ 1,207,602
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities, including $242,313
payable to affiliate (Note 6).................................. $ 555,435
Customer deposits............................................... 111,847
Current maturities of long term debt (Note 4)................... 42,546
-----------
Total current liabilities..................................... 709,828
===========
LONG-TERM DEBT, less current maturities........................... 5,107
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 1,000 shares authorized, issued, and
outstanding.................................................... 1,000
Additional paid in capital...................................... 328,936
Accumulated equity.............................................. 162,731
-----------
Total shareholders' equity.................................... 492,667
-----------
$ 1,207,602
===========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-33
<PAGE>
C.R., INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
REVENUES:
Service, rent and maintenance revenue.......................... $4,046,182
Product sales.................................................. 261,363
----------
Total revenues............................................... 4,307,545
----------
OPERATING EXPENSES:
Services, rent and maintenance................................. 1,766,926
Selling and marketing.......................................... 233,232
General and administrative..................................... 1,348,092
Research and development....................................... 115,542
Depreciation and amortization.................................. 433,280
Cost of product sales.......................................... 223,626
----------
Total operating expenses..................................... 4,120,698
----------
OPERATING INCOME................................................. 186,847
----------
OTHER INCOME (EXPENSE):
Gain on sale of assets......................................... 106,906
Other income................................................... 6,213
Interest expense, net of interest income of $3,251............. (56,171)
----------
56,948
----------
NET INCOME....................................................... $ 243,795
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-34
<PAGE>
C.R., INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK PAID IN ACCUMULATED
-------------
SHARES AMOUNT CAPITAL EQUITY TOTAL
------ ------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994....... 1,000 $1,000 $328,936 $ 295,318 $ 625,254
Net income..................... 0 0 0 243,795 243,795
Forgiveness of note receivable
from affiliates (Note 6)...... 0 0 0 (376,382) (376,382)
----- ------ -------- --------- ---------
BALANCE, December 31, 1995....... 1,000 $1,000 $328,936 $ 162,731 $ 492,667
===== ====== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
F-35
<PAGE>
C.R., INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................... $243,795
--------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................... 433,280
Research and development......................................... 115,542
Gain on sale of assets........................................... (106,906)
Changes in operating assets and liabilities:
Accounts and other receivables................................. (151,947)
Prepaid expenses and other assets.............................. 13,036
Accounts payable and accrued liabilities....................... 257,893
Customer deposits.............................................. 15,490
--------
Total adjustments............................................ 576,388
--------
Net cash provided by operating activities.................... 820,183
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................................ (358,638)
Proceeds from sale of property and equipment....................... 228,482
Advances to affiliate.............................................. (397,188)
--------
Net cash used in investing activities........................ (527,344)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long term debt....................................... (440,791)
--------
NET DECREASE IN CASH................................................. (147,952)
CASH AT BEGINNING OF YEAR............................................ 178,008
--------
CASH AT END OF YEAR.................................................. $ 30,056
========
SUPPLEMENTAL INFORMATION:
Interest paid...................................................... $ 59,422
========
Forgiveness of note receivable due from shareholders............... $376,382
========
</TABLE>
The accompanying notes are an integral part of this statement.
F-36
<PAGE>
C.R., INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION AND BUSINESS OPERATIONS
C.R., Inc. (the "Company"), a Texas corporation, is a communications company
providing local, regional, and nationwide paging and voicemail services to
approximately 9,500 subscribers in Texas, New Mexico, Oklahoma, Arkansas, and
Louisiana.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company's policy is to recognize revenue at the time the service is
provided.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers all
investments purchased with an original maturity of three months or less to be
cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1995, the estimated fair value of the Company's financial
instruments approximates their carrying value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for renewals and
improvements are capitalized, and replacements, maintenance, and repairs that
do not improve or extend the lives of the respective assets are expensed as
incurred. Depreciation is provided on a straight-line basis over the remaining
estimated useful lives, as follows:
<TABLE>
<S> <C>
Paging systems equipment.................................... 3 to 5 years
Furniture and fixtures...................................... 5 to 7 years
Leasehold improvements...................................... 5 to 39 years
</TABLE>
As of December 31, 1995, depreciation expense totaled $426,032 and is
included in depreciation and amortization in the accompanying statement of
operations.
INVENTORY
Inventory includes pagers held for sale. Inventory is valued at the lower of
cost or market (determined on a first-in, first-out basis).
F-37
<PAGE>
C.R., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, at December 31, 1995
consisted of the following:
<TABLE>
<S> <C>
Affiliate License................................................. $40,500
Acquired customer base............................................ 35,437
Other............................................................. 5,487
-------
$81,424
=======
</TABLE>
Affiliate license represents a contract with CUE Paging Corporation ("CUE"),
a nationwide satellite paging company presently offering the exclusive right
to purchase airtime and network services in the Dallas, Texas metropolitan
area and southern Louisiana, to provide regional paging in these service areas
utilizing FM subcarrier technology. The affiliate license is recorded at cost
and amortized on the straight-line basis over the ten-year contract period.
Acquired customer base represents customer accounts purchased by the Company
and is carried on the balance sheet at cost, net of accumulated amortization.
The assets are being amortized on the straight-line basis over a period of 15
years.
The Company periodically reviews the carrying values assigned to goodwill
and other intangible assets based on expectations of future cash flows and
operating income generated by the underlying tangible assets in determining
whether the intangible assets are recoverable.
As of December 31, 1995, amortization expense totaled $14,748 and is
included in depreciation and amortization in the accompanying statement of
operations.
LONG-LIVED ASSETS
Long-lived assets are evaluated regularly for other than temporary
impairment. If circumstances suggest that the asset values may be impaired, an
assessment of the assets' estimated fair value is performed and an impairment
loss is recognized in income from operations in the amount at which the
assets' carrying value exceeds the assets' estimated fair value. As of
December 31, 1995, none of the Company's long-lived assets were considered to
be impaired.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 1995 consisted of
the following:
<TABLE>
<S> <C>
Accounts payable................................................ $238,931
Other accrued liabilities....................................... 74,289
--------
$313,220
========
</TABLE>
ADVERTISING COSTS
The Company expenses all advertising costs as incurred. Advertising costs
totaled $94,740 as of December 31, 1995 and are included in selling and
marketing in the accompanying statement of operations.
CUSTOMER DEPOSITS
The Company requires a last-month advance from certain customers as a
deposit to guarantee payment. The customer deposits are held up to six months
and then applied to the customer's account. The Company had $111,847 in
customer deposits as of December 31, 1995.
F-38
<PAGE>
C.R., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. INVESTMENT IN NATIONS LINK
On May 25, 1995, the Company entered into a joint venture agreement with
Satellink Communications, Inc. ("Satellink") and Cape Fear Paging of North
Carolina, Inc. to form and operate a third-party supplier, Nations Link, Ltd.
("Nations Link"). The Company's ownership percentage in the joint venture was
approximately 33%. The Company does not have control over the operations of
the joint venture; however, it does exercise significant influence.
Accordingly, the Company accounts for its investment in Nations Link using the
equity method of accounting. During fiscal 1995, the Company wrote-off its
investment in Nations Link and recorded a total of $115,542 in research and
development expense related to pager design. The Company also had unsecured
and noninterest bearing advances outstanding to Nations Link totaling $52,275
as of December 31, 1995, which are included in the accompanying balance sheet.
4. NOTE PAYABLE
On February 24, 1995, the Company converted substantially all of its capital
lease obligations into a 10% promissory note of $245,000, payable in equal
monthly installments of $21,539, including interest, through February 29,
1996. Remaining future minimum payments under the note payable as of December
31, 1995 was $42,546.
5. TAX STATUS
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be taxed as an S corporation. In lieu of corporate
income taxes, the shareholders of an S corporation are taxed on their
proportionate share of the Company's taxable income. Therefore, no provision
or liability for federal income taxes has been included in these financial
statements.
6. RELATED-PARTY TRANSACTIONS
On May 16, 1994, the shareholders of the Company formed a new company, Call
One, Inc ("Call One"). Call One is intended to be the sole provider of message
center services for the Company. Advances in the amount of $76,382 were made
to Call One by the Company during 1995 and are recorded as a reduction to
accumulated equity in the accompanying statement of shareholders' equity as
collection of the advances is not anticipated.
Prior to January 1, 1995, the Company had advanced $300,000 to Call One and
Nations Link and classified these advances as due from affiliates. As of
December 31, 1995, the Company's shareholders agreed to forgive the entire due
from affiliates balance. The forgiveness of these advances is reflected as a
reduction in accumulated equity in the accompanying statement of shareholders'
equity.
The Company receives message center services from Call One. The services
include base box charges ranging from $8,000 to $12,000 per month and 100 to
110 minutes at $.32 per minute. Average monthly charges of the Company are
approximately $40,000. As of December 31, 1995, the Company owed Call One
$242,313 for services received during fiscal 1995. The liability is recorded
in accounts payable and accrued liabilities in the accompanying balance sheet.
During 1995, the Company paid approximately $100,000 in management fees to a
shareholder of the Company for services provided throughout the year.
F-39
<PAGE>
C.R., INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases office space under a noncancelable operating lease
expiring on May 31, 1996. The Company recorded lease expense of approximately
$60,500 in 1995, related to this operating lease. The future minimum payments
due in 1996 under this lease was approximately $25,000.
8. SUBSEQUENT EVENT
Effective June 1, 1996, Satellink acquired substantially all of the assets
of the Company under the terms of an asset purchase agreement. The acquired
assets consisted primarily of regional and nationwide paging subscribers, a
CUE paging regional affiliate agreement, notes receivable, deposits,
equipment, and furniture and fixtures. The purchase price was approximately
$5,700,000.
F-40
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Saner Communications, Inc.:
We have audited the accompanying balance sheet of MESSAGE WORLD (an
unincorporated division of Saner Communications, Inc, a Georgia corporation)
as of December 31, 1996 and the related statements of operations, (accumulated
deficit), retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Division's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Message World as of
December 31, 1996 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 9, 1998
F-41
<PAGE>
MESSAGE WORLD
BALANCE SHEET
AS OF DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 49,455
Accounts receivable................................................. 69,411
Other receivables................................................... 652
Inventory........................................................... 10,000
--------
Total current assets.............................................. 129,518
--------
PROPERTY AND EQUIPMENT, AT COST:
Paging systems and equipment........................................ 152,173
Voicemail equipment................................................. 175,000
Furniture and fixtures.............................................. 16,836
Computer and terminal equipment..................................... 7,892
--------
351,901
Less accumulated depreciation....................................... (206,901)
--------
Property and equipment, net....................................... 145,000
--------
OTHER ASSETS.......................................................... 3,788
--------
$278,306
========
LIABILITIES AND RETAINED EARNINGS
CURRENT LIABILITIES:
Accounts payable and accrued liabilities............................ $ 27,654
Customer deposits................................................... 493
Current maturities of capital lease obligation (Note 3)............. 48,972
Deferred revenue.................................................... 61,486
--------
Total current liabilities......................................... 138,605
--------
CAPITAL LEASE OBLIGATION, NET OF CURRENT MATURITIES (NOTE 3).......... 87,501
--------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
RETAINED EARNINGS..................................................... 52,200
--------
$278,306
========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-42
<PAGE>
MESSAGE WORLD
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
REVENUES:
Service, rent and maintenance revenues........................... $593,628
Product sales.................................................... 148,530
--------
Total revenues................................................. 742,158
--------
OPERATING EXPENSES:
Services, rent, and maintenance.................................. 120,338
Selling and marketing............................................ 115,005
General and administrative....................................... 208,074
Engineering...................................................... 5,985
Depreciation..................................................... 16,969
Cost of products sold............................................ 25,761
--------
Total operating expenses....................................... 492,132
--------
OPERATING INCOME................................................... 250,026
INTEREST EXPENSE................................................... (18,299)
--------
NET INCOME......................................................... $231,727
========
</TABLE>
The accompanying notes are an integral part of this statement.
F-43
<PAGE>
MESSAGE WORLD
STATEMENT OF (ACCUMULATED DEFICIT) RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
BALANCE, December 31, 1995....................................... $(179,527)
Net income..................................................... 231,727
---------
BALANCE, December 31, 1996....................................... $ 52,200
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-44
<PAGE>
MESSAGE WORLD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................ $ 231,727
---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 16,969
Changes in operating assets and liabilities:
Accounts receivable............................................ 16,280
Other receivables.............................................. (611)
Accounts payable and accrued liabilities....................... (258,337)
Customer deposits.............................................. (1,097)
---------
Total adjustments............................................. (226,796)
---------
Net cash provided by operating activities..................... 4,931
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............................... (1,969)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligation................. (27,189)
---------
NET DECREASE IN CASH................................................ (24,227)
CASH AND CASH EQUIVALENTS, beginning of year........................ 73,682
---------
CASH AND CASH EQUIVALENTS, end of year.............................. $ 49,455
=========
INTEREST PAID....................................................... $ 18,299
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-45
<PAGE>
MESSAGE WORLD
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND BUSINESS OPERATIONS
Saner Communications, Inc., a Georgia S Corporation ("Saner"), is engaged in
providing local voice mailbox services to approximately 5,000 subscribers in
the Atlanta, Georgia area through Message World, an unincorporated division of
Saner. Message World purchases airtime solely through Preferred Networks,
Incorporated ("PNI"). The financial statements and related footnotes contained
herein reflect the operations of Message World. Substantially all of the
assets and operations of Saner are included in Message World; consequently,
these financial statements include substantially all costs and expenses of
Saner, with the exception of certain immaterial clerical costs recorded
directly by Saner.
Saner has elected under the Internal Revenue Code to be taxed as an S
corporation. The shareholders of an S corporation are taxed on their
proportionate share of Saner's taxable income. Therefore, no provision or
liability for federal income taxes has been included in these financial
statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Message World's policy is to recognize revenue at the time the service is
provided.
CASH AND CASH EQUIVALENTS
Message World considers cash and cash equivalents to include cash on hand
and temporary cash investments purchased with an original maturity of three
months or less.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1996, the estimated fair value of Message World's
financial instruments approximates their carrying value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for renewals and
improvements are capitalized, and replacements, maintenance, and repairs which
do not improve or extend the lives of the respective assets are expensed as
incurred. Depreciation is provided on a straight-line basis over the remaining
estimated useful lives, as follows:
<TABLE>
<S> <C>
Paging system and equipment................................... 5 years
Voicemail equipment........................................... 10 20 years
Computers and terminal equipment.............................. 5 10 years
Furniture and fixtures........................................ 5 10 years
Leasehold improvements........................................ 5 10 years
</TABLE>
F-46
<PAGE>
MESSAGE WORLD
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
INVENTORY
Inventory consists of pagers held for sale. Inventory is valued at the lower
cost or market (determined on a first-in, first-out basis).
LONG-LIVED ASSETS
Long-lived assets are evaluated regularly for other than temporary
impairment. If circumstances suggest that the asset values may be impaired, an
assessment of the assets' estimated fair value is performed and an impairment
loss is recognized in income from operations in the amount at which the
assets' carrying value exceeds the assets' estimated fair value. As of
December 31, 1996, none of Message World's long-lived assets were considered
to be impaired.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 1996 consisted of
the following:
<TABLE>
<S> <C>
Accounts payable.................................................. $23,636
Accrued payroll................................................... 4,018
-------
$27,654
=======
</TABLE>
3. CAPITAL LEASES
Message World leases voicemail equipment under a noncancelable capital
lease. The equipment will revert to Message World upon the maturity of the
lease in October 1999. At December 31, 1996, the net book value of this
equipment was $145,000. The effective interest rate on this lease was
approximately 11.5%.
Future minimum payments under the noncancelable capital lease as of December
31, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $ 48,972
1998............................................................. 45,133
1999............................................................. 42,368
--------
$136,473
========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Message World leases office space under a noncancelable operating lease
expiring on July 14, 2000. Message World recorded lease expense of
approximately $24,299 in 1996 related to these operating leases.
Future minimum payments under noncancelable operating leases as of December
31, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $ 35,371
1998............................................................. 36,786
1999............................................................. 38,257
2000............................................................. 24,452
--------
$134,866
========
</TABLE>
F-47
<PAGE>
MESSAGE WORLD
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. RELATED-PARTY TRANSACTIONS
Message World purchases airtime from PNI, in which Saner is a shareholder.
During 1996, Message World purchased approximately $66,000 of airtime from
PNI.
6. SUBSEQUENT EVENT
Effective February 1, 1997, Satellink Communications, Inc. acquired
substantially all of the assets of Message World under the terms of an asset
purchase agreement. The assets sold consisted primarily of local voicemail
subscribers, a voicemail equipment, pagers and spare parts, accounts
receivable, and furniture and fixtures. The purchase price was approximately
$1,600,000 before recording certain acquisition expenses and adjustments.
F-48
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Stockholders of Hyde's Stay in Touch, Inc.
I have audited the accompanying Balance Sheets of Hyde's Stay in Touch, Inc.
as of December 31, 1997 and 1996 and the related statements of Income,
Retained Earnings and Cash Flows for the years then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audits.
I conducted my audits in accordance with generally accepted auditing
standards. These standards require that I 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. I believe that my audits provide a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hyde's Stay in Touch, Inc. as
of December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
James N. Rachel
/s/ James N. Rachel
Shreveport, Louisiana
February 23, 1998
F-49
<PAGE>
HYDE'S STAY IN TOUCH, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash............................................ $ 119,684 $ 124,550
Investments--Trading securities................. 843,982 434,282
Accounts receivable............................. 581,074 444,877
Inventory....................................... 279,686 356,646
Prepaid expenses................................ 2,950 4,725
---------- ---------- ---
Total Current Assets.......................... 1,827,376 1,365,080
Property and Equipment, net....................... 891,434 758,352
Other Assets;
Loan fees, net.................................. 3,334 5,834
Deposits........................................ 3,730 2,730
Due from Budget Phone, Inc. .................... 358,592 225,332
---------- ---------- ---
Total Other Assets............................ 365,656 233,896
---------- ---------- ---
TOTAL ASSETS...................................... $3,084,466 $2,357,328
========== ========== ===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................ $ 100,659 $ 190,063
Accrued expenses................................ 11,504 11,694
Current maturity of long term debt.............. 544,924 566,426
---------- ---------- ---
Total Current Liabilities..................... 657,087 768,183
Long Term Liabilities:
Long term debt, excluding current portion....... 1,430,992 199,362
---------- ---------- ---
Total Liabilities............................. 2,088,079 967,545
Stockholders' Equity:
Common stock.................................... 706 1,000
Retained earnings............................... 995,681 1,388,783
---------- ---------- ---
Total Stockholders' Equity.................... 996,387 1,389,783
---------- ---------- ---
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $3,084,466 $2,357,328
========== ========== ===
</TABLE>
See Accompanying Notes and Auditor's Report
F-50
<PAGE>
HYDE'S STAY IN TOUCH, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Income
Fees and airtime, net................................. $3,697,402 $3,224,049
Pager, hardware, and accessory sales.................. 926,867 874,920
Dealer airtime........................................ 373,984 331,712
Dealer hardware sales................................. 224,902 68,768
Trade income.......................................... 40,615 41,325
---------- ----------
Total Income........................................ 5,263,770 4,540,774
Cost of Goods Sold...................................... 1,803,028 1,478,908
---------- ----------
Gross Profit.......................................... 3,460,742 3,061,866
Operating Expenses, net................................. 2,063,387 2,162,589
---------- ----------
Income From Operations.................................. 1,397,356 899,277
Other Income (Expense)..................................
Interest income....................................... 37,378 28,188
Unrealized gain (loss) on investment.................. 72,365 (3,760)
Other income.......................................... 17,144 26,311
Rent income........................................... 7,560 2,720
Gain (loss) on sale of assets......................... -- --
Interest expense...................................... (40,904) (34,775)
---------- ----------
Total Other Income (Expense)........................ 93,543 18,684
---------- ----------
Net Income.............................................. $1,490,898 $ 917,961
========== ==========
</TABLE>
See Accompanying Notes and Auditor's Report
F-51
<PAGE>
HYDE'S STAY IN TOUCH, INC.
STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
Beginning Retained Earnings......................... $ 1,388,783 $1,041,901
Net Income.......................................... 1,490,898 917,961
Shareholder Distributions........................... (416,413) (571,079)
Retirement of Treasury Stock........................ (1,467,587) --
----------- ----------
Ending Retained Earnings............................ $ 995,681 $1,388,783
=========== ==========
</TABLE>
See Accompanying Notes and Auditor's Report
F-52
<PAGE>
HYDE'S STAY IN TOUCH, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income.......................................... $ 1,490,898 $ 917,961
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization...................................... 2,500 2,500
Depreciation...................................... 222,365 198,060
(Increase) Decrease in:
Accounts receivable............................... (136,197) (62,379)
Inventory......................................... 76,960 (91,505)
Prepaid expenses.................................. 1,775 2,251
Increase (Decrease) in:
Accounts payable.................................. (89,404) 165,880
Accrued expenses.................................. (190) (16,165)
----------- -----------
Net Cash Provided (Used) by Operating Activities. 1,568,707 1,116,603
Cash Flows From Investing Activities:
Rental deposits..................................... (1,000) --
Stock redemption.................................... (1,467,880) --
Acquisition of fixed assets......................... (478,991) (250,764)
Sale of fixed assets................................ 123,543 4,524
Shareholder distributions........................... (416,413) (796,411)
Advance to Budget Phone, Inc. ...................... (133,260) --
----------- -----------
Net Cash Provided (Used) by Investing Activities. (2,374,001) (1,042,651)
Cash Flows From Financing Activities:
Principal reduction of debt......................... (566,434) (127,689)
Loan proceeds....................................... 1,776,562 430,191
----------- -----------
Net Cash Provided (Used) by Financing Activities. 1,210,128 302,502
----------- -----------
Net Increase In Cash................................. 404,834 376,454
Beginning Cash....................................... 558,832 182,378
----------- -----------
Ending Cash.......................................... $ 963,666 $ 558,832
=========== ===========
</TABLE>
See Accompanying Notes and Auditor's Report
F- 53
<PAGE>
HYDE'S STAY IN TOUCH
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS OPERATIONS
The Company was organized in 1988 and is licensed by the Federal
Communications Commission (FCC) as a private paging carrier. It specializes in
one-way communications through a networking of UHF and VHF MHz frequencies.
The business provides state of the art paging and voicemail services to over
38,000 subscribers. The Company's coverage area includes eastern Texas, all of
the State of Louisiana and portions of Mississippi.
ACCOUNTING METHOD
The accrual method of accounting is used for both financial and income tax
reporting purposes.
CASH AND CASH EQUIVALENTS
For purposes of the financial statements of cash flows, the Company
considers cash in investments, operating bank accounts, cash on hand, and all
highly liquid investments with maturities of three months or less at date of
purchase to be cash equivalents.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
CONCENTRATION OF CREDIT RISK
The Company occasionally maintains deposits in excess of federally insured
limits. Statement of Financial Accounting Standards No. 105 identifies this as
a concentration of credit risk requiring disclosure, regardless of the degree
of risk. The risk is managed by maintaining all deposits in high quality
financial institutions.
ACCOUNTS RECEIVABLE
All accounts receivable at December 31, 1997 and 1996 are considered by
management to be collectible and therefore no allowance for bad debts was
deemed necessary.
INVESTMENTS
The Company's security investments that are bought and held primarily for
the purpose of selling them in the near term are classified as trading
securities. Trading securities are recorded at fair value on the balance sheet
in current assets, with the change in fair value during the period included in
earnings.
INVENTORIES
Inventories consist of pagers, which are valued at the lower of market, with
cost determined on a first-in, first-out basis.
F-54
<PAGE>
HYDE'S STAY IN TOUCH
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1996
LOAN FEES
The Company is amortizing a SBA loan fee of $12,502 over sixty months. At
December 31, 1997, sixteen months remained to be amortized.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Expenditures for maintenance
and repairs are expensed as incurred while renewals and betterments are
capitalized.
Depreciation and amortization have been provided using the straight-line
method over the useful lives of the assets as follows:
<TABLE>
<S> <C>
Office furniture and fixtures.................................. 10 years
Vehicles....................................................... 3 years
Leased equipment............................................... 3 years
Machinery and equipment........................................ 5-10 years
Leasehold improvements......................................... 10-40 years
</TABLE>
Leased equipment consists of pagers, which are leased to customers on a
monthly basis.
These pagers are added to a leased pool on an accrual basis. The pool is
then depreciated over a three-year period.
Depreciation for the years ended December 31, 1997 and 1996 was $222,365 and
$198,060, respectively.
REVENUE RECOGNITION
The Company prebills clients monthly for services. The billings are mailed
prior to the end of the month for services of the next month. The financial
statements reflect twelve monthly billing cycles. Revenue is recognized when
the bills are created. This prepayment is recognized as income in full when
received.
INCOME TAXES
Under the provisions of the Internal Revenue Code, the Company has elected
to be taxed as an "S" corporation. Under such election, the Company's federal
taxable income or loss and tax credits are passed through to the individual
stockholders.
NOTE B: INVESTMENTS IN TRADING SECURITIES
Investments in trading securities are summarized as follows at December 31,
1997:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
GAIN LOSS VALUE
---------- ---------- --------
<S> <C> <C> <C>
Eaton Vance Municipals....................... $ 8,898 $ -- $135,704
Oppenheimer Value Fund....................... 8,889 -- 113,229
Oppenheimer Income Fund...................... 33,964 -- 261,517
John Hancock Bank Fund....................... 27,137 -- 81,575
Eaton Vance Growth Fund...................... 1,511 -- 51,511
Franklin Templeton Mutual.................... -- 8,034 200,446
------- ------ --------
$80,339 $8,034 $843,982
======= ====== ========
</TABLE>
F-55
<PAGE>
HYDE'S STAY IN TOUCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1996
Investments in trading securities are summarized as follows at December 31,
1996:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
GAIN LOSS VALUE
---------- ---------- --------
<S> <C> <C> <C>
Eaton Vance Municipals....................... $ -- $2,066 $120,339
Oppenheimer Value Fund....................... 1,106 -- 52,466
Oppenheimer Income Fund...................... -- 5,585 208,101
John Hancock Bank Fund....................... 2,785 -- 53,376
------ ------ --------
$3,891 $7,651 $434,282
====== ====== ========
</TABLE>
NOTE C: ACCOUNTS RECEIVABLE
Accounts Receivable consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Accounts Receivable Trade................................. $488,882 $390,780
Trade Out Receivables..................................... 22,562 13,247
Accounts Receivable Employees............................. 69,630 40,850
-------- --------
$581,074 $444,877
======== ========
</TABLE>
NOTE D: INVENTORIES
Inventories consist of various types of pagers held in each of the various
business locations the Company operates. The total value at lower of cost or
market at December 31, 1997 and 1996 was $279,686 and $356,646, respectively.
NOTE E: PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Office furniture and fixtures......................... $ 45,309 $ 39,805
Vehicles.............................................. 13,423 13,423
Leased equipment...................................... 637,571 577,492
Machinery and equipment............................... 1,193,557 920,556
Leasehold improvements................................ 56,509 39,647
---------- ----------
1,946,369 1,590,923
Less: Accumulated depreciation........................ 1,054,935 832,571
---------- ----------
$ 891,434 $ 758,352
========== ==========
NOTE F: PREPAID EXPENSES
Prepaid expenses consist of the following:
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Prepaid Insurance..................................... $ 2,950 $ 4,725
========== ==========
</TABLE>
F-56
<PAGE>
HYDE'S STAY IN TOUCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1996
NOTE G: ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Interest payable............................................. $ 4,934 $ 767
Sales tax payable............................................ 6,153 9,652
Payroll tax payable.......................................... 417 1,275
------- -------
$11,504 $11,694
======= =======
</TABLE>
NOTE H: LEASE COMMITMENTS
The Company leases building facilities and an auto under agreements which
have been classified as operating leases.
Future lease commitments under operating leases at December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING OPERATING
DECEMBER 31 LEASES
------------ ---------
<S> <C>
1998........................................................ $ 87,453
1999........................................................ 66,797
2000........................................................ 51,225
2001........................................................ 9,990
2002........................................................ 5,960
--------
Total minimum lease payments.................................. $221,425
========
</TABLE>
Future lease commitments under capital leases at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING OPERATING
DECEMBER 31 LEASES
------------ ---------
<S> <C>
1997....................................................... $ 63,114
1998....................................................... 87,453
1999....................................................... 66,797
2000....................................................... 51,225
2001....................................................... 9,990
--------
Total minimum lease payments.................................. $278,579
========
</TABLE>
The Company rents space on several transmission towers throughout its
coverage area. Many of the rentals are verbal and on a month to month basis.
Industry standard is sixty days notice to vacate.
Total rental expense on the operating leases for the years ended December
31, 1997 and 1996 was $174,377 and $156,778, respectively.
F-57
<PAGE>
HYDE'S STAY IN TOUCH
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1996
NOTE I: LONG TERM DEBT
Long term debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Note payable to Commercial National Bank in
Shreveport, Louisiana, a $300,000 revolving line
of credit maturing May 31, 1997, at a variable
interest rate. This note is collateralized by
accounts receivable and personal guaranty of
Robert D. Hyde, Jr................................ $ 150,000 $ 285,000
Note payable to Commercial National Bank in
Shreveport, Louisiana, payable in monthly
installments of $13,180 including interest at
8.00% through March 27, 1999. This note is a U.S.
Small Business Administration loan and is
collateralized by equipment, inventory, accounts
receivable, and personal guaranty of Robert D.
Hyde, Jr.......................................... 199,354 335,597
Note payable to the Estate of Shirley Ann Gunstream
Hyde, dated December 31, 1997, payable with
interest at 8.00% on December 31, 1998............ 187,732 145,191
Note payable to Danny Hagen Gunstream Trust,
payable in monthly installments of $9,278.90
including interest at 8.00% through February 10,
2013. The notes is secured by the personal
guaranty of R. Daniel Hyde, Jr. The note can be
accelerated under certain conditions of the sale
of company stock.................................. 970,950 --
Note payable to the congregation of St. John's
Roman Catholic Church of Caddo Parish, Louisiana,
payable in monthly installments of $5,676.88
including interest at 8.00% through November 10,
2007.............................................. 467,880 --
---------- ---------
Total long term debt............................. 1,975,916 765,788
Current portion.................................. (544,924) (566,426)
---------- ---------
Long term portion................................ $1,430,992 $ 199,362
========== =========
</TABLE>
The interest expense for the years ended December 31, 1997 and 1996 was
$40,904 and $34,775, respectively.
Maturities of the notes for each of the five years succeeding December 31 are
as follows:
<TABLE>
<CAPTION>
YEAR 1997 1996
---- -------- --------
<S> <C> <C>
1st........................................................ $544,924 $566,426
2nd........................................................ 123,538 147,542
3rd........................................................ 77,860 51,820
4th........................................................ 84,125 --
5th........................................................ 91,110 --
-------- --------
$921,557 $765,788
======== ========
</TABLE>
F-58
<PAGE>
HYDE'S STAY IN TOUCH, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1996
NOTE J: CAPITAL STOCK
The capital stock consists of 1,000 authorized shares of no par value common
stock. At December 31, 1996 there were 100 shares outstanding of which 50 were
held by Mr. R. Daniel Hyde, Jr. and 50 by the Estate of Shirley Hyde. Mr. Hyde
is the executor of the estate. In her will, Mrs. Hyde made bequeaths to
St. John's Catholic Church and to the Hagen Gunstream Trust. On December 19,
1997 these gifts were transferred from the estate to the donees in the form of
29.36 shares of stock of Hyde's Stay In Touch, Inc. Simultaneous with the
transfer, the stock was redeemed by the Corporation as treasury stock to be
retired. The stock redemption resulted in corporate notes to the donees as set
forth in Note 1. At December 31, 1997 there were 70.64 shares of stock issued
and outstanding.
NOTE K: RELATED PARTY TRANSACTIONS
Payments made by the Company to the shareholders during the year were
charged to wages, administration fees, or shareholder distributions. The note
payable to the Estate of Shirley Ann Gunstream Hyde was established to
equalize shareholders' distributions. The amount of the note represents the
Estate's portion of the unfunded shareholders distributions at December 31,
1997 and 1996 which was $187,732 and $145,191, respectively. Except as set
forth in Note G there were no receivables from nor payables to the
shareholders at December 31, 1997 or 1996.
NOTE L: CASH FLOW INFORMATION
The total interest paid for cash flow purposes for the years ended December
31, 1997 and 1996 was $30,954 and $34,008, respectively.
F-59
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of January
31, 1998 has been prepared to give effect to the following events and
transactions (collectively, the "Transactions") as if each occurred on January
31, 1998: (i) the acquisition (the "Hyde's Acquisition") of Hyde's Stay In
Touch, Inc. ("Hyde's"); (ii) the issuance of debt, preferred stock, and stock
warrants of $7,500,000 and $4,405,000 and $95,000, respectively, related to
the proposed acquisition of Hyde's; and (iii) the sale and issuance of
shares of Common Stock in a public offering.
The unaudited pro forma consolidated statement of operations for the six
months ended January 31, 1998 have been prepared by combining Satellink's
audited historical results of operations for that period with Hyde's unaudited
historical results of operations for the same period adjusted to give effect
to the Transactions as if they had occurred on August 1, 1997.
The unaudited pro forma consolidated statement of operations for the year
ended July 31, 1997 have been prepared by combining Satellink's audited
historical results of operations for the year ended July 31, 1997 with Hyde's
audited historical results of operations for the year ended September 30, 1997
adjusted to give effect to the Transactions as if they had occurred on August
1, 1996. In addition, the pro forma consolidated statement of operations for
the year ended July 31, 1997 give effect to Satellink's February 1, 1997
acquisition of Message World as if it had occurred on August 1, 1996.
This unaudited pro forma consolidated financial information is prepared for
informational purposes only and is not necessarily indicative of future
results or of actual results that would have been achieved had the
Transactions been consummated at the beginning of the periods presented. The
Hyde's Acquisition has not yet been consummated, and no assurance can be given
that the Hyde's Acquisition will be consummated on the terms currently
contemplated or at all. If the Hyde's Acquisition is not consummated, or is
consummated on terms different than those currently contemplated, the pro
forma consolidated information would be materially affected. The unaudited pro
forma consolidated financial information should be read in conjunction with
"Risk Factors -- Risk that Hyde's Acquisition May Not Close," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Consolidation
and Results of Operations" and the consolidated financial statements of
Satellink Communications, Inc., Hyde's, and Message World and related notes
thereto included elsewhere in the Prospectus.
The pro forma financial statements are based upon available information and
certain assumptions that management believes are reasonable. Final adjustments
may differ from the pro forma adjustments herein.
F-60
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL CONSOLIDATED
---------------------------------
SATELLINK PRO FORMA PRO FORMA AS ADJUSTED
COMMUNICATIONS, HYDE'S STAY ACQUISITION PRO FORMA OFFERING FOR THE
INC. IN TOUCH, INC.(A) ADJUSTMENTS CONSOLIDATED ADJUSTMENTS OFFERING(E)
--------------- ----------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 255,861 $ 109,492 $ (109,492)(b) $ 255,861 $ $
Investments............ -- 843,982 (843,982)(b) --
Accounts receivable,
net................... 3,801,322 524,351 -- 4,325,673
Other receivables...... 235,633 74,018 -- 309,651
Inventory.............. 283,576 308,559 -- 592,135
Deferred tax asset..... -- -- -- --
Prepaid expenses and
other current assets.. 391,013 4,350 -- 395,363
------------ ---------- ----------- ------------ ---- ----
Total current assets... 4,967,405 1,864,752 (953,474) 5,878,683
Property and equipment,
net.................... 10,399,262 908,878 (408,878)(b) 10,899,262
Goodwill, net........... 9,695,292 -- 8,321,499 (c) 18,016,791
Other intangible assets,
net.................... 2,967,988 -- 2,200,000 (c) 5,167,988
Investment in joint
venture................ 337,082 -- -- 337,082
Other assets............ -- 367,223 -- 367,223
------------ ---------- ----------- ------------ ---- ----
Total assets........... $ 28,367,029 $3,140,853 $ 9,159,147 $ 40,667,029
============ ========== =========== ============ ==== ====
LIABILITIES AND
SHAREHOLDERS' DEFICIT
Current liabilities:
Current maturities of
long term debt........ $ 428,000 $ 694,922 $ (694,922)(b) $ 428,000
Accounts payable and
accrued liabilities... 2,851,585 21,831 (21,831)(b) 3,151,585
300,000 (c)
Customer deposits...... 247,468 -- -- 247,468
Deferred revenues...... 1,092,874 -- -- 1,092,874
Accrued dividends on
preferred stock....... 43,887 -- -- 43,887
------------ ---------- ----------- ------------ ---- ----
Total current
liabilities........... 4,663,814 716,753 (416,753) 4,963,814
Long-term debt, less
current maturities..... 23,441,212 1,263,490 (1,263,490)(b) 30,941,212
7,500,000 (d)
Stock warrants.......... 4,575,596 -- 95,000 (d) 4,670,596
Minority interest....... 11,022 -- -- 11,022
Series C redeemable
preferred stock........ 3,500,000 -- -- 3,500,000
Series D redeemable
preferred stock........ -- -- 4,405,000 (d) 4,505,000
Shareholders' Deficit:
Series A convertible
preferred stock....... 74 -- -- 74
Class A voting common
stock................. 23,495 706 (706)(d) 23,495
Class B nonvoting
common stock.......... -- -- -- --
Additional paid in
capital............... 2,475,845 -- -- 2,475,845
Stock warrants......... -- -- -- --
Accumulated deficit.... (10,324,029) 1,159,904 (1,159,904)(d) (10,324,029)
------------ ---------- ----------- ------------ ---- ----
Total shareholders'
deficit............... (7,824,615) 1,160,610 (1,160,610) (7,824,615)
------------ ---------- ----------- ------------ ---- ----
Total liabilities and
shareholders' deficit. $ 28,367,029 $3,140,853 $ 9,159,147 $ 40,667,029 $ $
============ ========== =========== ============ ==== ====
</TABLE>
F-61
<PAGE>
- --------
ACQUISITION ADJUSTMENTS:
(a) Derived from the unaudited balance sheet of Hyde's as of January 31, 1998.
(b) Reflects a reduction of certain assets and liabilities that will not be
acquired or assumed from Hyde's by the Company, pursuant to the stock
purchase agreement.
(c) Reflects the Company's estimate of the purchase price allocation arising
from the acquisition of Hyde's by the Company as if such acquisition had
occurred on January 31, 1998. A summary of the computation follows:
<TABLE>
<S> <C>
Purchase price.............................................. $12,000,000
Less: Net tangible assets acquired.......................... (2,187,379)
Plus: Fair value adjustments to net tangible assets
acquired................................................... 408,878
Less: Identifiable intangible assets........................ (2,200,000)
-----------
8,021,499
Plus: Transaction costs of purchase acquisition............. 300,000
-----------
Excess purchase price over the fair value of Hyde's net
assets acquired (i.e. goodwill)............................ $ 8,321,499
===========
</TABLE>
Because the acquisition of Hyde's has not been consummated, the Company's
estimated allocation of the purchase price should be considered
preliminary. Subsequent to the consummation of the transaction, the Company
will undertake a full investigation of the allocation of the purchase price
among the assets acquired. The result of such an investigation may
materially impact the Company's results of operations as allocation of
value among assets acquired and liabilities assumed with differing useful
lives may differ from management's current estimate.
(d) Reflects the expected issuance of debt and Series D Redeemable Preferred
Stock and related detachable warrants of $7,500,000, $4,405,000 and
$95,000, respectively, related to the proposed acquisition of Hyde's and
the elimination of Hyde's historical shareholders' equity.
OFFERING ADJUSTMENTS:
(e) Reflects the sale of shares of Common Stock offered by the Company
hereby at an assumed offering price of $ and application of the
proceeds therefrom as follows:
<TABLE>
<S> <C>
Gross proceeds from the offering..................................... $
Underwriting discounts and commissions at 7%.........................
Expenses related to the offering.....................................
---
Net proceeds to the Company........................................
Reduction of the revolving line of credit and term loan..............
Redemption of Series D preferred stock...............................
---
Net increase in cash and cash equivalents.......................... $
===
</TABLE>
The redemption of the Series D Preferred Stock will result in a charge to
shareholders' equity of $ for the difference between the carrying value of
the preferred stock and its redemption price of $ .
(f) Reflects reclassification of stock warrants to shareholders' equity
related to the elimination of the put feature upon completion of an
initial public offering.
(g) Reflects the conversion of shares of Series C Convertible Preferred
Stock into approximately shares each of the Company's Class A Common
Stock pursuant to the securities purchase agreement.
(h) Reflects the conversion of shares of Series A Convertible Preferred
Stock into shares each of the Company's Class A common stock, which are
automatically converted in the event of an initial public offering.
(i) Reflects the recognition of the Company's net deferred tax asset as of
January 31, 1998. As a result of the debt and corresponding interest
expense reduction in conjunction with the initial public offering,
management believes that it is more likely than not that the net deferred
tax asset is realizable upon completion of the initial public offering.
F-62
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------
HYDE'S STAY PRO FORMA PRO FORMA CONSOLIDATED
SATELLINK IN TOUCH, ACQUISITION PRO FORMA OFFERING AS ADJUSTED
COMMUNICATIONS, INC INC. (A) ADJUSTMENTS CONSOLIDATED ADJUSTMENTS FOR THE OFFERING
------------------- ----------- ----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Service, rent, and
maintenance........... $ 9,480,557 $2,109,191 $ -- $11,589,748 $ $
Product sales.......... 637,266 595,782 -- 1,233,048
----------- ---------- -------- ----------- ---- ----
Total revenues......... 10,117,823 2,704,973 -- 12,822,796
Cost of products sold.. 555,935 704,232 -- 1,260,167
----------- ---------- -------- ----------- ---- ----
Net revenues........... 9,561,888 2,000,741 -- 11,562,629
OPERATING EXPENSES:
Services, rent and
maintenance........... 3,598,094 197,359 -- 3,795,453
Selling and marketing.. 1,431,693 135,863 -- 1,567,556
General and
administrative........ 1,709,863 792,484 (300,000)(b) 2,202,347
Engineering............ 382,606 -- -- 382,606
Fixed asset impairment
and one-time
reengineering charges. 1,533,996 -- -- 1,533,996
Depreciation and
amortization.......... 1,392,526 134,895 394,510(c) 1,921,931
----------- ---------- -------- ----------- ---- ----
Total operating
expenses.............. 10,048,778 1,260,601 94,510 11,403,889
----------- ---------- -------- ----------- ---- ----
OPERATING INCOME (LOSS). (486,890) 740,140 (94,510) 158,740
----------- ---------- -------- ----------- ---- ----
OTHER INCOME (EXPENSES):
Other income........... 96,004 119,998 -- 216,002
Interest expense....... (1,112,287) (14,211) (328,125)(d) (1,454,623)
Accretion of stock
warrants.............. (228,874) -- -- (228,874)
Income from joint
venture............... 60,999 -- -- 60,999
Minority interest...... (5,673) -- -- (5,673)
----------- ---------- -------- ----------- ---- ----
Total other income
(expense)............. (1,189,831) 105,787 (328,125) (1,412,169)
----------- ---------- -------- ----------- ---- ----
INCOME (LOSS) BEFORE
INCOME TAX PROVISION... (1,676,721) 845,927 (422,635) (1,253,429)
INCOME TAX PROVISION.... -- -- -- --
----------- ---------- -------- ----------- ---- ----
NET INCOME (LOSS)....... (1,676,721) 845,927 (422,635) (1,253,429)
----------- ---------- -------- ----------- ---- ----
PREFERRED STOCK
DIVIDENDS.............. 218,922 -- 191,250(e) 410,172
----------- ---------- -------- ----------- ---- ----
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS.... $(1,895,643) $(1,663,601) $
=========== =========== ====
PRO FORMA LOSS
ATTRIBUTABLE TO COMMON
SHAREHOLDERS:
Class A Common Stock... $(1,893,759) $(1,661,948) $
Class B Common Stock... (1,884) (1,653)
BASIC AND DILUTED NET
LOSS PER SHARE:
Class A Common Stock .. $ (0.82) $ (0.72) $
Class B Common Stock .. (53.42) (47.23)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING--BASIC:
Class A Common Stock .. 2,304,370 2,304,370
Class B Common Stock .. 35 35
</TABLE>
- --------
ACQUISITION ADJUSTMENTS:
(a) Historical amounts related to the proposed acquisition of Hyde's in the
pro forma statement of operations for the six months ended January 31,
1998 have been derived from Hyde's unaudited financial statements for that
period.
(b) Reflects a reduction in salaries and distributions, reflected as expense,
to the owner of Hyde's who, pursuant to the stock purchase agreement, will
not continue employment with the Company upon consummation of the proposed
acquisition.
F-63
<PAGE>
(c) Reflects additional depreciation and amortization expense associated with
the increase in the basis of the acquired assets to fair market value at
the date of acquisition for Hyde's. Amounts allocated to customer base,
FCC licenses, covenant not to compete, goodwill and equipment in
connection with the Hyde's acquisition will be amortized over five, ten,
two, thirty, and ten years, respectively. Given that the acquisition of
Hyde's has not been consummated, the Company's estimated allocation of the
purchase price is preliminary. Subsequent to the consummation of the
Hyde's acquisition, the Company will undertake a full investigation of the
allocation of the purchase price among the assets acquired, and the result
of such an investigation may materially impact the Company's results of
operations as allocation of value among assets acquired with differing
useful lives may differ from management's current estimate.
(d) Reflects the increase in interest expense attributable to borrowings used
to affect to the proposed acquisition of Hyde's at an estimated interest
rate of (8.75% - LIBOR + 3%), which represents the Company's interest rate
at the time of the consummation of the acquisition.
(e) Reflects the accrual of dividends on Series D Redeemable Preferred Stock,
8.5% coupon, issued in connection with the Company's proposed acquisition
of Hyde's.
OFFERING ADJUSTMENTS:
(f) Reflects a reduction of interest expense related to the pay off of
outstanding long term debt from the proceeds of the offering at the
Company's blended historical rate of %.
(g) Reflects the elimination of the warrant accretion as the put feature is
contractually eliminated upon completion of an initial public offering.
(h) Reflects income tax effect, using an effective rate of %, related to the
Company's pro forma results of operations. Pro forma results do not
include any impact from changes in the valuation reserve which has been
recorded against net operating loss carryforwards historically incurred by
the Company. Upon completion of the initial public offering and
application of the proceeds to repay certain debt, the Company may
substantially reduce the valuation allowance.
(i) Reflects a decrease of $ in dividends related to the conversion of
Series C Preferred Stock which is automatically converted to common stock
in the event of an initial public offering and a decrease of $ related
to the conversion of Series A Preferred Stock which the Company intends to
convert into common stock in connection with the initial public offering,
and the decrease of $ in dividends related to the redemption of Series
D Preferred Stock which is required to be redeemed in the event of an
initial public offering.
(j) Excluding the effects of the one-time charge related to asset impairment
and reengineering charges in the amount of $ , net of tax, net income
and income per share would have been as follows:
<TABLE>
<S> <C>
Net income:
Class A Common Stock ........................................... $
Class B Common Stock ...........................................
Basic net income per share:
Class A Common Stock ........................................... $
Class B Common Stock ...........................................
Diluted net income per share: $
</TABLE>
(k) Basic weighted average common shares outstanding are comprised of the
following for each class of common stock:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- -------
<S> <C> <C>
Weighted average shares outstanding prior to initial
public offering..........................................
Conversion of Class B Common Stock........................
Conversion of Series A Convertible Preferred Stock........
Conversion of Series C Convertible Preferred Stock........
Issuance of common shares from the initial public
offering.................................................
-------- ---
Pro forma weighted average shares outstanding.............
======== ===
</TABLE>
F-64
<PAGE>
(l) Diluted net income per share is only applicable for periods in which
earnings are positive. Diluted net income per share consists of the
following:
<TABLE>
<CAPTION>
CLASS A
-------
<S> <C>
Pro forma weighted average shares outstanding........................
Dilutive stock options and warrants..................................
------
Pro forma weighted average shares outstanding........................
======
</TABLE>
F-65
<PAGE>
SATELLINK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------
SATELLINK PRO FORMA PRO FORMA CONSOLIDATED
COMMUNICATIONS, MESSAGE HYDE'S STAY ACQUISITION PRO FORMA OFFERING AS ADJUSTED
INC. WORLD(A) IN TOUCH, INC.(B) ADJUSTMENTS CONSOLIDATED ADJUSTMENTS FOR THE OFFERING
--------------- -------- ----------------- ----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Service, rent, and
maintenance.......... $16,308,042 $230,768 $3,939,527 $ -- $20,478,337 $ $
Product sales......... 1,264,418 130,409 1,113,468 -- 2,508,295
----------- -------- ---------- ----------- ----------- ------ ------
Total revenues........ 17,572,460 361,177 5,052,995 -- 22,986,632
Cost of products sold. 1,201,271 37,941 1,204,171 -- 2,443,383
----------- -------- ---------- ----------- ----------- ------ ------
Net revenues.......... 16,371,189 323,236 3,848,824 -- 20,543,249
OPERATING EXPENSES:
Services, rent, and
maintenance.......... 6,541,774 56,782 550,645 -- 7,149,201
Selling and marketing. 2,313,930 56,195 264,498 -- 2,634,623
General and
administrative....... 3,039,390 91,307 1,727,242 (558,125)(c) 4,299,814
Engineering........... 638,387 3,200 -- -- 641,587
Depreciation and
amortization......... 2,241,518 16,969 210,262 855,346 (d) 3,324,095
----------- -------- ---------- ----------- ----------- ------ ------
Total operating
expenses............. 14,774,999 224,453 2,752,647 297,221 18,049,320
----------- -------- ---------- ----------- ----------- ------ ------
OPERATING INCOME....... 1,596,190 98,783 1,096,177 (297,221) 2,493,929
----------- -------- ---------- ----------- ----------- ------ ------
OTHER INCOME
(EXPENSES):
Other income.......... 89,808 -- 61,448 -- 151,256
Interest expense...... (1,564,067) (18,299) (35,736) (733,967)(e) (2,352,069)
Accretion of stock
warrants............. (1,773,107) -- -- -- (1,773,107)
Income from joint
venture.............. 26,123 -- -- -- 26,123
Minority interest..... (2,829) -- -- -- (2,829)
----------- -------- ---------- ----------- ----------- ------ ------
Total other income
(expense)............ (3,224,072) (18,299) 25,712 (733,967) (3,950,626)
INCOME (LOSS) BEFORE
INCOME TAX PROVISION.. (1,627,882) 80,484 1,121,889 (1,031,188) (1,456,697)
INCOME TAX PROVISION... -- -- -- -- --
----------- -------- ---------- ----------- ----------- ------ ------
NET INCOME (LOSS)...... (1,627,882) 80,484 1,121,889 (1,031,188) (1,456,697)
PREFERRED STOCK
DIVIDENDS............. 438,558 -- -- 382,500 (f) 812,058
----------- -------- ---------- ----------- ----------- ------ ------
NET LOSS ATTRIBUTABLE
TO COMMON
SHAREHOLDERS.......... $(2,066,440) $(2,268,755) $
=========== =========== ======
PRO FORMA LOSS
ATTRIBUTABLE TO COMMON
SHAREHOLDERS:
Class A Common Stock.. $(2,035,280) $(2,234,544) $
Class B Common Stock.. (31,160) (34,211)
BASIC AND DILUTED NET
LOSS PER SHARE:
Class A Common Stock.. $ (0.90) $ (0.98) $
Class B Common Stock.. (58.24) (63.96)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES--
BASIC
Class A Common Stock.. 2,271,393 2,271,393
Class B Common Stock.. 535 535
</TABLE>
F-66
<PAGE>
- --------
ACQUISITION ADJUSTMENTS:
(a) The Message World acquisition was completed on February 1, 1997.
Historical amounts for Satellink in the pro forma statement of operations
for the year ended July 31, 1997 include the results of operations of
Message World subsequent to the acquisition date. Historical amounts shown
for Message World reflect its unaudited results of operations for the six
months ended January 31, 1997.
(b) Historical amounts related to the proposed acquisition of Hyde's in the
pro forma statement of operations for the year ended July 31, 1997 have
been derived from its unaudited financial statements for the annual period
ended September 30, 1997.
(c) Reflects a reduction in salaries and distributions, reflected as expense,
to the owner of Hyde's who, pursuant to the stock purchase agreement, will
not continue employment with Satellink upon consummation of the proposed
acquisition.
(d) Reflects additional depreciation and amortization expense associated with
the increase in the basis of the acquired assets to fair market value at
the date of acquisition for Message World and Hyde's (the "Acquisitions").
Amounts allocated to the Message World name will be amortized over ten
years. Amounts allocated to customer base, FCC licenses, covenant not to
compete, goodwill and equipment in connection with the Acquisitions will
be amortized over five, ten, two, thirty and ten years, respectively.
Given that the acquisition of Hyde's has not been consummated, the
Company's estimated allocation of the purchase price is preliminary.
Subsequent to the consummation of the transaction, the Company will
undertake a full investigation of the allocation of the purchase price
among the assets acquired, the result of such an investigation may
materially impact the Company's results of operations as allocation of
value among assets acquired with differing useful lives may differ from
management's current estimate.
(e) Reflects the increase in interest expense attributable to borrowings used
to affect the probable acquisition of Hyde's at an estimated interest rate
of (8.75% - LIBOR + 3%), which represents the Company's interest rate at
the time of the consumation of the acquisition and the incremental
interest expense related to the Message World acquisition at the Company's
blended interest rate of 9.72%.
(f) Reflects the accrual of dividends on Series D Redeemable Preferred Stock,
8.5% coupon, issued in connection with the Company's proposed acquisition
of Hyde's.
OFFERING ADJUSTMENTS:
(g) Reflects a reduction of interest expense related to the pay off of
outstanding long term debt from the proceeds of the offering at the
Company's blended historical rate of %.
(h) Reflects the elimination of the warrant accretion as the put feature is
contractually eliminated upon completion of an initial public offering.
(i) Reflects income tax effect, using an effective rate of %, related to the
Company's pro forma results of operations. Pro forma results do not
include any impact from changes in the valuation reserve which has been
recorded against net operating loss carryforwards historically incurred by
the Company. Upon completion of the IPO, and application of the proceeds
to repay certain debt, the Company may substantially reduce the valuation
allowance.
(j) Reflects a decrease of $ in dividends related to the conversion of
Series C Convertible Preferred Stock which is automatically converted to
common stock in the event of an initial public offering and a decrease of
$ related to the conversion of Series A Convertible Preferred Stock
which the Company intends to convert into common stock in connection with
the initial public offering, and the decrease of $ in dividends
related to the redemption of Series D Convertible Preferred Stock which is
required to be redeemed in the event of an initial public offering.
F-67
<PAGE>
(k) Basic weighted average common shares outstanding are comprised of the
following for each class of common stock:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------- -------
<S> <C> <C>
Weighted average shares outstanding prior to initial
public offering..........................................
Conversion of Class B common shares.......................
Conversion of Series A preferred stock....................
Conversion of Series C preferred stock....................
Issuance of common shares from the initial public
offering.................................................
-------- ---
Pro forma weighted average shares outstanding.............
======== ===
(l) Diluted earnings per share is only applicable for periods in which earnings
are positive. Diluted earnings per share consists of the following:
<CAPTION>
CLASS A
--------
<S> <C>
Pro forma weighted average shares outstanding.............
Dilutive stock options and warrants.......................
--------
Pro forma weighted average shares outstanding.............
========
</TABLE>
F-68
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH INFOR-
MATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OF COMMON STOCK OF-
FERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF
OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF.
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY RE-
QUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 21
Dividend Policy........................................................... 21
Capitalization............................................................ 22
Dilution.................................................................. 23
Selected Consolidated Financial and Operating Data........................ 24
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 26
Business.................................................................. 35
Management................................................................ 50
Certain Transactions...................................................... 55
Principal and Selling Shareholders........................................ 57
Description of Capital Stock.............................................. 59
Shares Eligible for Future Sale........................................... 62
Underwriting.............................................................. 66
Legal Matters............................................................. 67
Experts................................................................... 67
Available Information..................................................... 67
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHARES
[SATELLINK COMMUNICATIONS, INC.
LOGO APPEARS HERE]
COMMON STOCK
----------------
PROSPECTUS
----------------
J.C.Bradford&Co.
Morgan Keegan &
Company, Inc.
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered hereby, other
than underwriting discounts and commissions. All amounts except the SEC
registration fee and the NASD filing fee are estimated.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 10,178
NASD filing fee................................................. 3,950
Accounting fees and expenses.................................... 350,000
Nasdaq National Market listing fee.............................. 40,000
Legal fees and expenses......................................... 260,000
Printing and engraving expenses................................. 200,000
Blue sky fees and expenses...................................... 2,000
Directors and officers' insurance............................... 15,000
Transfer agent and registrar fees and expenses.................. 10,000
Miscellaneous................................................... 8,872
--------
Total......................................................... $900,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Bylaws state that the Company shall indemnify and save harmless the
directors, officers, employees and agents of the Company for personal losses
or damages incurred for acts or omissions done or not done on behalf of the
Company in accordance with the Company's indemnification policy (the
"Policy"). The Policy provides that the Company shall indemnify and hold
harmless any person who was or who is a party or who is threatened to be made
a party to any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than in an
action by or in the right of the Company) by reason of the fact that he or she
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
agent of another company, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, if he or she acted in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. No indemnification shall be made in respect of any claim, issue or
matter as to which a director, officer, employee or agent of the Company shall
have been adjudged to be liable to the Company, unless and only to the extent
that the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of the case, such person is fairly
and reasonably entitled to indemnify for such expenses which the court shall
deem proper. To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the Policy, he or she shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith. Otherwise, any
indemnification shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she
has met the applicable standard of conduct. Such a determination shall be
made: (1) by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding; (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel then employed
by the Company, in a written opinion; or (3) by the affirmative vote of a
majority of the shares entitled to vote thereon.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On November 17, 1995, the Company issued and sold 3,500 shares of Series C
Convertible Preferred Stock to Creditanstalt, Stiles A. Kellett, Jr., an
affiliate of Mr. Kellett and an unaffiliated accredited investor for cash
consideration of $1,000 per share and received proceeds of $3,500,000 in a
transaction exempt from registration pursuant to Sections 4(2) and 4(6) of the
Securities Act and Rule 505 of Regulation D thereunder. In accordance with the
terms and conditions of the designation of the Series C Convertible Preferred
Stock, contemporaneously with the consummation of the Offering, each issued
and outstanding share of Series C Convertible Preferred Stock will be
converted into 209.67115 shares of Common Stock without any further action on
the part of the Company or the Series C Investors.
During 1996, the Company approved the conversion of all outstanding shares
of Class B Common Stock into Class A Common Stock. As of January 31, 1998,
2,071 shares of Class B Common Stock have been converted into 134,635 shares
of Class A Common Stock, and there are no remaining shares of Class B Common
Stock outstanding. In February 1996, the Company issued and sold 81,250 shares
of Class A Common Stock for cash consideration of $3.08 per share and received
proceeds of $250,000 in a transaction exempt from registration under the
Securities Act pursuant to Section 4(2) thereunder.
On April 3, 1998, the Company issued and sold 4,500 shares of Series D
Redeemable Preferred Stock for cash consideration of $1,000 per share in a
transaction exempt from registration under the Securities Act pursuant to Rule
506 of Regulation D. The shares of Series D Redeemable Preferred Stock were
offered to and purchased by a limited number of accredited investors,
including certain directors and executive officers of the Company. Pursuant to
the terms of the designation of the Company's Series D Redeemable Preferred
Stock, all outstanding shares of Series D Redeemable Preferred Stock will be
redeemed contemporaneously with the consummation of the Offering through
proceeds realized from the Offering.
On August 1, 1995, the Company granted an option to an employee to purchase
65,000 shares of Common Stock at an exercise price of $2.31 per share (the
estimated fair value at the date of grant). The option has a term of five
years and vests ratably over a period of three years. In January 1998, the
employee partially exercised his option and purchased 43,333 shares of Common
Stock for cash consideration of $100,099. During fiscal 1997, the Company
granted to principals of Breckenridge options to purchase 130,000 shares of
Common Stock at an exercise price of $4.78 per share (the estimated fair value
at the date of grant) in consideration of services provided in connection with
several of the Company's acquisitions. The option has a term of five years and
vested immediately. During the six months ended January 31, 1998, the Company
granted options to employees to purchase 108,383 shares of Common Stock at an
exercise price of $6.00 per share (the estimated fair value at the date of
grant). These options to employees have terms of ten years and vest ratably
over a period of three years.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1* Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4.1 Stockholders Agreement, dated August 1, 1988, by and between Satellink
Paging, Inc. and the several stockholders of the Company.
4.2 Debenture Purchase Agreement and Amendment to Stockholders Agreement,
dated July 25, 1989, by and between Satellink Paging, Inc. and the
several stockholders of the Company.
4.3 Series A Preferred Stock Purchase Agreement and Second Amendment to
Stockholders Agreement, dated by and among Satellink Paging, Inc., the
several purchasers and the several security holders of the Company.
4.4 Second Amended and Restated Warrant Agreement, as amended, dated
November 17, 1995, by and between Satellink Paging, Inc. and
Creditanstalt American Corporation.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
4.5 First Amendment, dated May 31, 1996, to Second Amended and Restated
Warrant Agreement by and between Satellink Paging, Inc. and
Creditanstalt American Corporation
4.6 Second Amendment, dated June 27, 1997, to Second Amended and Restated
Warrant Agreement by and between Satellink Paging, Inc. and
Creditanstalt American Corporation.
4.7 Series C Convertible Preferred Stock Securities Purchase Agreement,
dated November 17, 1995, by and among Satellink Paging, Inc. and
Creditanstalt American Corporation. (The Company has entered into
agreements substantially similar in all material respects to this
agreement. A schedule of such similar agreements is attached to this
exhibit).
4.8 Form of Preferred Stock and Warrant Purchase Agreement, dated April 3,
1998, by and among Satellink Communications, Inc. and the several
purchasers of Series D Preferred Stock.
5 Form of opinion regarding legality.
10.1 Satellink Communications, Inc. 1997 Long-Term Incentive Plan.
10.2 Asset Purchase Agreement, dated February 1, 1997, by and among
Satellink Paging, LLC, Saner Communications, Inc. and Michael J.
Saner.
10.3 Merger Agreement, dated May 23, 1997, by and among Satellink Paging,
Inc., A. Lee Pickard and Satellink Paging, LLC.
10.4 Shareholder Agreement, dated May 25, 1995, between C.R., Inc., Cape
Fear Paging Company of North Carolina and Satellink Paging, Inc.
10.5 Merger Agreement, dated January 27, 1998, by and among Premier Paging,
Inc., Premier Paging of New Orleans, Inc., the shareholders of Premier
Paging, Inc., the shareholders of Premier Paging of New Orleans, Inc.
and Satellink Paging, LLC.
10.6 Asset Purchase Agreement, dated May 31, 1996, between Satellink
Paging, Inc., C.R., Inc., James Sowell, Larry Simmons and Jay Lee
Jameson, as Trustee of The Safeton Trust.
10.7 Asset Purchase Agreement, dated February 15, 1997, by and among
Satellink Paging, LLC, Call One, Inc., James Sowell, Larry Simmons and
Jay Lee Jameson, as Trustee of The Safeton Trust.
10.8 Option to Purchase Common Stock of Satellink Communications, Inc.
executed in favor of Donald W. Rochow of The Breckenridge Group, Inc.
(The Company has entered into agreements substantially similar in all
material respects to this agreement. A schedule of such similar
agreements is attached to this exhibit).
10.9 Third Amended and Restated Loan and Security Agreement, dated June 27,
1997, by and among Satellink Communications, Inc., Satellink Paging,
LLC, certain named Lenders and Creditanstalt-Bankverein.
10.10 First Amendment, dated March 11, 1998, to Third Amended and Restated
Loan and Security Agreement by and among Satellink Communications,
Inc., Satellink Paging, LLC, certain named Lenders and Creditanstalt-
Bankverein.
10.11* Agreement with Cape Fear Paging Company of North Carolina.
10.12** Sales and Distribution Agreement, dated May 21, 1996, between Paging
Network of Atlanta, Inc. and Satellink Paging, Inc.
10.13** Agency Agreement for Private Carrier Paging (Georgia), dated March 4,
1992, between Preferred Networks, Inc. and Satellink Paging, Inc.
10.14* A+ Network Agreement
10.15* Pager Supply Agreement
10.16** Distribution Agreement, dated April 2, 1990, between CUE Paging
Corporation and Satellink Paging, Inc., as amended by that certain
Amendment to the Distribution Agreement, dated April 2, 1990.
10.17** Regional Affiliate Agreement, dated August 20, 1990, between CUE
Paging Corporation and C.R., Inc., as assigned to Satellink Paging,
Inc.
10.18** Distribution Agency Agreement, dated November 29, 1989 between
Satellink Paging, Inc. and Southern Connections, Inc. (The Company has
entered into agreements substantially similar in all material respects
to this agreement. A schedule of such similar agreements is attached
to this exhibit).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
10.19** Reseller Agreement, dated October 17, 1997, between Destineer
Corporation and Satellink Paging , Inc. d/b/a/ Satellink Messaging
10.20 Stock Purchase Agreement, dated April 9, 1998 by and amoung Satellink
Paging, LLC and Hyde's Stay In Touch, Inc. and R. Daniel Hyde, Jr.
21 Subsidiaries of the Company.
23.1 Consent of Alston & Bird LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of James N. Rachel.
24 Power of Attorney (included in Part II of the Registration Statement).
27 Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment
**Portions omitted pursuant to a request for confidential treatment.
(b) The following Financial Statement Schedules of Satellink Communications,
Inc. are included in this Registration Statement:
Not Applicable.
ITEM 17. UNDERTAKINGS.
(f) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Roswell, State of
Georgia, on the 10th day of April, 1998.
SATELLINK COMMUNICATIONS, INC.
By: /s/ Jerry W. Mayfield
--------------------------------
JERRY W. MAYFIELD
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jerry W. Mayfield and Daniel D. Lensgraf, or
either of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
pre-effective and post-effective amendments) to this Registration Statement
and to sign any registration statement (and any post-effective amendments
thereto) effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposed as he might or could do in person, hereby ratifying and confirming
that said attorney-in-fact, agent or their substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on April 10, 1998.
SIGNATURE TITLE
/s/ Jerry W. Mayfield Chairman of the Board,
- ------------------------------------- President and Chief
Jerry W. Mayfield Executive Officer
(Principal Executive
Officer)
/s/ Daniel D. Lensgraf Senior Vice President--
- ------------------------------------- Finance & Administration
Daniel D. Lensgraf and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ James O. Carpenter Director
- -------------------------------------
James O. Carpenter
/s/ Marc A. Comeaux Director
- -------------------------------------
Marc A. Comeaux
II-5
<PAGE>
SIGNATURE TITLE
/s/ Robert D. Gage, IV Director
- -------------------------------------
Robert D. Gage, IV
/s/ Gordon E. Kaiser Director
- -------------------------------------
Gordon E. Kaiser
/s/ Stiles A. Kellett, Jr. Director
- -------------------------------------
Stiles A. Kellett, Jr.
/s/ David C. Massey Director
- -------------------------------------
David C. Massey
/s/ Robert P. Poche Director
- -------------------------------------
Robert P. Poche
II-6
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION OF
SATELLINK COMMUNICATIONS, INC.
I.
The name of the corporation is:
Satellink Communications, Inc.
II.
The corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III.
The corporation shall have perpetual duration.
IV.
The object of the corporation is pecuniary gain and profit and the
corporation is formed for the purpose of providing national, regional and local
paging services and engaging in such other businesses as the Board of Directors
may from time to time specify by resolution.
V.
A. Authorized Capitalization. The total number of shares of capital
-------------------------
stock that the corporation shall be authorized to issue is Fifty
Million Sixty Eight Thousand Five Hundred (50,068,500) divided into
three classes as follows: (a) Fifty Million (50,000,000) shares of
Class A common stock, $.01 par value ("Class A Common Stock"); (b)
Twenty Thousand (20,000) shares of Class B common stock, $.01 par
value ("Class B Common Stock"); and (c) Forty Eight Thousand Five
Hundred (48,500) shares of preferred stock, $.01 par value ("Preferred
Stock").
B. Common Stock. The shares of Class A Common Stock shall have unlimited
------------
voting rights. The holders of shares of Class A Common Stock shall be
entitled to one vote per share in all proceedings in which action way
be or is required to be taken by the shareholders of the corporation.
The shares of Class A Common Stock and the Class B Common Stock
(together, "Common Stock") shall be identical in all respects and for
all
<PAGE>
purposes except that the holders of shares of Class B Common Stock
shall not be entitled to vote except with respect to those matters as
to which the Georgia Business Corporation Code expressly confers
voting rights upon non-voting shares. Each share of Common Stock
shall be entitled to participate equally in all dividends payable with
respect to the Common Stock as, if, and when declared by the Board of
Directors of the corporation, subject to any dividend preferences of
the Preferred Stock then outstanding, and share ratably in all assets
of the corporation in the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the affairs of the
corporation or upon any distribution of the assets of the corporation,
subject to any liquidation preferences of the Preferred Stock then
outstanding.
C. Preferred Stock. Subject to the provisions of the Articles of
---------------
Incorporation and to the provisions of the Georgia Business
Corporation Code, as it exists now or as hereafter may be amended, the
Board of Directors of the corporation may determine the preferences,
limitations, and relative rights of any series of Preferred Stock and
may designate the number of shares within that series prior to the
issuance of any shares of that series.
D. Series A Convertible Preferred Stock. The authorized shares of
------------------------------------
Preferred Stock of the corporation shall include a series designated
as Series A Convertible Preferred Stock (the "Series A Preferred
Stock") which shall consist of Seven Thousand Five Hundred (7,500)
shares. The rights, preferences, privileges, and restrictions granted
to and imposed upon the Series A Preferred Stock are:
(1) Voting. The holders of shares of Series A Preferred Stock shall
------
be entitled to vote on all matters submitted to a vote of the
shareholders of the corporation, voting together with the holders
of Class A Common Stock as one class. Each share of Series A
Preferred Stock shall be entitled to the number of votes equal to
the number of shares of Class A Common Stock into which such
share of Series A Preferred Stock could be converted on the
record date for determining the shareholders entitled to vote,
rounded to the nearest hundredth of a vote; it being understood
that whenever the Conversion Price (as hereinafter defined) is
adjusted as provided in paragraph (5) of this Article V.D., the
voting rights of the Series A Preferred Stock shall also be
similarly adjusted. Except as required by law or set forth in
this paragraph (1) of this Article V.D., the shares of Series A
Preferred Stock shall have no special voting rights and their
consent shall not be required for the taking of any corporate
action.
-2-
<PAGE>
(2) Dividends. The holders of shares of Series A Preferred Stock
---------
shall be entitled to receive out of funds legally available
therefor and, after payment of dividends on the Series C
Convertible Preferred Stock and Series D Redeemable Preferred
Stock, but before any cash, stock, or other dividend is declared
or paid with respect to any class or series of Common Stock or
any other class or series of capital stock of the Company (except
the Series C Convertible Preferred Stock and the Series D
Redeemable Preferred Stock), whether now existing or hereafter
issued, when, as and if declared by the board of directors,
dividends at the rate per annum of $12.00 per share payable
annually on November 15 (or, if such date is not a business day,
on the business day immediately following such date) commencing
on November 15, 1991, to holders of record on the 10th business
day preceding the dividend payment date. Commencing on the date
of original issuance of the shares of Series A Preferred Stock
(the "Original Issuance Date"), dividends shall accrue from day
to day, whether or not earned or declared, and shall be
cumulative; provided, however, that except as provided in
paragraphs (3) and (11) of this Article V. D., the corporation
shall be under no obligation to pay dividends unless and until
declared by the Board of Directors. Dividends accrued on shares
of Series A Preferred Stock for any period less than a full
annual period between the dividend payment dates (or, in the case
of the first dividend payment, from the Original Issuance Date
through the first dividend payment date) shall be computed on the
basis of a 360-day year of 30-day months. Accrued but unpaid
dividends shall accumulate as of the dividend payment date on
which they first become payable, but no interest shall accrue or
be payable on accumulated but unpaid dividends. Any partial
payment of then accrued dividends on shares of Series A Preferred
Stock shall be made pro rata.
--------
(3) Liquidation. Upon any liquidation, dissolution, or winding up of
-----------
the corporation, whether voluntary or involuntary, the holders of
shares of Series A Preferred Stock shall be entitled to receive,
out of the assets or funds of the corporation which remain after
satisfaction in full of all valid claims of creditors and which
are available for distribution to shareholders, and after any
distribution or payment of any such assets or funds of the
corporation to the holders of Series C Convertible Preferred
Stock and Series D Redeemable Preferred Stock but prior to and in
preference of any distribution or payment of any such assets or
funds of the corporation to the holders of shares of Common Stock
or of any class or series of capital stock of the Corporation
(except the Series C Convertible Preferred Stock and Series D
Redeemable Preferred
-3-
<PAGE>
Stock), whether now existing or hereafter created, a liquidation
payment in an amount equal to all dividends accrued but unpaid
thereon (whether or not declared) to the date payment thereof is
made available to the holders of shares of Series A Preferred
Stock, plus a cumulative liquidation premium at the rate of
$38.00 per share per annum accruing from the Original Issue Date
to the date payment is made available to holders of shares of
Series A Preferred Stock, computed on the basis of a 360-day year
of 30-day months; provided, however, that if the liquidation,
-----------------
dissolution or winding up of the corporation, whether voluntary
or involuntary, occurs following the fifth anniversary of the
Original Issue Date, the liquidation premium shall be $190.00 per
share. The amount payable with respect to a share of Series A
Preferred Stock pursuant to this paragraph (3) of this Article
V.D. upon the liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, is hereinafter
referred to as the "Liquidation Payment." If upon the
liquidation, dissolution or winding, up of the corporation,
whether voluntary or involuntary, the assets or funds which
remain after satisfaction in full of all valid claims of
creditors and after payment of the liquidation preference of the
Series C Convertible Preferred Stock and Series D Redeemable
Preferred Stockand which are available for distribution to the
holders of shares of Series A Preferred Stock shall be
insufficient to permit payment to the holders of shares of Series
A Preferred Stock of the full amounts of their Liquidation
Payments, then the assets or funds of the corporation available
for such distribution shall be distributed pro rata among the
--------
holders of shares of Series A Preferred Stock then outstanding
based on the number of shares of Series A Preferred Stock held by
each. After the holders of the Series A Preferred Stock have
been paid in full their Liquidation Payments, the remaining
assets or funds of the corporation, if any, may be distributed to
the holders of stock ranking on liquidation junior to the Series
A Preferred Stock. Written notice of the liquidation,
dissolution or winding up of the corporation, whether voluntary
or involuntary, stating a payment date, the amount of the
Liquidation Payment per share, and the place where Liquidation
Payments shall be payable, shall be given by mail, postage
prepaid not less than twenty (20) days prior to the payment date
stated therein, to the holders of record of shares of Series A
Preferred Stock, such notice to be addressed to each such holder
at his or its address as shown by the records of the corporation.
A consolidation or merger of the corporation into or with any
other entity or entities or a sale, lease, exchange or transfer
by the corporation of all or any part of its assets which shall
not in fact result in the liquidation (in whole or in part) of
the
-4-
<PAGE>
corporation, and the distribution of its assets to its
shareholders, shall be deemed not to be a liquidation,
dissolution or winding up of the corporation within the meaning
of the provisions of this paragraph (3) of this Article V.D.
(4) Conversion. The holders of shares of Series A Preferred Stock
----------
shall have the following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of
----------------
this paragraph (4) of this Article V.D., each share of
Series A Preferred Stock shall be convertible, at the option
of the holder thereof, at any time after the date of
Issuance of such share, into fully paid and nonassessable
shares of Class A Common Stock initially at a conversion
price equal to $200.00 per share of Class A Common Stock,
with each share of Series A Preferred Stock being valued at
$100.00 for such purpose, which conversion price shall be
adjusted as hereinafter provided in this Article V.D. (such
conversion price, as so adjusted, is hereinafter sometimes
referred to as the "Conversion Price") (that is, a
conversion rate initially equivalent to one (1) share of
Class A Common Stock for each share of Series A Preferred
Stock so converted, subject to adjustment as the Conversion
Price is adjusted as hereinafter provided in this Article
V.D.).
(b) Mechanics of Conversion. The conversion rights of holders
-----------------------
of shares of Series A Preferred Stock shall be exercised by
giving written notice that the holder elects to convert a
stated number of shares of Series A Preferred Stock into
Class A Common Stock to the corporation at its principal
office (or such other office or agency of the corporation as
the corporation may designate by notice in writing to the
holders of shares of Series A Preferred Stock). Before any
holder of shares of Series A Preferred Stock shall be
entitled to convert the same into shares of Class A Common
Stock and to receive certificates therefor, the holder shall
surrender the certificate or certificates representing the
shares of Series A Preferred Stock to be converted, duly
endorsed, at the principal office of the corporation (or
such other office or agency of the corporation as the
corporation may designate by notice in writing to the
holders of Series A Preferred stock) (or shall notify the
corporation that such certificate has been lost, stolen or
destroyed and shall execute an agreement satisfactory to the
corporation to indemnify the corporation
-5-
<PAGE>
for any lose it may incur in connection with such lost,
stolen or destroyed certificate), and shall give written
notice to the corporation at such office specifying the name
or names in which such holder wishes the certificate or
certificates for shares of Class A Common Stock to be issued
if different from the name of such holder shown on the books
and records of the corporation. No fractional shares of
Class A Common Stock shall be issued upon conversion of
shares of Series A Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be
entitled, the corporation may, in its sole discretion, elect
to pay a cash amount equal to such fraction multiplied by
the then effective Conversion Price. The corporation shall,
as soon as practicable after delivery of such certificate or
certificates, or such agreement and indemnification in the
case of lost, stolen or destroyed certificate or
certificates, issue and deliver to such holder of shares of
Series A Preferred Stock a certificate or certificates for
the number of shares of Class A Common Stock to which such
holder shall be entitled as aforesaid, and, if the
corporation elects not to issue fractional shares, a check
payable to the holder in the amount of any cash amounts
payable in lieu of a fractional share of Class A Common
Stock resulting from the conversion. Such conversion shall
be deemed to have been made immediately prior to the close
of business (the "Conversion Date") on the date of surrender
of the certificate or certificates representing the shares
of Series A Preferred Stock to be converted, and the person
or persons entitled to receive the certificate or
certificates for the shares of Class A Common Stock issuable
upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Class A
Common Stock on such date. The corporation shall not be
obligated to pay any dividends which shall have been
declared and shall be payable to holders of shares of Series
A Preferred Stock on a dividend payment date if the dividend
record date for such dividend is subsequent to the
Conversion Date.
(5) Adjustment of Conversion Price. If and whenever the corporation
------------------------------
shall issue or sell, or is, in accordance with the applicable
provisions of this paragraph (5) of this Article V.D., deemed to
have issued or sold, any shares of Common Stock for consideration
per share less than the Conversion Price in effect immediately
prior to such issuance or sale, then, forthwith upon such
issuance or sale, the Conversion Price of the shares of Series A
Preferred Stock
-6-
<PAGE>
shall be reduced to a price equal to the price per share at which
the corporation issued or sold or is deemed to have issued or
sold, such shares of Common Stock. Notwithstanding anything
contained herein to the contrary, no adjustment of the Conversion
Price shall be made as a result of the issuance of: (i) any
shares issued pursuant to any other stock option or other plan
duly adopted by the Board of Directors of the corporation,
provided that this exception shall not apply to issuances made
pursuant to such plans which exceed ten (10%) percent of the
Common Stock of the corporation then outstanding on a fully
diluted basis, counting as outstanding all shares of Common Stock
issuable upon exercise or conversion of all outstanding options,
warrants, and convertible securities and (ii) any shares of
Common Stock issued pursuant to the conversion of any shares of
Class A Preferred Stock.
(a) Issuance of Rights or Options. In case at any time the
-----------------------------
corporation shall grant (whether directly or by assumption
in a merger or otherwise) any warrants or other rights to
subscribe for or purchase, or grant any options for the
purchase of, Common Stock or any security convertible into
or exchangeable for Common Stock (such warrants, rights,
options are hereinafter the "Options" and such convertible
or exchangeable stock or securities are hereinafter
"Convertible Securities") whether or not the Options or the
right to convert or exchange the Convertible Securities are
immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such options
or upon the conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if
any, received or receivable by the corporation as
consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable
to the corporation upon the exercise of all such options,
plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issuance
or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise
of such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Conversion Price in
effect immediately prior to the time of the granting of such
options, then the total maximum number of shares of Common
Stock issuable upon the
-7-
<PAGE>
exercise of such options or upon conversion or exchange of
the total maximum amount of such Convertible Securities
issuable upon the exercise of such options shall be deemed
to have been issued for such price per share as of the date
of granting of such Options and thereafter shall be doomed
to be outstanding, except as otherwise provided in paragraph
(5) (c) of this Article V.D., no adjustment of the
Conversion Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon
exercise of such options or upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. In case the corporation
----------------------------------
shall issue or sell (whether directly or by assumption in a
merger or otherwise) any Convertible Securities (other than
Convertible Securities issued upon the exercise of Options
referred to in paragraph (5)(a) of this Article V. D.),
whether or not the rights to exchange or convert the
Convertible Securities are immediately exercisable, and the
price per share for which common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the total
amount received or receivable by the corporation as
consideration for the issuance or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the corporation upon the
conversion or exchange thereof, by (ii) the total maximum
number of shares of Common stock issuable upon the
conversion or exchange of all such convertible Securities)
shall be less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then
the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such
price per share as of the date of the issuance or sale of
such Convertible Securities and thereafter shall be deemed
to be outstanding, and, except as otherwise provided in
paragraph (5)(c) of this Article V.D., no adjustment of the
Conversion Price shall be made upon the actual issuance of
such Common Stock upon conversion or exchange of such
Convertible Securities.
(c) Change in Option Price or Conversion Rate. Upon the
-----------------------------------------
occurrence of any of the following events, namely, if the
purchase price provided for in any option referred to in
-8-
<PAGE>
paragraph (5)(a) of this Article V.D., the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
paragraphs (5)(a) or (5)(b) of this Article V.D., or the
rate at which Convertible Securities referred to in
paragraphs (5)(a) or (5)(b) of this Article V.D. are
convertible into or exchangeable for Common Stock shall
change at any time (including, but not limited to, changes
under or by reason of provisions designed to protect against
dilution), the Conversion Price in effect at the time of
such event shall forthwith be adjusted to the Conversion
Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration,
or conversion rate, as the case may be, at the time
initially granted, issued, or sold, but only if as a result
of such adjustment the Conversion Price then in effect
hereunder is thereby reduced; and on the expiration of any
such option or the termination of any such right to convert
or exchange such Convertible Securities referred to in
paragraphs (5)(a), (5)(b) or (5)(c) of this Article V.D.,
the Conversion Price then in effect hereunder shall
forthwith be increased to the Conversion Price which would
have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration
or termination, never been issued.
(d) Stock Dividends. In case the corporation shall declare a
---------------
dividend or make any other distribution upon or with respect
to any security of the corporation which dividend or
distribution is payable in Common Stock (except for
dividends or distributions upon the Common Stock), Options,
or Convertible Securities, any Common Stock Options, or
Convertible Securities issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold
for consideration equal to the fair value of such Common
Stock, Options, or Convertible Securities as determined in
good faith by the Board of Directors of the corporation and
the Conversion Price of the outstanding Series A Preferred
Stock shall be adjusted, if appropriate, pursuant to the
applicable provisions of this paragraph (5) of this Article
V.D.
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<PAGE>
(e) Consideration for Stock. In case any shares of Common
-----------------------
Stock, Options, or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be
deemed to be the amount received by the corporation
therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid
or allowed by the corporation in connection therewith. In
case any shares of Common Stock, Options, or Convertible
Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash
received by the corporation shall be deemed to be the fair
value of such consideration as determined in good faith by
the Board of Directors of the corporation, without deduction
of any expenses incurred or any underwriting commission or
concessions paid or allowed by the corporation in connection
therewith. in case any options shall be issued in connection
with the issue and sale of other securities of the
corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have
been issued for such consideration as determined in good
faith by the Board of Directors of the corporation.
(f) Record Date. In case the corporation shall take a record of
-----------
the holder or holders of a class of securities for the
purpose of determining the holders thereof who are entitled
(i) to receive a dividend or other distribution payable in
Common Stock, Options, or Convertible Securities, (ii) to
subscribe for or otherwise acquire any shares of stock of
any class or any other securities or property, or (iii) to
receive any other distribution, payment, or right, the
corporation shall mail to each holder of shares of Series A
Preferred Stock at least twenty (20) days prior to such
record date, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend,
distribution, payment or right, and description of the
amount and character of such dividend, distribution,
payment, or right.
(g) Treasury Shares. The disposition of any shares of Common
---------------
Stock owned or held by or for the account of the corporation
shall be considered an issue or sale of Common Stock for the
purpose of this paragraph (5) of this Article V.D.
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<PAGE>
(h) Subdivision or Combination of Common Stock. In case the
------------------------------------------
corporation shall at any time subdivide (by any stock split,
stock dividend, recapitalization, or otherwise) its
outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionally reduced, and,
conversely, in case the outstanding shares of Common Stock
shall be combined into a smaller number of shares (by a
reverse stock split, recapitalization, or otherwise), the
Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(i) Reorganization or Reclassification. If any capital
----------------------------------
reorganization or reclassification of the capital stock of
the corporation (other than any reorganization or
reclassification effected in a transaction that is deemed a
liquidation, dissolution, or winding up of the corporation
pursuant to paragraph (3) of this Article V.D.) shall be
effected, and, as a result thereof, holders of shares of
Class A Common Stock shall be entitled to receive securities
or assets with respect to or in exchange for shares of Class
A Common Stock, then, as a condition of such reorganization
or reclassification, lawful and adequate provisions shall be
made whereby each holder of shares of Series A Preferred
Stock shall have the right to receive, upon conversion of
the shares of Series A Preferred Stock held by such holder,
in lieu of the shares of Class A Common Stock immediately
theretofore issuable upon the conversion of shares of Series
A Preferred Stock, the number and kind of securities or the
amount and kind of assets to which a holder of a number of
shares of Class A Common Stock into which such shares of
Series A Preferred Stock could have bean converted
immediately prior to such reorganization or
reclassification, and in any such case, appropriate
provisions shall be made with respect to the rights and
interests of holders of Series A Preferred Stock such that
the provisions of this Article V.D. (including, without
limitation, provisions for adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as
possible, with respect to any securities or assets
thereafter deliverable upon the exercise of the conversion
rights of the shares of Series A Preferred Stock.
(j) Notice of Adjustment. Upon any adjustment of the Conversion
--------------------
Price the corporation shall give written notice
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<PAGE>
thereof, by first class mail, postage prepaid, addressed to
each holder of shares of Series A Preferred Stock at the
address of such holder as shown on the books of the
corporation, which notice shall state the conversion price
resulting from such adjustment, setting forth in reasonable
detail the method upon which such calculation is based.
(k) Exception. Notwithstanding any provision of this Section
---------
D(5) to the contrary, no provision of this Section D(5)
shall apply, or cause any adjustment in the Conversion Price
as a result of (i) the issuance or exercise of that Warrant
to be issued by the Corporation pursuant to a Warrant
Agreement with Creditanstalt-Bankverein (the "Warrant
Agreement"), (ii) the issuance, conversion, exercise or
rights granted to the shares of Class A Common Stock or
Series B Convertible Preferred Stock to be issued upon
exercise of the Warrants or upon the conversion of the
Series B Convertible Preferred Stock, respectively, or (iii)
the granting, exercise or operation of any rights granted in
the Warrant Agreement.
(6) Other Notices. In case at any time:
-------------
(a) the corporation shall declare any dividend upon its Common
Stock or any class thereof payable in cash or stock or make
any other distribution to the holders of its Common Stock or
any class thereof;
(b) the corporation shall offer for subscription pro rata to the
holders of its Common Stock or any class thereof any
additional shares of stock of any class or the rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the corporation, or
a consolidation or merger of the corporation with or into,
or a sale of all or substantially all its assets to, another
entity or entities;
(d) there shall be voluntary or involuntary dissolution,
liquidation, or winding up of the corporation; or
(e) the corporation shall be in default under any of its
material contracts, agreements, commitments or instruments;
then, in any one or more of said cases, the corporation
shall give, by first class mail, postage prepaid, addressed
to each
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<PAGE>
holder of shares of Series A Preferred Stock at the address
of such holder as shown on the books of the corporation, (i)
at least twenty (20) days prior written notice of the date
on which the books of the corporation shall close or a
record shall be taken for such dividend, distribution, or
subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or
winding up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, at least twenty (20) days prior
written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause shall
also specify, in the case of any such dividend,
distribution, or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and such
notice in accordance with the foregoing clause shall also
specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, as the case may be.
(7) Stock to Be Reserved. The corporation shall at all times reserve
--------------------
and keep available out of its authorized but unissued Class A
Common Stock, solely for the purpose of effecting the conversion
of the shares of Series A Preferred Stock as herein provided,
such number of shares of Class A Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding
shares of Series A Preferred Stock; and if at any time the number
of authorized but unissued shares of Class A Common Stock shall
not be sufficient to effect the conversion of all the then
outstanding Series A Preferred Stock, the corporation will take
such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Class
A Common Stock to such number of shares as shall be sufficient
for such purpose.
(8) No Reissuance of Converted, Redeemed or Repurchased Series A
------------------------------------------------------------
Preferred Stock. Any shares of Series A Preferred Stock which
---------------
are converted into shares of Class A Common stock as provided in
this Article V.D., and any shares of Series A Preferred Stock
redeemed pursuant to paragraph (11) of this Article V.D. or
otherwise acquired by the corporation in any manner whatsoever,
shall be cancelled and shall not under any circumstances be
reissued, and
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<PAGE>
the corporation may from time to time take such appropriate
corporate action as may be necessary to reduce accordingly the
number of authorized shares of Series A Preferred Stock.
(9) The issuance of certificates for shares of Class A Common Stock
upon conversion of shares of Series A Preferred Stock shall be
made without charge to the holders thereof for any issuance tax
in respect thereof, provided that the corporation shall not be
required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate
in a name other than that of the holder of shares of Series A
Preferred Stock which is being converted.
(10) Closing of Books. The corporation will at no time close its
----------------
transfer books against the transfer of any shares of Series A
Preferred Stock or of any shares of Class A Common Stock issued
or issuable upon the conversion of any shares of Series A
Preferred Stock in any manner which interferes with the timely
conversion of such shares of Series A Preferred Stock, except as
say otherwise be required to comply with applicable securities
laws or by agreement among the holders of the shares of Series A
Preferred Stock.
(11) Right of Corporation to Call Shares. The corporation shall have
-----------------------------------
the right to call for redemption all or any part of the
outstanding shares of Series A Preferred Stock, at any time or
from time to time following the third anniversary of the Original
Issue Date, at a price per share equal to the Liquidation Payment
that would be payable thereon if the corporation were liquidated,
disposed, or wound up on the date fixed for redemption. The
amount payable with respect to each share of Series A Preferred
Stock is hereinafter referred to as the "Call Price." Written
notice of the corporation's election to purchase all or part of
the then outstanding shares of Series A Preferred Stock stating a
payment date, the amount of the Call Price, and the place where
the Call Price shall be payable, shall be given by mail, postage
prepaid, not less than thirty (30) but not more than sixty (60)
days prior to the payment date stated therein, to the holders of
record of all shares of Series A Preferred Stock called for
redemption, such notice to be addressed to each such holder at
its address as shown by the records of the corporation. Each
holder of shares of Series A Preferred Stock shall be entitled to
convert the shares of Series A Preferred Stock held by such
holder pursuant to paragraph (4) of this Article V.D. at any time
prior to the payment date set forth in the written notice.
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<PAGE>
E. Series B Convertible Preferred Stock. The authorized number of shares
------------------------------------
of Preferred Stock of the Corporation shall include a Series B Convertible
Preferred Stock (the "Series B Preferred Stock") which shall consist of
THIRTY THOUSAND (30,000) shares, par value $.01 per share. The rights,
preferences, privileges and restrictions granted to and imposed upon the
Series B Preferred Stock are:
(1) Rank. All shares of Series B Preferred Stock shall rank equally
----
and be identical in all respects. The Corporation shall not be
restricted from issuing additional securities of any kind, including
shares of preferred stock of any class, series or designation
(including, without limitation, preferred stock ranking in parity as
to rights and preferences with the Series B Preferred Stock now or
hereafter authorized), provided that issuances of the Series B
Preferred Stock shall be limited to issuance to Creditanstalt American
Corporation or any Affiliate of Creditanstalt American Corporation (as
such term is defined in Article V, Section E(5)(a)).
(2) Dividends. Dividends and other distributions, payable in cash or
---------
other property shall be paid on the Series B Preferred Stock equally,
ratably and on a parity with such dividends and other distributions
paid on the Common Stock, as and when such dividends and other
distributions are declared by the Board of Directors of the
Corporation, as though the Common Stock and Series B Preferred Stock
were on and the same class: provided that in determining the number of
shares of Series B Preferred Stock outstanding and entitled to receipt
of any such dividend or other distribution, each share of Series B
Preferred Stock outstanding shall be deemed to be equal to the number
of shares of Common Stock into which one share of Series B Preferred
Stock could have been converted on the date on which the holders of
Common Stock and Series B Preferred Stock were determined to receive
payment of such dividend or other distribution, after giving effect to
any adjustments.
(3) Voting Rights. Except as otherwise specifically provided by the
-------------
Georgia Business Corporation Code or other laws of the State of
Georgia, the holders of Series B Preferred Stock shall not be entitled
to vote or give a consent to or on any matters required or permitted
to be submitted to the shareholders of the Corporation for their
approval.
(4) Liquidation. The Series B Preferred Stock shall be preferred
-----------
upon liquidation over the Common Stock and any other class or classes
of stock of the Corporation ranking junior in rights and preferences
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<PAGE>
to the Series B Preferred Stock upon liquidation, so that holders of
shares of Series B Preferred Stock shall be entitled to be paid, after
full payment is made on any stock ranking prior to the Series B
Preferred Stock as to rights and preferences, but before any
distribution is made to the holders of the Common Stock and such junior
stock upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation. The amount payable on each share of
Series B Preferred Stock in the event of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation shall be $.01
per share. After such payment of $.01 per share shall have been made in
full to the holders of the Series B Preferred Stock, the holders of the
outstanding Series B Preferred Stock shall be entitled to share ratably
with the holders of the other classes of stock then outstanding in the
distribution of the remaining assets of the Corporation. If, upon any
such liquidation, dissolution or winding up of the Corporation, its net
assets are insufficient to permit the payment in full of the amounts to
which the holders of all outstanding shares of Series B Preferred Stock
are entitled as above provided, the entire net assets of the Corporation
remaining (after full payment is made on any classes or series of stock
ranking prior to the Series B Preferred Stock) shall be distributed
among the holders of shares of Series B Preferred Stock in amounts
proportionate to the full preferential amounts to which they and holders
of shares of preferred shares ranking in parity with the Series B
Preferred Stock are entitled. For the purpose of this Section 4, the
voluntary sale, lease, exchange or transfer, for cash, shares of stock,
securities or other consideration, of all or substantially all the
Corporation's property or assets to, or its consolidation or merger
with, one or more corporations shall not be deemed to be a liquidation,
dissolution or winding up of the Corporation voluntary or involuntary.
Notwithstanding the foregoing, in the event that any holder of Series B
Preferred Stock converts its Series B Preferred Stock to Common Stock
pursuant to Section 5 hereof, the right to preferential liquidation
rights with respect to such converted stock pursuant to this Section 4
shall be immediately terminated.
(5) Conversion Provisions.
---------------------
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall be convertible at any
time at the option of the holder thereof, upon surrender to the
transfer agent for the Series B Preferred Stock of the Corporation
of the certificate or certificates evidencing the shares so to be
converted, into
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<PAGE>
one fully paid and non-assessable share of Common Stock of the
Corporation. Notwithstanding the foregoing provisions of this
Section 5, a holder of Series B Preferred Stock shall not have the
right to convert the Series B Preferred Stock held by it if the
Common Stock to be received upon conversion would, when aggregated
with shares of Common Stock previously issued as Warrant Shares (as
that term is defined in the Warrant Agreement) or issued in
conversion of Series B Preferred Stock previously issued as Warrant
Shares or otherwise held by or attributable to such holder (other
than shares no longer held by such holder and which constitute Non
Attributable Stock), exceed 4.99% of the then outstanding Common
Stock, unless the holder is a party other than a bank or an
Affiliate of a bank which is subject to the provisions of the Bank
Holding Company Act of 1956 and the Common Stock to be issued upon
such conversion will constitute, Non-Attributable Stock, as
hereinafter defined. For purposes of this provision, "Non-
Attributable Stock" shall mean shares of Common Stock or Series B
Preferred Stock which have been previously sold, or were issued
pursuant to the exercise of Warrants which were previously sold,
either 1. in a widely dispersed public offering; 2. in a private
placement in which no purchaser, individually or in concert with
others, acquired Common Stock, Series B Preferred Stock, Warrants
or any combination thereof, representing (upon conversion, in the
case of the Preferred Stock, and upon exercise for Common Stock, in
the case of the Warrants) more than 2% of the outstanding Common
Stock; 3. in compliance with Rule 144 (or any rule which is a
successor thereto) of the Securities Act of 1933, as amended; or 4.
in the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0 % of the
shares outstanding of the Corporation in any six month period. For
purposes of this provision, "Affiliate" of any individual,
corporation, trust, partnership or other entity shall mean any
other individual, corporation, trust, partnership or other entity
directly or indirectly controlling, controlled by or under direct
or indirect common control with such individual, corporation,
trust, partnership or other entity. For purposes of this
definition, as to Creditanstalt American Corporation, Affiliate
shall include any partnership a majority of the partners of which
are officers, directors, employees or Affiliates of Creditanstalt
American Corporation, and as to
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<PAGE>
the Corporation, Affiliate shall not include Creditanstalt
American Corporation.
(b) The number of shares of Common Stock into which an issued
and outstanding share of Series B Preferred Stock is
convertible shall be subject to adjustment from time to time
as follows:
(i) In the event that the Corporation shall at any time (A)
declare a dividend on the Common Stock in shares of its
Common Stock, (B), split or subdivide the outstanding
Common Stock, or (C) combine the outstanding Common
Stock into a smaller number of shares, each share of
Series B Preferred Stock outstanding at the time of the
record date for such dividend or of the effective date
of such split, subdivision or combination shall
thereafter be convertible into the aggregate number of
shares of Common Stock which, if such share of Series B
Preferred Stock had been converted immediately prior to
such time, the holder of such share would have owned or
have been entitled to receive by virtue of such
dividend, subdivision or combination. Such adjustment
shall be made successively whenever any event listed
above shall occur.
(ii) In the event that the corporation shall at any time (A)
issue any shares of Common Stock without consideration
or at a price per share less than the current market
price per share of Common Stock (as defined in
subsection (5)(b)(iii) hereof), other than shares
issued upon exercise of the Warrants or (B) issue
options, rights or warrants to subscribe for or
purchase Common Stock (or securities convertible into
Common Stock other than the Series B Preferred Stock)
at any exercise price per share (or having a conversion
price per share, if a security convertible into Common
Stock) less than the then current market price per
share of Common Stock (as defined in subsection
(5)(b)(iii) hereof), each share of Series B Preferred
Stock outstanding on the date of such issuance shall
thereafter be convertible into a number of shares of
Common Stock equal to the product of (x) the number of
shares of Common Stock into which such share of Series
B Preferred
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<PAGE>
Stock was convertible immediately prior to such date of issuance
and (y) a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of such issuance
plus the number of additional shares of Common Stock to be issued
or to be offered for subscription or purchase upon exercise of such
options, rights or warrants (or into which the convertible
securities so to be offered are initially convertible) and of which
the denominator shall be the number of shares of Common Stock
outstanding on the date of such issuance plus the number of shares
of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so to be issued or to be offered
for subscription or purchase upon exercise of such options, rights,
or warrants (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current market rice. In case such subscription price may be paid in
a consideration part or all of which shall be in form other than
cash, the value of such consideration shall be as determined by
agreement between the holders of a majority of the outstanding
shares of Series B Preferred Stock and the Corporation or, in the
absence of such an agreement by an independent investment banking
firm or ran independent appraiser reasonably acceptable to the
holders of a majority of the outstanding shares of Series B
Preferred Stock (in either case the cost of which engagement will
be borne by the Corporation). Shares of Common Stock owned by or
held for the account of the Corporation or any majority-owned
subsidiary of the Corporation shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever the date of such issuance is fixed (which
date of issuance shall be the record date for such issuance if a
record date therefore is fixed); and, in the event that (A) such
shares or options, rights or warrants are not so issued, or (B) any
such option, rights or warrants expires according to its terms
without having been exercised, each share of Series B Preferred
Stock outstanding shall, as of the date of cancellation of
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<PAGE>
such issuance in the case of clause (A) above and the
date of such expiration in the case of clause (B)
above, be convertible into the number of shares of
Common Stock as would have been the case had the date
of such issuance of such unissued options, rights or
warrants not been fixed or such expired options, rights
or warrants not been issued as the case may be.
(iii) For the purpose of any computation under this Section
(5)(b), the "current market price per share" of Common
Stock on any date shall be deemed to be:
(A) if the Common Stock is then reported on the
Composite Transactions Tape, the average of the
daily closing prices for the 30 consecutive
trading days immediately prior to such date as
reported on the Composite Transactions Tape; or
(B) if the Common Stock is then listed or admitted to
trading on a national securities exchange, the
average of the daily last sales prices regular way
of the Common Stock, for the 30 consecutive
trading days immediately prior to such date, on
the principal national securities exchange on
which the Common Stock is traded or, in case no
such sale takes place on any such date, the
average of the closing bid and asked prices
regular way, in either case on such national
securities exchange; or
(C) if the Common Stock is then traded in the over-
the-counter market, the average of the daily
closing sales prices, or, if there is no closing
sales price, the average of the closing bid and
asked prices, in the over-the-counter market, for
the 30 consecutive trading days immediately prior
to such date, as reported by the National
Association of Securities Dealers' Automated
Quotation System, or, if not so reported, as
reported by the National Quotation Bureau,
Incorporated
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<PAGE>
or any successor thereof, or, if not so reported
the average of the closing bid and asked prices as
furnished by any member of the National
Association of Securities Dealers, Inc. selected
from time to time by the Board of Directors of the
Corporation for that purpose; or
(D) if no such prices are then furnished, the higher
of (x) the exercise price and (y) the fair market
value of a share of Common Stock as determined by
agreement between the holders of a majority of the
outstanding shares of Series B Preferred Stock and
the Corporation or, in the absence of such an
agreement, by an independent investment banking
firm or an independent appraiser (in either case
the cost of which engagement will be borne by the
Corporation) reasonably acceptable to the holders
of a majority of outstanding shares of Series B
Preferred Stock.
(iv) No adjustment in the number of shares of Common Stock
issuable upon conversion of a share of Series B
Preferred Stock shall be required unless such
adjustment would require an increase or decrease in the
aggregate number of shares of Common Stock so issuable
of at least 1%, provided that any adjustments which by
reason of this subsection (5)(b)(iv) are not required
to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations
under this Section (5)(b)(iv) shall be made to the
nearest cent, or to the nearest hundredth of a share,
as the case may be.
(v) In the event of any capital reorganization of the
Corporation, or of any reclassification of the Common
Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the
consolidation of the Corporation with or the merger of
the Corporation with or into any other corporation or
of the sale of the properties and assets of the
Corporation as, or
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<PAGE>
substantially as, an entirety to any, other
corporation, each share of Series B Preferred Stock
shall after such capital reorganization,
reclassification of Common Stock, consolidation, merger
or sale be convertible upon the terms and conditions
specified in this Section (5), for the number of shares
of stock or other securities or assets to which a
holder of the number of shares of Common Stock into
which a share of Series B Preferred Stock is then
convertible (at the time of such capital
reorganization, reclassification of Common Stock,
consolidation, merger or sale) would have been entitled
upon such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in
this Section (5) with respect to the rights of
conversion thereafter of the Series B Preferred Stock
shall be appropriately adjusted so as to be applicable,
as nearly as may reasonably be, to any shares of stock
or other securities or assets thereafter deliverable on
the conversion of the Series B Preferred Stock. The
Corporation shall not effect any such consolidation,
merger or sale unless prior to or simultaneously with
the consummation thereof, the successor corporation (if
other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing
such assets of the appropriate corporation or entity
shall assume by written instrument, the obligation to
deliver to the holder of each share of Series B
Preferred Stock the shares of stock, securities or
assets to which, in accordance with the foregoing
provisions, such holder may be entitled upon conversion
of such Series B Preferred Stock and all other
obligations of the Corporation under this Section (5),
and effective provisions are made in the Articles or
Certificate of Incorporation of such successor or
transferee corporation providing for conversion
privileges relating to the Series B Preferred Stock
equivalent to those set forth in this Section (5).
(vi) If any question at any time arises with respect to the
number of shares of Common Stock into which a share of
Series B Preferred Stock is convertible
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following any adjustment pursuant to this Section (5),
such question shall be determined by agreement between
the holders of a majority of the outstanding shares of
Series B Preferred Stock and the Corporation or, in the
absence of such an agreement by an independent
investment banking firm or an independent appraiser (in
either case the cost of which engagement will be borne
by the Corporation) reasonably acceptable to the
Corporation and the holders of a majority of
outstanding shares of Series B Preferred Stock and such
determination shall be binding upon the Corporation and
the holders of the Series B Preferred Stock.
(vii) Anything in this Section (5) to the contrary
notwithstanding, the Corporation shall be entitled to
take such increases in the number of shares of Common
Stock issuable upon conversion of shares of Series B
Preferred Stock, in addition to those adjustments
required by this Section (5), as it in its sole
direction shall determine to be advisable in order that
any consolidation or subdivision of the Common Stock,
or any issuance wholly for cash or any shares of Common
Stock at less than the current market price, or any
issuance wholly for cash or shares of Common Stock or
securities which by their terms are convertible into or
exchangeable for shares of Common Stock, or any
issuance of rights, options or warrants referred to
hereinabove in this Section (5), hereinafter made by
the Corporation to the holders of its common Stock
shall not be taxable to them.
(viii) Upon any adjustment of the number of the shares of
Common Stock issuable upon conversion of shares of
Series B Preferred Stock pursuant to this Section (5),
the Corporation shall promptly put in any event within
20 days thereafter, cause to be given to each of the
registered holders of the Series B Preferred Stock, at
its address appearing on the Register for the Series B
Preferred Stock by registered mail, postage prepaid,
return receipt requested a certificate signed by its
chairman, president or chief financial officer setting
forth the
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number of shares of Common Stock issuable upon
conversion of shares of Class B common Stock as so
adjusted and describing in reasonable detail the facts
accounting for such adjustment and the method of
calculation used. Where appropriate, such certificate
may be given in advance and included as a part of the
notice required to be mailed under the other provisions
of this resolution.
(ix) The Corporation will at all times have authorized, and
reserve and keep available, free from preemptive
rights, for the purpose of enabling it to satisfy any
obligation to issue shares of Common Stock upon the
conversion of the Series B Preferred Stock, the number
of shares of Common Stock deliverable upon conversion
of the Series B Preferred Stock.
(x) The Corporation shall not be required to issue
fractional shares of Common Stock upon conversion of
the Series B Preferred Stock but shall pay for any such
fraction of a share an amount in cash equal to the
current market price per share of Common Stock of such
share (determined in accordance with the provisions of
subsection (5)(b)(iii) hereof) multiplied by such
fraction.
(xi) The Corporation will pay all taxes attributable to the
issuance of shares of Common Stock upon conversion of
shares of Series B Preferred Stock, provided that the
Corporation shall not be required to pay any income tax
incurred by the holder upon conversion of the Series B
Preferred Stock or any tax which may be payable in
respect of any transfer involved in the issue of any
shares of Common Stock in a name other than that of the
registered holder of the Series B Preferred Stock
surrendered for conversion, and the Corporation shall
not be required to issue or deliver such certificate
unless or until the person or persons requesting the
issuance thereof shall have paid to the Corporation the
amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been
paid.
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(6) Notices to Holders of Series B Preferred Stock.
----------------------------------------------
In the event
(a) of any consolidation or merger to which the Corporation is a
party and for which approval of any shareholders of the
Corporation is required, or of the conveyance or transfer of
the properties and assets of the Corporation substantially
as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a
change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination); or
(b) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, or
(c) that the Corporation proposes to take any other action which
would require an adjustment in the number of shares of
Common Stock or other securities or assets issuable upon
conversion of shares of Series B Preferred Stock pursuant to
Section (5):
then the Corporation shall cause to be given to each of the
registered holders of the Series B Preferred Stock at its
address appearing on the Register for the Series B Preferred
Stock, at least 20 calendar days prior to the applicable
record date hereinafter specified, by registered mail,
postage prepaid, return receipt requested, a written notice
stating (i) the date as of which the holders of record of
Common Stock entitled to participate in the event
contemplated by clause (c) above are to be determined, or
(ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it
is expected that holders of record of Common Stock shall be
entitled to exchange their shares for securities or other
property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice
required by this Section (6) or any defect therein shall not
affect the legality or validity of any distribution, right,
warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any
action.
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<PAGE>
F. SERIES C CONVERTIBLE PREFERRED STOCK. The authorized shares of
Preferred Stock of the Corporation shall include a series designated
as Series C Convertible Preferred Stock (the "Series C Preferred
Stock"). The rights, preferences, privileges and restrictions granted
to and imposed upon the Series C Preferred Stock are:
Section 1. Designation and Rank.
--------- --------------------
The number of shares which shall constitute the Series C Convertible
Preferred Stock (the "Series C Preferred Stock") shall be 3,500 shares, $.0l par
value per share. All shares of Series C Preferred Stock shall rank equally and
be identical in all respects. Except for shares of Series D Redeemable
Preferred Stock, the Corporation shall be restricted from issuing additional
securities of any kind, including shares of preferred stock of any class, series
or designation, which rank on a parity with or senior to the Series C Preferred
Stock. Issuances of the Series C Preferred Stock shall be limited to issuances
pursuant to the terms of that certain Securities Purchase Agreement (the
"Agreement") dated as of November 17, 1995, between the Corporation and the
prospective purchaser (the "Purchaser").
Section 2. Dividends.
--------- ---------
(a) The holders of shares of the Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the board of directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at an annual rate of 10% of the liquidation preference per share (an amount
equivalent to $100 per share) of the Series C Preferred Stock. Such dividends
shall be cumulative from the date of issuance of the Series C Preferred Stock,
whether or not in any Dividend Period or Periods (as hereinafter defined) there
shall be funds of the Corporation legally available for the payment of such
dividends and whether or not such dividends are declared, and shall be payable
monthly, when, as and if declared by the board of directors of the Corporation
on the last day of each month and on the conversion date until such Series C
Preferred Stock has been converted pursuant to the Conversion Right (each a
"dividend payment date"). If such dividend payment date shall be on a day other
than a Business Day, then the dividend payment date shall be on the next
succeeding Business Day. Each such dividend shall be payable in arrears to the
holders of record of shares of the Series C Preferred Stock, as they appear on
the stock records of the Corporation at the close of business on the 10th day of
the preceding month (each a "dividend record date"). Dividends on the Series C
Preferred Stock shall accrue (whether or not declared) on a daily basis from the
date of issuance of the Series C Preferred Stock and accrued dividends for each
Dividend Period shall accumulate to the extent not paid on the dividend payment
date first following the Dividend Period for which they accrue. As used herein,
the term "accrued" with respect to dividends includes both accrued and
accumulated dividends. Accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
dividend payment
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date, to holders of record on such date, not exceeding 45 days prior to the
payment date thereof, as may be fixed by the board of directors of the
Corporation. "Dividend Period" means a monthly dividend period commencing on the
date of issuance of the Series C Preferred Stock and thereafter on the last day
of each month and ending on and including the day preceding the first day of the
next succeeding Dividend Period.
(b) The amount of dividends payable for each full Dividend Period for the
Series C Preferred Stock shall be computed by dividing the annual dividend rate
by twelve (rounded down to the nearest cent). The amount of dividends payable
shall be computed on the basis of a 360-day year of twelve 30-day months. The
initial dividend payment will be calculated based on the number of days elapsed
from the date of issuance of the Series C Preferred Stock until the first
dividend payment date. The final dividend payment will be calculated based on
the number of days elapsed from the most recent dividend payment date until the
conversion date.
(c) So long as any shares of the Series C Preferred Stock are outstanding,
except for shares of Series D Redeemable Preferred Stock, no other stock of the
Corporation ranking on a parity with or junior to the Series C Preferred Stock
as to dividends or upon liquidation, dissolution or winding up shall be
redeemed, purchased or otherwise acquired for any consideration (except by
conversion into or exchange for stock ranking junior to the Series C Preferred
Stock as to dividends and upon liquidation, dissolution or winding up) and no
dividends (other than dividends or distributions paid in shares of or options,
warrants or rights to purchase shares of Class A Common Stock or other stock
ranking junior to the Series C Preferred Stock) shall be declared or paid or set
apart for payment, unless in each case (i) the full cumulative dividends, if
any, accrued on all outstanding shares of the Series C Preferred Stock shall
have been paid or set apart for payment for all past Dividend Periods and (ii)
sufficient funds shall have been set apart for the payment of the dividend for
the current Dividend Period with respect to the Series C Preferred Stock.
Section 3. Voting Rights.
--------- -------------
(a) Except as provided in subsection 3(b) below, prior to conversion as
provided herein, the holders of Series C Preferred Stock shall not be entitled
to vote or give a consent to or on any matters required or permitted to be
submitted to the shareholders of the Corporation for their approval except as
otherwise specifically provided by applicable law.
(b) So long as any shares of the Series C Preferred Stock remain
outstanding, the consent of the holders of at last sixty-seven percent (67%) of
the shares of the Series C Preferred Stock outstanding at the time given in
person or by proxy either in writing (as permitted by law and the Articles of
Incorporation and Bylaws of the Corporation) or at any special or annual
meeting, shall be necessary to permit, effect or validate any one or more of the
following:
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<PAGE>
(i) the authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock, or any security
convertible into stock of such class or series, ranking prior to or on a parity
with the Series C Preferred Stock as to dividends or the distribution of assets
upon liquidation, dissolution or winding up of the Corporation;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Articles of
Incorporation which would adversely affect any right, preference, privilege or
voting power of the Series C Preferred Stock or of the holders thereof;
provided. however, that any increase in the amount of authorized preferred stock
or the creation and issuance of other series of preferred stock, or any increase
in the amount of authorized shares of such series or of any other series of
preferred stock, in each case ranking junior to the Series C Preferred Stock
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to adversely affect
such rights, preferences, privileges or voting powers; or
(iii) the authorization of any reclassification of the Series C
Preferred Stock.
Section 4. Liquidation.
--------- -----------
The Series C Preferred Stock shall upon voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, rank pari passu, with
----------
the Series D Redeemable Preferred Stock and senior and prior to the Class A
Common Stock and any other outstanding class or classes of stock of the
Corporation (including the Corporation's Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock), so that holders of shares of Series C
Preferred Stock shall be entitled to be paid before any distribution is made to
the holders of the Class A Common Stock and such junior stock upon the voluntary
or involuntary dissolution, liquidation or winding up of the Corporation. The
amount payable on each share of Series C Preferred Stock in the event of the
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation shall be $1,000.00 per share. If, upon any such liquidation,
dissolution or winding up of the Corporation, its net assets are insufficient to
permit the payment in full of the amounts to which the holders of all
outstanding shares of Series C Preferred Stock and Series D Redeemable Preferred
Stock are entitled as above provided, the entire net assets of the Corporation
remaining (after full payment is made on any classes or series of stock ranking
prior to the Series C Preferred Stock) shall be distributed among the holders of
shares of Series C Preferred Stock in amounts proportionate to the full
preferential amounts to which they and holders of shares of Series D Redeemable
Preferred Stock and any other preferred shares ranking in parity with the Series
C Preferred Stock are entitled. After such payment shall have been made in full
to the holders of the Series C Preferred Stock and Series D Redeemable Preferred
Stock, the holders of the outstanding Series C Preferred Stock shall be entitled
to no further participation in such distribution of the assets of the
Corporation and the remaining assets of the Corporation shall be divided and
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<PAGE>
distributed among the holders of the other classes of stock then outstanding
according to their respective rights and shares. For the purpose of this
Section 4, the voluntary sale, lease, exchange or transfer, for cash, shares of
stock, securities or other consideration, of all or substantially all the
Corporation's property or assets to, or its consolidation or merger with, one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up of the Corporation, voluntary or involuntary. Notwithstanding the
foregoing, in the event that any holder of Series C Preferred Stock converts its
Series C Preferred Stock to Class A Common Stock or Series B Preferred Stock
pursuant to Section 5 or 6 hereof, the right to preferential liquidation rights
with respect to such converted stock pursuant to this Section 4 shall be
immediately terminated.
Section 5. Discretionary Conversion.
---------- ------------------------
Subject to the provisions for adjustment set forth in Section 7 hereof,
each share of Series C Preferred Stock shall be convertible at any time at the
option of the holder thereof, upon surrender to the transfer agent for the
Series C Preferred Stock of the Corporation (which transfer agent shall
initially be the Corporation) of the certificate or certificates evidencing the
shares so to be converted, into 3.22571 fully paid and non-assessable shares of
Class A Common Stock or, if such holder is a Regulated Holder, Series B
Preferred Stock of the Corporation; provided, however, that the right to convert
shares called for redemption pursuant to Section 9 hereof shall terminate at the
close of business on (i) the date fixed for redemption or (ii) if the
Corporation shall so elect and state in the Redemption Notice, the date (which
date shall be the date fixed for redemption or an earlier date not less than 30
days after the date of mailing of the redemption notice) on which the
Corporation irrevocably deposits with a designated bank or trust company as
paying agent, money sufficient to pay, on the redemption date, the redemption
price, unless the Corporation shall default in making payment of the amount
payable upon such redemption. Except as provided below, a Regulated Holder of
the Series C Preferred Stock shall be entitled to designate whether Class A
Common Stock or Series B Preferred Stock shall be issued upon conversion of the
Series C Preferred Stock. As used herein, the term "Regulated Holder" shall
mean the holder of any Series C Preferred Stock that is (or that is a subsidiary
of a bank holding company) subject to the various provisions of the Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act"), or any
similar, related or successor laws and regulations regulating banks or bank
holding companies, and that holds any share of Series C Preferred Stock, so long
as such Regulated Holder holds such shares.
Notwithstanding the foregoing provisions of this Section 5, a Regulated
Holder of Series C Preferred Stock shall not have the right to convert the
Series C Preferred Stock held by it into shares of Class A Common Stock if the
Class A Common Stock to be received upon conversion would, when aggregated with
the shares of Class A Common Stock or other classes of voting stock of the
Corporation previously issued, or issued in conversion of Series C Preferred
Stock, or otherwise held by or attributable to such Regulated Holder under the
Bank Holding Company Act, (other than, in each case, shares no longer held by
such Regulated Holder constituting Non-Attributable Stock), exceed
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<PAGE>
4.99% of the then outstanding voting stock of the Corporation, unless the holder
is a party other than a bank or an Affiliate of a bank which is subject to the
provisions of the Bank Holding Company Act, and the Class A Common Stock to be
issued upon such conversion will constitute Non-Attributable Stock, as
hereinafter defined. For purposes of this provision, "Non-Attributable Stock"
shall mean shares of capital stock of the Corporation which have been previously
sold, or were issued pursuant to the exercise of warrants or upon conversion of
shares of Series C Preferred Stock which were previously sold, either (i) in a
widely dispersed public offering; (ii) in a private placement in which no
purchaser, individually or in concert with others, acquired Class A Common
Stock, Series C Preferred Stock or any combination thereof, representing (upon
conversion, in the case of the Series C Preferred Stock) more than 2% of the
outstanding Class A Common Stock; (iii) in compliance with Rule 144 (or any rule
which is a successor thereto) of the Securities Act of 1933, as amended; or (iv)
in the secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0 % of the shares outstanding of the
Corporation in any six month period. For purposes of this provision,
"Affiliate" of any individual, corporation, trust, partnership or other entity
shall mean any other individual, corporation, trust, partnership or other entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with such individual, corporation, trust, partnership or other
entity. For purposes of this definition, as to Creditanstalt American
Corporation ("Creditanstalt"), Affiliate shall include any partnership a
majority of the partners of which are officers, directors or employees of
Creditanstalt or of any its Affiliates, and as to the Corporation, Affiliate
shall not include Creditanstalt.
Section 6. Automatic Conversion.
--------- --------------------
Subject to the provisions for adjustment set forth in Section 7 hereof,
each share of the Series C Preferred Stock shall be automatically converted to
3.22571 fully paid and nonassessable shares of Class A Common Stock or, in the
case of a Regulated Holder, Series B Preferred Stock, as designated by such
Regulated Holder of the Series C Preferred Stock, (i) in the event that the
Corporation sells shares of its Class A Common Stock in a public offering with
an aggregate proceeds to the Corporation of not less than $10,000,000 or (ii)
upon the consent of the holders of 75% of the outstanding Series C Preferred
Stock.
Section 7. Adjustment Provisions.
--------- ---------------------
The number of shares of Class A Common Stock or, in the case of a Regulated
Holder, Class B Preferred Stock into which an issued and outstanding share of
Series C Preferred Stock is convertible shall be subject to adjustment from time
to time as follows:
(a) If the Corporation shall (x) declare a dividend on the Class A Common
Stock or Series B Preferred Stock in shares of its capital stock (whether shares
of Class A Common Stock, Series B Preferred Stock, Series C Preferred Stock or
of capital stock of any other class), (y) split or subdivide the outstanding
Class A Common Stock or Series
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<PAGE>
B Preferred Stock or (z) combine the outstanding Class A Common Stock or Series
B Preferred Stock into a smaller number of shares, each share of Series C
Preferred Stock outstanding at the time of the record date for such dividend or
of the effective date of such split, subdivision or combination shall thereafter
entitle the holder, of such share of Series C Preferred Stock to receive the
aggregate number and kind of shares which, if such share of Series C Preferred
Stock had been converted immediately prior to such time, such holder would have
owned or have become entitled to receive by virtue of such dividend, subdivision
or combination. Such adjustment shall be made successively whenever any event
listed above shall occur and, if a dividend which is declared is not paid, each
share of Series C Preferred Stock outstanding, shall again entitle the holder
thereof to receive the number of shares of Class A Common Stock or, in the case
of a Regulated Holder, Series B Preferred Stock as would have been the case had
such dividend not been declared. If at any time, as a result of an adjustment
made pursuant to this subsection 7(a), the holder of any share of Series C
Preferred Stock thereafter converted shall become entitled to receive any shares
of capital stock of the Corporation other than shares of Class A Common Stock or
Series B Preferred Stock, thereafter the number of such other shares so
receivable upon conversion of any share of Series C Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Class A Common
Stock or Series B Preferred Stock contained in this subsection 7.
(b) If the Corporation shall issue any shares of Class A Common Stock
without consideration or at a price per share less than the Current Market Price
Per Share (as herein defined) of such stock as at the date of such issuance,
including any shares of Class A Common Stock deemed to have been issued pursuant
to this subsection 7(b) but excluding any Exempted Securities, each share of
Series C Preferred Stock outstanding on the date of such issuance shall
thereafter entitle the holder of such share of Series C Preferred Stock to
receive upon conversion thereof a number of shares of Class A Common Stock or,
in the case of a Regulated Holder, Series B Preferred Stock equal to the product
of (y) the number of shares of Class A Common Stock or Series B Preferred Stock
to which the holder of such share of Series C Preferred Stock or Series B
Preferred Stock was entitled immediately prior to such issuance and (z) the
quotient that is obtained by dividing:
(A) the total number of shares of Class A Common Stock outstanding
immediately after such issuance (including any shares of such
stock deemed to have been issued pursuant to this subsection 7(b)
by
(B) the sum of
(i) the number of shares of Class A Common Stock outstanding
immediately prior to such issuance plus
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<PAGE>
(ii) the number of shares of Class A Common Stock which the
aggregate consideration received (or deemed to be received) by
the Corporation upon such issuance would purchase at such Current
Market Price Per Share.
For purposes of any adjustment of the number of shares of Class A Common Stock
or Series B Preferred Stock obtainable upon the conversion of any shoes of
Series C Preferred Stock pursuant to this subsection 7(b), the following
provisions shall be applicable:
(1) In the case of the issuance of Class A Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid
therefor, without deducting therefrom any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation in connection with
the issuance or sale thereof.
(2) In the case of the issuance of Class A Common Stock for a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined by agreement between the
holders of sixty-seven percent (67%) of the shares of Series C Preferred
Stock outstanding and the Corporation or, in the absence of such an
agreement, by an independent investment banking firm or an independent
appraiser engaged by the Corporation and reasonably acceptable to the
holders of sixty-seven percent (67%) of the shares of Series C Preferred
Stock outstanding (in either case the cost of which engagement will be
borne by the Corporation). In the case of any issuance of Class A Common
Stock upon the exercise of any warrants, options or other rights or the
conversion or exchange of any convertible or exchangeable securities, the
aggregate consideration received by the Corporation upon such issuance
shall be deemed to include the consideration, if any, received by the
Corporation upon the issuance of such warrants, options or rights or such
convertible or exchangeable securities (excluding any cash received on
account of accrued interest or accrued dividends) and, in the case of any
conversion or exchange of securities, shall not include any amount
attributable to the converted or exchanged securities.
(3) If (A) the Corporation shall issue warrants or options to purchase
or rights to subscribe for Class A Common Stock other than Exempted
Securities, and (B) the consideration, if any, received by the Corporation
upon the issuance of such warrants, options or rights plus the minimum
aggregate consideration required to be paid upon exercise of such warrant,
options or rights (the amount of such consideration to be determined in
each case as set forth above) shall be less than the product of the Current
Market Price Per Share on the date of such issuance multiplied by the
maximum number of shares of Class A Common Stock deliverable upon such
exercise, then such aggregate maximum number of shares shall be deemed to
have been issued at the time such warrants, options or rights
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were issued and for a consideration equal to such minimum aggregate
consideration.
(4) If (A) the Corporation shall issue (y) securities (other than
Exempted Securities) which are by their terms convertible into or
exchangeable for Class A Common Stock or (z) warrants or options to
purchase or rights to subscribe for an such convertible or exchangeable
securities (other than Exempted Securities), and (B) the consideration
received by the Corporation for any such securities or any such options or
rights (excluding any cash received on account of accrued interest or
accrued dividends) plus the minimum aggregate consideration (not including
any amount attributed to the converted or exchanged securities), if any),
to be received by the Corporation upon the conversion or exchange of such
securities or upon the exercise of such options and the conversion or
exchange of the securities received upon such exercise, as the case may be
(the amount of such consideration to be determined in each case as set
forth above) shall be less than the product of the Current Market Price Per
Share on the date of such issuance multiplied by the maximum number of
shares deliverable upon conversion of or in exchange for such convertible
or exchangeable securities or upon the exercise of any such options and
subsequent conversion or exchanges thereof, then such aggregate maximum
number of shares shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and for a
consideration equal to such minimum aggregate consideration.
(5) Upon any reduction in the exercise price payable upon exercise of
any of such warrants options or rights as are referred to in this
subsection 7(b) or any reduction in the amount of consideration required to
be paid or the conversion or exchange price or ratio payable upon
conversion or exchange of any of such convertible or exchangeable
securities, in each case other than a change resulting from any
antidilution provisions thereof which are no more favorable in such
instance to the holder thereof than the provisions of this Section 7 are to
the holders of the Series C Preferred Stock, (A) if an adjustment shall
previously have been made pursuant to this subsection 7(b) in respect of
such warrants, options or rights or such securities, the number of shares
of Class A Common Stock or Series B Preferred Stock obtainable upon the
conversion of the shares of Series C Preferred Stock shall forthwith be
readjusted to such number of shares as would have obtained had the
adjustment made upon the issuance of such warrants, options, rights or
securities as have not been exercised, converted or exchanged prior to such
change (or any prior adjustment made pursuant to this subdivision (5) been
made upon the basis of such change, and (B) if an adjustment has not
previously been made pursuant to this subsection 7(b) in respect of such
options or rights or such securities, then such warrants, options or rights
or such securities shall be deemed to have been granted or issued (as the
case may be) for purposes of subsection 7(b) as of the date of such
reduction, and any adjustments required to be made pursuant to subsection
7(b) as a result of such deemed grant or issuance shall forthwith be made
effective as of such date.
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(6) All grants or issuances of options or other rights to acquire
shares of Class A Common Stock (or securities convertible into or
exchangeable for shares of such stock) issued to any officer, director or
employee of the Corporation or of any Subsidiary of the Corporation or to
members of the immediate family of any of them ("Management Options"), and
all issuances of shares of Class A Common Stock (or securities convertible
into or exchangeable for shares of Class A Common Stock) under or pursuant
to such Management Options shall, for purposes of this subsection 7(b), be
deemed to be granted and issued for no consideration except to the extent
cash or notes are paid therefor; provided that the foregoing provisions of
this clause (6) shall not apply to options or other rights to acquire
securities that constitute Exempted Securities (hereinafter defined).
(7) Shares of Class A Common Stock owned by or held for the account
of the Corporation or any majority-owned subsidiary of the Corporation
shall not be deemed outstanding for the purpose of any computation made
pursuant to this subsection 7(b). Any adjustment required to be made
pursuant to this subsection 7(b) shall be made successively whenever the
date of issuance or deemed issuance of any such Class A Common Stock or
any such options, rights or convertible or exchangeable securities is
fixed (which date of issuance shall be the record date for such issuance
if a record date therefor is fixed) and, in the event that (A) such shares
or options, rights, warrants or convertible or exchangeable securities are
not so issued, or (B) any such option, right, warrant or convertible or
exchangeable security (or the conversion or exchange right thereunder)
expires according to its terms without having been exercised, converted or
exchanged, each share of Series C Preferred Stock outstanding shall, as of
the date of cancellation of such issuance in the case of clause (A) above
and the date of such expiration in the case of clause (B) above, entitle
the holder thereof to receive the number of shares of Class A Common Stock
or Series B Preferred Stock as would have been the case had the date of
such issuance of such unissued options, rights, warrants or convertible or
exchangeable securities not been fixed or such expired options, rights,
warrants or convertible or exchangeable securities not been issued, as the
case may be.
(c) In the event of any capital reorganization of the Corporation, or of
any reclassification of the Class A Common Stock (other than a subdivision or
combination of outstanding shares of Class A Common Stock or Series B Preferred
Stock), or in case of the consolidation of the Corporation with or the merger
of the Corporation with or into any other corporation or of the sale of the
properties and assets of the Corporation as, or substantially as, an entirety
to any other corporation, each share of Series C Preferred Stock shall after
such capital reorganization, reclassification of Class A Common Stock,
consolidation, merger or sale be convertible upon the terms and conditions
specified herein, for the number of shares of stock or other securities or
assets to which a holder of the number of shares of Class A Common Stock or
Series B
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Preferred Stock into which such share of Series C Preferred Stock shall be
convertible (at the time of such capital reorganization, reclassification of
Class A Common Stock, consolidation, merger or sale) would have been entitled
upon such capital reorganization, reclassification of Class A Common Stock,
consolidation, merger or sale; and in any such case, if necessary, the
provisions set forth in this subsection 7 with respect to the rights thereafter
of the holders of the shares of Series C Preferred Stock shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock or other securities or assets thereafter deliverable upon the
conversion of the shares of Series C Preferred Stock.
(d) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Corporation, the other provisions of this Section 7
are not strictly applicable or (if strictly applicable) would not fairly
protect the conversion rights of the shares of Series C Preferred Stock in
accordance with the essential intent and principles of such provisions, then
the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of decreasing the number of shares of Class A Common
Stock or Series B Preferred Stock obtainable upon the conversion of each share
of Series C Preferred Stock from that which would otherwise be determined
pursuant to this Section 7.
(e) No adjustment in the number of shares of Class A Common Stock or
Series B Preferred Stock into which a share of Series C Preferred Stock shall
be convertible shall be required unless such adjustment would require an
increase or decrease in the aggregate number of such shares of Class A Common
Stock or Series B Preferred Stock obtainable of at least 1%, provided that any
adjustments which by reason of this subsection 7(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 7 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(f) Irrespective of any adjustments in the number or kind of shares
obtainable upon the conversion of a share of Series C Preferred Stock,
certificates theretofore or thereafter issued may continue to express the same
number and kind of shares as are stated on the certificates initially issuable
therefor.
(g) If any question shall at any time arise with respect to the number of
shares of Class A Common Stock or Series B Preferred Stock into which a share
of Series C Preferred Stock is then convertible following any adjustment
pursuant to this Section 7 such question shall be determined by agreement
between the holders of sixty-seven percent (67%) of the shares of Series C
Preferred Stock and the Corporation or, in the absence of such an agreement, by
an independent investment banking firm or an independent appraiser engaged by
the Corporation (in either case the cost of which engagement will be borne by
the Corporation) and reasonably acceptable to the
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Corporation and the holders of sixty-seven percent (67%) of shares of Series C
Preferred Stock and such determination shall be binding upon the Corporation
and the holders of the shares of Series C Preferred Stock.
(h) Anything in this Section 7 to the contrary notwithstanding, the
Corporation shall be entitled to make such increases in the number of shares of
Class A Common Stock or Series B Preferred Stock into which a share of Series C
Preferred Stock shall be convertible, in addition to those adjustments required
by this Section 7, as it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Class A Common Stock or
Series B Preferred Stock, or any issuance wholly for cash of any shares of
Class A Common Stock or Series B Preferred Stock at less than the Current
Market Price Per Share, or any issuance wholly for cash of shares of Class A
Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Class A Common Stock or any stock dividend, or any
issuance of rights, options or warrants referred to hereinabove in this Section
7, hereinafter made by the Corporation to the holders of its Class A Common
Stock shall not be taxable to them.
(i) For purposes of this Section 7. the following terms shall have the
following meanings:
"Current Market Price Per Share" shall mean, with respect to any
------------------------------
shares of the Class A Common Stock, as of any particular date of
determination:
(A) if such stock is then reported or the Composite Transactions
Tape, the average of the daily closing prices for the 30 consecutive
trading days immediately prior to such date as reported on the
Composite Transactions Tape (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-
day period); or
(B) if such stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a
national securities exchange, the average of the daily last sale
prices regular way of such stock, for the 30 consecutive trading days
immediately prior to such date (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-
day period), on the principal national securities exchange on which
such stock is traded or, in case no such sale takes place on any such
day, the average of the closing bid and asked prices regular way, in
either case on such national securities exchange; or
(C) if such stock is not then reported on the Composite
Transaction Tape and is not then listed or admitted to trading on a
national securities exchange but is then traded in the over-the-
counter market, the average of the daily closing sales prices, or, if
there is no closing sales
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price, the average of the closing bid and asked prices, in the over-
the-counter market, for the 30 consecutive trading days immediately
prior to such date (as adjusted for any stock dividend, split,
combination or reclassification that occurred during such 30-day
period), as reported by the National Association of Securities
Dealers' Automated Quotation System, or, if not so reported, as
reported by the National Quotation Bureau, Incorporated or any
successor thereof, or, if not so reported the average of the closing
bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by
the Board of Directors of the Corporation for that purpose; or
(D) if no such prices are then furnished, the fair market value
of such stock as determined by agreement between the holders of sixty-
seven percent (67%) of the shares of Series C Preferred Stock and the
Corporation or, in the absence of such an agreement, by an independent
investment banking firm or an independent appraiser engaged by the
Corporation (in either case the cost of which engagement will be borne
by the Corporation) and reasonably acceptably, to the holders of
sixty-seven (67%) of the shares of Series C Preferred Stock.
"Exempted Securities" shall mean (A) Warrant Shares (as defined in the
-------------------
Stock Purchase Agreement), (B) shares issued upon conversion of the Series
A Convertible Preferred Stock or Series B Convertible Preferred Stock, (C)
3,000 shares of Class A Common Stock issued to employees of the Seller
pursuant to options issued to employees of the Seller having an exercise or
conversion price per share at least equal to the then Current Market Price
Per Share, and (D) up to 1000 shares issued upon exercise of options,
rights or warrants outstanding on the date hereof and held by officers or
employees of the Seller.
(j) Upon any adjustment of the number of the shares of Class A Common Stock
or Series B Preferred Stock issuable upon conversion of shares of Series C
Preferred Stock pursuant to this Section 7, the Corporation shall promptly but
in any event within 20 days thereafter, cause to be given to each of the
registered holders of the Series C Preferred Stock, at its address appearing on
the Register for the Series C Preferred Stock by registered mail, postage
prepaid, return receipt requested a certificate signed by its chairman,
president or chief financial officer setting forth the number of shares of Class
A Common Stock or Series B Preferred Stock issuable upon conversion of shares of
Class A Common Stock or Series B Preferred Stock as so adjusted and describing
in reasonable detail the facts accounting for such adjustment and the method of
calculation used. Where appropriate, such certificate may be given in advance
and included as a part of the notice required to be mailed under the other
provisions of this resolution.
(k) The Corporation will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any
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obligation to issue shares of Class A Common Stock or Series B Preferred Stock
upon the conversion of the Series C Preferred Stock, the number of shares of
Class A Common Stock or Series B Preferred Stock deliverable upon conversion of
the Series C Preferred Stock.
(l) The Corporation shall not be required to issue fractional shares of
Class A Common Stock or Series B Preferred Stock upon conversion of the Series C
Preferred Stock but shall pay for any such fraction of a share an amount in cash
equal to the Current Market Price per share of Class A Common Stock or Series B
Preferred Stock of such share (determined in accordance with the provisions of
subsection 7(i) hereof) multiplied by such fraction.
(m) The Corporation will pay all taxes attributable to the issuance of
shares of Class A Common Stock or Series D Preferred Stock upon conversion of
shares of Series C Preferred Stock, provided that the Corporation shall not be
required to pay any income tax incurred by the holder upon conversion of the
Series C Preferred Stock or any tax which may be payable in respect of any
transfer involved in the issue of any shares of Class A Common Stock or Series B
Preferred Stock in a name other than that of the registered holder of the Series
C Preferred Stock surrendered for conversion, and the Corporation shall not be
required to issue or deliver such certificate unless or until the person or
persons requesting the issuance thereof shall have paid to the Corporation the
amount of such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
Section 8. Notices to Preferred Stock. In the event:
--------- --------------------------
(a) that the Corporation shall authorize the issuance to all holders of
Class A Common Stock or Series B Preferred Stock of rights or warrants to
subscribe for or purchase capital stock of the Corporation or of any other
subscription rights or warrants; or
(b) that the Corporation shall authorize the distribution to all holders of
Class A Common Stock or Series B Preferred Stock of evidences of its
indebtedness or assets (including, without limitation cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends payable in such class of stock); or
(c) of any consolidation or merger to which the Corporation is a party and
for which approval of any stockholders of the Corporation is required, or of the
conveyance or transfer of the properties and assets of the Corporation
substantially as an entirety, or of any capital reorganization or
reclassification or change of the Class A Common Stock or Series B Preferred
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination);
or
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(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Corporation; or
(e) that the Corporation proposes to take any other action which would
require an adjustment in the number of shares of Class A Common Stock or Series
B Preferred Stock or other securities or assets issuable upon conversion of
shares of Series C Preferred Stock pursuant to Section 5 or 6;
then the Corporation shall cause to be given to each of the registered holders
of the Series C Preferred Stock at its address appearing on the Register for the
Series C Preferred Stock, at least 20 calendar days prior to the applicable
record date, if any, hereinafter specified, or, if no such record date if
specified, 20 calendar days prior to the taking of any action referred to in
clause (a) through (e) above, by registered mail, postage prepaid, return
receipt requested, a written notice stating (i) the date as of which the holders
of record of Class A Common Stock or Series B Preferred Stock to be entitled to
receive any such rights, warrants or distribution are to be determined, or (ii)
the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or (iii)
the date on which such other action is to be effected, and the date as of which
it is expected that holders of record of Class A Common Stock or Series B
Preferred Stock shall be entitled to exchange their shares for securities or
other property, if any, deliverable upon such reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up or other
action. The failure to give the notice required by this Section 8 or any defect
there-in shall not affect the legality or validity of any distribution, right,
warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or other action referred to above, or the vote upon any such
action.
Section 9. Redemption.
--------- ----------
(a) The Series C Preferred Stock shall be redeemed on November 17, 2002, in
whole but not in part, out of funds legally available therefor, subject to the
notice provisions described in this Section 9 at a redemption price equal to the
liquidation preference ($1,000.00 per share) plus accrued and unpaid dividends
as of the redemption date.
(b) In the event the holders of sixty-seven percent (67%) of the Series C
Preferred Stock then outstanding shall demand such redemption, notice of such
demand for redemption shall be given to the Corporation by first class mail,
postage prepaid, mailed not less than 40 nor more than 60 days prior to the
redemption date, as specified by such holders in such notice, to the Corporation
at the address provided in Section 10 hereof. The Corporation shall, within 10
days of receipt of such demand, give notice (the "Redemption Notice") to each
holder of record of shares to be redeemed at such holder's address as the same
appears on the stock records of the Corporation. Each such Redemption Notice
shall state: (i) the redemption date; (ii) the number of shares of Series C
Preferred Stock to be redeemed; (iii) the redemption price; (iv) the place or
places
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where certificates for such shares are to be surrendered for payment of the
redemption price; (v) the then current conversion ratio; and (vi) that dividends
on the shares to be redeemed shall cease to accrue on such redemption date.
Redemption Notice having been mailed as aforesaid, from and after the redemption
date, unless the Corporation shall be in default in providing money for the
payment of the redemption price (including any accrued and unpaid dividends to
(and including) the date fixed for redemption), (i) dividends on the shares of
the Series C Preferred Stock so called for redemption shall cease to accrue,
(ii) said shares shall be deemed no longer outstanding, and (iii) all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the moneys payable upon redemption without interest
thereon) shall cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the redemption date, the Corporation shall deposit with a bank or trust
company having an office in Atlanta, Georgia, and having a capital and surplus
of at least $50,000,000, funds necessary for such redemption (and so as to be
and continue to be available therefor), with irrevocable instructions and
authority to such bank or trust company that such funds be applied to the
redemption of the shares of Series C Preferred Stock. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of three years from such redemption date
shall be released or repaid to the Corporation, after which, subject to any
applicable laws relating to escheat or unclaimed property, the holder or holders
of such shares of Series C Preferred Stock so called for redemption shall look
only to the Corporation for payment of the redemption price.
(c) Upon surrender in accordance with said Redemption Notice of the
certificates for any such shares so redeemed, such shares shall be redeemed by
the Corporation at the redemption price aforesaid. Notwithstanding the
foregoing, if the Redemption Notice has been given pursuant to this Section 9
and any holder of shares of Series C Preferred Stock shall, prior to the close
of business on (i) the redemption date, or (ii) if the Corporation shall so
elect and state in the Redemption Notice, the date (which date shall be the date
fixed for redemption or an earlier date not less than 30 days after the date of
mailing of the Redemption Notice) or which the Corporation irrevocably deposits
with a designated bank or trust company as paying agent, money sufficient to
pay, on the redemption date, the redemption price, elect to surrender to the
transfer agent of the Series C Preferred Stock of the Corporation pursuant to
Section 5 hereof for the conversion of any or all of the shares to be redeemed
held by such holder (accompanied by a certificate or certificates for such
shares), then the conversion of such shares to be redeemed shall become
effective as provided in Section 5.
Section 10. Form of Notice.
---------- --------------
Except as may be otherwise provided for herein, all notices referred to
herein shall be in writing, and all notices hereunder shall be deemed to have
been given upon receipt, in the case of notice of conversion given to the
Corporation as contemplated in Section 5 hereof, or, in all other cases, upon
the earlier of receipt of such notice or three Business Days after the mailing
of such notice if sent by registered mail (unless first-class mail
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shall be specifically permitted for such notice) with postage prepaid,
addressed: if to the Corporation, to its offices at 1100 Northmeadow Parkway,
Suite 100, Roswell, Georgia 30076 Attention: Daniel D. Lensgraf, or if to any
holder of Series C Preferred Stock, to such holder at the address of such holder
as listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the Series C Preferred Stock); or to such
other address as the Corporation or holder, as the case may be, shall have
designated by notice similarly given.
G. SERIES D REDEEMABLE PREFERRED STOCK. The authorized shares of
Preferred Stock of the Corporation shall include a series
designated as Series D Redeemable Preferred Stock (the "Series D
Preferred Stock"). The rights, preferences, privileges and
restrictions granted to and imposed upon the Series D Preferred
Stock are:
Section 1. Designation and Rank.
--------- --------------------
The number of shares which shall constitute the Series D Preferred
Stock shall be 4,500 shares, $.01 par value per share. All shares of Series D
Preferred Stock shall rank equally and be identical in all respects. As long as
any shares of the Series D Preferred Stock are issued and outstanding, the
Corporation shall be restricted from issuing additional securities of any kind,
including shares of preferred stock of any class, series or designation, which
rank on a parity with or senior to the Series D Preferred Stock. Issuances of
the Series D Preferred shall be limited to issuances pursuant to the terms of
that certain Preferred Stock and Warrant Purchase Agreement (the "Purchase
Agreement") dated as of March __, 1998, between the Corporation and each of the
purchasers named therein.
Section 2. Definitions.
--------- -----------
Unless the context otherwise requires, the terms defined in this
Section 2 shall have, for all purposes of this Article V.G., the meanings herein
specified (with terms defined in the singular having comparable meanings when
used in the plural).
"Business Day" shall mean a day other than a Saturday, a Sunday or any
other day on which banking institutions in Georgia generally are not open for
business.
"Series D Dividend Payment Date" shall mean the last day of each month
during the Series D Dividend Payment Period.
"Series D Dividend Payment Period" shall mean the period from, and
including, the Initial Issue Date to, but not including, the date all the
outstanding shares of Series D Preferred Stock are redeemed and the redemption
price is paid in full.
"Series D Dividend Period" shall mean a monthly dividend period
commencing on the Initial Issue Date and thereafter on the first day of each
month and ending on and
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including the day preceding the first day of the next succeeding Series D
Dividend Period.
"Series D Dividend Record Date" shall mean the close of business on
the date that is one (1) Business Day prior to any Series D Dividend Payment
Date.
"Initial Issue Date" shall mean the date that shares of Series D
Preferred Stock are first issued by the Corporation.
"Liquidation Preference" shall mean, with respect to each share of
Series D Preferred Stock outstanding, $1,000.00 per share.
"Redemption Date" shall mean with respect to each share of Series D
Preferred Stock the date on which such share is redeemed and the redemption
price for such share is paid in full.
"Series D Preferential Amount" shall mean, with respect to each share
of Series D Preferred Stock outstanding, an amount equal to the Liquidation
Preference plus all accrued and unpaid dividends thereon.
Section 3. Dividends.
--------- ---------
(a) The holders of shares of the Series D Preferred Stock shall be
entitled to receive, when, as and if declared by the board of directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at an annual rate of 8.5% of the Liquidation Preference per share of the Series
D Preferred Stock. Such dividends shall be cumulative from the Initial Issue
Date, whether or not in any Series D Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of such dividends and
whether or not such dividends are declared, and shall be payable monthly, when,
as and if declared by the board of directors of the Corporation on a Series D
Dividend Payment Date. If such Series D Dividend Payment Date shall be on a day
other than a Business Day, then the Series D Dividend Payment Date shall be on
the next succeeding Business Day. Each such dividend shall be payable in
arrears to the holders of record of shares of the Series D Preferred Stock, as
they appear on the stock records of the Corporation at the Series D Dividend
Record Date. Dividends on the Series D Preferred Stock shall accrue (whether or
not declared) on a daily basis from the Initial Issue Date and accrued dividends
for each Series D Dividend Period shall accumulate to the extent not paid on the
Series D Dividend Payment Date first following the Series D Dividend Period for
which they accrue. As used herein, the term "accrued" with respect to dividends
includes both accrued and accumulated dividends. Accrued and unpaid dividends
for any past Series D Dividend Periods may be declared and paid at any time,
without reference to any regular payment date, to holders of record on the
applicable Series D Dividend Record Date, not exceeding 45 days prior to the
payment date thereof, as may be fixed by the board of directors of the
Corporation.
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(b) The amount of dividends payable for each full Series D Dividend
Period for the Series D Preferred Stock shall be computed by dividing the annual
dividend rate (8.5%) by twelve (rounded down to the nearest cent). The amount
of dividends payable shall be computed on the basis of a 360-day year of twelve
30-day months. The initial dividend payment will be calculated based on the
number of days elapsed from the Initial Issue Date until the first Series D
Dividend Payment Date. The final dividend payment will be calculated based on
the number of days elapsed from the most recent Series D Dividend Payment Date
until the Redemption Date.
(c) Except as otherwise provided in this Article V, so long as any
shares of the Series D Preferred Stock are outstanding, no other stock of the
Corporation ranking on a parity with or junior to the Series D Preferred Stock
as to dividends or upon liquidation, dissolution or winding up shall be
redeemed, purchased or otherwise acquired for any consideration (except by
conversion into or exchange for shares of the Series C Preferred Stock or other
stock ranking junior to the Series D Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) and no dividends (other than dividends
or distributions paid in shares of or options, warrants or rights to purchase
shares of Class A Common Stock, Class B Preferred Stock or other stock ranking
junior to the Series D Preferred Stock) shall be declared or paid or set apart
for payment, unless in each case (i) the full cumulative dividends, if any,
accrued on all outstanding shares of the Series D Preferred Stock shall have
been paid or set apart for payment for all past Series D Dividend Periods and
(ii) sufficient funds shall have been set apart for the payment of the dividend
for the current Series D Dividend Period with respect to the Series D Preferred
Stock.
Section 4. Voting Rights.
--------- -------------
(a) Except as otherwise provided in subsection 4(b) below or as
required by applicable law, prior to redemption as provided herein, the holders
of Series D Preferred Stock shall not be entitled to vote or give a consent to
or on any matters required or permitted to be submitted to the shareholders of
the Corporation for their approval.
(b) So long as any shares of the Series D Preferred Stock remain
outstanding, the consent of the holders of at least sixty-seven percent (67%) of
the shares of the Series D Preferred Stock outstanding at the time given in
person or by proxy either in writing (as permitted by law and the Articles of
Incorporation and Bylaws of the Corporation) or at any special or annual
meeting, shall be necessary to permit, effect or validate any one or more of the
following:
(i) the authorization, creation or issuance, or any increase
in the authorized or issued amount, of any class or series of stock, or any
security convertible into stock of such class or series, ranking prior to
or on a parity with the Series D Preferred Stock as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Corporation;
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(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Articles
of Incorporation which would adversely affect any right, preference,
privilege or voting power of the Series D Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized preferred stock or the creation and issuance of other
series of preferred stock, or any increase in the amount of authorized
shares of such series or of any other series of preferred stock, in
each case ranking junior to the Series D Preferred Stock with respect
to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to
adversely affect such rights, preferences, privileges or voting
powers; or
(iii) any increase in the authorized number or reclassification
of the Series D Preferred Stock.
Section 5. Liquidation.
--------- -----------
The Series D Preferred Stock shall upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, rank pari passu with
---- -----
the Series C Preferred Stock and rank senior and prior to the Class A Common
Stock and any other outstanding class or classes of stock of the Corporation,
including the Corporation's Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock (collectively herein called the "Junior
Securities"), so that holders of shares of Series D Preferred Stock shall be
entitled to be paid before any distribution is made to the holders of the Junior
Securities upon the voluntary or involuntary dissolution, liquidation or winding
up of the Corporation. The amount payable on each share of Series D Preferred
Stock in the event of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation shall be $1,000.00 per share. If, upon any such
liquidation, dissolution or winding up of the Corporation, its net assets are
insufficient to permit the payment in full of the amounts to which the holders
of all outstanding shares of Series D Preferred Stock and Series C Preferred
Stock are entitled as above provided, the entire net assets of the Corporation
remaining (after full payment is made on any class or series of stock ranking
prior to the Series D Preferred Stock) shall be distributed among the holders of
shares of Series D Preferred Stock in amounts proportionate to the full
preferential amounts to which they and holders of shares of Series C Preferred
Stock and any other preferred shares ranking in parity with the Series D
Preferred Stock are entitled. After such payment shall have been made in full
to the holders of the Series D Preferred Stock and the Series C Preferred Stock,
the holders of the outstanding Series D Preferred Stock shall be entitled to no
further participation in such distribution of the assets of the Corporation and
the remaining assets of the Corporation shall be divided and distributed among
the holders of the other classes of stock then outstanding according to their
respective rights and shares. For the purpose of this Section 5, the voluntary
sale, lease, exchange or transfer, for cash, shares of stock, securities or
other consideration, of all or substantially all the Corporation's property or
assets to, or its consolidation or merger with, one or more
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corporations shall not be deemed to be a liquidation, dissolution or winding up
of the Corporation, voluntary or involuntary.
Section 6. Redemption.
--------- ----------
(a) The Corporation shall redeem the Series D Preferred Stock upon the
completion of a Qualified Public Offering (as defined below), in whole but not
in part (the "Mandatory Redemption"), out of funds legally available therefor,
subject to the notice provisions of this Section 6 at a redemption price per
share equal to the Series D Preferential Amount. "Qualified Public Offering"
shall mean an underwritten public offering covering the offering and sale of
Common Stock of the Corporation in which the aggregate gross proceeds to the
Corporation equals or exceeds $15,000,000.
(b) At anytime and from time to time after the first anniversary of
the Initial Issue Date, the Corporation may redeem (subject to the legal
availability of funds), in whole or in part, but in any event in increments of
not less than the lesser of (i) $500,000 or (ii) the amount necessary to redeem
all Series D Preferred Stock, at a redemption price per share equal to the
Series D Preferential Amount.
(c) At anytime after the fifth anniversary of the Initial Issue Date,
the holders of shares of Series D Preferred Stock then outstanding shall have
the option of demanding redemption of the Series D Preferred Stock held by such
holders upon the terms and conditions set forth in this subparagraph 6(c). In
the event the holders of twenty (20%) of the Series D Preferred Stock then
outstanding shall demand such redemption, notice of such demand for redemption
(the "Redemption Demand") shall be given to the Corporation by first class mail,
postage prepaid, mailed not less than 40 nor more than 60 days prior to the
redemption date, as specified by such holders in such notice, to the Corporation
at the address provided in Section 7 hereof.
(d) Not less than 5 days prior to the anticipated date of a Qualified
Public Offering or within 10 days after the receipt of a Redemption Demand, as
the case may be, the Corporation shall give notice (the "Redemption Notice") to
each holder of record of shares to be redeemed at such holder's address as the
same appears on the stock records of the Corporation. Each such Redemption
Notice shall state: (i) the Redemption Date; (ii) the number of shares of
Series D Preferred Stock to be redeemed; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed shall cease to accrue on such Redemption Date. Redemption Notice
having been mailed as aforesaid, from and after the Redemption Date, unless the
Corporation shall be in default in providing money for the payment of the
redemption price (including any accrued and unpaid dividends to (and including)
the date fixed for redemption), (i) dividends on the shares of the Series D
Preferred Stock so called for redemption shall cease to accrue, (ii) said shares
shall be deemed no longer outstanding, and (iii) all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from
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the Corporation the moneys payable upon redemption without interest thereon)
shall cease. The Corporation's obligation to provide moneys in accordance with
the preceding sentence shall be deemed fulfilled if, on or before the Redemption
Date, the Corporation shall deposit with a bank or trust company having an
office in Atlanta, Georgia, and having a capital and surplus of at least
$50,000,000, funds necessary for such redemption (and so as to be and continue
to be available therefor), with irrevocable instructions and authority to such
bank or trust company that such funds be applied to the redemption of the shares
of Series D Preferred Stock. Any interest accrued on such funds shall be paid
to the Corporation from time to time. Any funds so deposited and unclaimed at
the end of three years from such Redemption Date shall be released or repaid to
the Corporation, after which, subject to any applicable laws relating to escheat
or unclaimed property, the holder or holders of such shares of Series D
Preferred Stock so called for redemption shall look only to the Corporation for
payment of the redemption price. Notwithstanding the foregoing, a Mandatory
Redemption pursuant to Section 6(a) is expressly conditioned upon the completion
of a Qualified Public Offering.
(e) Upon surrender in accordance with said Redemption Notice of the
certificates for any such shares so redeemed, such shares shall be redeemed by
the Corporation at the redemption price aforesaid.
Section 7. Form of Notice.
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Except as may be otherwise provided for herein, all notices referred
to herein shall be in writing, and all notices hereunder shall be deemed to have
been given upon receipt, in the case of a Redemption Demand given to the
Corporation as contemplated in Section 6 hereof, or, in all other cases, upon
the earlier of receipt of such notice or three Business Days after the mailing
of such notice if sent by registered mail or overnight delivery (unless first-
class mail shall be specifically permitted for such notice) with postage
prepaid, addressed: if to the Corporation, to its offices at 1325 Northmeadow
Parkway, Suite 120, Roswell, Georgia 30076 Attention: Daniel D. Lensgraf, or if
to any holder of Series D Preferred Stock, to such holder at the address of such
holder as listed in the stock record books of the Corporation (which may include
the records of any transfer agent for the Series D Preferred Stock); or to such
other address as the Corporation or holder, as the case may be, shall have
designated by notice similarly given.
VI.
The corporation shall be entitled to purchase its own shares out of
its unreserved and unrestricted earned and capital surplus available therefor.
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VII.
The corporation shall be entitled to distribute a portion of its
assets to its shareholders out of capital surplus available therefor.
VIII.
The corporation shall not commence business until it shall have
received $500.00 in payment for the issuance of shares of stock.
IX.
The initial registered office of the corporation shall be at 12
Perimeter Center East, Suite 1200, Atlanta, Georgia 30346. The initial
registered agent of the corporation at such address shall be Jerry W. Mayfield.
X.
The initial board of directors shall consist of four (4) members who
shall be and whose addresses are:
NAME and ADDRESS
----------------
Marc A. Comeaux
440 Otter Creek Road
Atlanta, Georgia 30328
Jerry W. Mayfield
216 Burdin Road
Lafayette, Louisiana 70508
James O. Carpenter
P.O. Box 608
Port Gibson, Mississippi 39150
E. Paul Breaux, III
337 Bacque Crescent
Lafayette, Louisiana 70503
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XI.
The name and address of the incorporator is:
V. Scott Killingsworth
Powell, Goldstein, Frazer & Murphy
Suite 1050
400 Perimeter Center Terrace
Atlanta, Georgia 30346
XII.
The pre-emptive right of any shareholder to acquire authorized and
unissued shares of the corporation is denied.
XIII.
Any action required by law or by the bylaws of the corporation to be
taken at a meeting of the shareholders of the corporation, and any action which
may be taken at a meeting of the shareholders, may be taken without a meeting if
a written consent, setting forth the action so taken, shall be signed by persons
entitled to vote at a meeting those shares having sufficient voting power to
cast not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
were present and voted. Notice of such action without a meeting by less than
unanimous written consent shall be given within ten (10) days of the taking of
such action to those shareholders of record on the date when the written consent
is first executed and whose shares were not represented on the written consent.
XIV.
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of the duty of
care or other duty as a director, provided this article shall not eliminate or
limit the liability of a director: (i) for any appropriation, in violation of
his duties, of any business opportunity of the corporation; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (iii) for the types of liabilities set forth in
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Georgia Business Corporation Code Section 14-2-154; or (iv) for any transaction
from which the director derives an improper personal benefit.
IN WITNESS WHEREOF, the undersigned has executed these Restated
Articles of Incorporation.
/s/ Jerry W. Mayfield
-------------------------------------
Jerry W. Mayfield
President and Chief Executive Officer
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EXHIBIT 3.2
BYLAWS
OF
SATELLINK PAGING INC.
ARTICLE I
OFFICES
The corporation shall at all times maintain a registered office in the
State of Georgia and a registered agent at that address but may have other
offices located within or outside the State of Georgia as the Board of Directors
may determine.
ARTICLE II
SHAREHOLDERS' MEETINGS
2.1 Annual Meeting. A meeting of shareholders of the corporation shall be
held annually, within four (4) months of the end of each fiscal year of the
corporation. The annual meeting shall be held at such time and place and on such
date as the Directors shall determine from time to time and as shall be
specified in the notice of the meeting.
2.2 Special Meetings. Special meetings of the shareholders may be called
at any time by the President or any holder or holders of as much as twenty-five
percent of the outstanding capital stock of the corporation. Special meetings
shall be held at such a time and place and on such date as shall be specified in
the notice of the meeting.
<PAGE>
2.3 Place. Annual or special meetings of shareholders may be held within
or without the State of Georgia.
2.4 Notice. Notice of annual or special shareholders meetings stating
place, day and hour of the meeting shall be given in writing not less than ten
nor more than fifty days before the date of the meeting, either mailed to the
last known address or personally given to each shareholder. Notice of a meeting
may be waived by an instrument in writing executed before or after the meeting.
The waiver need not specify the purpose of the meeting or the business
transacted, unless one of the purposes of the meeting concerns a plan of merger
or consolidation, in which event the waiver shall comply with the further
requirements of law concerning such waivers. Attendance at such meeting in
person or by proxy shall constitute a waiver of notice thereof. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. The notice of any meeting at which amendments to or
restatements of the articles of incorporation, merger or consolidation of the
corporation, or the disposition of corporate assets requiring shareholder
approval are to be considered shall state such purpose, and further comply with
all requirements of law.
2.5 Quorum. At all meetings of shareholders a majority of the outstanding
shares of stock shall constitute a quorum for the transaction of business, and
no resolution or business shall be
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transacted without the favorable vote of the holders of a majority of the shares
represented at the meeting and entitled to vote. A lesser number may adjourn
from day to day, and shall announce the time and place to which the meeting is
adjourned.
2.6 Action in Lieu of Meeting. Any action to be taken at a meeting of the
shareholders of the corporation, or any action that may be taken at a meeting of
the shareholders, may be taken without a meeting if a consent in writing setting
forth the action so taken shall be signed by the holders of all of the shares
entitled to vote with respect to the subject matter thereof, or by the holders
of such lesser number of shares as may be required in accordance with any lawful
provision of the Articles of Incorporation, and any further requirements of law
pertaining to such consents have been complied with.
ARTICLE III
DIRECTORS
3.1 Management. Subject to these bylaws, or any lawful agreement between
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may exercise all of the powers that may be exercised or performed by the
corporation.
3.2 Number of Directors. The shareholders shall fix by resolution the
precise number of members of the Board of Directors, provided that the Board of
Directors shall consist of
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not fewer than three (3) nor more than seven (7) members unless there are fewer
than three (3) shareholders, in which case there may be two (2) directors or, if
at any time at least 51% of the stock of the corporation shall be held by one
(1) person, the Shareholders may determine to have only one (1) member of the
Board of Directors. Directors shall be elected at each annual meeting of the
shareholders and shall serve for a term of one year and until their successors
are elected. A majority of said Directors shall constitute a quorum for the
transaction of business. All resolutions adopted and all business transacted by
the Board of Directors shall require the affirmative vote of a majority of the
Directors present at the meeting.
3.3 Vacancies. The Directors may fill the place of any Director which may
become vacant prior to the expiration of his term, such appointment by the
Directors to continue until the expiration of the term of the Director whose
place has become vacant, or may fill any directorship created by reason of an
increase in the number of directors, such appointment by the Directors to
continue for a term of office until the next election of directors by the
Shareholders and until the election and qualification of the successor.
3.4 Meetings. The Directors shall meet annually, without notice, following
the annual meeting of the shareholders. Special meetings of the Directors may be
called at any time by the President or by any two Directors, on two days'
written
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notice to each Director, which notice shall specify the time and place of the
meeting. Notice of any such meeting may be waived by an instrument in writing
executed before or after the meeting. Directors may attend and participate in
meetings either in person or by means of conference telephones or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by means of such
communication equipment shall constitute presence in person at any meeting.
Attendance in person at such meeting shall constitute a waiver of notice
thereof.
3.5 Action in Lieu of Meeting. Any action to be taken at a meeting of the
Directors, or any action that may be taken at a meeting of the Directors, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors and any further requirements of
law pertaining to such consents have been complied with.
3.6 Removal. Any Director may be removed from office, with or without
cause, upon the majority vote of the shareholders, at a meeting with respect to
which notice of such purpose is given.
3.7 Interested Directors and Officers. An interested director or officer
is one who is a party, to a contract or transaction with the corporation or who
is an officer or director of, or has a financial interest in, another
corporation, partnership or association which is a party to a contract or
transaction with the corporation. Contracts and transactions
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between the corporation and one or more interested directors or officers shall
not be void or voidable solely because of the involvement or vote of such
interested persons as long as (i) the contract or transaction is approved in
good faith by the board of directors or appropriate committee by the affirmative
votes of a majority of disinterested directors, even if the disinterested
directors be less than a quorum, at a meeting of the board or committee at which
the material facts as to the interested person or persons and the contract or
transaction are disclosed or known to the board or committee prior to the vote;
or (ii) the contract or transaction is approved in good faith by the
shareholders after the material facts as to the interested person or persons and
the contract or transaction have been disclosed to them; or (iii) the contract
or transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the board, committee, or shareholders. Interested
directors may be counted in determining the presence of a quorum at a meeting of
the board or committee which authorizes the contract or transaction.
3.8 Committees of the Board. The Directors may, by resolution passed by a
majority of the entire Board of Directors, designate one or more committees,
each committee to consist of two or more Directors, which, to the extent
provided in the resolution, shall have and may exercise the powers of the Board
in managing the corporate business and affairs, and may have
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power to authorize the seal of the corporation to be fixed to all papers which
may require it. The committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.
The committees shall keep regular minutes of their proceedings and report same
to the Board of Directors when required.
ARTICLE IV
OFFICERS
4.1 General Provisions. The officers of the corporation shall consist of a
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors, and such other officers as may be elected by the Board of Directors
or appointed as provided in these bylaws. Each officer shall be elected or
appointed for a term of office running until the meeting of the Board of
Directors following the next annual meeting of the shareholders of the
corporation, or such other term as provided by resolution of the Board of
Directors or the appointment to office. Each officer shall serve for the term of
office for which he is elected or appointed and until his successor has been
elected or appointed and has qualified or his earlier resignation, removal from
office or death. Any two or more offices may be held by the same person, except
the offices of President and Secretary.
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4.2 President. The President shall be the chief executive officer of the
corporation and shall have general and active management of the operation of the
corporation. He shall be responsible for the administration of the corporation,
including general supervision of the policies of the corporation and general and
active management of the financial affairs of the corporation, and shall execute
bonds, mortgages or other contracts in the name and on behalf of the
corporation.
4.3 Secretary. The Secretary shall keep minutes of all meetings of the
shareholders and Directors and have charge of the minute books, stock books and
seal of the corporation and shall perform such other duties and have such other
powers as may from time to time be delegated to him by the President or the
Board of Directors.
4.4 Treasurer. The Treasurer shall be charged with the management of the
financial affairs of the corporation, shall have the power to recommend action
concerning the corporation's affairs to the President, and shall perform such
other duties and have such other powers as may from time to time be delegated to
him by the President or Board of Directors.
4.5 Assistant Secretaries and Treasurers. Assistants to the Secretary and
Treasurer may be appointed by the President or elected by the Board of Directors
and shall perform such duties and have such powers as shall be delegated to them
by the President or the Board of Directors.
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4.6 Vice Presidents. The corporation may have one or more Vice Presidents,
elected by the Board of Directors, who shall perform such duties and have such
powers as may be delegated by the President or the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Share Certificates. Share certificates shall be numbered in the order
in which they are issued. They shall be signed by the President and Secretary
and the seal of the corporation shall be affixed thereto. Share certificates
shall be kept in a book and shall be issued in consecutive order therefrom. The
name of the person owning the shares, the number of shares, and the date of
issue shall be entered on the stub of each certificate. Share certificates
exchanged or returned shall be cancelled by the Secretary and placed in their
original place in the stock book.
5.2 Transfer of Shares. Transfers of shares shall be made on the stock
books of the corporation by the holder in person or by power of attorney, on
surrender of the old certificate for such shares, duly assigned.
5.3 Voting. The holders of the capital stock shall be entitled to one vote
for each share of stock standing in their name.
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ARTICLE VI
SEAL
The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such a seal at any time, the signature of the corporation followed by the
word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the
corporation. The seal shall be in the custody of the Secretary and affixed by
him or by his assistants on the certificates of stock and other appropriate
papers.
ARTICLE VII
AMENDMENT
These bylaws may be amended by majority vote of the Board of Directors of
the corporation or by majority vote of the shareholders, provided that the
shareholders may provide by resolution that any bylaw provision repealed,
amended, adopted or altered by them may not be repealed, amended, adopted or
altered by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION
The corporation shall indemnify and save harmless the Directors, officers,
employees or agents of the corporation for personal losses or damages incurred
for acts or omissions done or not done on behalf of the corporation in
accordance with the
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Indemnification Policy (the Policy) attached hereto as Exhibit A and
incorporated herein by this reference. It is the intention of the corporation
that indemnification under the Policy shall extend to the maximum
indemnification possible under the laws of the State of Georgia.
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EXHIBIT A
INDEMNIFICATION POLICY
OF
SATELLINK PAGING INC.
1. Under the circumstances prescribed in Paragraphs 3 and 4 below, the
corporation shall indemnify and hold harmless any person who was or who is a
party or who is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a Director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in a manner which he
<PAGE>
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
2. Under the circumstances prescribed in Paragraphs 3 and 4 below, the
corporation shall indemnify and hold harmless any person who was or is a party
or who is threatened to be made a party to any threatened, pending or completed
action or suit by, or in the right of the corporation to procure a judgment in
its favor by reason of the fact he is or was a Director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
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3. To the extent that a Director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Paragraphs 1 and 2, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
4. Except as provided in Paragraph 3 and except as may be ordered by a
court, any indemnification under Paragraphs 1 and 2 shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Paragraphs 1 and 2. Such a determination shall be made: (1) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding; (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested Directors so
directs, by the firm of independent legal counsel then employed by the
corporation, in a written opinion; or (3) by the affirmative vote of a majority
of the shares entitled to vote thereon.
5. Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or
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proceeding upon receipt of an undertaking by or on behalf of the Director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Indemnification Policy.
6. The indemnification and advancement of expenses provided by or granted
pursuant to this Indemnification Policy shall not be deemed exclusive of any
other rights, in respect of indemnification or otherwise, to which those seeking
indemnification or advancement of expenses may be entitled under any by-law,
resolution, or agreement, either specifically or in general terms approved by
the affirmative vote of the holders of a majority of the shares entitled to vote
thereon, taken at a meeting, the notice of which specified that such by-law,
resolution, or agreement, would be placed before the shareholders, both as to
action by a Director, officer, employee, or agent in his official capacity and
as to action in another capacity while holding such office or position. No such
other rights, in respect to indemnification or otherwise, may be provided or
granted to a Director, officer, employee, or agent pursuant to this policy: (i)
for any appropriation, in violation of his duties, of any business opportunity
of the corporation; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law; (iii) for the
types of liabilities set forth in Georgia Business
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Corporation Code, Section 14-2-154; or (iv) for any transaction from which the
director derives an improper personal benefit.
7. The corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, officer, employee or agent of the corporation,
or who is or was serving at the request of the corporation as a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Indemnification Policy.
8. If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders or by an insurance
carrier pursuant to insurance maintained by the corporation, the corporation
shall, not later than the next annual meeting of shareholders unless such
meeting is held within three months from the date of such payment, and, in any
event, within 15 months from the date of such payment, sent by first class mail
to its shareholders of record at the time entitled to vote for the election of
Directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
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The indemnification and advancement of expenses provided by or granted
pursuant to this Indemnification Policy shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
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EXHIBIT 4.1
STOCKHOLDERS AGREEMENT
THIS AGREEMENT, made as of the 1st day of August, 1988 by and between
SATELLINK PAGING INC., a corporation organized and existing under the laws of
the State of Georgia (hereinafter referred to as the "Corporation"), and its
stockholders and/or subscribers listed on Exhibit A hereto (such stockholders
sometimes hereinafter referred to individually and collectively as the
"Stockholder" and the "Stockholders");
W I T N E S S E T H:
WHEREAS, the Stockholders have subscribed for and are the holders of all
of the issued and outstanding common stock of the Corporation presently issued
and outstanding or subscribed for; and
WHEREAS, the Stockholders and the Corporation deem it to be desirable
and in the best interest of the Corporation to enter into an agreement on the
terms and conditions hereinafter stated with respect to said common stock to
provide thereby for the continuity of management of the Corporation;
NOW, THEREFORE, for and in consideration of these premises and the
mutual covenants and agreements contained herein, the parties hereto do hereby
mutually agree as follows:
<PAGE>
SECTION 1: Options and Restrictions.
------------------------
The Stockholders do hereby agree that all of the common stock (whether
Class A or Class B) of the Corporation owned or subscribed for by them (the
"Stock") shall be subject to the following options, restrictions, terms and
conditions:
(a) Except as provided in this Section 1 the Stockholders shall not
sell, assign, transfer, pledge or hypothecate their Stock without the prior
written consent of all of the parties hereto.
(i) A Stockholder or his estate may sell his Stock to the
Corporation, if both parties so desire, at such price and on such terms
as may be agreed upon by the Corporation and that Stockholder. Such
parties may elect by mutual agreement to proceed under this item (i),
notwithstanding the existence of any other options on the part of the
Corporation provided for in this Agreement.
(ii) If a Stockholder desires to sell his Stock to a party other
than the Corporation, he shall give written notice to the Corporation
and to the other Stockholder(s) of his intention to do so. The
Corporation shall have an option to purchase the Stock of the Selling
Stockholder at any time within thirty (30) days of receipt of such
notice at the price and upon the terms provided in subsection (f)
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of this Section 1. (Any Stockholder desiring to sell his Stock or whose
Stock is subject to the options provided in subsection (d) is referred
to herein as the "Selling Stockholder.")
(iii) In the event that the Corporation does to exercise its option
to purchase the Stock within the said thirty (30) day period, it shall
notify the other Stockholder(s) and the other Stockholder(s) shall have
an option to purchase the Stock. The option of the other Stockholder(s)
may be exercised at any time within thirty (30) days of the expiration
of the option of the Corporation, at the same price and upon the same
terms as the Corporation. If such option is exercised by more than one
of the other Stockholders, the Stockholders exercising the option shall
purchase the Stock of the Selling Stockholder in proportion to their
holdings of Stock, or as they shall otherwise agree.
(iv) In the event that neither the Corporation nor the other
Stockholder(s) shall exercise the option to purchase the Stock of the
Selling Stockholder within the stated period, the Selling Stockholder
shall, for a period of thirty (30) days after the expiration of such
options, be free to sell his Stock to any other party; provided,
however, the sale must be at the price and upon terms
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provided in subsection (f) of this Section 1 and further provided that
the purchaser of such Stock must, prior to such purchase, execute such
documents as the Corporation may reasonably require to evidence the fact
that the Stock acquired by the purchaser remains subject to this
Agreement, and such purchaser is bound by the terms of this Agreement in
the same manner and to the same extent as the Selling Stockholder had
previously been. If the Selling Stockholder does not sell his Stock
within said thirty (30) day period, the restrictions of this subsection
(a) of this Section 1 shall again apply to his Stock.
(v) All of the Stock held by the Selling Stockholder shall be offered
pursuant to the terms hereof, and any exercise of an option to purchase
shall also be for all of the Stock of the Selling Stockholder.
(b) In the event that the employment of any Stockholder who is an
employee of the Corporation shall cease or be terminated for any reason other
than death, the Corporation shall have the first option and the other
Stockholder(s) the second option to purchase all of the Stock of such
Stockholder (such Stockholder hereinafter referred to as the "Terminated
Stockholder"), at the price and on the terms set forth in subsection (g) of this
Section 1. In order to exercise its option, the Corporation must initiate an
appraisal, if at all, by notice in writing by the
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Corporation to the Terminated Stockholder within thirty (30) days after said
termination of employment. In the event that the Corporation does not so
initiate an appraisal, or does so but does not thereafter exercise its option
within the time period set forth in subsection (g) of this Section 1, it shall
notify the other Stockholder(s) and the other Stockholder(s) shall have thirty
(30) days from the end of the thirty (30) day period mentioned above (if the
Corporation did not initiate an appraisal during such period), or, if the
Corporation did initiate an appraisal but did not exercise its option, from the
later to occur of the expiration of the option of the Corporation or the giving
of such notice to the other Stockholder(s), to exercise the option or initiate
an appraisal, as appropriate, by notice in writing of said action by the other
Stockholder(s) to the Terminated Stockholder. If such option is exercised by
more than one of the other Stockholders, the Stockholders exercising the option
shall purchase the Stock of the Terminated Stockholder in proportion to their
holdings of Stock, or as they shall otherwise agree. All of the stock of the
Terminated Stockholder shall be subject to the options contained in this
subsection (b) of this Section 1, and any exercise of such options shall also be
for all of the Stock of the Terminated Stockholder. In the event that neither
the Corporation nor the other Stockholder(s) shall exercise the options
contained in this subsection (b) of this
-5-
<PAGE>
Section 1, the Stock of the Terminated Stockholder shall be released from the
terms and provisions of this Agreement.
(c) Upon the death of a Stockholder, the Corporation shall have the
first option and the other Stockholder(s) the second option to purchase all of
the Stock of the deceased Stockholder (hereinafter referred to as the "Deceased
Stockholder") at the price and on the terms set forth in subsection (g) of this
Section 1. In order to exercise its option, the Corporation must initiate an
appraisal, if at all, by notice in writing to the personal representative of the
Deceased Stockholder given by the Corporation with respect to its option at any
time within thirty (30) days after the date of the Deceased Stockholder's death,
provided, however, that the option period shall toll for any period of time from
the time of death of the Deceased Stockholder in which his personal
representative has not taken office. In the event the Corporation does not so
initiate an appraisal, or does so but does not thereafter exercise its option
within the time period set forth in subsection (g) of this Section 1, it shall
notify the other Stockholder(s) and the other Stockholder(s) shall have thirty
(30) days from the end of the thirty (30) day period mentioned above (if the
Corporation did not initiate an appraisal during such period), or, if the
Corporation did initiate an appraisal but did not exercise its option, from the
later to occur of the expiration of the option of the Corporation or the giving
of such notice to the other
-6-
<PAGE>
Stockholder(s), to exercise the option or initiate an appraisal, as appropriate,
by notice in writing of the action to the personal representative of the
Deceased Stockholder. If this option is exercised by more than one of the other
Stockholders, the other Stockholders exercising the option shall purchase the
Stock of the Deceased Stockholder in proportion to their holdings of Stock, or
as they shall otherwise agree. In the event that neither the Corporation nor
the other Stockholder(s) exercise the options contained in this subsection (c)
of this Section 1, the personal representative of the Deceased Stockholder shall
have the option to require the Corporation to purchase all of the Stock of the
Deceased Stockholder at the appraised value as, and otherwise on the terms, set
forth in subsection (g) of this Section 1, said option to be exercisable within
thirty (30) days after the expiration of the option periods of the Corporation
and the other Shareholders provided in this subsection (c) of this Section 1.
In the event that neither the Corporation nor the other Stockholder(s) nor the
personal representative of the Deceased Stockholder exercise the option
contained in this subsection (c) of this Section 1, the Stock of the Deceased
Stockholder shall be released from the terms and provisions of this Agreement.
Notwithstanding anything to the contrary in this Agreement, Stock may be sold,
assigned, transferred, pledged or hypothecated by (i) Robert D. Gage III to
Robert D. Gage IV and
-7-
<PAGE>
vice versa; and (ii) Jay Menard, Mary Menard and/or Jay Andre Menard to Jerry W.
Mayfield and/or Marc A. Comeaux.
(d) Upon the occurrence of any of the following events with respect to a
Stockholder:
(i) the voluntary filing of a petition in bankruptcy or insolvency
or any other voluntary petition or application or other recourse to or
use of the provisions under any bankruptcy or insolvency laws of the
Stockholder for the purpose of protecting the Stockholder from his
creditors;
(ii) the application for or consent to the appointment of a
receiver or trustee for the Stock or all or a substantial portion of the
property of the Stockholder or the making of an assignment for the
benefit of creditors of the Stockholder; or
(iii) the institution of proceedings in any court of competent
jurisdiction, by a creditor or any third party, seeking to adjudicate
the Stockholder as bankrupt or insolvent, or to approve a petition for
reorganization or appointing a receiver, trustee or liquidator of the
Stock or all or a substantial part of the assets of the Stockholder, or
the entry of an order, judgment or decree in any such proceeding against
the Stockholder and granting the relief sought, provided that the
proceeding or order, judgment or
-8-
<PAGE>
decree continues unstayed and in effect for sixty (60) or more days; or
(iv) the Stock or all or a substantial portion of the property
of the Stockholder is attached or levied upon and such action is not removed or
bonded whin forty-five (45) days; or
(v) the dissolution of any corporate Stockholder;
the Corporation shall have the first option and the other Stockholder(s) the
second option to purchase all of the Stock of the Stockholder, to whom the
above-described events relate (hereinafter together with the Stockholders
referred to in subsection (a) of this Section 1 referred to as the "Selling
Stockholder"), at the price and on the terms set forth in subsection (g) of this
Section 1. In order to exercise its option, the Corporation must initiate an
appraisal, if at all, by notice in writing to the Selling Stockholder or the
personal representative of the Selling Stockholder given by the Corporation with
respect to its option at any time within thirty (30) days of notice to the
Corporation of the occurrence of one or more of the above events or at any time
during the pendancy of any of the foregoing proceedings. In the evnt that the
Corpration does not so initiate an appraisal, or does so but does not thereafter
exercise its option within the time period set forth in subsection (g) of this
Section 1, it shall notify
-9-
<PAGE>
the other Stockholder(s) and the other Stockholder(s) shall have thirty (30)
days from the end of the thirty (30) day period mentioned above (if the
Corporation did not initiate an appraisal during such period), or, if the
Corporation did initiate an appraisal but did not exercise its option, from the
later to occur of expiration of the option of the Corporation or the giving of
such notice to the other Stockholder(s), to exercise the option or initiate an
appraisal, as appropriate, by notice in writing of said action by the other
Stockholder(s) to the Selling Stockholder or the personal representative of the
Selling Stockholder. If this option is exercised by more than one of the other
Stockholders, the other Stockholders exercising the option shall purchase the
Stock of the Selling Stockholder in proportion to their holdings of Stock, or as
they shall otherwise agree. In the event that neither the Corporation nor the
other Stockholder(s) exercise the option contained in this subsection (d) of
this Section 1, the Stock of the Selling Stockholder shall remain subject to the
terms and provisions of this Agreement.
(e) Any exercise of an option to purchase the Stock of a Stockholder by
the Corporation or the other Stockholder(s) under subsections (a),(b),(c),(d) or
(h) of this Section 1, whether such Stock or any part thereof shall be held by
the Stockholder or any other party, shall be by written notice of intention to
exercise the same given to the parties and within the time limit set forth in
said subsections. The notice shall specify the date
-10-
<PAGE>
upon which the sale of Stock shall be closed and the time and place of the
closing, said closing to be not more than fifteen (15) days after the giving of
such notice, unless the option results from the death of a Stockholder and the
personal representative of the Deceased Stockholder has not yet taken office. In
the latter event, the closing shall take place within not more than ten (10)
days after the Corporation or the other Stockholder(s) whichever gave notice,
has been notified that said personal representative has taken office. If an
option is exercised by more than one of the other Stockholders, the date, time
and place of the closing shall be mutually agreed upon by such Stockholders
exercising the option. In the event that the Selling, Terminated or Deceased
Stockholder or the personal representative of the Selling or Deceased
Stockholder or any other appropriate party shall fail to appear at the closing
and deliver the Stock or any part thereof, the Corporation or the other
Stockholder(s), whichever is exercising the option, may thereupon place the
consideration to be paid for such Stock in escrow for the Selling, Terminated or
Deceased Stockholder, or personal representative of the Selling or Deceased
Stockholder or other appropriate party, with any national banking association or
trust company in the City of Atlanta, Georgia, whereupon the Corporation, if it
is exercising its option, shall be privileged to cancel the said certificate or
certificates representing the Stock, and treat the Stock as having been
purchased by the
-11-
<PAGE>
Corporation, and if the other Stockholder(s) are exercising the option the
corporation shall be privileged to cancel the said certificate or certificates
representing the Stock and issue new certificates to the other Stockholder(s)
and treat the Stock as having been purchased by the other Stockholder(s). Such
consideration shall be released from such bank acting as escrow agent only upon
surrender of original certificate or certificates representing the Stock to the
escrow agent or proof of destruction or loss thereof satisfactory to the escrow
agent.
(f) The purchase price and terms of purchase of the Stock if purchased
by the Corporation or the other Stockholder(s) under subsection (a) (other than
under subsection (a)(i)) shall be at a price and on terms identical to or at
least as favorable as those the Selling Stockholder has received from or has
negotiated with another purchaser in a written, bona fide third party offer for
the purchase of all of the Stock of the Selling Stockholder (such offer
hereinafter referred to as the "Outside Offer"). The written notice from the
Selling Stockholder to the Corporation and the other Stockholders must set forth
all of the terms and conditions of the Outside Offer and include a signed copy
of the Outside Offer. If the Stock is to be purchased by a third party under
subsection (a), the sale must be in accordance with the Outside Offer.
-12-
<PAGE>
(g) The price and terms of payment on the purchase of the Stock by
either the Corporation or the other Stockholder(s) under subsection (b), (c) or
(d) shall be as follows:
(i) The price shall be determined by an independent, professional
appraisal which shall be initiated by written notice to the Stockholder
within the time limits set forth in said subsections. This appraisal
shall be conducted by an appraiser who is experienced in the valuation
of closely-held corporations, and who shall be agreed upon within
fifteen (15) days of notice of initiation of the appraisal by both the
Selling Stockholder and the purchasing party. If the parties cannot
agree on an appraiser within fifteen (15) days of notice of initiation
of the appraisal, then each party shall designate one appraiser within
that fifteen days, and these two designated appraisers will constitute a
selection committee to designate a third, independent appraiser within
ten (10) days of the committee's appointment. In either case, the final
appraiser selected shall be required to commit to conduct the appraisal
within forty-five (45) days of his designation. It is understood by all
the parties to this Agreement that an option need not be exercised until
a price is determined by the appraiser, but such option must be
exercised, if at all, within ten (10) days of such price determination
or, if the Corporation initiated an appraisal
-13-
<PAGE>
but did not exercise its option, by the other Stockholder(s) within
thirty (30) days of the later to occur of the expiration of the option
of the Corporation or the giving of notice to the other Stockholder(s)
by the Corporation of its action, as appropriate, and, once the option
is exercised, the price determined by the appraiser shall be conclusive
and binding upon the parties to the transactions.
(ii) The purchase price shall be paid at the option of the
purchaser either in cash or in monthly installments over a period of not
more than five (5) years from the date of purchase, with interest on the
unpaid balance thereof at the rate of interest announced publicly by The
Citizens and Southern National Bank in Atlanta, Georgia, from time to
time, as its "prime rate."
(h) In the event that any of the Stock shall be sold, transferred,
assigned or conveyed in any manner to any party in violation of the terms and
conditions of this Agreement, the Corporation shall have the first option and
the other Stockholder(s) the second option in proportion to the holdings of
Stock of the other Stockholders exercising the option, or as they shall
otherwise agree, to purchase the Stock sold, transferred, conveyed or assigned
in violation of this Agreement from the then holder thereof. The purchase price
for the purchase of the Stock pursuant to such option shall be equal to the
lesser of the
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<PAGE>
amount received by the Corporation on the issuance of the Stock, the appraised
value of the Stock as determined in accordance with subsection (g) of this
Section 1, or the price actually paid by the then holder of the Stock. The
purchase price shall be payable at the option of the Corporation or the other
Stockholder(s), whichever exercises the option, in cash or by note payable on or
before twelve (12) months from the date of the notice, with interest thereon at
the rate of seven (7%) percent per annum, or by a combination of cash and such
notice. Said option shall be exercisable and the transaction of purchase shall
be closed in the manner set forth in subsection (e) of this Section 1. The
notice of exercise of its option by the Corporation may be given by the
Corporation at any time within six (6) months from the date the Corporation
receives notice of the transaction in violation of this Agreement, and in the
event the Corporation does not exercise its option, it shall notify the other
Stockholder(s) and they shall have three (3) months from the later to occur of
the expiration of the option period of the Corporation or the giving of such
notice to the other Stockholder(s), to give the notice of exercise of the
option. The notice of exercise of the options shall be given to the Stockholder
whose Stock or any part thereof was so sold, transferred, assigned or conveyed
in violation of this Agreement, and, if and to the extent it is reasonable and
possible to do so,
-15-
<PAGE>
to the holder of such Stock at the address of such party known to the parties
hereto exercising the options.
(i) All options granted under this Section 1 are made solely to
Stockholders owning or subscribing for the same class of Stock as the class of
the Stock with respect to which the option is to be granted, and all options
granted hereunder shall be granted with respect to a Stockholder's proportionate
holding of such class of Stock, or as the Stockholders holding such class of
Stock shall otherwise agree.
SECTION 2: Repurchase by Corporation.
-------------------------
Notwithstanding anything to the contrary herein, in the event that the
Corporation exercises any of its options provided herein for the purchase of the
Stock of a Selling, Terminated or Deceased Stockholder but is prohibited by law
from purchasing all or a part of the stock subject to such option, the
Corporation may purchase such part of the Stock as is not prohibited by law and
shall promptly notify the other Shareholder(s) of the prohibition, and the other
Stockholder(s) shall then be able to exercise their options to purchase the
Stock or the part thereof not purchased by the Corporation by appropriate notice
in writing within thirty (30) days of such notice to the other Shareholder(s).
The terms and conditions of the options, including notice, closing and purchase
price and payment terms,
-16-
<PAGE>
otherwise provided herein shall not be affected except as expressly provided
above.
SECTION 3: Management Provisions.
---------------------
(a) The Stockholders hereby agree that, in the event that and for so
long as, Cue Paging Corporation ("Cue") and/or an "affiliate" thereof (as
defined below) owns the required number of shares of the voting Stock in the
Corporation, Cue shall be entitled to one seat on the Board of Directors of
the Corporation and the Stockholders shall vote their respective Stock for the
nominee to the Board designated by Cue.
For purposes of the foregoing, the required number of shares to be owned
by Cue and/or its affiliate shall be (a) 1200, during the first year this
agreement is in effect, and (b) 4820, during all subsequent years, subject in
each case to modification proportionate to any reverse stock split, stock
redemption or other action reducing the number of outstanding shares of Stock.
Notwithstanding any provision to the contrary contained herein, Cue
shall at all times have the right to transfer any and all Stock owned by Cue to
any "affiliate" of Cue provided, however, that as a condition to such transfer
such affiliate shall become a party to this Agreement. For purposes of this
Agreement, "affiliate" shall mean any person or entity that controls, is
controlled by, or is under common control with, Cue.
-17-
<PAGE>
(b) The Stockholders hereby agree that, in the event that and for so
long as, Robert D. Gage IV ("Gage IV"), Robert D. Gage III, James O. Carpenter
("J. Carpenter"), Ira Carpenter, Jr. and Charles R. Carpenter (collectively, the
"Mississippi Stockholders") own in the aggregate at least twenty percent (20%)
of the voting Stock of the Corporation, the Mississippi Stockholders shall be
entitled to two seats on the Board of Directors of the Corporation and the
Stockholders shall vote their respective Stock for the election of Gage IV and
J. Carpenter, or their respective nominees, to the Board.
(c) The Stockholders hereby agree to vote their respective Stock for the
election of Marc A. Comeaux and Jerry Mayfield, or their respective nominees, to
the Board of Directors of the Corporation.
SECTION 4: Preemptive Rights.
-----------------
It is acknowledged that the Corporation's Articles of Incorporation deny
shareholders' preemptive rights; nevertheless, the shareholders who are parties
to this Agreement shall have preemptive rights with respect to the Class A and
Class B Common Stock of the Corporation as and under only those circumstances
provided for in O.C.G.A. Section 14-2-11 as in effect on July 1, 1988, as if the
Corporation's Articles of Incorporation preserved the preemptive rights of
shareholders; provided, however, that notwithstanding the foregoing such rights
shall not apply (i) to
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any issuance of stock by the Corporation unless the stock is being issued at a
price lower than the lesser of (a) $62.227 per share and (b) the then
"stockholders equity" per share of the Corporation's common stock as reflected
on the Corporation's most recent financial statements; (ii) to any issuance of
stock to Cue at a deemed price of $62.227 per share as a result of Cue's (or an
affiliate) being required to pay off indebtedness of the Corporation, as
provided for in the Share Subscription Agreement between the Corporation and
Cue; (iii) to any issuance of shares under any of the circumstances described in
subsection (d) of O.C.G.A. Section 14-2-111; or (iv) to the issuance to the
parties hereto of the Stock as listed on Schedule 1 attached hereto and
incorporated herein by reference.
SECTION 5: Right of Cue to Participate in Majority Sale.
--------------------------------------------
The parties hereby agree that in the event that any Stockholder, or
group of Stockholders acting in concert, in a single transaction or in a
series of related transactions, contract to sell Stock aggregating in excess of
fifty (50%) per cent of the outstanding voting stock of the Corporation or in
excess of fifty (50%) of the entire outstanding stock of the Corporation (a
"Majority Sale"), then, in such event, Cue shall be offered the opportunity to
participate in such sale in a proportion equal to the same percentage of shares
of Stock owned by Cue as theretofore owned by the selling Stockholder or
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<PAGE>
Stockholders. That is, if Cue at the time owns 15% of the outstanding stock of
the Corporation and a group of Stockholders contracts to sell in a Majority Sale
51% of the outstanding stock of the Corporation owned by them, Cue shall be
given the opportunity to participate in such sale so as to sell 7.65% of the
outstanding stock of the Corporation (51% of 15%) or if the group of selling
Stockholders contracts to sell in a Majority Sale 100% of the outstanding Stock
of the Corporation owned by them, Cue shall be given the opportunity to
participate in such sale so as to sell all 15% of its shares of stock of the
Corporation. Unless otherwise agreed by the parties, Cue's participation in such
sale shall be by means of assignment to Cue and assumption by Cue of a
proportionate part of each Stockholder's rights and obligations under the
contract(s) of sale.
SECTION 6: Legend.
------
All certificates evidencing the Stock shall bear the following legend:
"The shares of stock evidenced by this Certificate are subject to the
terms of a certain Stockholders Agreement between Satellink Paging Inc.
and its Stockholders, a copy of which Agreement is on file at the
principal or registered office of the corporation. No transfer of the
shares represented hereby may be made except in accordance with and
subject to the provisions of said Agreement."
-20-
<PAGE>
SECTION 7: Notices.
-------
All notices and other communications under this Agreement shall be
deemed to have been given if deposited in the United States mail, registered or
certified mail, postage prepaid, if to the parties hereto at the addresses last
shown for each such party on the books of the Corporation, if to the Corporation
at its registered office, and if to any other party as herein otherwise
provided.
SECTION 8: Successors.
----------
This Agreement shall be binding upon any transferees and assigns of the
Stock whether such transfers or assignments are consistent with or in violation
of the terms and provisions of this Agreement, and upon the heirs, legal
representatives, successors and assigns of such transferees and assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Corporation and the heirs, legal representatives, successors and
assigns of the Stockholders.
SECTION 9: Other Securities.
----------------
The term "Stock" as used herein shall include not only the common stock
hereinabove referred to, but shall also include any capital stock of the
Corporation whenever acquired by any means, including purchase, stock dividends,
stock splits or conversions,
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<PAGE>
together with any stock or securities for which such stock is exchanged pursuant
to any reorganization of the Corporation.
SECTION 10: Termination.
-----------
This Agreement shall terminate and be of no force and effect upon the
sooner of (i) the passage of twenty (20) years from the date of this Agreement,
or (ii) the effective date of a written agreement signed by all of the parties
hereto providing for the termination of this Agreement. The rights of a
Stockholder hereunder shall terminate when such Stockholder ceases to own any
Stock, or options, warrants or other rights to purchase stock.
SECTION 11: Entire Agreement.
----------------
This Agreement represents the entire agreement between the parties and
all prior negotiations are hereby superseded; provided, however, to the extent
that any of the Stock now or hereafter owned or subscribed for by an employee of
the Corporation is subject to a risk of forfeiture or to a repurchase option on
the part of the Corporation pursuant to an employment agreement, employee stock
plan or stock option plan or any similar arrangement, the terms of such
agreement or arrangement shall control and take precedence over the terms hereof
to the extend of any conflict, but otherwise the terms of this Agreement shall
be fully applicable to such Stock.
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<PAGE>
SECTION 12: Governing Law.
-------------
This Agreement shall be interpreted under and governed by the laws of
the State of Georgia.
SECTION 13: Equitable Remedies.
------------------
In the event of any actual or threatened default in, or breach of any of
the terms, conditions and provisions of this Agreement, the party or parties who
are thereby aggrieved shall have the right to specific performance and
injunction in addition to any and all rights and remedies at law or in equity,
and all such rights and remedies shall be cumulative.
SECTION 14: Severability.
------------
In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, the same shall not invalidate or otherwise affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
SECTION 15: Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same
instrument.
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<PAGE>
SECTION 16. Amendment.
---------
No amendment or modification of this Agreement shall be effective unless
in writing and executed by the parties hereto.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its corporate seal to be affixed, an the individual Stockholders
have set their hands and seals, as of the day and year first above indicated.
SATELLINK PAGING INC.
BY: /s/ Jerry W. Mayfield
---------------------------------
Title: Executive Vice President/
Secretary
Attest:
BY:
-------------------------
Secretary
[CORPORATE SEAL]
<PAGE>
EXHIBIT A
Each of the undersigned stockholders hereby acknowledges and agrees that
by signing in the space provided below he/she is entering that certain
Stockholders Agreement dated as of August 1, 1988 restricting the
transferability of the capital stock of Satellink Paging Inc. (the "Agreement")
and he/she is thereby a party to the Agreement.
STOCKHOLDER DATE ADDRESS
- ----------- ---- -------
/s/ Marc A. Comeaux 7/25/88 440 Otter Creek CT
- -----------------------(SEAL) -------------- -----------------------
Marc A. Comeaux Atlanta, GA 30328
-----------------------
/s/ Jerry W. Mayfield 8/1/88
- -----------------------(SEAL) -------------- _______________________
Jerry W. Mayfield
_______________________
/s/ James O. Carpenter 8/1/88 c/o People's Bank
- -----------------------(SEAL) -------------- -----------------------
James O. Carpenter PO Box 529
-----------------------
Biloxi, MS 39533
-----------------------
/s/ Ira Carpenter, Jr. 8/1/88 c/o People's Bank
- -----------------------(SEAL) -------------- -----------------------
Ira Carpenter, Jr. PO Box 529
-----------------------
Biloxi, MS 39533
-----------------------
<PAGE>
STOCKHOLDER DATE ADDRESS
- ----------- ---- -------
/s/ Charles R. Carpenter 8/1/88 c/o People's Bank
- ------------------------(SEAL) ------ ---------------------
Charles R. Carpenter
P.O. Box 529
---------------------
Biloxi, MS 39533
---------------------
/s/ Robert D. Gage, III 8/1/88 P.O. Box 608
- -----------------------(SEAL) ------ ---------------------
Robert D. Gage, III
Port Gibson, MS 39150
---------------------
/s/ Robert D. Gage, IV 8/1/88 P.O. Box 608
- ----------------------(SEAL) ------ ---------------------
Robert D. Gage, IV
Port Gibson, MS 39150
---------------------
/s/ Jay Menard 8/1/88 4011 Pinhook Rd.
- --------------(SEAL) ------ ---------------------
Jay Menard
Lafayette, LA 70508
---------------------
/s/ Mary Menard 8/1/88 4011 Pinhook Rd.
- ---------------(SEAL) ------ ---------------------
Mary Menard
Lafayette LA 70508
---------------------
/s/ Jay Andre Menard 8/1/88 4011 Pinhook Rd.
- --------------------(SEAL ------ ---------------------
Jay Andre Menard
Lafayette, LA 70508
---------------------
/s/ E. Paul Breaux, III 8/1/88 337 Bacque Crescent
- -----------------------(SEAL) ------ ---------------------
E. Paul Breaux, III
Lafayette, LA 70503
---------------------
<PAGE>
STOCKHOLDER DATE ADDRESS
- ----------- ---- -------
/s/ David Autin 8/1/88 157 Ronald Blvd.
- ----------------------(SEAL) ----------- ----------------------
David Autin Lafayette, LA 70503
----------------------
/s/ David Robertson 8/1/88 3604 Cherokee Rd.
- ----------------------(SEAL) ----------- ----------------------
David Robertson Atlanta, GA
----------------------
/s/ Robert Poche' 8/1/88 750 Lake Top Way
- ----------------------(SEAL) ----------- ----------------------
Robert Poche' Roswell, GA 30076
----------------------
/s/ Humberto Izquierdo 8/1/88 420 Chimney Bluff
- ----------------------(SEAL) ----------- ----------------------
Humberto Izquierdo Alpharetta, GA 30346
----------------------
CUE PAGING CORPORATION
By: /s/ Gene Swanzy
-------------------------
Title: President
----------------------
Attest: /s/ J. G. O'Neill
---------------------
Secretary
[CORPORATE SEAL]
<PAGE>
SCHEDULE 1
SATELLINK PAGING INC.
SHAREHOLDER LISTING
I. Voting Stock - Class A
Name Shares
---- ------
Marc A. Comeaux 6,455
Jerry W. Mayfield 5,277
James O. Carpenter 2,000
E. Paul Breaux, III 1,094
Jay Menard 1,000
Mary E. Menard 1,000
Jay A. Menard 1,000
David F. Robertson 600
David L. Autin 574
Robert D. Gage, III 500
Robert D. Gage, IV 500
Cue Paging Corporation 4,285.333
Mississippi Shareholders* 4,285.222
----------
28,570.666
II. Non-Voting Stock - Class B
Name Shares
---- ------
Robert P. Poche' 1,000
David F. Robertson 750
Humberto Izquierdo 750
Cue Paging Corporation 535.667
Mississippi Shareholders* 535.667
---------
3,571.334
*Mississippi Shareholders are Robert D. Gage, III, Robert D. Gage, IV, James O.
Carpenter, Charles R. Carpenter, and Ira Carpenter, Jr. The shares held by this
group will be allocated among these shareholders as they designate.
<PAGE>
EXHIBIT 4.2
DEBENTURE PURCHASE AGREEMENT
AND AMENDMENT TO STOCKHOLDERS AGREEMENT
THIS AGREEMENT, made as of the 25th day of July, 1989 by and between
---- ----
SATELLINK PAGING INC., a corporation organized and existing under the laws of
the State of Georgia (hereinafter referred to as the "Corporation"), and its
stockholders listed on Exhibit A hereto (such stockholders sometimes hereinafter
---------
referred to individually and collectively as the "Stockholder" and the
"Stockholders");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has 27,970.540 shares of $.01 par value Class A Voting
Common Stock issued and outstanding, and 1621.318 shares of $0.01 par value
Class B Non-voting Common Stock issued and outstanding, the ownership of which
is shown on Exhibit A, (as to each Stockholder, all such shares of capital stock
in the Company owned by such Stockholder, whether now or hereafter issued or
resulting from conversion of the Debentures hereinafter described, stock split,
recapitalization or merger effected by the Company, are herein referred to
collectively as the "Shares"); and
WHEREAS, the Company wishes to offer to the Stockholders on the terms and
conditions set forth herein, certain convertible debentures of the Company in
the aggregate amount of $450,000; and
<PAGE>
WHEREAS, the Stockholders desire to enter into this Agreement with the
Company regarding the sale of such debentures;
WHEREAS, The Company and the Stockholders also desire to amend the
Stockholders Agreement hereinafter referred to in connection with the sale of
such debentures;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used in this Agreement, the following terms shall have the meaning
set forth below:
1.01 "Agreement" means this Agreement together with any addenda and
---------
amendments made in the manner described in this Agreement.
1.02 "Conversion Shares" means all shares of the stock
-----------------
any class or series at any time issued by the Company and now or in
the future owned either of record or beneficially by a Stockholder
as a result of a conversion of all or any portion of the Debentures and shall
include any shares of stock issued with respect to the Conversion Shares
pursuant to stock splits, stock dividends, a recapitalization or merger.
-2-
<PAGE>
1.03 "Debenture" or "Debentures" means the 10% Convertible Debentures of
--------- ----------
the Company Due June 30, 1992, as more fully described in the form of Debenture
attached hereto as Exhibit B and incorporated by reference herein.
---------
1.04 "Stockholders Agreement" means that certain Stockholders Agreement,
----------------------
dated as of August 1, 1988, among the Company, the Stockholders, and David F.
Robertson, as the same may be hereafter amended.
ARTICLE II
----------
AMENDMENT OF STOCKHOLDERS AGREEMENT
-----------------------------------
2.01 Acknowledgments. All of the parties hereto do hereby acknowledge and
---------------
agree as follows:
(a) David F. Robertson is no longer a party to the Stockholders
Agreement, his entire interest in the Company having heretofore been repurchased
by the Company with the consent of all the Stockholders. It is likewise
acknowledged that for all purposes of the Stockholders Agreement, a person shall
no longer be deemed a party thereto once that person's entire investment
interest in the Company (whether in the form of Shares or Debentures) has been
terminated, whether by transfer to a third party as permitted under the
Stockholders Agreement or by repurchase by the Company or other Stockholders
contemplated thereby.
-3-
<PAGE>
(b) The pre-emptive rights accorded the Stockholders pursuant to Section 4
of the Stockholders Agreement are not applicable to the sale of the Debentures
or the issuance of stock of the Company upon conversion thereof, in as much as
the minimum conversion price under the Debentures is greater than $62.227 per
share. Nevertheless, it is acknowledged that the Debentures have been initially
offered to the Stockholders in proportion to their respective percentage equity
interests in the Company.
2.02. Amendments. The Stockholders Agreement is hereby amended as follows:
-----------
(a) Each of the Debentures purchased or to be purchased pursuant hereto is
hereby made subject to all of the options and restrictions set forth in Section
1 of the Stockholders Agreement.
(b) In the event any option referred to in Section 1 of the Agreement shall
become exercisable with respect to Stockholders any Debenture, the price payable
by the Company or the purchasing Stockholders, as the case may be, for such
Debenture shall be the principal amount of such debenture plus accrued but
unpaid interest thereon; and such price is expressly agreed to be applicable
even in the case of a proposed third-party sale as described in Section 1
(a)(ii) of the Stockholders Agreement. Because there is no need to determine
-4-
<PAGE>
the option price of a Debenture by appraisal, it is acknowledged and agreed that
the periods for exercise of the options provided in Section 1 of the
Stockholders Agreement in the case of Debentures shall be thirty (30) days for
the Company's initial repurchase option followed by an additional thirty (30)
days for the options of the other Stockholders, if applicable. All such periods
shall begin on the respective dates as provided in the Stockholders Agreement,
and, in the case of a Stockholder's death, shall be subject to tolling as
provided in the Stockholders Agreement pending the appointment of the deceased
Stockholder's personal representative.
(c) Once any option described in Section 1 of the Stockholders Agreement
becomes applicable to any Debenture, the holder's right to convert the Debenture
shall be suspended until either the option has been exercised and the Debenture
purchased thereunder, or all option periods described in the Stockholders'
Agreement have expired without exercise of any appicable option. Upon the
exercise of such an option and the purchase the Debenture, or upon the
expiration of all applicable option periods, any conversion rights
then applicable under the terms of the Debenture shall again be exercisable
in accordance with the terms therof by the then owner of the Debenture.
(d) In addition to the restrictions and conditions set forth in
the Stockholders Agreement, it is further agreed that a Stockholder may
transfer all or any portion of the Debentures (or
-5-
<PAGE>
any Conversion Shares) to a third party if and only if, prior to
--------------
the consummation of any such transfer, (i) the Company shall have received the
opinion of its counsel, or counsel satisfactory to it, that such transfer does
not require registration under the Securities Act of 1933 and any applicable
state securities laws, and (ii) the transferring Stockholder shall obtain the
written agreement of such transferee that the transferee will be bound by, and
the Debentures or Conversion Shares transferred will be subject to, this
Agreement and the Stockholders Agreement. Such written agreement shall be
attached as an addendum to this Agreement and the Stockholders Agreement, and
shall thereby be incorporated as a part of this Agreement and the Stockholders
Agreement, whereupon such transferee shall have adopted this Agreement and the
Stockholders Agreement, and thereafter shall be a party hereto and thereto, and
the term "Stockholder" as used herein shall thereafter mean and include such
transferee. The Company shall not give effect an its books to any transfer or
purported transfer of Debentures or Conversion Shares held or owned by person
unless each conditions hereof effecting such transfer shall have been satisfied.
ARTICLE III
----------
PURCHASE OF DEBENTURES
----------------------
-6-
<PAGE>
3.01 Agreement to Purchase. Each Stockholder hereby agrees to purchase
---------------------
Debentures in the total principal amount set forth beside that Stockholder's
signature at the end of this Agreement. In the event the word "none" appears
beside a Stockholder's name, then such Stockholder is entering into this
Agreement solely for the purpose of joining in the agreements set forth in
Article II above.
3.02 Price and Payment. The purchase price of each Debenture shall be
-----------------
the face principal amount thereof, as indicated next to the Stockholder's
signature below, which amount shall be payable in cash. Each Debenture shall be
issued effective on the date of receipt of the purchase price therefor, and
interest shall accrue thereunder from such date. Unless full payment is received
on or before July 1, 1989, the Stockholder's right to purchase any Debentures
shall, at the option of the Company, be forfeited, and the Debenture which the
defaulting Stockholder has agreed to purchase may be offered to other
Stockholders.
ARTICLE IV
REPRESENTATIONS OF STOCKHOLDERS
-------------------------------
Each Stockholder purchasing Debentures represents, warrants, covenants
and agrees with the Company as follows:
-7-
<PAGE>
4.01 The Debenture to be purchased by such Stockholder is being received
for such Stockholder's own account without participation of any other person (or
for a trust or custodial account if the purchaser is a trustee or custodian),
with the intent of holding such Debenture and the Conversion Shares issued upon
conversion thereof for investment and without the intent of participating,
directly or indirectly, in a distribution of the Debentures or the Conversion
Shares and not with a view to, or for resale in connection with, any
distribution of the Debentures or the Conversion Shares or any portion thereof;
and the Stockholder either has a preexisting personal or business relationship
with the Company or one or more of its officers or directors, or is an
"Accredited Investor" within the meaning of Rule 501 of the Securities and
Exchange Commission, or is an executive officer of the Company, or, by reason of
his or her business or financial experience or the business and financial
experience of his or her professional advisors, has the capacity to protect his
or her interests in connection with the purchase of the Debentures; and the
Stockholder has reviewed, or has been given the opportunity to review,
any and all books and records of the Company, contracts, financial statements,
business plans, and any other information in the Company's possession which
the Stockholder has deemed relevant to his, her, or its investment evaluation of
the Debentures.
-8-
<PAGE>
4.02 The Debentures to be sold to such Stockholder, and the Conversion
Shares to be issued to such Stockholder upon conversion of such Debentures, will
not be offered for sale, sold or transferred by such Stockholder other than
pursuant to:
(a) An effective registration under applicable state securities laws or in a
transaction which is otherwise in compliance with those laws;
(b) An effective registration under the Securities Act of 1933 as amended (the
"1933 Act"), or a transaction exempt from registration under the 1933 Act;
and
(c) Compliance with the applicable securities laws.
ARTICLE V
---------
LEGEND ON DEBENTURES
---------------------
5.01 Each Debenture shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions
hereof and applicable securities law (any such Debenture or not having such
legends shall be surrendered upon demand the Company and so endorsed):
"This Debenture (and any shares of stock issued upon conversion hereof)
are subject to and transferable only in accordance with that certain
Stockholders Agreement by and among Satellink Paging, Inc. (the "Company")
and the Stockholders thereof dated as of August 1, 1988, as amended, a copy of
which is on file at the office of the Company in Atlanta, Georgia (the
"Stockholders' Agreement"). No
-9-
<PAGE>
transfer or pledge of this Debenture (or any shares of stock issued upon
conversion hereof) may be made except in accordance with and subject to the
provisions of said Agreement. By acceptance of this Debenture, any holder,
transferee or pledgee hereof agrees to be bound by all of the provisions of said
Agreement."
"This Debenture (and any shares of stock issued upon conversion hereof)
have been acquired by the holder for investment and not for resale, transfer or
distribution, have been issued pursuant to exemptions from the registration
requirements of applicable state and federal securities laws, and may not be
offered for sale, sold or transferred other than pursuant to effective
registration under such laws, or in the transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the Company of compliance with
such laws, as to which the Company may rely upon an opinion of counsel
satisfactory to the Company."
A copy of this Agreement shall be kept on file in the principal office of the
Company.
5.02 The parties to this Agreement intend that the legend conform to
the provisions of Section 11-8-204 of the Uniform Commercial Code of Georgia
and Section 14-2-120(d) of the Georgia Business Corporation Code. This legend
may be modified from time to time by the Board of Directors the Company to
conform to any amendments to Section 11-8-204, Section 14-2-120(d)
(or any successor provisions), to other applicable laws, or to this Agreement.
The parties acknowledge that any Conversion Shares issued will
-10-
<PAGE>
also carry an appropriate legend as required by the Stockholders Agreement and
by applicable securities laws.
ARTICLE VI
----------
MISCELLANEOUS
-------------
6.01 This Agreement may not be amended or terminated orally; and no
amendment, termination or attempted waiver of any part or provision hereof
shall be valid unless in writing and signed by the party sought to be bound.
6.02 Any and all notices, designations, consents, offers, acceptances or
any other communication under this Agreement shall be given in writing and
delivered by personal delivery or by certified mail, return receipt requested
postage and charges prepaid, which shall be addressed as shown beside the
respective names of the parties hereto at the end of this document.
Any party hereto may change the address to which notices,
requests, demands, tenders and other communications to such
party shall delivered or mailed by giving notice thereof
to the other parties hereto in the manner provided. Notices
delivered in person shall be effective and deemed received
on the date of delivery. Notices sent by mail shall be
effective and deemed received upon the date of actual receipt
or five (5) days after mailing, whichever is earlier.
-11-
<PAGE>
6.03 No delay or omission by the Company in exercising any of its rights
shall operate as a waiver of such rights, and a waiver in writing on one
occasion shall not be construed as a consent or a waiver of any right or remedy
on any future occasion.
6.04 Section headings used herein are for convenience of reference only
and shall not be considered in construing this Agreement.
6.05 The parties agree to perform any further acts and to execute and
deliver any instruments or documents that may be necessary or reasonably deemed
advisable to carry out the purposes of this Agreement.
6.06 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, the same shall not invalidate or otherwise affect any other
provisions of this Agreement, and this Agreement shall construed if such
invalid, illegal or unenforceable provision or portion thereof had never
been contained herein.
6.07 This Agreement shall be binding upon and shall inure to the benefit of
each Stockholder and its, hers or his respective heirs, successors, legal
representatives and lawful assigns. Except as expressly provided herein, no
party shall have the right to assign this Agreement, or any
-12-
<PAGE>
interest under this Agreement, without the prior written consent of the other
parties. Notwithstanding anything to the contrary contained in this Agreement,
no attempted transfer of Debentures or Conversion Shares or any interest therein
shall be valid unless and until the acquiror of such Debentures or Conversion
Shares or interest therein agrees in writing to accept and be bound by all the
terms and conditions of this Agreement and the Stockholders Agreement, in which
case all such terms and conditions shall inure to the benefit of and be binding
upon such acquiror, his successors, personal representatives, heirs and
permitted assigns to the same extent as if such acquiror had originally been a
party to this Agreement and the Stockholders Agreement.
6.08 This Agreement shall be construed, administered and enforced according
to the laws of the State of Georgia.
6.09 This writing expresses the entire understanding and agreement of
the parties hereto with respect to such terms, restricitions and limitations.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which, taken together, shall constitute one
and the same instrument.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
STOCKHOLDER DEBENTURE ADDRESS
- ----------- AMOUNT -------
------
(SEAL)
- ---------------
Marc A. Comeaux ------ ----------------------
----------------------
- --------------- (SEAL) ------ ----------------------
Jerry W. Mayfield
----------------------
- --------------- (SEAL) ------ ----------------------
James O. Carpenter
----------------------
- --------------- (SEAL)
Ira Carpenter, Jr. ------ ----------------------
-14-
<PAGE>
- --------------- (SEAL) ------ ----------------------
Charles R. Carpenter
----------------------
- --------------- (SEAL) ------ ----------------------
Robert D. Gage, III
----------------------
- --------------- (SEAL) ------ ----------------------
Robert D. Gage, IV
----------------------
- ---------------- (SEAL)
Jay Menard ------ ----------------------
----------------------
- ---------------- (SEAL)
Mary Menard ------ ----------------------
----------------------
- ---------------- (SEAL)
Jay Andre Menard ------ ----------------------
---------------------
-15-
<PAGE>
- --------------- (SEAL)
E. Paul Breaux,III ------ ----------------------
----------------------
- ---------------- (SEAL)
David Autin ------ ----------------------
----------------------
- ---------------- (SEAL)
Robert Poche' ------ ----------------------
----------------------
- ---------------- (SEAL)
Humberto Izquierdo ------ ---------------------
---------------------
CUE PAGING CORPORATION
By: /s/ Donald M. McDonnell
-----------------------------
Title: President
--------------------------
Attest: /s/ J. G. O'Neill
-------------------------
Secretary
(CORPORATE SEAL]
-16-
<PAGE>
SATELLINK PAGING, INC.
By:
-------------------------------
Title:
----------------------------
Attest:
---------------------------
Secretary
[CORPORATE SEAL]
-17-
<PAGE>
EXHIBIT A
SATELLINK PAGING INC.
SHAREHOLDER LISTING
I. Voting Stock - Class A
Name Shares
---- ------
Marc A. Comeaux 6,455
Jerry W. Mayfield 5,277
James 0. Carpenter 2,785.629
Charles R. Carpenter 285.667
Ira Carpenter, Jr. 714.193
E. Paul Breaux, III 1,094
Jay Menard 1,000
Mary E. Menard 1,000
Jay E. Menard 1,000
David L. Autin 574
Robert D. Gage, III 1,749.859
Robert D. Gage, IV 1,749.859
Cue Paging Corporation 4,285.333
----------
27,970.540
II. Non-Voting Stock - Class B
Name Shares
---- ------
Robert P. Poche' 400
Humberto Izquierdo 150
Cue Paging Corporation 535.667
Robert D. Gage, III 156.233
Robert D. Gage, IV 156.233
James 0. Carpenter 98.204
Charles R. Carpenter 35.707
Ira Carpenter, Jr. 89.274
---------
1,621.318
<PAGE>
EXHIBIT B
This Debenture (and any shares of stock issued upon conversion hereof) are
subject to and transferable only in accordance with that certain Stockholders
Agreement by and among Satellink Paging, Inc. (the "Company") and the
Stockholders thereof, dated as of August 1, 1988, as amended, a copy of which is
on file at the office of the Company in Atlanta, Georgia (the "Stockholders'
Agreement"). No transfer or pledge of this Debenture (or any shares of stock
issued upon conversion hereof) may be made except in accordance with and subject
to the provisions of said Agreement. By acceptance of this Debenture, any
holder, transferee or pledgee hereof agrees to be bound by all of the provisions
of said Agreement.
This Debenture (and any shares of stock issued upon conversion hereof) have
been acquired by the holder for investment and not for resale, transfer or
distribution, have been issued pursuant to exemptions from the registration
requirements of applicable state and federal securities laws, and may not be
offered for sale, sold or transferred other than pursuant to effective
registration under such laws, or in the transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the Company of compliance with
such laws, as to which the Company may rely upon an opinion of counsel
satisfactory to the Company.
SATELLINK PAGING, INC.
10% CONVERTIBLE DEBENTURE DUE JUNE 30, 1992
Atlanta, Georgia
$ , 1998
------------------ ----------
SATELLINK PAGING, INC., a Georgia corporation (the "Company") promises to
pay to (the "Holder") the principal sum
--------------------------------
of
-------------------------------
-18-
<PAGE>
($ ) DOLLARS on June 30, 1992 (the "Maturity Date"), upon the surrender
--------
of this Debenture to the Company, and to further observe the following
provisions:
1. Interest. The Company promises to pay interest on the principal amount
--------
set forth above at the rate of Ten (10%) percent per annum, payable quarterly
commencing on September 30, 1989. Interest on this Debenture will be computed on
the basis of a 360-day year of twelve 30-day months and will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of initial issuance.
2. Conversion. The Holder may convert this Debenture in its entirety into
----------
shares of Class A Voting Common Stock, $.01 par value, of the Company (the
"Common Stock") at any time before the close of business on the second
anniversary of the date hereof, at a conversion price of determined as follows:
(a) In the event conversion is effected on or before the close of
business on the first anniversary of the date of this Debenture, the conversion
price shall be $66.667 per share.
(b) In the event conversion is effected after the first anniversary of
the date of this Debenture, and on or before the close of business on
December 31, 1990, the conversion price shall be $80.00 per share.
(c) In the event conversion is effected after December 31, 1990 and on
or before the close of business of the second anniversary of the date hereof the
conversion price shall be $100.00 per share.
This Debenture shall not be convertible after the close of business on
the second anniversary of the date hereof. The date hereof, the Maturity Date,
and the dates above for determining the conversion price shall be as stated on
this Debenture notwithstanding that the initial issuance hereof, may occur on a
date later than that specified above.
Partial conversions of this Debenture are not permitted.
The number of shares issuable upon conversion of this Debenture equals the
principal amount hereof divided by the conversion price. In the event of a
dividend payable in Common Stock or a subdivision, combination or
reclassification of the Common Stock, or in the event of a distribution to
holders of
-19-
<PAGE>
Common Stock of any shares of capital stock of the Company other than Common
Stock, the conversion privilege and the conversion price in effect immediately
prior to any such event shall be adjusted so that the Holder of this Debenture
may recevie upon conversion the number of shares of Common Stock of the Company
that would have been received if conversion of the Debenture had occurred
immediately prior to such event. For a dividend or distribution, the adjustment
shall become effective on the payment date but as of the date immediately after
the record date for the dividend or distribution. For a subdivision, combination
or reclassification, the adjustment shall become effective immediately after the
effective date of the subdivision, combination or reclassification. On
conversion no adjustment for interest or dividends will be made, and the Company
will deliver cash based on the conversion price of a whole share in lieu of any
fractional share. To convert the Debenture, the Holder must (i) complete and
sign the conversion notice on the Debenture, (ii) surrender the Debenture to the
Company, (iii) furnish appropriate endorsements or transfer documents if
required by the Company, (iv) pay any transfer or similar tax, if required, and
(v) enter into the Stockholders Agreement between the Company and its
shareholders dated as of August 1, 1988 (and as it may subsequently be amended)
if such Holder is not a party thereto.
3. Redemption. The Company may redeem the Debenture at any time at the
------------
Company's option upon mailing a notice of not less than 30 nor more than 60 days
prior to the date fixed for such redemption to the Holder at his or its address
on the books of the Company at a redemption price of the principal amount of the
Debenture plus accrued interest to the redemption date. The Holder of a
Debenture which shall be called for redemption, shall have no right convert the
Debenture into shares of Common Stock after the tenth business day prior to the
date fixed for redemption. The Company may redeem this Debenture only if the
Company redeems all of its 10% Convertible Debentures Due June 30, 1992 then
outstanding. Purchase by the Company of any Debenture pursuant to the terms of
the Stockholders Agreement shall not be considered a redemption, and the
Company shall at all times have the rights with respect to this
Debenture, and any shares of stock issued upon conversion hereof, provided for
in the Stockholders Agreement.
4. Default. In the event the Company defaults in payment of principal
---------
hereunder when due, or defaults in the payment of interest and fails to cure
such default within ten days after receipt of demand by the holder hereof the
holder may declare the entire principal amount hereof, and all accrued and
unpaid interest immediately due and payable; and in such event the holder hereof
shall have all rights and remedies available under the circumstances at law or
in equity.
-21-
<PAGE>
5. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company, shall not have any liability for any
obligations of the Company under the Debenture. The Holder by accepting a
Debenture waives and releases all such liability, and such waiver and release
are part of the consideration for the issue of the Debenture.
6. No Waiver. No delay or omission on the part of Holder in exercising
---------
any right hereunder shall operate as a waiver of such right or any other right
under this Debenture. A waiver on one occasion shall not be construed as a bar
to or waiver of any right in the future.
7. Governing Law. This Debenture shall be construed and enforced in
-------------
accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Debenture under its corporate seal, and the same has been attested, all by its
officers thereunto duly authorized, the day and year first above written.
SATELLINK PAGING, INC.
By:
---------------------
[CORPORATE SEAL] Title:
------------------
Attest:
-------------------------
Secretary
-22-
<PAGE>
FORM OF ASSIGNMENT
The undersigned hereby assigns and transfers
this Debenture in the principal amount of
$ to and
----------------- ----------------------
appoints agent to transfer this
--------------------
Debenture on the books of the Company. The agent
may substitute another to act for him.
--------------------
Date:
---------------
Signature guaranteed by:
- ------------------------
-23-
<PAGE>
CONVERSION NOTICE
The undersigned hereby gives notice of conversion pursuant to
Paragraph 2 of this Debenture in the principal amount of $ ,
-------------
with such conversion to be made on , 19 .
------------------------ ------
-------------------------------------
Date:
--------------------------------
Signature guaranteed by:
- ------------------------
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND
SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
BY AND AMONG
SATELLINK PAGING INC.
AND
THE SEVERAL PURCHASERS AND SECURITYHOLDERS
NAMED ON THE SIGNATURE PAGES HEREOF
Dated as of ________ __, 1990
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. THE SERIES A SHARES .....................................
1.1 Issuance, Sale, and Delivery of
the Series A Shares ................................
1.2 Closing .................................................
SECTION 2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY .....................................
2.1 Organization, Standing, and Qualifications ..............
2.2 Subsidiaries and other Equity Interests .................
2.3 Authorization of Agreements, Etc. .......................
2.4 Compliance with Other Instruments .......................
2.5 Authorized Capital Stock ................................
2.6 Litigation; Compliance with Law .........................
2.7 Proprietary Information of Third Parties ................
2.8 Title to Properties .....................................
2.9 Leasehold Interests .....................................
2.10 Loans and Advances ......................................
2.11 Governmental Approvals ..................................
2.12 Brokers .................................................
2.13 Transactions With Affiliates ............................
2.14 Financial Statements ....................................
2.15 Disclosure ..............................................
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
THE PURCHASERS .....................................
3.1 Representations and Warranties by Purchaser .............
3.2 Legends .................................................
SECTION 4. CONDITIONS TO THE OBLIGATIONS OF
THE PURCHASERS .....................................
SECTION 5. CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY ........................................
SECTION 6. COVENANTS OF THE COMPANY ................................
6.1 Financial and Technical Information .....................
6.2 Reserve for Conversion Shares ...........................
SECTION 7. AMENDMENT TO STOCKHOLDERS AGREEMENT .....................
7.1 Acknowledgement .........................................
7.2 Amendments ..............................................
-i-
<PAGE>
SECTION 8. MISCELLANEOUS ...........................................
8.1 Expenses ................................................
8.2 Survival Agreements .....................................
8.3 Finder's Fees ...........................................
8.4 Parties in Interest .....................................
8.5 Notices .................................................
8.6 Governing Law ...........................................
8.7 Entire Agreement ........................................
8.8 Counterparts ............................................
8.9 Amendments and Waivers ..................................
8.10 Severability ............................................
8.11 Titles and Subtitles ....................................
TABLE OF SCHEDULES
SCHEDULE I Schedule of Purchasers
SCHEDULE II Schedule of Exceptions
SCHEDULE III Investor Certification
TABLE OF EXHIBITS
EXHIBIT A Articles of Amendment
TABLE OF DEFINED TERMS
TERM DEFINED IN SECTION
Agreement Preamble
Class A Common Stock Recitals
Class B Common Stock 2.5
Closing 1.2
Closing Date 1.2
Common Stock 2.5
Company Preamble
Conversion Shares 2.3
Financial Statements 2.14
Preferred Stock 2.5
Purchased Securities 3.1
Purchasers Preamble
Securities Act 2.11
Securityholder Preamble
Series A Shares Recitals
Stockholders Agreement Recitals
-ii-
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND
SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of ________ __, 1990
by and among SATELLINK PAGING INC., a Georgia corporation (the "Company"), the
several purchasers named on the signature pages hereof (individually a
"Purchaser" and collectively the "Purchasers"), and the several securityholders
of the Company (who are not purchasers) also named on the signature pages hereof
(individually a "Securityholder" and collectively the "Securityholders"). The
Securityholders are made parties to this Agreement with respect to the
provisions of Section 5 hereof only and shall not be entitled to the benefits of
any other provisions hereof.
W I T N E S E T H
WHEREAS, the Company wishes to issue and sell to the Purchasers up to an
aggregate of 7,500 shares of its preferred stock, $.01 par value, designated as
"Series A Convertible Preferred Stock" (the "Series A Shares"); and
WHEREAS, the Purchasers, severally and not jointly, wish to purchase the
Series A Shares on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Company, certain of the Purchasers and the Securityholders
are also parties to the Stockholders Agreement dated as of August 1, 1988, as
amended by Debenture Purchase Agreement and Amendment to Stockholders Agreement
dated as of July 25, 1989 (such Stockholders Agreement, as amended, is
hereinafter referred to as the "Stockholders Agreement"), to make all of the
Purchasers, the Series A Shares and the shares of Class A common stock, $.01 par
value (the "Class A Common Stock") into which the Series A Shares are
convertible, subject to the Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties hereby agree as follows:
SECTION 1.
THE SERIES A SHARES
1.1 Issuance, Sale, and Delivery of the Series A Shares. The Company has
authorized the sale and issuance of the Series A Shares to the Purchasers in
accordance with the terms of this
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Agreement. The Company agrees to issue and sell to each Purchaser, and each
Purchaser hereby agrees to purchase from the Company, the number of Series A
Shares set forth opposite the name of such Purchaser under the heading "Number
of Series A Shares Purchased" on Schedule I, at a price of $100.00 per Series A
Share.
1.2 Closing. The closing of the purchase and sale of the Series A Shares
shall take place at the offices of Powell, Goldstein, Frazer & Murphy, Suite
1050, 400 Perimeter Center Terrace, Atlanta, Georgia, 30346 at 10:00 a.m.,
Eastern Standard time, on _______ __, 1990, or at such other location, date, and
time as may be fixed by mutual agreement between the Purchasers and the company
(such closing being the "Closing" and the date the Closing actually occurs being
the "Closing Date"). At the Closing, the Company shall issue and deliver to each
Purchaser a certificate evidencing the number of Series A Shares set forth
adjacent to such Purchaser's name on Schedule I under the caption "Number of
Shares Purchased" in definitive form, registered in the name of such Purchaser,
against delivery by each Purchaser of the purchase consideration set forth
adjacent to such Purchaser's name on Schedule I under the caption "Purchase
Consideration," payable in such form and on such terms as described under such
caption.
SECTION 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser that, except
as otherwise set forth in the Schedule of Exceptions attached hereto as Schedule
II (which Schedule of Exceptions makes explicit reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty as to which such exception
shall apply):
2.1 Organization, Standing, and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Georgia and is duly qualified to transact business as a
foreign corporation and is in good standing in each state in which the nature of
the business transacted by it or the character of the properties owned or leased
by it requires such qualification. The Company has the requisite corporate power
and authority to own, lease, and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted.
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2.2 subsidiaries and Other Equity Interests. The Company does not (i) own
of record or beneficially, directly, or indirectly, (A) any shares of capital
stock or securities convertible into capital stock of any corporation, or (B)
any participating interest in any partnership, joint venture, or other
non-corporate business enterprise or (ii) control, directly or indirectly, any
other entity.
2.3 Authorization of Agreements, Etc. All corporate action on the part of
the Company, its officers, directors, and stockholders necessary for the sale
and issuance of the Series A Shares, the issuance of the Class A Common Stock
issuable upon conversion of the Series A Shares (the "Conversion Shares"), and
the execution, delivery, and performance by the Company of this Agreement has
been duly and validly taken. This Agreement is the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms
except as enforcement may limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application relating to or
affecting enforcement of creditors' rights and to the exercise of judicial
discretion in accordance with general equitable principles.
2.4 Compliance With Other Instruments. The Company is not in violation of
or default under any provision of its Articles of Incorporation, as amended, or
Bylaws, or any provision of any indenture, contract, agreement, mortgage, deed
of trust, loan, commitment, judgment, decree, order, or obligation to which it
is a party or by which any of its properties or assets are bound, except for
violations or defaults which, individually or in the aggregate, do not and will
not have a material adverse effect on the operations, business or financial
condition of the Company. The execution and delivery by the Company of this
Agreement and the other documents and instruments contemplated hereby, the
performance by the Company of its obligations hereunder and thereunder, the
issuance, sale, and delivery of the Series A Shares and the Conversion Shares
will not result in any such violation, conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any such
provision, require any consent or waiver under any such provision, or result in
the creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
2.5 Authorized Capital Stock. The authorized capital stock of the Company
will, immediately prior to the Closing, consist of 50,000 shares of Class A
Common Stock, of which 27,970.54 shares are validly issued and outstanding,
fully paid and nonassessable, 20,000 shares of Class B common stock, $.0l par
value ("Class B Common Stock"), of which 2,821.32 shares are validly issued and
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outstanding, fully paid and nonassessable (the Class A Common Stock and the
Class B Common Stock hereinafter sometimes referred to as the "Common Stock"),
and 30,000 shares of preferred stock, $.01 par value ("Preferred Stock")
(including 7,500 shares of Preferred Stock designated as Series A Shares), none
of which are issued and outstanding. The Conversion Shares have been duly and
validly reserved for issuance upon conversion of the Series A Shares and, when
so issued, will be duly authorized, validly issued, fully paid, and
nonassessable, and will be free of any liens or encumbrances created, or
imposed, by operation of law or otherwise, upon such shares, by the Company
except for certain restrictions on transfer under state and/or federal
securities laws as set forth herein or otherwise required by such laws at the
time a transfer is proposed. The designations, powers, preferences, rights,
qualifications, and limitations of the Series A Shares are as set forth in the
Company's Articles of Amendment, in substantially the form of Exhibit A hereto.
There are no outstanding rights, plans, options, warrants, conversion rights, or
agreements for the purchase or acquisition from the Company of any shares of the
capital stock of the Company, except that up to 5,650.01 shares of Class A
Common Stock have been reserved for issuance upon conversion of the Company's
outstanding 10% Convertible Debentures due June 30, 1992. Neither the issuance,
sale, or delivery of the Series A Shares nor the issuance or delivery of the
Conversion Shares is subject to any preemptive right of stockholders of the
Company or to any right of first refusal or other right in favor of any person
which has not been waived.
2.6 Litigation; Compliance with Law. There is no (i) action, suit, claim,
proceeding, or investigation pending or, to the best of the Company's knowledge,
threatened against or affecting the Company, at law or in equity, by or before
any Federal, state, municipal, or other governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, (ii) arbitration
proceeding relating to the Company pending under collective bargaining
agreements or otherwise, or (iii) governmental inquiry pending or, to the best
of the Company's knowledge, threatened against or affecting the Company
(including without limitation any inquiry as to the qualification of the Company
to hold or receive any license or permit), and there is no basis known to the
Company for any of the foregoing. The Company is not subject to any order, writ,
injunction, or decree known to or served upon the Company of any court or of any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign. The Company is, to the
best of its knowledge, in material compliance with all laws, rules, regulations,
and orders applicable to the Company's business. There is no existing law, rule,
regulation, or order nor is the Company aware of any
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proposed law, rule, regulation, or order, whether Federal or state, which would
prohibit or restrict the Company from, or otherwise materially adversely affect
the Company in, conducting its business in any jurisdiction in which it is now
conducting business or in which it proposes to conduct business.
2.7 Title to Properties. The Company has good and marketable title to all
the tangible properties and assets owned by it, free and clear of all mortgages,
pledges, security interests, liens, charges, claims, restrictions, and other
encumbrances, except liens for current taxes not yet due and payable and minor
imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company. The Company owns or leases all tangible properties and assets necessary
to the operation of its business as now conducted.
2.8 Leasehold Interests. Each lease or agreement to which the Company is a
party under which it is a lessee of any property, real or personal, is a valid
and subsisting agreement without any default of the Company thereunder and, to
the best of the Company's knowledge, without any default thereunder of any other
party thereto. No event has occurred and is continuing which, with due notice or
lapse of time or both, would constitute a default or event of default by the
Company under any such lease or agreement or, to the best of the Company's
knowledge, by any other party thereto. The Company's possession of such property
has not been disturbed and, to the best of the Company's knowledge, no claim has
been asserted against the Company adverse to its rights in such leasehold
interests.
2.9 Loans and Advances. Except as reflected in the Financial Statements
(as hereinafter defined), the Company does not have any outstanding loans or
advances to any person and is not obligated to make any such loans or advances,
except for advances to employees of the Company in respect of reimbursable
business expenses anticipated to be incurred by them in - -connection with
performance of services for the Company.
2.10 Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Section 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale, and
delivery of the Series A Shares, the issuance and delivery of the Conversion
Shares, or the consummation of any other transaction contemplated hereby, other
than filings pursuant to state
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securities laws (all of which filings have been made or will be made within the
applicable time frame for such filings) in connection with the offer and sale of
the Series A Shares, and the filing of a notice under Regulation D under the
Securities Act of 1933, as amended (the "Securities Act").
2.11 Brokers. The Company has no contract, arrangement, or understanding
with any broker, finder, or similar agent with respect to the transactions
contemplated by this Agreement.
2.12 Financial Statements. The Company's financial statements (consisting
of an unaudited balance sheet and unaudited statements of operations,
stockholders' deficiency, and cash flows) for the period from __________, 19__
(inception) to __________, 19__ (together the "Financial Statements") have been
furnished to Purchasers. The Financial Statements are true, correct, and
complete in all material respects and have been prepared in accordance with
generally accepted accounting principles consistently applied, are in accordance
with the books and records of the Company, and present fairly the financial
position of the Company as of the dates, and for the periods indicated, with the
unaudited financial statements being subject to normal year-end audit
adjustments.
2.13 Disclosure. Neither this Agreement nor any Schedule or Exhibit hereto
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates, or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading. There is no
material fact which the Company has not disclosed to the Purchasers and of which
the Company is aware which materially and adversely affects or could materially
and adversely affect the business, prospects, financial condition, operations,
property, or affairs of the Company.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
3.1 Representations and Warranties by Purchasers. Each Purchaser
acknowledges that the Series A Shares and the Conversion Shares (the "Purchased
Securities") have not been registered under the Securities Act, and are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon the representations of the
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Purchasers contained herein. Each Purchaser represents and warrants to the
Company, severally and not jointly, and only as to itself that:
(a) The Purchased Securities are being acquired for Purchaser's own
account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act or the securities laws of any other state applicable to
Purchaser.
(b) During the negotiation of the transactions contemplated hereby,
Purchaser and its representatives have been afforded full and free access to
corporate books, records, contracts, documents, and other information concerning
the Company and to offices and facilities of the Company, have been afforded an
opportunity to ask such questions of the Company's officers, employees, agents,
accountants, and representatives concerning the Company's business, operations,
financial condition, assets, liabilities, and other relevant matters as they
have deemed necessary or desirable, and have been given all such information as
has been requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.
(c) Purchaser and Purchaser's representatives have been solely
responsible for Purchaser's own "due diligence" investigation of the Company and
the Company's management and business, for Purchaser's own analysis of the
merits and risks of this investment, and for Purchaser's own analysis of the
fairness and desirability of the terms of the investment. In taking any. action
or performing any role relative to the arranging of the proposed investment,
Purchaser has acted solely in Purchaser's own interest and not as an agent of
the Company. Purchaser has such knowledge and experience in financial and
business matters that Purchaser is capable of evaluating the merits and risks of
the purchase of the Purchased Securities pursuant to the terms of this Agreement
and of protecting Purchaser's interests in connection therewith.
(d) Purchaser is able to bear the economic risk of the purchase of
the Purchased Securities pursuant to the terms of this Agreement, including a
complete loss of Purchaser's investment in the Purchased Securities.
(e) Purchaser acknowledges that (i) the Purchased Securities have
not been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act,
(ii) the Purchased Securities must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities
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<PAGE>
Act or is exempt from such registration, (iii) the Purchased Securities will
bear legends to such effect, (iv) the Company will make a notation on its
transfer books to such effect, and (v) the Company is under no obligation to
register any of the Purchased Securities under the Securities Act or any state
securities laws.
(f) Purchaser has furnished the Company with an Investor
Certification in substantially the form of Schedule III hereto and the
information set forth thereon with respect to Purchaser's organization and its
principal office or its principal residence, as the case may be, and Purchaser's
status as an accredited investor is true and correct.
(g) Purchaser has the full right, power, authority, and capacity to
enter into and perform Purchaser's obligations under this Agreement, and this
Agreement constitutes a valid and binding obligation of Purchaser enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws of general application
relating to or affecting enforcement of creditors' rights and rules or laws
concerning equitable remedies.
(h) Purchaser knows of no public solicitations or advertisements in
connection with the offer and sale of the Purchased Securities.
3.2 Legends. Purchaser acknowledges that each certificate representing the
Purchased Securities may be endorsed with the legend required by Section 6 of
the Stockholders Agreement and the following legend and Purchaser shall not make
any transfer of the Purchased Securities without first complying with the
restrictions on transfer described in such legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION UNDER SUCH ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH APPLICABLE STATE SECURITIES LAWS.
Purchaser agrees that the Company may also endorse any other legends required by
applicable state securities laws.
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The Company need not register a transfer of the Purchased Securities, and may
also instruct its transfer agent not to register the transfer of the Purchased
Securities, unless the conditions specified in the foregoing legends are
satisfied.
SECTION 4.
CONDITIONS TO THE OBLIGATIONS
OF THE PURCHASERS
The obligation of each Purchaser to purchase the Series A Shares being
purchased by it on the Closing Date is, at its option, subject to the
satisfaction or waiver on or before the Closing Date of the following
conditions:
(a) Representations and Warranties to be True and Correct. The
representations and warranties contained in Section 2 hereof shall be true,
complete, and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date.
(b) Performance. The Company shall have performed and complied with
all covenants and agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date.
(c) Consents and Waivers. The Company shall have obtained any and
all consents, permits, and waivers and made all filings necessary or appropriate
for the consummation of the transactions contemplated hereby.
(d) Supporting Documents. The Purchasers shall have received copies
of the following documents:
(i) (A) the Articles of Incorporation of the Company, as
amended, certified as of a recent date by the Secretary of State of the State of
Georgia, and (B) a certificate of said Secretary dated as of a recent date as to
the due incorporation and good standing of the Company, the payment of all
franchise taxes by the Company, and listing all documents of the Company on file
with said Secretary;
(ii) a certificate of the Secretary or an Assistant Secretary
of the Company dated the Closing Date certifying: (A) that attached thereto is a
true and complete copy of the Bylaws of the Company as in effect on the date of
such certification; (B) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors and/or the stockholders of the
Company authorizing the
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execution, delivery, and performance of this Agreement, the issuance, sale, and
delivery of the Series A Shares and the reservation, issuance and delivery of
the Conversion Shares and that all such resolutions are in full force and
effect, and are all the resolutions adopted in connection with the foregoing
agreements and the transactions contemplated thereby; (C) that the Articles of
Incorporation have not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (i)(B) above; and
(D) to the incumbency and specimen signature of each officer of the Company
executing this Agreement, and any certificate or instrument furnished pursuant
hereto, and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate referred to in
this clause (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the Company as the
Purchasers reasonably may request.
(e) Compliance Certificate. On the Closing Date, the Company shall
have delivered to Purchasers a certificate, executed by the President of the
Company, dated the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b) and (c) of this Section 4.
(f) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents relating to such transactions shall be
satisfactory in form and substance to the Purchasers, and the Purchasers have
received all such counterpart originals or certified or other copies of such
documents as they reasonably may request.
SECTION 5.
CONDITIONS TO THE OBLIGATIONS
OF THE COMPANY
The obligation of the Company to issue and sell the Series A Shares to the
Purchasers on the Closing Date is, at its option, subject to the satisfaction or
waiver, on or before the Closing Date, of the following conditions:
(a) Representations and Warranties to be True and Correct. All
representations and warranties of the Purchasers, and each of them, contained in
Section 3 hereof shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
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(b) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Purchasers in connection with the transactions
contemplated hereby, and all documents incidental thereto, shall be satisfactory
in form and substance to the Company.
SECTION 6.
RESERVATION OF CONVERSION SHARES
The Company covenants and agrees with each of the Purchasers that, unless
waived in accordance with Section 9.9 hereof, so long as any of the Series A
Shares or Conversion Shares is outstanding the Company shall at all times
reserve and keep available out of its authorized but unissued shares of Class A
Common Stock, for the purpose of effecting the conversion of the Series A Shares
and otherwise complying with the terms of this Agreement. If at any time the
number of authorized but unissued shares of Class A Common Stock shall not be
sufficient to effect the conversion of the Series A Shares or otherwise fail to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
SECTION 7.
AMENDMENT TO STOCKHOLDERS AGREEMENT
7.1 Acknowledgement. All of the parties hereto acknowledge and agree that
the preemptive rights accorded to the Stockholders (as defined in the
Stockholders Agreement) pursuant to Section 4 of the Stockholders Agreement are
not applicable to the sale of Series A Shares or the issuance of Class A Common
Stock of the Company upon conversion thereof, inasmuch as the minimum conversion
price under the Series A Shares is greater than $66.227 per share.
[Nevertheless, it is hereby acknowledged that Series A Shares have been
initially offered to the Stockholders in proportion to their respective
percentage equity interest in the Company.]
7.2 Amendments. The Stockholders Agreement is hereby amended as follows:
(a) Each of the Series A Shares purchased or to be purchased
pursuant hereto is hereby made subject to all of the
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options and restrictions set forth in Section 1 of the Stockholders Agreement.
[(b) In the event any option referred to in Section 1 of the
Stockholders Agreement shall become exercisable with respect to any Series A
Shares, the price payable by the Company or the purchasing Stockholders, as the
case may be, for such Series A Shares shall be $100.00 plus accrued and unpaid
dividends thereon and the amount of the cumulative liquidation preference to the
date of payment; and such price is expressly agreed to be applicable even in the
case of a proposed third-party sale as described in Section 1(a)(ii) of the
Stockholders Agreement. Because there is no need to determine the option price
of a Series A Share by appraisal, it is hereby acknowledged and agreed that the
periods for exercise of the options provided in Section 1 of the Stockholders
Agreement in the case of Series A Shares shall be 30 days for the Company's
initial repurchase option, followed by an additional 30 days for the options of
the other Stockholders, if applicable. All such periods shall begin on their
respective dates as provided in the Stockholders Agreement, and, in the case of
a Purchaser's death, shall be subject to tolling as provided in the Stockholders
Agreement pending the appointment of the deceased Purchaser's personal
representative.]
(c) Once any option described in Section 1 of the Stockholders
Agreement becomes applicable to any Series A Shares, the holder's right to
convert such Series A Shares shall be suspended until either the option has been
exercised and the Series A Shares have been purchased thereunder, or all option
periods described in the Stockholders Agreement have expired without exercise of
any applicable option. Upon the exercise of such an option and the purchase of
such Series A Shares, or upon the expiration of all applicable option periods,
any conversion rights then applicable to such Series A Shares shall again be
exercisable by the then holder of such Series A Shares.
(d) In addition to the restrictions and conditions set forth in the
Stockholders Agreement, it is further agreed that a Purchaser may transfer any
Series A Shares (or any Conversion Shares) to a third party if and only if,
prior to the consummation of any such transfer, in addition to complying with
any applicable warranties contained in Section 3 hereof, the transferring
Purchaser shall obtain the written agreement of such transferee that the
transferee will be bound by, and the Series A Shares or Conversion Shares
transferred will be subject to, this Agreement and the Stockholders Agreement.
Such written agreement shall be attached as an addendum to this Agreement and
the Stockholders Agreement and shall thereby be incorporated as a part of this
Agreement and the Stockholders Agreement, whereupon
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such transferee shall have adopted this Agreement and the Stockholders
Agreement, and thereafter shall be a party hereto and thereto, and the term
"Stockholder" as used in the Stockholders Agreement shall thereafter mean and
include such transferee. The Company shall not give effect on its books to any
transfer or purported transfer of Series A Shares or Conversion Shares held or
owned by a Purchaser to any person unless each and all of the conditions hereof
affecting such transfer shall have been satisfied.
SECTION 8.
MISCELLANEOUS
8.1 Expenses. Each party hereto will pay its own expenses in connection
with the transactions contemplated hereby, whether or not such transactions
shall be consummated.
8.2 Survival of Agreements. All covenants, agreements, representations,
and warranties made herein or in any certificate or instrument delivered to the
Purchasers pursuant to or in connection with this Agreement shall survive the
execution and delivery of this Agreement, and the Closing of the transactions
contemplated hereby.
8.3 Finder's Fees.
(a) The Company (i) represents and warrants that it has retained no
finder or broker, in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold Purchasers harmless of
and from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company, or any of its employees or representatives, is responsible.
(b) Each Purchaser (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and hold the Company harmless of
and from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which Purchaser,
or any of Purchaser's employees or representatives, is responsible.
8.4 Parties in Interest. All representations, covenants, and agreements
contained in this Agreement shall bind and inure
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to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. Without limiting the generality of the foregoing,
all representations, covenants, and agreements benefiting the Purchasers shall
inure to the benefit of any and all subsequent holders from time to time of the
Series A Shares or Conversion Shares.
8.5 Notices. Every notice or other communication required or contemplated
by this Agreement by any party shall be delivered either by (a) personal
delivery, (b) postage prepaid return receipt requested certified mail (airmail
if available), or the equivalent of certified mail under the laws of the country
where mailed, (c) facsimile transmission or (d) "tested" telex (a telex for
which the proper answer back has been received) addressed to the party for whom
intended as follows:
If to a Securityholder, at the address of such Securityholder set forth in
the Stockholders Agreement.
If to a Purchaser, at the address of such Purchaser set forth in Schedule
I hereof.
If to the Company, at Satellink Paging Inc., 12 Perimeter Center East,
Suite 1200, Atlanta, Georgia, Attn: Marc A. Comeaux, President, Telecopier:
(404) 698-9025; with a copy (which shall not constitute notice) to: Sidney J.
Nurkin, Esq., Powell, Goldstein, Frazer & Murphy, 400 Perimeter Center Terrace,
Suite 1050, Atlanta, Georgia, 30346, Telecopier: (404) 399-2879.
or at such other address as the intended recipient previously shall have
designated by written notice to the other parties. Notice by certified mail
shall be effective on the date it is officially recorded as delivered to the
intended recipient by return receipt or equivalent. All notices and other
communications required or contemplated by this Agreement delivered in person or
sent by facsimile transmission or "tested" telex shall be deemed to have been
delivered to and received by the addressee and shall be effective on the date of
personal delivery or on the date sent, respectively. Notice not given in writing
shall be effective only if acknowledged in writing by a duly authorized
representative of the party to whom it was given.
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
8.7 Entire Agreement. This Agreement, including the Schedules and Exhibits
hereto, and the other documents delivered pursuant hereto constitute the full
and entire agreement of the parties with respect to the subject matter hereof
and thereof.
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No representations or statements of any kind made be any representative of
either party which are not stated herein shall be binding. No course of dealing
or usage of trade or course of performance shall be relevant to explain or
supplement any term expressed in this Agreement.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.9 Amendments and Waivers. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except that parties may be
added to this Agreement as provided in Section 6.02(d) hereof by written
instrument executed by the party to be added to this Agreement as provided in
that Section.
8.10 Severability. If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, to the extent
possible, it shall be construed in such manner as to be valid, legal, and
enforceable but so as to most nearly retain the intent of the parties and, if
such construction is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
8.11 Titles and Subtitles. The title and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
IN WITNESS WHEREOF, the Company and the Purchasers have executed
this Agreement as of the day and year first above written.
SATELLINK PAGING INC.
(Corporate Seal) By: ______________________________
Marc A. Comeaux, President
Attest:
______________________________
Secretary
[Signatures Continued on Next Page]
-15-
<PAGE>
[Signatures Continued From Preceding Page]
PURCHASERS:
______________________________
______________________________
NON-PURCHASER
SECURITYHOLDERS:
______________________________
______________________________
______________________________
-16-
<PAGE>
SCHEDULE I
TO
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
dated _______________, 1990
Schedule of Purchasers
Purchaser Name Number of Shares Purchase
and Address Purchased Consideration
----------- --------- -------------
Marc A. Comeaux _____________ Cancellation of
Satellink Paging Inc. demand promissory
12 Perimeter Center East note in the principal
Suite 1200 amount of $__________
Atlanta, GA 30346 (accrued interest to
Closing Date: $____)
Jerry W. Mayfield _____________ Cancellation of
Satellink Paging Inc. demand promissory
12 Perimeter Center East note in the principal
Suite 1200 amount of $__________
Atlanta, GA 30346 (accrued interest to
Closing Date: $____)
Totals _____________ _____________
$
============= =============
Schedule I to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
I-1
<PAGE>
SCHEDULE II
TO
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
dated ___________, 1990
Schedule of Exceptions
Affected
Section Description of Exception or Qualification
- -------- -----------------------------------------
2.8 [CUE and Stephens Security Interests]
Schedule II to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
II-1
<PAGE>
SCHEDULE III
TO
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
dated __________, 1990
Investor Certification
ALL INFORMATION FURNISHED IS FOR THE SOLE USE OF SATELLINK PAGING INC. (THE
"COMPANY") AND ITS COUNSEL AND WILL BE HELD IN CONFIDENCE BY THE COMPANY AND ITS
COUNSEL, EXCEPT THAT THIS QUESTIONNAIRE MAY BE FURNISHED TO SUCH PARTIES AS THE
COMPANY AND COUNSEL DEEM NECESSARY TO ESTABLISH COMPLIANCE WITH FEDERAL OR STATE
SECURITIES LAWS OR TO THE EXTENT REQUIRED BY LAW. CAPITALIZED TERMS NOT DEFINED
HEREIN HAVE THE MEANINGS ASCRIBED IN THE SERIES A PREFERRED STOCK PURCHASE
AGREEMENT AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT DATED ____________,
1990.
The Series A Shares being offered by the Company are not registered under the
Securities Act of 1933, as amended (the "Act"), in reliance upon certain
exemptions from registration provided by the Act. One of the exemptions being
relied upon is provided by Regulation D of the Securities and Exchange
Commission. Regulation D requires, among other things, that prior to making a
sale of any shares of Series A Shares, the Company must have reasonable grounds
to believe, and shall believe after reasonable inquiry, that the offeree is an
"accredited investor" (as defined). The Company intends to limit the purchase of
the Series A Shares to accredited investors [AND UP TO 35 NON-ACCREDITED
INVESTORS?]. In order to obtain the facts needed to determine whether the
Company may accept a purchaser's investment, it is necessary for the purchaser
(the "Purchaser") to complete this Investor Certification. The form should be
signed, dated, and forwarded to the Company.
* * * * * * * * * * * *
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-1
<PAGE>
Answer all questions. Write "N/A" if not applicable.
* * * * * * * * * * * *
A. PLEASE PROVIDE THE FOLLOWING INFORMATION.
1. (a) Name of Purchaser:
____________________________________________________________________
(b) If Purchaser is a corporation, partnership, trust or other entity,
state the name of individual(s) making the investment decision on behalf of the
entity:
____________________________________________________________________
____________________________________________________________________
2. (a) Purchaser's Address:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
3. Telephone/Number: (___)___________________________________________________
4. Taxpayer Identification Number of Purchaser: _____________________________
5. Date of organization or incorporation: ___________________________________
B. THE FOLLOWING INFORMATION IS TO BE PROVIDED SO THAT THE COMPANY CAN
DETERMINE IF THE PURCHASER IS AN ACCREDITED INVESTOR.
Please indicate, by initialing, one or more of the following categories
which are applicable to you. If no category is applicable, please initial
Item 18.
Under Regulation D, an "accredited investor" is defined as any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:
1. _______ A bank as defined in Section 3(a) (2) of the Act
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-2
<PAGE>
whether acting in its individual or fiduciary capacity.
2. _______ A savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Act whether acting in its
individual or fiduciary capacity.
3. _______ A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
4. _______ An insurance company as defined in Section 2(13) of the Act.
5. _______ An investment company registered under the Investment Company
Act of 1940.
6. _______ A business development company as defined in Section 2(a)(48)
of the Investment Company Act of 1940 [a closed-end company,
operated for the purpose of investing in securities described
in Section 55(a)(l)-(3) of such Act and makes available
"significant managerial assistance" with respect to the
issuers of such securities and has elected to be regulated
pursuant to Sections 55-65 of such Act as a business
development company].
7. _______ A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
8. _______ A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees,
if such plan has total assets in excess of $5,000,000.
9. _______ An employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 ("ERISA"), (a) if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of ERISA, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or (b) if the employee benefit plan has total assets
in excess
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-3
<PAGE>
of $5,000,000, or (c) if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors.
10. _______ A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940 [a company
which is a business development company but which need not be
closed-end and need not elect to be subject to regulation
under Sections 55-65 of the Investment Company Act of 1940].
11. _______ An organization described in Section 501(c)(3) of the Internal
Revenue Code, with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the securities
offered.
12. _______ A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of
$5,000,000.
13. _______ A director or executive officer of the Company. (An "executive
officer" means the president, any vice president in charge of
a principal business unit, division or function (such as
sales, administration or finance), any other officer who
performs a policy making function, or any other person who
performs similar policy making functions for the Company.)
14. _______ A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000.
[For purposes of calculating net worth, any assets may be
considered including the fair market value of one's principal
residence and automobiles. The principal residence owned by an
individual should be valued either at (A) cost, including the
cost of improvements, net of current encumbrances upon the
property, or (B) the appraised value of the property as
determined upon a recent written appraisal used by an
institutional lender making a loan secured by the property,
including the cost of subsequent improvements, net of current
encumbrances upon the property.]
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-4
<PAGE>
15. _______ A natural person who had an individual income (not including
income of spouse) in excess of $200,000 in each of the two
most recent years (1988 and 1989) or joint income with that
person's spouse in excess of $300,000 in each of those years
and who reasonably expects to reach the same income level in
the current year (1990).
["Income" may include amounts normally excluded from "adjusted
gross income" such as any amounts attributable to tax exempt
income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion,
contributions to an IRA or Keogh retirement plan, alimony
payments, and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross
income. However, "income" is not necessarily synonymous with
"revenue"; for example, a self-employed person should deduct
operating expenses to give an accurate indication of income.]
16. _______ A trust, with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person is
described in Rule 506(b)(2)(ii) under the Act.
17. _______ An entity in which all of the equity owners meet the
requirements of Items B1, B2, B3, B4, B5, B6, B7, B8, B9, B10,
B11, B12, B13 or B14 and/or B15 immediately above. (If this
item is checked, complete the "Accredited Investor
Certificate" below.)
18. _______ Check here if none of the above are applicable.
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-5
<PAGE>
C. THE FOLLOWING INFORMATION IS TO BE PROVIDED BY PURCHASERS WHO ARE
INDIVIDUALS, OR BY THE PERSON MAKING THE INVESTMENT DECISION ON BEHALF OF
CORPORATIONS, PARTNERSHIPS, TRUSTS, OR OTHER ENTITIES.
1. Are you aware of the fact that you have the opportunity to question a
representative of the Company about this investment, the Company, the
Company's properties, the Company's operations and the Company's methods
of doing business?
________ ________
Yes No
2. (a) Do you understand the merits and risks associated with investments in
closely-held companies?
________ ________
Yes No
(b) Do you understand the merits and risks associated with an investment
in the Company?
________ ________
Yes No
3. Do you understand that there is no guarantee of any financial return on
this investment and that you run the risk of losing your entire
investment?
________ ________
Yes No
4. Do you understand that this investment is illiquid?
________ ________
Yes No
5. Do you understand that you may purchase an interest in the Company for
investment only, and not with a view to the sale or other distribution
thereof?
________ ________
Yes No
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-6
<PAGE>
SIGNATURE
The undersigned hereby represents to the Company that (a) the information
contained herein is complete and accurate and may be relied upon by the Company,
(b) the Company will be notified by the undersigned of any material adverse
change in any of the information contained herein occurring prior to the
purchase of the Series A Shares, (c) the undersigned has received or had access
to all material information enabling the undersigned to make an informed
investment decision and that all information requested has been furnished to the
undersigned.
_______________________________________________
Name of Purchaser (please print)
By: _______________________
Title: ____________________
Executed at ___________________________________________, _______________________
on this _____ day of ____________, 19___.
Schedule III to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
III-7
<PAGE>
EXHIBIT A
TO
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
dated ___________, 1990
Articles of Amendment
Exhibit A to Series A Preferred Stock Purchase Agreement
and Second Amendment to Stockholders Agreement
A-l
<PAGE>
PGFM DRAFT 9/28/90
EXHIBIT A
TO
SERIES A STOCK PURCHASE AGREEMENT
AND SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT
FORM OF
ARTICLES OF AMENDMENT
OF
SATELLINK PAGING INC.
1. The name of the corporation is Satellink Paging Inc.
2. The date of incorporation was June 2, 1988.
3. Effective upon the filing hereof with the Secretary of State of
Georgia, the Articles of Incorporation of Satellink Paging Inc. shall be amended
by deleting Article V thereof in its entirety and in lieu thereof inserting the
following:
V
A. Authorized Capitalization. The total number of shares of capital
stock that the corporation shall be authorized to issue is One
Hundred Thousand (100,000) divided into three classes as follows:
(a) Fifty Thousand (50,000) shares of Class A common stock, $.01 par
value ("Class A Common Stock"), (b) Twenty Thousand (20,000) shares
of Class B common stock, $.0l par value ("Class B Common Stock"),
and (c) Thirty Thousand (30,000) shares of preferred stock, $.01 par
value ("Preferred Stock").
B. Common Stock. The shares of Class A Common Stock shall have
unlimited voting rights. The holders of shares of Class A Common
Stock shall be entitled to one vote per share in all proceedings in
which action may be or is required to be taken by the shareholders
of the corporation. The shares of Class A Common Stock and the Class
B Common Stock (together, "Common Stock") shall be identical in all
respects and for all purposes except that the holders of shares of
Class B Common Stock shall not be entitled to vote except with
respect to those matters as to which the Georgia Business
Corporation Code expressly
Exhibit A
A-1
<PAGE>
confers voting rights upon non-voting shares. Each share of Common
Stock shall be entitled to participate equally in all dividends
payable with respect to the Common Stock as, if, and when declared
by the Board of Directors of the corporation, subject to any
dividend preferences of the Preferred Stock then outstanding, and
share ratably in all assets of the corporation in the event of any
voluntary or involuntary liquidation, dissolution, or winding up of
the affairs of the corporation or upon any distribution of the
assets of the corporation, subject to any liquidation preferences of
the Preferred Stock then outstanding.
C. Preferred Stock. Subject to the provisions of the Articles of
Incorporation and to the provisions of the Georgia Business
Corporation Code, as it exists now or as hereafter may be amended,
the Board of Directors of the corporation may determine the
preferences, limitations, and relative rights of any series of
Preferred Stock and may designate the number of shares within that
series prior to the issuance of any shares of that series.
D. Series A Convertible Preferred Stock. The authorized shares of
Preferred Stock of the corporation shall include a series designated
as Series A Convertible Preferred Stock (the "Series A Preferred
Stock") which shall consist of Seven Thousand Five Hundred (7,500)
shares. The rights, preferences, privileges, and restrictions
granted to and imposed upon the Series A Preferred Stock are:
(1) Voting. The holders of shares of Series A Preferred Stock
shall be entitled to vote on all matters submitted to a vote
of the shareholders of the corporation, voting together with
the holders of Class A Common Stock as one class. Each share
of Series A Preferred Stock shall be entitled to the number of
votes equal to the number of shares of Class A Common Stock
into which such share of Series A Preferred Stock could be
converted on the record date for determining the shareholders
entitled to vote, rounded to the nearest hundredth of a vote;
it being understood that whenever the Conversion Price (as
hereinafter defined) is adjusted as provided in paragraph (5)
of this Article V.D., the voting rights of the Series A
Preferred Stock shall also be similarly adjusted.
Exhibit A
A-2
<PAGE>
Except as required by law or set forth in this paragraph (1)
of this Article V.D., the shares of Series A Preferred Stock
shall have no special voting rights and their consent shall
not be required for the taking of any corporate action.
(2) Dividends. The holders of shares of Series A Preferred Stock
shall be entitled to receive out of funds legally available
therefor and before any cash, stock, or other dividend is
declared or paid with respect to any class or series of Common
Stock or any other class or series of capital stock of the
Company, whether now existing or hereafter issued, when, as,
and if declared by the Board of Directors, dividends at the
rate per annum of $12.00 per share payable annually on
November 15 (or, if such date is not a business day, on the
business day immediately following such date) commencing on
November 15, 1991, to holders of record on the 10th business
day preceding the dividend payment date. Commencing on the
date of original issuance of the shares of Series A Preferred
Stock (the "Original Issue Date"), dividends shall accrue from
day to day, whether or not earned or declared, and shall be
cumulative; provided, however, that except as provided in
paragraphs (3) and (11) of this Article V.D., the corporation
shall be under no obligation to pay dividends unless and until
declared by the Board of Directors. Dividends accrued on
shares of Series A Preferred Stock for any period less than a
full annual period between dividend payment dates (or, in the
case of the first dividend payment, from the Original Issue
Date through the first dividend payment date) shall be
computed on the basis of a 360-day year of 30-day months.
Accrued but unpaid dividends shall accumulate as of the
dividend payment date on which they first become payable, but
no interest shall accrue or be payable on accumulated but
unpaid dividends. Any partial payment of then accrued
dividends on shares of Series A Preferred Stock shall be made
pro rata.
(3) Liquidation. Upon any liquidation, dissolution, or winding up
of the corporation, whether voluntary or involuntary, the
holders of shares of Series A
Exhibit A
A-3
<PAGE>
Preferred Stock shall be entitled to receive, out of the
assets or funds of the corporation which remain after
satisfaction in full of all valid claims of creditors and
which are available for distribution to shareholders, and
prior to and in preference of any distribution or payment of
any such assets or funds of the corporation to the holders of
shares of Common Stock or of any class or series of capital
stock of the corporation, whether now existing or hereafter
created, a liquidation payment in an amount per share equal to
$100.00, plus an amount equal to all dividends accrued but
unpaid thereon (whether or not declared) to the date payment
thereof is made available to holders of shares of Series A
Preferred Stock, plus a cumulative liquidation premium at the
rate of $38.00 per share per annum accruing from the Original
Issue Date to the date payment is made available to holders of
shares of Series A Preferred Stock, computed on the basis of a
360-day year of 30-day months; provided, however, that if the
liquidation, dissolution, or winding up of the corporation,
whether voluntary or involuntary, occurs following the fifth
anniversary of the Original Issue Date, the liquidation
premium shall be $190.00 per share. The amount payable with
respect to a share of Series A Preferred Stock pursuant to
this paragraph (3) of this Article V.D. upon the liquidation,
dissolution or winding up of the corporation, whether
voluntary or involuntary, is hereinafter referred to as the
"Liquidation Payment". If upon the liquidation, dissolution,
or winding up of the corporation, whether voluntary or
involuntary, the assets or funds which remain after
satisfaction in full of all valid claims of creditors and
which are available for distribution to the holders of shares
of Series A Preferred Stock shall be insufficient to permit
payment to the holders of shares of Series A Preferred Stock
of the full amounts of their Liquidation Payments, then the
assets or funds of the corporation available for such
distribution shall be distributed pro rata among the holders
of shares of Series A Preferred Stock then outstanding based
on the number of shares of Series A Preferred Stock held by
each. After the holders of Series A Preferred Stock have been
paid in full their Liquidation Payments, the remaining assets
or funds of the corporation, if any, may be
Exhibit A
A-4
<PAGE>
distributed to the holders of stock ranking on liquidation
junior to the Series A Preferred Stock. Written notice of the
liquidation, dissolution, or winding up of the corporation,
whether voluntary or involuntary, stating a payment date, the
amount of the Liquidation Payment per share, and the place
where Liquidation Payments shall be payable, shall be given by
mail, postage prepaid not less than twenty (20) days prior to
the payment date stated therein, to the holders of record of
shares of Series A Preferred Stock, such notice to be
addressed to each such holder at his or its address as shown
by the records of the corporation. A consolidation or merger
of the corporation into or with any other entity or entities
or a sale, lease, exchange, or transfer by the corporation of
all or any part of its assets which shall not in fact result
in the liquidation (in whole or in part) of the corporation,
and the distribution of its assets to its shareholders, shall
be deemed to be a liquidation, dissolution, or winding up of
the corporation within the meaning of the provisions of this
paragraph (3) of this Article V.D.
(4) Conversion. The holders of shares of Series A Preferred Stock
shall have the following conversion rights:
(a) Right to Convert. Subject to the terms and conditions of
this paragraph (4) of this Article V.D., each share of
Series A Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date
of issuance of such share, into fully paid and
nonassessable shares of Class A Common Stock initially
at a conversion price equal to $100.00 per share of
Class A Common Stock, with each share of Series A
Preferred Stock being valued at $100.00 for such
purpose, which conversion price shall be adjusted as
hereinafter provided in this Article V.D. (such
conversion price, as so adjusted, is hereinafter
sometimes referred to as the "Conversion Price") (that
is, a conversion rate initially equivalent to one (1)
share of Class A Common Stock for each share of Series A
Preferred Stock so converted, subject to adjustment as
the Conversion Price
Exhibit A
A-5
<PAGE>
is adjusted as hereinafter provided in this Article
V.D.).
(b) Mechanics of Conversion. The conversion rights of
holders of shares of Series A Preferred Stock shall be
exercised by giving written notice that the holder
elects to convert a stated number of shares of Series A
Preferred Stock into Class A Common Stock to the
corporation at its principal office (or such other
office or agency of the corporation as the corporation
may designate by notice in writing to the holders of
shares of Series A Preferred Stock). Before any holder
of shares of Series A Preferred Stock shall be entitled
to convert the same into shares of Class A Common Stock
and to receive certificates therefor, the holder shall
surrender the certificate or certificates representing
the shares of Series A Preferred Stock to be converted,
duly endorsed, at the principal office of the
corporation (or such other office or agency of the
corporation as the corporation may designate by notice
in writing to the holders of Series A Preferred Stock)
(or shall notify the corporation that such certificate
has been lost, stolen or destroyed and shall execute an
agreement satisfactory to the corporation to indemnify
the corporation for any loss it may incur in connection
with such lost, stolen or destroyed certificate), and
shall give written notice to the corporation at such
office specifying the name or names in which such holder
wishes the certificate or certificates for shares of
Class A Common Stock to be issued if different from the
name of such holder shown on the books and records of
the corporation. No fractional shares of Class A Common
Stock shall be issued upon conversion of shares of
Series A Preferred Stock. In lieu of any fractional
share to which the holder would otherwise be entitled,
the corporation may, in its sole discretion, elect to
pay a cash amount equal to such fraction multiplied by
the then effective Conversion Price. The corporation
shall, as soon as practicable after delivery of such
certificate or certificates, or such agreement and
indemnification in the case of
Exhibit A
A-6
<PAGE>
lost, stolen or destroyed certificate or certificates,
issue and deliver to such holder of shares of Series A
Preferred Stock a certificate or certificates for the
number of shares of Class A Common Stock to which such
holder shall be entitled as aforesaid, and, if the
corporation elects not to issue fractional shares, a
check payable to the holder in the amount of any cash
amounts payable in lieu of a fractional share of Class A
Common Stock resulting from the conversion. Such
conversion shall be deemed to have been made immediately
prior to the close of business (the "Conversion Date")
on the date of surrender of the certificate or
certificates representing the shares of Series A
Preferred Stock to be converted, and the person or
persons entitled to receive the certificate or
certificates for the shares of Class A Common Stock
issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares
of Class A Common Stock on such date. The corporation
shall not be obligated to pay any dividends which shall
have been declared and shall be payable to holders of
shares of Series A Preferred Stock on a dividend payment
date if the dividend record date for such dividend is
subsequent to the Conversion Date.
(5) Adjustment of Conversion Price. If and whenever the
corporation shall issue or sell, or is, in accordance with the
applicable provisions of this paragraph (5) of this Article
V.D., deemed to have issued or sold, any shares of Common
Stock for consideration per share less than the Conversion
Price in effect immediately prior to such issuance or sale,
then, forthwith upon such issuance or sale, the Conversion
Price of the shares of Series A Preferred Stock shall be
reduced to a price equal to the price per share at which the
corporation issued or sold or is deemed to have issued or
sold, such shares of Common Stock. Notwithstanding anything
contained herein to the contrary, no adjustment of the
Conversion Price shall be made as a result of the issuance of:
(i) any shares issued pursuant to any other stock option or
other plan duly adopted by the Board of Directors of the
corporation, provided that this
Exhibit A
A-7
<PAGE>
exception shall not apply to issuances made pursuant to such
plans which exceed ten (10%) percent of the Common Stock of
the corporation then outstanding on a fully diluted basis,
counting as outstanding all shares of Common Stock issuable
upon exercise or conversion of all outstanding options,
warrants, and convertible securities; and (ii) any shares of
Common Stock issued pursuant to the conversion of any shares
of Class A Preferred Stock.
(a) Issuance of Rights or Options. In case at any time the
corporation shall grant (whether directly or by
assumption in a merger or otherwise) any warrants or
other rights to subscribe for or purchase, or grant any
options for the purchase of, Common Stock or any
security convertible into or exchangeable for Common
Stock (such warrants, rights, options are hereinafter
the "Options" and such convertible or: exchangeable
stock or securities are hereinafter "Convertible
Securities") whether or not the Options or the right to
convert or exchange the Convertible Securities are
immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the
corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional
consideration payable to the corporation upon the
exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if
any, payable upon the issuance or sale of such
Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise
of such Options) shall be less than the Conversion Price
in effect immediately prior to the time of the granting
of such Options, then the total maximum number of
Exhibit A
A-8
<PAGE>
shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to
have been issued for such price per share as of the date
of granting of such Options and thereafter shall be
deemed to be outstanding, except as otherwise provided
in paragraph (5)(c) of this Article V.D., no adjustment
of the Conversion Price shall be made upon the actual
issuance of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(b) Issuance of Convertible Securities. In case the
corporation shall issue or sell (whether directly or by
assumption in a merger or otherwise) any Convertible
Securities (other than Convertible Securities issued
upon the exercise of Options referred to in paragraph
(5)(a) of this Article V.D.), whether or not the rights
to exchange or convert the Convertible Securities are
immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount
received or receivable by the corporation as
consideration for the issuance or sale of such
Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to
the corporation upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the
Conversion Price in effect immediately prior to the time
of such issue or sale, then the total maximum number of
shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as
of the date of the issuance or sale of such Convertible
Securities and thereafter shall be deemed to be
outstanding, and, except as otherwise provided in
paragraph (5) (c) of
Exhibit A
A-9
<PAGE>
this Article V.D., no adjustment of the Conversion Price
shall be made upon the actual issuance of such Common
Stock upon conversion or exchange of such Convertible
Securities.
(c) Change in Option Price or Conversion Rate. Upon the
occurrence of any of the following events, namely, if
the purchase price provided for in any Option referred
to in paragraph (5)(a) of this Article V.D., the
additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities
referred to in paragraphs (5)(a) or (5)(b) of this
Article V.D., or the rate at which Convertible
Securities referred to in paragraphs (5)(a) or (5)(b) of
this Article V.D. are convertible into or exchangeable
for Common Stock shall change at any time (including,
but not limited to, changes under or by reason of
provisions designed to protect against dilution), the
Conversion Price in effect at the time of such event
shall forthwith be adjusted to the Conversion Price
which would have been in effect at such time had such
Options or Convertible Securities still outstanding
provided for such changed purchase price, additional
consideration, or conversion rate, as the case may be,
at the time initially granted, issued, or sold, but only
if as a result of such adjustment the Conversion Price
then in effect hereunder is thereby reduced; and on the
expiration of any such Option or the termination of any
such right to convert or exchange such Convertible
securities referred to in paragraphs (5)(a), (5)(b) or
(5)(c) of this Article V.D., the Conversion Price then
in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the
time of such expiration or termination had such Option
or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination,
never been issued.
(d) Stock Dividends. In case the corporation shall declare a
dividend or make any other
Exhibit A
A-10
<PAGE>
distribution upon or with respect to any security of the
corporation which dividend or distribution is payable in
Common Stock (except for dividends or distributions upon
the Common Stock), Options, or Convertible Securities,
any Common Stock, Options, or Convertible Securities
issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold for
consideration equal to the fair value of such Common
Stock, Options, or Convertible Securities as determined
in good faith by the Board of Directors of the
corporation and the Conversion Price of the outstanding
Series A Preferred Stock shall be adjusted, if
appropriate, pursuant to the applicable provisions of
this paragraph (5) of this Article V.D.
(e) Consideration for Stock. In case any shares of Common
Stock, Options, or Convertible Securities shall be
issued or sold for cash, the consideration received
therefor shall be deemed to be the amount received by
the corporation therefor, without deduction therefrom of
any expenses incurred or any underwriting commissions or
concessions paid or allowed by the corporation in
connection therewith. In case any shares of Common
Stock, Options, or Convertible Securities shall be
issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by
the corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the
Board of Directors of the corporation, without deduction
of any expenses incurred or any underwriting commissions
or concessions paid or allowed by the corporation in
connection therewith. In case any Options shall be
issued in connection with the issue and sale of other
securities of the corporation, together comprising one
integral transaction in which no specific consideration
is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued for
such consideration as determined in good faith by the
Board of Directors of the corporation.
Exhibit A
A-11
<PAGE>
(f) Record Date. In case the corporation shall take a record
of the holder or holders of a class of securities for
the purpose of determining the holders thereof who are
entitled (i) to receive a dividend or other distribution
payable in Common Stock, Options, or Convertible
Securities, (ii) to subscribe for or otherwise acquire
any shares of stock of any class or any other securities
or property, or (iii) to receive any other distribution,
payment, or right, the corporation shall mail to each
holder of shares of Series A Preferred Stock at least
twenty (20) days prior to such record date, a notice
specifying the date on which any such record is to be
taken for the purpose of such dividend, distribution,
payment or right, and a description of the amount and
character of such dividend, distribution, payment, or
right.
(g) Treasury Shares. The disposition of any shares of Common
Stock owned or held by or for the account of the
corporation shall be considered an issue or sale of
Common Stock for the purpose of this paragraph (5) of
this Article V.D.
(h) Subdivision or Combination of Common Stock. In case the
corporation shall at any time subdivide (by any stock
split, stock dividend, recapitalization, or otherwise)
its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect
immediately prior to such subdivision shall be
proportionally reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined
into a smaller number of shares (by a reverse stock
split, recapitalization, or otherwise), the Conversion
Price in effect immediately prior to such combination
shall be proportionately increased.
(i) Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock
of the corporation (other than any reorganization or
reclassification effected in a transaction that is
deemed a
Exhibit A
A-12
<PAGE>
liquidation, dissolution, or winding up of the
corporation pursuant to paragraph (3) of this Article
V.D.) shall be effected, and, as a result thereof,
holders of shares of Class A Common Stock shall be
entitled to receive securities or assets with respect to
or in exchange for shares of Class A Common Stock, then,
as a condition of such reorganization or
reclassification, lawful and adequate provisions shall
be made whereby each holder of shares of Series A
Preferred Stock shall have the right to receive, upon
conversion of the shares of Series A Preferred Stock
held by such holder, in lieu of the shares of Class A
Common Stock immediately theretofore issuable upon the
conversion of shares of Series A Preferred Stock, the
number and kind of securities or the amount and kind of
assets to which a holder of a number of shares of Class
A Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately
prior to such reorganization or reclassification, and in
any such case, appropriate provisions shall be made with
respect to the rights and interests of holders of Series
A Preferred Stock such that the provisions of this
Article V.D. (including, without limitation, provisions
for adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as possible, with
respect to any securities or assets thereafter
deliverable upon the exercise of the conversion rights
of the shares of Series A Preferred Stock.
(j) Notice of Adjustment. Upon any adjustment of the
Conversion Price the corporation shall give written
notice thereof, by first class mail, postage prepaid,
addressed to each holder of shares of Series A Preferred
Stock at the address of such holder as shown on the
books of the corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method upon which such
calculation is based.
Exhibit A
A-13
<PAGE>
(6) Other Notices. In case at any time:
(a) the corporation shall declare any dividend upon its
Common Stock or any class thereof payable in cash or
stock or make any other distribution to the holders of
its Common Stock or any class thereof;
(b) the corporation shall offer for subscription pro rata to
the holders of its Common Stock or any class thereof any
additional shares of stock of any class or the rights;
(c) there shall be any capital reorganization or
reclassification of the capital stock of the
corporation, or a consolidation or merger of the
corporation with or into, or a sale of all or
substantially all its assets to, another entity or
entities;
(d) there shall be voluntary or involuntary dissolution,
liquidation, or winding up of the corporation; or
(e) the corporation shall be in default under any of its
material contracts, agreements, commitments or
instruments;
then, in any one or more of said cases, the corporation shall
give, by first class mail, postage prepaid, addressed to each
holder of shares of Series A Preferred Stock at the address of
such holder as shown on the books of the corporation, (i) at
least twenty (20) days prior written notice of the date on
which the books of the corporation shall close or a record
shall be taken for such dividend, distribution, or
subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or
winding up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, at least twenty (20) days prior
written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause shall also
specify, in the case of any such dividend, distribution, or
subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and such notice in accordance
Exhibit A
A-14
<PAGE>
with the foregoing clause shall also specify the date on which
the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be.
(7) Stock to Be Reserved. The corporation shall at all times
reserve and keep available out of its authorized but unissued
Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Preferred Stock as herein
provided, such number of shares of Class A Common Stock as
shall from time to time be sufficient to effect the conversion
of all outstanding shares of Series A Preferred Stock; and if
at any time the number of authorized but unissued shares of
Class A Common Stock shall not be sufficient to effect the
conversion of all the then outstanding Series A Preferred
Stock, the corporation will take such corporate action as may,
in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Class A Common Stock to such
number of shares as shall be sufficient for such purpose.
(8) No Reissuance of Converted, Redeemed or Repurchased Series A
Preferred Stock. Any shares of Series A Preferred Stock which
are converted into shares of Class A Common Stock as provided
in this Article V.D., and any shares of Series A Preferred
Stock redeemed pursuant to paragraph (11) of this Article V.D.
or otherwise acquired by the corporation in any manner
whatsoever, shall be cancelled and shall not under any
circumstances be reissued, and the corporation may from time
to time take such appropriate corporate action as may be
necessary to reduce accordingly the number of authorized
shares of Series A Preferred Stock.
(9) Issue Tax. The issuance of certificates for shares of Class A
Common Stock upon conversion of shares of Series A Preferred
Stock shall be made without charge to the holders thereof for
any issuance tax in respect thereof, provided that the
corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance
and delivery of any certificate in a name other than that of
the
Exhibit A
A-15
<PAGE>
holder of shares of Series A Preferred Stock which is being
converted.
(10) Closing of Books. The corporation will at no time close its
transfer books against the transfer of any shares of Series A
Preferred Stock or of any shares of Class A Common Stock
issued or issuable upon the conversion of any shares of Series
A Preferred Stock in any manner which interferes with the
timely conversion of such shares of Series A Preferred Stock,
except as may otherwise be required to comply with applicable
securities laws or by agreement among the holders of the
shares of Series A Preferred Stock.
(11) Right of Corporation to Call Shares. The corporation shall
have the right to call for redemption all or any part of the
outstanding shares of Series A Preferred Stock, at any time or
from time to time following the third anniversary of the
Original Issue Date, at a price per share equal to the
Liquidation Payment that would be payable thereon if the
corporation were liquidated, dissolved, or wound up on the
date fixed for redemption. The amount payable with respect to
each share of Series A Preferred Stock is hereinafter referred
to as the "Call Price". Written notice of the corporation's
election to purchase all or part of the then outstanding
shares of Series A Preferred Stock stating a payment date, the
amount of the Call Price, and the place where the Call Price
shall be payable, shall be given by mail, postage prepaid, not
less than thirty (30) but not more than sixty (60) days prior
to the payment date stated therein, to the holders of record
of all shares of Series A Preferred Stock called for
redemption, such notice to be addressed to each such holder at
its address as shown by the records of the corporation. Each
holder of shares of Series A Preferred Stock shall be entitled
to convert the shares of Series A Preferred Stock held by such
holder pursuant to paragraph (4) of this Article V.D. at any
time prior to the payment date set forth in the written
notice.
All other provisions of the Articles of Incorporation shall remain in full
force and effect.
Exhibit A
A-16
<PAGE>
4. This amendment was adopted by the Board of Directors of the corporation
on _______, 1990 and approved by the shareholders of the corporation on _______,
1990.
5. This amendment was duly approved by the shareholders of the corporation
in accordance with the provisions of Section 14-2-1003 of the Georgia Business
Corporation Code.
IN WITNESS WHEREOF, the corporation has caused these Articles of Amendment
to be executed by its duly authorized officer this day of _____________, 1990.
SATELLINK PAGING INC.
By: _____________________
Marc A. Comeaux,
President
Exhibit A
A-17
<PAGE>
JT 1334
COPYRIGHT, 1930 BY
DWIGHT & M. H. JACKSON
CHICAGO
PATENT PENDING
INCORPORATED UNDER THE LAWS OF THE STATE OF
GEORGIA
-------
[NUMBER] [SHARES]
SATELLINK PAGING INC.
Series A Convertible Preferred Stock
AUTHORIZED CAPITAL 100,000 SHARES $.01 PAR VALUE
AUTHORIZED SERIES A CONVERTIBLE PREFERRED STOCK 7,500 SHARES
-----
THIS CERTIFIES THAT is the owner of
-------------------------------------------
full paid and non-assessable
- --------------------------------------------------
SHARES OF THE CAPITAL STOCK OF
--------------------------------------------------
transferable on the books of the Corporation in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF the said Corporation has caused this Certificate to be signed
by its duly authorized officers and sealed with the Seal of the Corporation,
this day of A.D. 19
------------------ ------------- -----
- ------------------------- ---------------------------
SECRETARY PRESIDENT
No. S4 DWIGHT & M. H. JACKSON CORPORATION SUPPLY CO
<PAGE>
MINUTES OF A SPECIAL MEETING
OF THE BOARD OF DIRECTORS OF
SATELLINK PAGING INC. HELD ON OCTOBER 23, 1990
A special meeting of the Board of Directors of Satellink Paging Inc. (the
"Corporation") was held at the offices of the Corporation in Atlanta, Georgia on
October 23, 1990, commencing at approximately 6:30 p.m. Participating in the
meeting were Marc A. Comeaux and Jerry W. Mayfield (both present in person), and
James O. Carpenter, Robert D. Gage III and E. Paul Breaux (all participating by
telephone conference, by means of which all persons participating in the
telephone conference could hear each other). Gordon Kaiser was absent from the
meeting.
Also present by invitation of the Board of Directors were Frank B.
Strickland, Esq. of Wilson, Strickland & Benson, P.C., counsel to Cue Paging
Corporation, and Sidney J. Nurkin, Esq. and Gabriel Dumitrescu, Esq. of Powell,
Goldstein, Frazer & Murphy, counsel to the Corporation. Mr. Comeaux acted as
Chairman of the meeting and Mr. Mayfield acted as Secretary of the meeting.
Mr. Comeaux opened the meeting by stating that the only item on the agenda
for the meeting was the discussion of a proposed issuance of convertible
preferred stock and approval of the agreements and corporate documents that are
necessary to effect this issuance. Mr. Comeaux noted that a package of material
relating to this transaction, containing, among other things, drafts dated
September 28, 1990 of (i) resolutions of the Board of Directors authorizing the
convertible preferred stock, (ii) purchase agreement to be entered into between
the Corporation and the prospective investors, and (iii) articles of amendment
to the Articles of Incorporation of the Corporation, containing the proposed
terms of the convertible preferred stock, had been mailed to all the directors
the previous week.
Mr. Comeaux then reviewed for the Board of Directors the principal
features of the proposed transaction. He stated that the Corporation is
proposing to issue up to 7,500 shares of convertible preferred stock at an issue
price of $100 per share in cash. The Corporation's existing shareholders would
be given the first opportunity to offer to subscribe for the convertible
preferred stock until November 4, 1990. If all the 7,500 shares are not
subscribed for by existing shareholders on or before November 4, 1990, then up
to 2,000 shares may be issued to outside investors.
Mr. Comeaux then stated that the Company proposes to ask the potential
investors to subscribe for shares by executing purchase agreements with the
Corporation on or prior to November 21, 1990 and that if on such date the shares
of convertible preferred stock are oversubscribed the number of shares to be
issued to each investor will be reduced pro rata.
At the invitation of the Chairman, Mr. Nurkin then reviewed with the Board
of Directors the draft resolutions that had been mailed to the members of the
Board of Directors. During the discussion that ensued, a number of corrections
to the resolutions circulated to the Board of Directors have been suggested and
duly noted.
<PAGE>
After further discussion, and upon motion duly made by Mr. Mayfield and
seconded by Mr. Breaux, the following resolutions were unanimously (with one
director absent) adopted by the Board of Directors:
RESOLVED, that the resolutions attached as Annex I hereto (which are the
resolutions circulated to the members of the Board of Directors prior to this
meeting with the changes and corrections suggested at this meeting) be, and they
hereby are, approved and adopted in all respects;
RESOLVED, that the Corporation be, and it hereby is, authorized and
directed to offer and sell up to 7,500 newly-issued shares of Series A
Convertible Preferred Stock ("Series A Shares") on the following general terms
and conditions:
1. The Series A Shares will be issued for a consideration of $100 per
share in cash, payable upon the issuance thereof;
2. The Series A Shares will be offered first to the Corporation's
existing shareholders until November 4, 1990;
3. If any of the offered Series A Shares are not subscribed for by
existing stockholders on or prior to November 4, 1990, up to 2,000
of such shares may be offered to outside potential investors; and
4. If on November 21, 1990 the Series A Shares are oversubscribed, the
number of shares to be sold to each individual investor will be
reduced pro rata based on the number of shares originally subscribed
for.
There being no further business to come before the meeting, upon motion
duly made by Mr. Mayfield and seconded by Mr. Breaux, the meeting was adjourned.
/s/ Jerry W. Mayfield
----------------------------------
Jerry W. Mayfield, Secretary
of the Meeting
-2-
<PAGE>
ANNEX I
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS OF
SATELLINK PAGING INC. AT A SPECIAL MEETING
HELD ON OCTOBER 23, 1990
WHEREAS, the Board of Directors of the Corporation has determined that it
is in the best interest of the Corporation and its shareholders to amend the
Articles of Incorporation of the Corporation to (i) increase the number of
shares of authorized capital stock of the Corporation from 70,000 to 100,000
shares, (ii) create a class of capital stock to be designated "preferred stock,
$.01 par value" of the Corporation ("Preferred Stock"), (iii) create a series of
convertible Preferred Stock to be issued and sold in a private placement
pursuant to individual stock purchase agreements with various purchasers, and
(iv) authorize the Board of Directors of the Corporation to determine, with
respect to unissued and undesignated shares of Preferred Stock the preferences,
limitations, and relative rights of any series of Preferred Stock and to
designate the number of shares within that series prior to the issuance of any
shares of that series;
NOW THEREFORE, BE IT HEREBY RESOLVED, that the proposed amendment (the
"Amendment") to the Articles of Incorporation of the Corporation set forth in
the form of the Articles of Amendment (the "Articles of Amendment") attached as
Exhibit A to the Stock Purchase Agreement (as defined below) be, and it hereby
is, approved and adopted; and the Amendment be, and it hereby is, recommended to
the shareholders of the Corporation for approval;
RESOLVED, that upon the approval of the Amendment by the shareholders of
the Company, the appropriate officers of the Corporation are authorized and
directed to execute the Articles of the Amendment and file, or cause to be
filed, executed Articles of Amendment with the Secretary of State of Georgia and
to do any all other such acts and take all such other actions as may be
necessary or appropriate to cause the Articles of Amendment to become affective;
RESOLVED, that the Corporation is hereby authorized to offer and sell up
to 7,500 authorized but unissued shares of Preferred Stock designated as "Series
A Convertible Preferred Stock" (the "Series A Shares"), at the price per share
of not less than $100.00; and that the Board of Directors has specifically
determined that the per share price for the Series A Shares constitutes adequate
consideration for the issuances of such shares;
RESOLVED, that the Series A Preferred Stock Purchase Agreement and Second
Amendment to the Stockholders Agreement (the "Stockholders Agreement"), proposed
to be entered by and among the Corporation, the several purchasers named on the
signature pages thereof (the "Purchasers"), and certain other security holders
of the
<PAGE>
Corporation also named on the signature pages and thereof be, and it hereby is,
approved and adopted substantially in the form presented to the Board of
Directors and attached as Attachment A hereto;
RESOLVED, that the Corporation reserve and keep available out of its
authorized Class A common stock $.01 par value ("Class A Common Stock"), solely
for the purpose of issuance pursuant to the terms of the Series A Shares, such
number of shares of Class A Common Stock as shall from time to time be issuable
pursuant to the terms of the Series A Shares upon conversion thereof (the
"Conversion Shares");
RESOLVED, that the form of stock certificate attached as Attachment B
hereto be, and it hereby is, adopted as and for the stock certificate for the
Series A Shares;
RESOLVED, that the President or any Vice President of the Corporation are
authorized to determine the states, if any, in which appropriate action shall be
taken to qualify or register for sale all or such part of the Series A Shares of
the Corporation as said officers may deem advisable; that said officers are
hereby authorized to perform on behalf of the Corporation any and all such acts
as they deem necessary or advisable in order to comply with applicable laws of
any such states; and in connection therewith to execute and file all requisite
papers and documents, including, but not limited to, applications, reports,
surety bonds, irrevocable consents and appointments of attorneys for service of
process; and the execution by such officers of any such paper or document or the
doing by them of any act in connection with the foregoing matters shall
conclusively establish their authority to do so, such papers or documents being
hereby approved and ratified by the Corporation;
RESOLVED, that in connection with the foregoing, the Board of Directors
hereby adopts and makes a part of these resolutions, as if fully recited herein,
any prescribed forms of resolutions or consents as may be required or specified
by any of said states;
RESOLVED, that the foregoing approvals of each of the Amendment, the Stock
Purchase Agreement, the issuance and sale of the Series A Shares and the
Conversion Shares and the authorization of the Corporation to enter into and
perform the Stock Purchase Agreement and each transaction contemplated thereby
shall extend to and include all changes to the form of such agreements attached
hereto as shall be approved by the President or any Vice President of the
Corporation and deemed by such officer or officers to be in the best interest of
the Corporation;
RESOLVED, that the President or any Vice President of the Corporation are
each authorized and directed to execute and deliver the Stock Purchase Agreement
in substantially in the form attached as Attachment A hereto, together with such
changes as the President or any Vice President of the Corporation shall approve
and deem to be in the best interests of the Corporation, with the authority of
the President or any Vice President to make such changes and modifications being
conclusively evidenced
<PAGE>
by the signature of such officer to said agreements in the form thereof finally
so executed and delivered by the Corporation;
RESOLVED, that the Secretary and any Assistant Secretary of the
Corporation are each authorized to attest the signature of the President or any
Vice President of the Corporation under the documents referred to in the
preceding resolutions, and to affix the corporate seal thereto and to attest the
same (provided that no attestation or seal shall be required to make such
documents effective, valid, binding, and enforceable);
RESOLVED, that each of the officers of the Corporation is authorized and
directed to proceed with the sale, issuance, and delivery of the Series A Shares
and to do any and all such further acts and things as may be necessary on the
part of the Corporation to consummate the transactions provided for in the Stock
Purchase Agreement and to otherwise carry out the spirit and purpose of these
resolutions, and to resolve, in their discretion, all questions of method, form,
and detail and to execute, acknowledge, and deliver in the name and on behalf of
the Corporation such other agreements, papers, instruments, and documents as are
required by the Stock Purchase Agreement or as such officers deem necessary or
advisable in order to carry out the transactions described in the Stock Purchase
Agreement.
<PAGE>
EXHIBIT 4.4
SECOND AMENDED AND RESTATED
WARRANT AGREEMENT
SECOND AMENDED AND RESTATED WARRANT AGREEMENT dated as of November
17, 1995 (as amended, supplemented or modified from time to time, the "Warrant
Agreement") between SATELLINK PAGING INC., a Georgia corporation (the "Issuer"),
and CREDITANSTALT AMERICAN CORPORATION, having offices at 245 Park Avenue, New
York, New York 10167 ("Creditanstalt").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Promissory Note dated as of December 3, 1992 (the
"Original Note") among the Issuer and Creditanstalt-Bankverein, an affiliate of
Creditanstalt (the "Bank"), the Bank made a loan to the Issuer upon the terms
set forth in the Original Note; and
WHEREAS, on December 23, 1992 the Issuer and the Bank entered into a
certain Loan and Security Agreement dated as of December 23, 1992 (the "Loan
Agreement") pursuant to which the loan evidenced by the Original Note was
superseded and replaced by revolving credit facility; and
WHEREAS, in order to induce the Bank to structure and to provide the loan
pursuant to the Original Note, the Issuer executed and delivered a Warrant
Agreement dated as of December 3, 1992 (the "Original Warrant Agreement") and
issued to the Bank 11,951 of the Warrants hereinafter described; and
WHEREAS, the Bank assigned the Warrants issued under the Original Warrant
Agreement to Creditanstalt; and
WHEREAS, pursuant to the Consent, Waiver and Third Amendment to Loan and
Security Agreement dated as of December 23, 1994 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Loan Agreement
Amendment") between the Issuer and the Bank, the Issuer and the Bank amended the
Loan Agreement to provide for the loan of additional funds and to make other
changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the Loan
Agreement Amendment, the Issuer amended and restated the Original Warrant
Agreement in order to provide for additional Warrants and make certain other
changes therein, such amended and restated warrant agreement dated as of
December 23, 1994 (the "Amended and Restated Warrant Agreement"); and
WHEREAS, in connection with the Amended and Restated Loan and Security
Agreement dated of even date herewith (as the same may be amended, supplemented
or otherwise modified from time to time, the "Restated Loan Agreement") between
the Issuer
<PAGE>
and the Bank, the Issuer and the Bank now wish to enter into a Securities
Purchase Agreement dated of even date herewith (the "Securities Purchase
Agreement") in order to provided for the purchase by the Bank of additional
capital stock of the Issuer; and
WHEREAS, in connection with and to induce Creditanstalt to enter into the
Securities Purchase Agreement, the Issuer has agreed to further amend and
restate the Amended and Restated Warrant Agreement (the "Second Amended and
Restated Warrant Agreement") in order to amend the terms of the Warrants and
make certain changes therein; and
WHEREAS, in connection with this Second Amended and Restated Warrant
Agreement, Creditanstalt has agreed to return for cancellation by the Issuer
nine (9) Warrant Shares (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises the parties hereto agree
as follows:
Section 1. Definitions. (a) As used in this Warrant Agreement, unless
-----------
otherwise defined herein, terms defined in the Loan Agreement (as in effect on
the date hereof, whether or not the Loan Agreement is thereafter terminated or
expires according to its terms) shall have such defined meanings when used
herein and the following terms shall have the following meanings, unless the
context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or
---------
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be deemed to
control another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting power for
the selection of directors of such Person or (ii) direct, or cause the direction
of, the management and policies of the second Person, whether through the
ownership of voting securities, by contract or otherwise. In addition, as to
Creditanstalt, "Affiliate" shall include any partnership a majority of the
partners of which are officers, directors, employees or Affiliates of
Creditanstalt, and as to the Issuer, "Affiliate" shall not include Creditanstalt
or any Affiliate of Creditanstalt which is a holder of any Warrants.
"Commission" shall mean the Securities and Exchange Commission or any
----------
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"Common Stock" shall mean the Class A Common Stock, par value $.0l per
------------
share, of the Issuer, and shall include any stock into which such Common Stock
shall have been changed or any stock resulting from any reclassification of such
Common Stock and all other stock of any class or classes (however designated) of
the Issuer the registered holders of which have the right, without limitation as
to amount, either to all or to a share of the
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<PAGE>
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"Current Market Price Per Share" shall mean, with respect to any shares of
------------------------------
the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite
Transactions Tape, the average of the daily closing prices for the 30
consecutive trading days immediately prior to such date as reported on the
Composite Transactions Tape (as adjusted for any stock dividend, split,
combination or reclassification that occurred during such 30-day period);
or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a national
securities exchange, the average of the daily last sale prices regular way
of the Common Stock, for the 30 consecutive trading days immediately prior
to such date (as adjusted for any stock dividend, split, combination or
reclassification that occurred during such 30-day period), on the
principal national securities exchange on which the Common Stock is traded
or, in case no such sale takes place on any such day, the average of the
closing bid and asked prices regular way, in either case on such national
securities exchange; or
(iii) if the Common Stock is not then reported on the Composite
Transaction Tape and is not then listed or admitted to trading on a
national securities exchange but is then traded in the over-the-counter
market, the average of the daily closing sales prices, or, if there is no
closing sales price, the average of the closing bid and asked prices, in
the over-the-counter market, for the 30 consecutive trading days
immediately prior to such date (as adjusted for any stock dividend, split,
combination or reclassification that occurred during such 30-day period),
as reported by the National Association of Securities Dealers' Automated
Quotation System, or, if not so reported, as reported by the National
Quotation Bureau, Incorporated or any successor thereof, or, if not so
reported the average of the closing bid and asked prices as furnished by
any member of the National Association of Securities Dealers, Inc.
selected from time to time by the Board of Directors of the Issuer for
that purpose; or
(iv) if no such prices are then furnished, the higher of (x) the
Exercise Price and (y) the fair market value of a share of Common Stock as
determined by agreement between the holders of a majority of the Warrants
and the Issuer or, in the absence of such an agreement, by an independent
investment banking firm or an independent appraiser engaged by the Issuer
(in either case the cost of which engagement will be borne by the Issuer)
and reasonably acceptable to the holders of a majority of the Warrants.
-3-
<PAGE>
"Equity of the Issuer" shall mean the total shareholders' equity of the
--------------------
Issuer, including all series of Preferred Stock, determined in accordance with
generally accepted accounting principles.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
or any successor federal statute.
"Exchange Right" shall have the meaning given to such term in subsection
--------------
16(d).
"Exempted Securities" shall mean (A) Warrant Shares, (B) shares issued
-------------------
upon conversion of the Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock or Series C Convertible Preferred Stock, (C) 3,000
shares of Class A Common Stock issued to employees of the Issuer pursuant to
options issued to employees of the Issuer having an exercise or conversion price
per share at least equal to the then Current Market Price Per Share, and (D) up
to 1000 shares issued upon exercise of options, rights or warrants outstanding
on the date hereof and held by officers or employees of the Issuer.
"Exercise Price" shall mean the exercise price of a Warrant, which shall
--------------
be $.0l per share of Common Stock or Series B Preferred Stock, provided that in
no event shall the Exercise Price of all Warrants exceed $100.00 in the
aggregate.
"Expiration Date" shall mean December 3,2005.
---------------
"Non-Attributable Stock" shall mean shares of Common Stock, Series B
----------------------
Preferred Stock or other shares of capital stock of the Issuer previously held
by Creditanstalt or its Affiliates which have been previously sold, or were
issued pursuant to the exercise of Warrants which were previously sold, either
(a) in a widely dispersed public offering; (b) in a private placement in which
no purchaser, individually or in concert with others, acquired Warrants, Common
Stock, Series B Preferred Stock, other shares of capital stock of the Issuer or
any combination thereof, representing (upon conversion, in the case of the
Series B Preferred Stock or Series C Preferred Stock, and upon exercise for
Common Stock, in the case of the Warrants) more than 2% of the outstanding
Common Stock; (c) in compliance with Rule 144 (or any rule which is a successor
thereto) of the Securities Act or (d) into the secondary market in a market
transaction executed through a registered broker-dealer in blocks of no more
than 2.0% of the shares outstanding of the Issuer in any six month period.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not been
-------------------------
sold to the public and bear the legend set forth in subsection 14(b).
"Non-Surviving Combination" shall mean any merger, consolidation or other
-------------------------
business combination by the Issuer with one or more Persons in which the Issuer
is not the survivor, or a sale of all or substantially all of the assets of the
Issuer to one or more such other Persons.
-4-
<PAGE>
"Operating Cash Flow" shall mean, for any period for which the same is
-------------------
computed, the sum of (i) the Issuer's and its Subsidiaries' consolidated net
income (loss) for such period, plus (ii) the Issuer's and its Subsidiaries'
interest expense for such period, plus (iii) the Issuer's and its Subsidiaries'
depreciation and amortization for financial reporting purposes for such period,
plus (iv) the Issuer's and its Subsidiaries' income tax expense for such period,
computed in each case on a consolidated basis in accordance with generally
accepted accounting principles.
"Offer Right" shall have the meaning given to such term in subsection
-----------
16(b).
"Put Closing Date" shall have the meaning given to such term in subsection
----------------
16(d).
"Put Period" shall mean the period commencing on November 17, 2000 and
----------
ending at 5:00 p.m., New York time, on the Expiration Date; provided that in the
event that, on or before November 17, 1999, all indebtedness outstanding under
the Loan has been repaid in full and all loan commitments under the Loan
Agreement or the Commitment Letter have been terminated, said period shall
commence on the later of (A) said repayment of indebtedness and termination of
loan commitments or (B) November 17, 1999.
"Put Price" shall have the meaning given to such term in subsection
---------
16(a)(l).
"Put Right" shall have the meaning given to such term in subsection
---------
16(a)(l).
"Put Valuation Amount" shall mean, as of any date, the greater of (x) zero
--------------------
or (y) an amount equal to Operating Cash Flow for the most recently ended twelve
full calendar months preceding the date of determination multiplied by seven
(7).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Series A Preferred Stock" shall mean the Series A Convertible Preferred
------------------------
Stock, par value $.0l per share, of the Issuer and shall include any stock into
which such Series A Preferred Stock shall have been changed or any stock
resulting from any reclassification of such Series A Preferred Stock.
"Series B Preferred Stock" shall mean the Series B Convertible Preferred
------------------------
Stock, par value $.0l per share, of the Issuer which is convertible into Common
Stock of the Issuer, and shall include any stock into which such Series B
Preferred Stock shall have been changed or any stock resulting from any
reclassification of such Series B Preferred Stock.
"Series C Preferred Stock" shall mean the Series C Convertible Preferred
------------------------
Stock, par value $.0l per share, of the Issuer which is convertible into Common
Stock or Series B Preferred Stock, and shall include any stock into which such
Series C Preferred Stock shall
-5-
<PAGE>
have been changed or any stock resulting from any reclassification of such
Series C Preferred Stock.
"Subsidiary" shall mean, as to any Person, a corporation of which shares
----------
of stock having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Warrant Agreement
shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Warrant Certificate" shall mean a certificate evidencing one or more
-------------------
Warrants, substantially in the form of Exhibit A attached hereto, with such
changes therein as may be required to reflect any adjustments made pursuant to
Section 12.
"Warrant Holders" shall mean Creditanstalt or an Affiliate thereof and
---------------
such other financial institutions which receive Warrants in connection with the
syndication of the Loan and such other Persons to whom Creditanstalt or an
Affiliate thereof or such other financial institutions transfers Warrants in
compliance with the terms of this Warrant Agreement, and for purposes of Section
15 shall include holders of Non-Public Warrant Shares.
"Warrant Office" shall mean the office or agency of the Issuer at which
--------------
the Warrant Register shall be maintained and where the Warrants may be presented
for exercise, exchange, substitution and transfer, which office or agency will
be the office of the Issuer at 1100 Northmeadow Parkway, Suite 100, Atlanta,
Georgia 30076, which office or agency may be changed by the Issuer pursuant to
notice in writing to the Persons named in the Warrant Register as the holders of
the Warrants.
"Warrant Register" shall mean the register, substantially in the form of
----------------
Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock or Series B
--------------
Preferred Stock issued or issuable upon exercise of the Warrants, or Common
Stock issued or issuable upon conversion of the Series B Preferred Stock, in
each case as the number of such shares may be adjusted from time to time
pursuant to Section 12 and the provisions of the Issuer's Articles of
Incorporation.
"Warrants" shall mean the stock purchase warrants issued pursuant to this
--------
Warrant Agreement entitling the record holders thereof to purchase from the
Issuer at the Warrant Office an aggregate of 13,325 shares of Common Stock or
Series B Preferred Stock (in the percentages and to the extent provided in
subsections 6(e) and 6(f) hereof and subject in each case to adjustment as
provided in Section 12) at the Exercise Price at any time after November 17,
1995 and before 5:00 P.M., New York time, on the Expiration Date; individually,
a "Warrant."
-6-
<PAGE>
(b) For all purposes of this Warrant Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein, "hereof" and "hereunder" and other words of similar
import refer to this Warrant Agreement as a whole and not to any
particular Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender shall also
be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement shall be
deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation, each
of the representations and warranties of the Issuer in Section 3 hereof is
separate and is not limited, qualified or modified by the existence,
wording or satisfaction of any other representation of the Issuer in
Section 3 or otherwise;
(v) All references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being taken)
by any Person, the Issuer or any Subsidiary shall apply to such Person,
the Issuer or such Subsidiary, as the case may be, whether such action is
taken directly or indirectly; and
(vi) All references herein to actions by the Issuer or any
Subsidiary (including, without limitation, actions denoted by terms such
as "create", "sell", "transfer" or "dispose of") mean such action whether
voluntary or involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue and
--------------------
deliver to Creditanstalt or, at the option of Creditanstalt, an Affiliate
thereof, on the date hereof, the Warrants and one or more Warrant Certificates
evidencing the Warrants. No payment shall be required from Creditanstalt or its
Affiliate in consideration of its receipt of the Warrants. Previously issued
Warrant Certificates shall be delivered to the Issuer for cancellation upon
issuance of one or more new Warrant Certificates.
Section 3. Representations and Warranties. The Issuer hereby represents
------------------------------
and warrants to Creditanstalt, for the benefit of Creditanstalt and any other
Warrant Holder, as follows:
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Georgia, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Warrant Agreement and the Warrant Certificates, to issue the Warrants and to
perform its obligations under this Warrant Agreement and the Warrant
Certificates, has the corporate power and authority and legal
-7-
<PAGE>
right to own and lease its properties and is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where failure to be so qualified could not be reasonably expected to have
a material adverse effect on the business, properties, financial condition or
results of operations of the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this Warrant
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon the exercise of the Warrants and the
issuance of Common Stock upon conversion of the Series B Preferred Stock have
been duly authorized by all necessary corporate action and do not and will not
violate, or result in a breach of, or constitute a default under, or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
the assets of the Issuer pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Articles of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations of the Issuer,
except as enforceability may be limited by bankruptcy and insolvency, and (ii)
the Warrant Shares, when issued upon exercise of the Warrants in accordance with
the terms hereof, and the Common Stock, when issued upon conversion of the
Series B Preferred Stock in accordance with the terms of the Issuer's Articles
of Incorporation relating to the Series B Preferred Stock, will be duly
authorized, validly issued, fully paid and nonassessable shares of the Common
Stock and Series B Preferred Stock, as applicable, with no personal liability
attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 5,000,000 shares
of Class A Common Stock, par value $.0l per share, of which 32,158.513 shares
are issued and outstanding and 20,000 shares of Class B Common Stock, par value
$.0l per share, of which 2,071.318 shares are issued and outstanding, 7,500
shares of Series A Convertible Preferred Stock, par value $.0l per share, of
which 7,360 shares are issued and outstanding, 30,000 shares of Series B
Convertible Preferred Stock, par value $.0l per share, none of which are issued
and outstanding, 3,500 shares of Series C Convertible Preferred Stock, par value
$.01 per share, 3,500 of which are issued and outstanding. Except as set forth
on Schedule I hereto, there are no outstanding options, warrants, subscriptions,
rights, convertible or exchangeable securities or other agreements or plans
under which the Issuer may be or become obligated to issue, sell or transfer
shares of its capital stock of other securities. The Series B Preferred Stock
has no voting rights, except as required by law, and is convertible on a share-
for-share basis into Common Stock of the Issuer. To the Issuer's best knowledge,
-8-
<PAGE>
there are no voting agreements, voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of the Issuer or
any Subsidiary.
(e) Except as set forth on Schedule II hereto, no holder of securities of
the Issuer has any right to the registration of such securities under the
Securities Act and any applicable state securities law.
Section 4. Registration, Transfer and Exchange of Certificates.
---------------------------------------------------
(a) The Issuer shall maintain, at the Warrant Office, the Warrant Register
for registration of the Warrants and Warrant Certificates and transfers thereof.
On the date hereof, the Issuer shall register the Warrants and Warrant
Certificates in the Warrant Register in the name of Creditanstalt or an
Affiliate thereof, as the case may be. The Issuer may deem and treat the
registered holders of the Warrant Certificates as the absolute owners thereof
and the Warrants represented thereby (notwithstanding any notation of ownership
or other writing on the Warrant Certificates made by any person) for the purpose
of any exercise thereof or any distribution to the holders thereof, and for all
other purposes, and the Issuer shall not be affected by any notice to the
contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of any
outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant Certificates evidencing such
transferred Warrants shall be issued to the transferee and the surrendered
Warrant Certificates shall be cancelled. If less than all the Warrants evidenced
by Warrant Certificates surrendered for transfer are to be transferred, new
Warrant Certificates shall be issued to the holder surrendering such Warrant
Certificates evidencing such remaining number of Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be cancelled.
(d) No charge shall be made for any such transfer or exchange except for
any tax or other governmental charge imposed in connection therewith. Except as
provided in subsection 14(b) each Warrant Certificate issued upon transfer or
exchange shall bear the legend set forth in subsection 14(b) if the Warrant
Certificate presented for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
-----------------------------------------
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate
-9-
<PAGE>
of like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Issuer of such loss, theft or
destruction of such Warrant Certificate and, if requested, indemnity
satisfactory to it. The Issuer acknowledges that a written indemnity by
Creditanstalt or, if an Affiliate of Creditanstalt is the holder of such lost,
stolen or destroyed Warrant Certificate, by such Affiliate shall be satisfactory
to the Issuer for such purpose. No service charge shall be made for any such
substitution, but all expenses and reasonable charges associated with procuring
such indemnity and all stamp, tax and other governmental duties that may be
imposed in relation thereto shall be borne by the holder of such Warrant
Certificate. Each Warrant Certificate issued in any such substitution shall bear
the legend set forth in subsection 14(b) if the Warrant Certificate for which
such substitution was made bore such legend.
Section 6. Duration and Exercise of Warrants.
---------------------------------
(a) The Warrants evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business Day after
November 17, 1995 and on or before 5:00 P.M., New York time, on the Expiration
Date.
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant Office,
and upon payment of the aggregate Exercise Price for the number of Warrant
Shares in respect of which such Warrants are being exercised in lawful money of
the United States of America and/or by surrender to the Issuer of shares of
Common Stock then owned by the Warrant Holder and valued for purposes hereof at
their Current Market Price Per Share at the time of exercise. In lieu of
exercising Warrants pursuant to the immediately preceding sentence, the Warrant
Holder shall have the right to require the Issuer to convert the Warrants, in
whole or in part and at any time or times (the "Conversion Right"), into Warrant
Shares, by surrendering to the Issuer the Warrant Certificate evidencing the
Warrants to be converted, accompanied by the form of conversion notice on the
reverse thereof or attached thereto which has been duly completed and signed.
Upon exercise of the Conversion Right, the Issuer shall deliver to the Warrant
Holder (without payment by the Warrant Holder of any Exercise Price) that number
of Warrant Shares which is equal to the quotient obtained by dividing (x) the
value of the number of Warrants being converted at the time the Conversion Right
is exercised (determined by subtracting the aggregate Exercise Price for all
such Warrants immediately prior to the exercise of the Conversion Right from the
aggregate current market price (determined on the basis of the Current Market
Price Per Share) of that number of Warrant Shares purchasable upon exercise of
such Warrants immediately prior to the exercise of the Conversion Right (taking
into account all applicable adjustments pursuant to Section 12, including
without limitation any adjustments which would be made pursuant to subdivision
(7) of subsection 12(c) upon exercise of the Warrants being converted) by (y)
the Current Market Price Per Share of one share of Common Stock (or the number
of shares of Common Stock into which one share of Series B Preferred Stock can
be converted if the Warrants are being converted
-10-
<PAGE>
into Series B Preferred Stock) immediately prior to the exercise of the
Conversion Right. Any references in this Warrant Agreement to the "exercise" of
any Warrants, and the use of the term "exercise" herein, shall be deemed to
include (without limitation) any exercise of the Conversion Right. Any exercise
of a Warrant hereunder may be made subject to the satisfaction of one or more
conditions (including, without limitation, the consummation of a sale of the
capital stock of the Issuer or a merger or other business combination involving
the Issuer) which are set forth in a writing which is made a part of or is
appended to the aforementioned form of election to purchase or conversion notice
(as the case may be) by the Warrant Holder.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and
cause to be delivered to or upon the written order of the registered holders of
such Warrants and in such name or names as such registered holders may
designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate
are exercised at any time, a new Warrant Certificate or Certificates shall be
issued for the remaining number of Warrants evidenced by such Warrant
Certificate. Each new Warrant Certificate so issued shall bear the legend set
forth in subsection 14(b) if the Warrant Certificate presented in connection
with partial exercise thereof bore such legend unless the transfer restrictions
referred to in such legend are no longer applicable pursuant to subsection
14(d). All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled.
(e) At the election of a Warrant Holder made at the time of exercise, the
Warrant Shares to be issued upon such exercise may be either Common Stock or
Series B Preferred Stock (or a combination thereof), provided that the Warrant
Holder shall not have the right to have issued to it upon exercise Common Stock
which, when aggregated with the shares of Common Stock (other than shares of
Non- Attributable Stock) previously issued as Warrant Shares or issued in
conversion of Series B Preferred Stock previously issued as Warrant Shares, will
exceed 4.99% of the then outstanding Common Stock unless such Warrant Holder
certifies that such Warrants have previously been transferred either (i) in a
widely dispersed public offering of the Warrants, or (ii) in a private placement
in which no purchaser, individually or in concert with others, would have
acquired more than 2% of the outstanding Common Stock if the Warrants so
transferred had been exercised for Common Stock, or (iii) in compliance with
Rule 144 (or any rule which is a successor thereto) of the Securities Act, or
(iv) into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0% of the shares
outstanding of the Issuer in any six month period; provided further that (A) if
the Warrant Holder is a bank or an Affiliate of a bank subject to the provisions
of the Bank Holding Company Act of 1956, as amended, such Common Stock, together
with all other shares of Common Stock then owned by such Warrant Holder and its
Affiliates, will not exceed 4.99% of the then outstanding Common Stock and (B)
in no event shall more than 13,872 shares of Common Stock or Series B Preferred
Stock (or a combination thereof) in the aggregate, subject to
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<PAGE>
adjustment pursuant to Section 12, be issued upon exercise of the Warrants. In
the event two or more Warrant Holders attempt to exercise Warrants for Common
Stock simultaneously and, if permitted, such exercises would cause the 4.99%
limitation to be exceeded, then the Issuer shall notify the Warrant Holders who
had attempted to exercise Warrants for Common Stock and each such Warrant Holder
shall be entitled to exercise for Common Stock only such number of Warrants as
shall equal the product of (i) the number of Warrants the Warrant Holder sought
to exercise for Common Stock times (ii) a fraction, the numerator of which is
the maximum number of Warrants which may be exercised for Common Stock without
exceeding the 4.99% limitation and the denominator of which is the maximum
number of Warrants sought to be exercised for Common Stock by such Warrant
Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no
event shall any Warrant be exercisable for shares of Common Stock or Series B
Preferred Stock which, when aggregated with all other Warrant Shares then held
by Creditanstalt or its Affiliates, would, upon issuance, represent in excess of
24.99% of the Equity of the Issuer unless such shares, when issued, would
constitute Non-Attributable Stock.
Section 7. No Fractional Shares. The Issuer shall not be required to issue
--------------------
fractional shares of Common Stock or Series B Preferred Stock upon exercise of
the Warrants but shall pay for any such fraction of a share an amount in cash
equal to the then Current Market Price Per Share of one share of Common Stock
multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes attributable to
----------------
the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay (i) any income tax
incurred by the holder of the Warrant Certificate or the Warrant Shares upon
exercise of the Warrants or the issuance of the Warrant Shares, or (ii) any tax
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or any certificate for Warrant Shares in a name other than
that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or deliver
such certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.
Section 9. Stockholder Rights.
------------------
(a) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as a stockholder in respect of the
meetings of stockholders or the election of directors of the Issuer or any other
matter, or any rights whatsoever as a stockholder of the Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as imposing any obligation on the registered
holders thereof to purchase any securities or as imposing any liabilities on
such holders as stockholders of the
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<PAGE>
Issuer, whether such obligation or liabilities are asserted by the Issuer or by
creditors of the Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain Corporate
-------------------------------------------------------------
Actions.
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(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the Warrants
and conversion of the Series B Preferred Stock, the number of shares of Common
Stock and Series B Preferred Stock deliverable upon exercise of all outstanding
Warrants and conversion of Series B Preferred Stock.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Articles of
Incorporation, be fully paid and nonassessable and free from all taxes (except
as otherwise contemplated in Section 8 hereof) with respect to the issuance
thereof and from all liens, charges and security interests (other than any
created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Articles of Incorporation which would affect the authorization,
dividend, put, voting, liquidation, conversion, exchange or notice rights or
additional remedies provisions of the Series B Preferred Stock without the
written consent of all of the Warrant Holders.
(d) The Issuer will not, by amendment of its Articles of Incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
Agreement or the Warrant Certificates. Without limiting the generality of the
foregoing, the Issuer (a) will not permit the par value or the determined or
stated value of any shares of the Issuer's Common Stock or Series B Preferred
Stock receivable upon the exercise of the Warrants to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Issuer may validly and legally issue fully paid
and nonassessable shares of the Issuer's Common Stock or Series B Preferred
Stock (as the case may be), upon the exercise of the Warrants from time to time
outstanding, including, without limitation, amending its Articles of
Incorporation to reduce or eliminate the par value of the Common Stock, (c) will
not take any action which results in an adjustment in the number of Warrant
Shares obtainable upon the exercise of any Warrants if the total number of
shares of the Issuer's Common Stock (or other securities) issuable after such
action upon the exercise of all of the then-outstanding Warrants would exceed
the total number of shares of the Issuer's Common Stock (or other securities)
then authorized by the Issuer's Articles of Incorporation and available for
purpose of issuance upon such exercise, (d) will not have any authorized Common
Stock other than its existing authorized Common Stock, and (e) will not amend
its Articles of Incorporation to change any terms of its Common Stock.
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<PAGE>
(e) If the Issuer proposes, prior to the Expiration Date, to enter into a
transaction that would constitute a Non-Surviving Combination, if consummated,
the Issuer shall give written notice thereof to each of the Warrant Holders
promptly after an agreement is reached with respect to the Non-Surviving
Combination but in any event no less than thirty (30) days prior to the
consummation thereof. Such notice shall describe the proposed transaction in
reasonable detail and specify the consideration to be received by the Warrant
Holders in respect thereto and/or any adjustment to be made to the number of
Warrant Shares obtainable upon the exercise of the Warrants as a result of such
Non-Surviving Combination. The Issuer shall also furnish to each Warrant Holder
all notices and materials furnished to its stockholders in connection with such
transaction as and when such notices and materials are furnished to its
stockholders. The Issuer agrees that it will not enter into an agreement
providing for a Non-Surviving Combination or effect any such Non-Surviving
Combination unless the party to such transaction that is the surviving entity
thereof or the purchaser or purchasers of substantially all of the assets of the
Issuer (the "Survivor") (i) shall be obligated to distribute or pay to each
Warrant Holder, upon payment of the Exercise Price prior to the Expiration Date,
the number of shares of stock or other securities or other property (including
any cash) of the Survivor that would have been distributable or payable on
account of the Warrant Shares if such Warrant Holder's Warrants had been
exercised immediately prior to such Non-Surviving Combination (or, if
applicable, the record date therefor), as such number of shares or other
securities or other property may thereafter be adjusted pursuant to Section 12
of this Warrant Agreement and (ii) shall assume by written instrument all of the
obligations of the Issuer under this Warrant Agreement.
(f) The Issuer will take no action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which would
cause the sum of the number of Warrant Shares theretofore issued, if any, plus
the number of Warrant Shares then issuable in respect of Warrants then
outstanding and other capital stock at any time held by Creditanstalt (other
than Non-Attributable Stock) to exceed 24.99% of the aggregate issued and
outstanding shares of the Issuer after giving effect to such action, unless in
any such case the holders of a majority of the outstanding Warrants and Warrant
Shares shall have given their prior written consent to such action.
Section 11. Obtaining of Governmental Approvals and Stock Exchange
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Listings. Subject, in the case of any registration under the Securities Act, to
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the limitations set forth in Section 15, the Issuer will, at its own expense,
from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities which are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action which may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of Warrants and conversion of the Series B
Preferred Stock, will be listed on each securities exchange, if any, on which
the Common Stock and/or Series B Preferred Stock is then listed.
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<PAGE>
Section 12. Adjustment of Number of Warrant Shares Purchasable.
--------------------------------------------------
(a) The number of shares of Common Stock or Series B Preferred Stock
purchasable upon the exercise of each Warrant is subject to adjustment from time
to time upon the occurrence of any of the events enumerated in this Section 12
at any time or from time to time after the date hereof and prior to the
Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock or
Series B Preferred Stock in shares of its capital stock (whether shares of
Common Stock, Series B Preferred Stock or of capital stock of any other class),
(ii) split or subdivide the outstanding Common Stock or Series B Preferred Stock
or (iii) combine the outstanding Common Stock or Series B Preferred Stock into a
smaller number of shares, each Warrant outstanding at the time of the record
date for such dividend or of the effective date of such split, subdivision or
combination shall thereafter entitle the holder of such Warrant to receive the
aggregate number and kind of shares which, if such Warrant had been exercised
immediately prior to such time, such holder would have owned or have become
entitled to receive by virtue of such dividend, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur and, if a dividend which is declared is not paid, each Warrant outstanding
shall again entitle the holder thereof to receive the number of shares of Common
Stock or Series B Preferred Stock as would have been the case had such dividend
not been declared. If at any time, as a result of an adjustment made pursuant to
this subsection 12(b), the holder of any Warrant thereafter exercised shall
become entitled to receive any shares of capital stock of the Issuer other than
shares of Common Stock and Series B Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 12, and the provisions of this Warrant Agreement with respect to
the Warrant Shares shall apply on like terms to such other shares.
(c) If the Issuer shall issue any shares of Common Stock without
consideration or at a price per share less than the Current Market Price Per
Share of the Common Stock as at the date of such issuance, including any shares
of Common Stock deemed to have been issued pursuant to this subsection 12(c) but
excluding any Exempted Securities, each Warrant outstanding on the date of such
issuance shall thereafter entitle the holder of such Warrant to receive a number
of shares of Common Stock or Series B Preferred Stock equal to the product of
(i) the number of shares of Common Stock or Series B Preferred Stock to which
the holder of such Warrant was entitled immediately prior to such issuance and
(ii) the quotient that is obtained by dividing:
(X) the total number of shares of Common Stock outstanding
immediately after such issuance (including any shares of
Common Stock deemed to have been issued pursuant to this
subsection 12(c))
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<PAGE>
by
(Y) the sum of
(i) the number of shares of Common Stock outstanding
immediately prior to such issuance plus
(ii) the number of shares of Common Stock which the aggregate
consideration received (or deemed to be received) by the
Issuer upon such issuance would purchase at such Current
Market Price Per Share.
For purposes of any adjustment of the number of shares of Common Stock or Series
B Preferred Stock obtainable upon the exercise of any Warrants pursuant to this
subsection 12(c), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid therefor,
without deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Issuer in connection with the issuance or sale
thereof.
(2) In the case of the issuance of Common Stock for a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined by agreement between the holders of a
majority of the Warrants outstanding and the Issuer or, in the absence of such
an agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer and reasonably acceptable to the holders of a
majority of the Warrants outstanding (in either case the cost of which
engagement will be borne by the Issuer). In the case of any issuance of Common
Stock upon the exercise of any warrants, options or other rights or the
conversion or exchange of any convertible or exchangeable securities, the
aggregate consideration received by the Issuer upon such issuance shall be
deemed to include the consideration, if any, received by the Issuer as
consideration for the issuance of such warrants, options or rights or such
convertible or exchangeable securities (excluding any cash received on account
of accrued interest or accrued dividends) and, in the case of any conversion or
exchange of securities, shall not include any amount attributable to the
converted or exchanged securities. If any warrant, option or right to purchase
or subscribe for any Common Stock or convertible securities is issued in
connection with the issuance or sale of other securities by the Issuer, together
comprising one integrated transaction in which no specific consideration is
allocated to such warrant, option or right, such warrant, option or right shall
be deemed to have been issued for no consideration.
(3) If (a) the Issuer shall issue warrants or options to purchase or
rights to subscribe for Common Stock other than Exempted Securities, and (b) the
consideration, if any, received by the Issuer as consideration for the issuance
of such warrants, options or rights plus the minimum aggregate consideration
required to be paid upon exercise of such
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<PAGE>
warrants, options or rights (the amount of such consideration to be determined
in each case as set forth above) shall be less than the product of the Current
Market Price Per Share on the date of such issuance multiplied by the maximum
number of shares of Common Stock deliverable upon such exercise, then such
aggregate maximum number of shares shall be deemed to have been issued at the
time such warrants, options or rights were issued and for a consideration equal
to such minimum aggregate consideration.
(4) If (a) the Issuer shall issue (i) securities (other than
Exempted Securities) which are by their terms convertible into or exchangeable
for Common Stock or (ii) warrants or options to purchase or rights to subscribe
for any such convertible or exchangeable securities (other than Exempted
Securities), and (b) the consideration received by the Issuer for any such
securities or any such options or rights (excluding any cash received on account
of accrued interest or accrued dividends) plus the minimum aggregate
consideration (not including any amount attributed to the converted or exchanged
securities), if any, to be received by the Issuer upon the conversion or
exchange of such securities or upon the exercise of such options and the
conversion or exchange of the securities received upon such exercise, as the
case may be (the amount of such consideration to be determined in each case as
set forth above) shall be less than the product of the Current Market Price Per
Share on the date of such issuance multiplied by the maximum number of shares
deliverable upon conversion of or in exchange for such convertible or
exchangeable securities or upon the exercise of any such options and subsequent
conversion or exchanges thereof, then such aggregate maximum number of shares
shall be deemed to have been issued at the time such securities were issued or
such options or rights were issued and for a consideration equal to such minimum
aggregate consideration.
(5) Upon any reduction in the exercise price of Common Stock
deliverable upon exercise of any of such warrants, options or rights as are
referred to in this subsection 12(c) or any reduction in the amount of
consideration required to be paid or the conversion or exchange price or ratio
payable upon conversion or exchange of any of such convertible or exchangeable
securities, in each case other than a change resulting from any antidilution
provisions thereof which are no more favorable in such instance to the holder
thereof than the provisions of this Section 12 are to the Warrant Holders, (i)
if an adjustment shall previously have been made pursuant to this subsection
12(c) in respect of such warrants, options or rights or such securities, the
number of shares of Common Stock or Series B Preferred Stock obtainable upon the
exercise of the Warrants shall forthwith be readjusted to such number of shares
as would have obtained had the adjustment made upon the issuance of such
warrants, options, rights or securities as have not been exercised, converted or
exchanged prior to such change (or any prior adjustment made pursuant to this
subdivision (5)) been made upon the basis of such change, and (ii) if an
adjustment has not previously been made pursuant to this subsection 12(c) in
respect of such options or rights or such securities, then such warrants,
options or rights or such securities shall be deemed to have been granted or
issued (as the case may be) for purposes of this subsection 12(c) as of the date
of such reduction, and any adjustments required to be made pursuant to this
subsection 12(c) as a result of such deemed grant or issuance shall forthwith be
made effective as of such date.
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<PAGE>
(6) All grants or issuances of options or other rights to acquire
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) issued to any officer, director or employee of the
Issuer or of any Subsidiary of the Issuer or to members of the immediate family
of any of them ("Management Options"), and all issuances of shares of Common
Stock (or securities convertible into or exchangeable for shares of Common
Stock) under or pursuant to such Management Options shall, for purposes of this
subsection 12(c), be deemed to be granted and issued for no consideration except
to the extent cash or notes are paid therefor; provided that the foregoing
provisions of this clause (6) shall not apply to options or other rights to
acquire securities that constitute Exempted Securities.
(7) Shares of Common Stock owned by or held for the account of the
Issuer or any majority-owned Subsidiary shall not be deemed outstanding for the
purpose of any computation made pursuant to this subsection 12(c). Any
adjustment required to be made pursuant to this subsection 12(c) shall be made
successively whenever the date of issuance or deemed issuance of any such Common
Stock or any such options, rights or convertible or exchangeable securities is
fixed (which date of issuance shall be the record date for such issuance if a
record date therefor is fixed) and, in the event that (A) such shares or
options, rights, warrants or convertible or exchangeable securities are not so
issued, or (B) any such option, right, warrant or convertible or exchangeable
security (or the conversion or exchange right thereunder) expires according to
its terms without having been exercised, converted or exchanged, each Warrant
outstanding shall, as of the date of cancellation of such issuance in the case
of clause (A) above and the date of such expiration in the case of clause (B)
above, entitle the holder thereof to receive the number of shares of Common
Stock or Series B Preferred Stock as would have been the case had the date of
such issuance of such unissued options, rights, warrants or convertible or
exchangeable securities not been fixed or such expired options, rights, warrants
or convertible or exchangeable securities not been issued, as the case may be.
(d) In case the Issuer shall make a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Issuer is the continuing corporation) of evidences of its
indebtedness, cash or other assets, each Warrant outstanding on the date of such
distribution shall thereafter entitle the holder of such Warrant to receive a
number of shares of Common Stock and Series B Preferred Stock equal to the
product of (i) the number of shares of Common Stock and Series B Preferred Stock
to which the holder of such Warrant was entitled immediately prior to such date
of distribution and (ii) a fraction of which the numerator shall be the then
Current Market Price Per Share of Common Stock on such date and of which the
denominator shall be the then Current Market Price Per Share of Common Stock on
such date less the fair market value, as determined by agreement between the
holders of a majority of the Warrants and the Issuer or, in the absence of such
an agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer and reasonably acceptable to the holders of a
majority of the Warrants (in either case the cost of which engagement will be
borne by the Issuer) of the portion of the assets or evidences of indebtedness,
or the portion of the cash, so to be distributed applicable to one share of
then-outstanding Common
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<PAGE>
Stock. Such adjustment shall be made successively whenever a date for such
distribution is fixed (which date of distribution shall be the record date for
such distribution if a record date therefor is fixed) and, if such distribution
is not so made, each Warrant outstanding shall again entitle the holder thereof
to receive the number of shares of Common Stock and Series B Preferred Stock as
would have been the case had such date of distribution not been fixed.
(e) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other corporation or of
the sale of the properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale
be exercisable upon the terms and conditions specified in this Warrant
Agreement, for the number of shares of stock or other securities or assets to
which a holder of the number of Warrant Shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) upon exercise of such Warrant would have been entitled upon such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale; and in any such case, if necessary, the provisions set forth in this
Section 12 with respect to the rights thereafter of the holders of the Warrants
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or assets thereafter
deliverable on the exercise of the Warrants.
(f) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock or Series B Preferred Stock
purchasable upon the exercise of each Warrant from that which would otherwise be
determined pursuant to this Section 12.
(g) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(h) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
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<PAGE>
(i) If any question shall at any time arise with respect to the number of
Warrant Shares purchasable following any adjustment pursuant to this Section 12,
such question shall be determined by agreement between the holders of a majority
of the Warrants and the Issuer or, in the absence of such an agreement, by an
independent investment banking firm or an independent appraiser engaged by the
Issuer (in either case the cost of which engagement will be borne by the Issuer)
and reasonably acceptable to the Issuer and the holders of a majority of
Warrants and such determination shall be binding upon the Issuer and the holders
of the Warrants.
(j) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the
number of Warrant Shares purchasable upon the exercise of each Warrant, in
addition to those adjustments required by this Section 12, as it in its
sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, or any issuance wholly
for cash or any shares of Common Stock at less than the Current Market
Price Per Share, or any issuance wholly for cash or shares of Common Stock
or securities which by their terms are convertible into or exchangeable
for shares of Common Stock or any stock dividend, or any issuance of
rights, options or warrants referred to hereinabove in this Section 12,
hereinafter made by the Issuer to the holders of its Common Stock shall
not be taxable to them; and
(2) no adjustment in the number of Warrant Shares purchasable shall
be required in the event the Issuer pays a cash dividend to holders of
Common Stock and/or Series B Preferred Stock; provided that the Issuer
also pays a cash dividend to all holders of Warrants which dividend shall
be calculated as if the Warrants had been exercised; provided further that
in such event, no adjustment in the number of Warrant Shares purchasable
shall be made by the Issuer if such adjustment would cause the sum of the
number of Warrant Shares theretofore issued, if any, plus the number of
Warrant Shares purchasable and the number of shares of other capital stock
of the Issuer held by Creditanstalt to exceed 24.99% of the aggregate
issued and outstanding shares of the Issuer and in such event, the Issuer
shall pay a cash dividend to all holders of Warrants which dividend shall
be calculated as if the Warrants had been exercised.
Section 13. Notices to Warrant Holders; Notices of Issuances and
----------------------------------------------------
Dividends.
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(a) Upon any adjustment of the number of Warrant Shares purchasable upon
exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but in
any event within 20 days thereafter, cause to be given to each of the registered
holders of the Warrants at its address appearing on the Warrant Register by
registered mail, postage prepaid, return receipt requested a certificate signed
by its chairman, president or chief financial officer setting forth the number
of Warrant Shares purchasable upon exercise of a Warrant as so adjusted and
describing in reasonable detail the facts accounting for such adjustment and the
method of calculation used. Where appropriate, such certificate may be given in
advance and
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<PAGE>
included as a part of the notice required to be mailed under the other
provisions of this Section 13.
(b) In the event:
(i) that the Issuer shall authorize the issuance to all holders of
Common Stock or Series B Preferred Stock of rights or warrants to
subscribe for or purchase capital stock of the Issuer or of any other
subscription rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all holders
of Common Stock or Series B Preferred Stock of evidences of its
indebtedness or assets (including, without limitation cash dividends or
cash distributions payable out of consolidated earnings or earned surplus
or dividends payable in Common Stock or Series B Preferred Stock); or
(iii) of any consolidation or merger to which the Issuer is a party
and for which approval of any stockholders of the Issuer is required, or
of the conveyance or transfer of the properties and assets of the Issuer
substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination); or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Issuer; or
(v) that the Issuer proposes to take any other action which would
require an adjustment in the number of Warrant Shares or other securities
or assets to which each Warrant Holder is entitled pursuant to Section 12;
then the Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register at least 20 calendar
days prior to the applicable record date, if any, hereinafter specified, or, if
no such record date is specified, 20 calendar days prior to the taking of any
action referred to in clauses (i) through (v) above, by registered mail, postage
prepaid, return receipt requested, a written notice stating (i) the date as of
which the holders of record of Common Stock or Series B Preferred Stock to be
entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, or (iii) the date on which such other action is to be
effected, and the date as of which it is expected that holders of record of
Common Stock or Series B Preferred Stock shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or other action. The failure to give the notice
required by this Section 13 or any defect therein shall not affect the legality
or validity of any distribution, right, warrant, consolidation, merger,
conveyance, transfer,
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<PAGE>
dissolution, liquidation or winding up or other action referred to above, or the
vote upon any such action.
(c) Prior to the expiration or exercise of all outstanding Warrants, the
Issuer shall furnish to each Warrant Holder:
(1) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Issuer, either (A) a copy of the Issuer's
Annual Report on Form 10-K (or any successor form) and any documents
incorporated by reference into such form for the prior fiscal year, as
filed with the Commission under the Exchange Act, or (B) a copy of the
consolidated balance sheet of the Issuer and its consolidated Subsidiaries
as at the end of such year and the related consolidated statement of
income and retained earnings and of cash flow for such year, setting forth
in each case in comparative form the figures for the previous year
certified by certified independent public accountants, and the
consolidated balance sheet of the Issuer and its consolidated Subsidiaries
as at the end of such fiscal year, showing inter-company eliminations, and
the related consolidating statements of income and retained earnings and
changes in financial position of the Issuer and its consolidated
Subsidiaries for such year, showing inter-company eliminations, setting
forth in each case in comparative form the figures for the previous fiscal
year, certified by a firm of nationally recognized independent certified
public accountants;
(2) as soon as available but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Issuer, either (A) a copy of the Issuer's Quarterly Report on
Form 10-Q (or any successor form) for the preceding fiscal quarter, as
filed with the Commission under the Exchange Act, or (B) the unaudited
consolidated balance sheet of the Issuer and its consolidated Subsidiaries
as at the end of each such quarter and the related unaudited consolidated
statements of income and retained earnings and of cash flow of the Issuer
and its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date setting forth in each case in comparative
form the figures for the same period of the previous fiscal year,
certified by the chief-financial or accounting officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(3) promptly after the sending or filing thereof, as the case may
be, copies of any reports, certificates, budgets, definitive proxy
statements or financial statements which Issuer sends to its shareholders
and copies of any regular periodic and special reports or registration
statements which Issuer files with the Commission (or any governmental
agency substituted therefor), including, but not limited to, any report or
registration statement which Issuer files with any national securities
exchange;
(4) no later than April 30 of each year, a certificate of the
chairman, president or chief financial officer of the Issuer setting forth
the number of Warrant Shares purchasable upon exercise of a Warrant as of
the end of the preceding fiscal
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<PAGE>
year and a description in reasonable detail of any adjustments in such
number during the preceding fiscal year;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein (except as approved by such accountants
and officer and disclosed therein). So long as the Loan Agreement remains in
effect, compliance by the Issuer with the provisions of Section 6.2 thereof
shall be deemed to be compliance with subsections 13(c)(l) and 13(c)(2).
(d) The Issuer shall not:
(i) at any time prior to the expiration or exercise of all
outstanding Warrants or at any time while Creditanstalt or an Affiliate
thereof holds any Warrants or Warrant Shares, (A) issue any shares of
Common Stock without consideration or at a price per share less than the
Current Market Price Per Share of Common Stock, other than (y) Exempted
Securities and (z) shares issued for cash in a private placement not
registered under the Securities Act at a price per share not less than 85%
of the Current Market Price Per Share, or (B) issue options, rights or
warrants to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at an exercise price per share (or having a
conversion price per share, if a security convertible into Common Stock),
less than the Current Market Price Per Share of Common Stock on the date
of issuance of such options, rights, warrants or convertible securities or
(C) without the consent of Creditanstalt, issue after the date of this
Warrant Agreement options, rights or warrants to subscribe for or purchase
(or securities convertible into) shares of Common Stock if the number of
shares of Common Stock issuable thereunder during any fiscal year, when
added to shares of Common Stock issuable during such fiscal year under all
other options, rights or warrants or convertible securities issued after
the date of this Warrant Agreement, exceeds ten percent (10%) of the
Common Stock outstanding on the first day of the fiscal year in which such
option, rights, warrants or convertible securities are issued; and
provided that for purposes of this clause (C) and subsection 12(c)(i)(C)
hereof such options, rights and warrants (and convertible securities)
shall be deemed issued as to the shares of Common Stock purchasable or
convertible into thereunder during the fiscal year in which such rights as
to such shares become fully vested.
(ii) at any time declare any dividend (other than dividends payable
solely in Common Stock or any series of the Preferred Stock) on, or make
any payment on account of, or make any other distribution in respect of
any shares of any class of stock of the Issuer, whether in cash or
property or obligations of the Issuer or any of its Subsidiaries without
giving all Warrant Holders written notice of the proposed declaration of
such dividend on, or the making of such payment or other distribution in
respect of, the Common stock or Preferred Stock at least 10 days prior to
the record date set for such proposed dividend, payment or other
distribution.
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Section 14. Restrictions on Transfer.
------------------------
(a) Each of Creditanstalt and its Affiliates who are issued Warrants
pursuant to this Agreement (i) represents that it is acquiring the Warrants for
its own account for investment and not with a view to any distribution or public
offering within the meaning of the Securities Act, except in any case pursuant
to the registration of such Warrants or Warrant Shares under the Securities Act
or pursuant to a valid exemption from such registration requirement, (ii)
acknowledges that the Warrants and the Warrant Shares issuable upon exercise
thereof have not been registered under the Securities Act and (iii) agrees that
it will not sell or otherwise transfer any of its Warrants or Warrant Shares
except upon the terms and conditions specified herein and that it will cause any
transferee thereof to agree to take and hold the same subject to the terms and
conditions specified herein, provided that the Warrant Holders may sell the
Warrants or the Warrant Shares purchased upon exercise of the Warrants and
issued on conversion of the Series B Preferred Stock in one or more private
transactions not requiring registration under the Securities Act.
(b) Except as provided in subsection 14(d) hereof each Warrant Certificate
and each certificate for the Warrant Shares issued to Creditanstalt or an
Affiliate thereof or to a subsequent transferee thereof pursuant to subsection
14(c) shall include a legend in substantially the following form (with such
changes therein as may be appropriate to reflect whether such legend refers to
Warrants or Warrant Shares), provided that such legend shall not be required if
such transfer is being made in connection with a sale which is exempt from
registration pursuant to Rule 144 under the Securities Act or if the opinion of
counsel referred to in subsection 14(c) is to the further effect that neither
such legend nor the restrictions on transfer in this Section 14 are required in
order to ensure compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH
WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER PROVISIONS OF THE SECOND
AMENDED AND RESTATED WARRANT AGREEMENT, DATED AS OF NOVEMBER 17, 1995
BETWEEN THE ISSUER AND CREDITANSTALT AMERICAN CORPORATION, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE
OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among Creditanstalt and/or
its Affiliates), the holder thereof shall give written notice to the Issuer of
such holder's intention to effect such assignment, transfer or sale, which
notice shall set forth the date of such proposed
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assignment, transfer or sale and the identity of the proposed transferee. Each
holder wishing to effect such a transfer of any Warrant or Warrant Shares shall
also furnish to the Issuer an agreement by the transferee thereof that it is
taking and holding the same subject to the terms and conditions specified herein
and, unless the transferee is an Affiliate of such holder, a written opinion of
such holder's counsel, in form reasonably satisfactory to the Issuer, to the
effect that the proposed transfer may be effected without registration under the
Securities Act.
(d) The restrictions set forth in this Section l4 shall terminate and
cease to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form reasonably satisfactory to the Issuer, to the effect that
compliance with such restrictions is not necessary in order to comply with the
Securities Act with respect to the transfer of the Warrants and the Warrant
Shares; provided, however, that after three (3) years from the date of issuance
of any Warrants, such restrictions will automatically terminate (without the
necessity of any opinion of counsel) as to such Warrants and as to any Warrant
Shares issued in respect of such Warrants upon exercise of the Conversion Right
set forth in subsection 6(b) above. Whenever such restrictions shall so
terminate the holder of such Warrants and/or Warrant Shares shall be entitled to
receive from the Issuer, without expense (other than transfer taxes, if any),
Warrant Certificates or certificates for such Warrant Shares not bearing the
legend set forth in subsection 14(b) at which time the Issuer will rescind any
transfer restrictions relating thereto.
(e) With a view to making available to Creditanstalt and its Affiliates
and subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may permit the
sale of Warrants and Warrant Shares to the public or certain other institutions
without registration, the Issuer agrees to take any and all such actions as may
be required of it to make available to Creditanstalt and its Affiliates and such
subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act or any
successor provision thereto from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Issuer under the Securities Act and the
Exchange Act from and after the date the Issuer first becomes subject to
the provisions of Section 13 or 15(d) of the Exchange Act; and
(iii) so long as Creditanstalt or an Affiliate thereof owns any
Warrants or Warrant Shares furnish to Creditanstalt forthwith upon request
a written statement by the Issuer as to its compliance with the reporting
requirements of Rule 144 or any successor provision thereto, and of the
Securities Act and the Exchange Act, (to the
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extent not previously furnished to Creditanstalt under subsection 13(d)) a
copy of the most recent annual or quarterly report of the Issuer filed
with the Commission, in each case from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the Exchange
Act, and such other reports and documents of the Issuer and other
information in the possession of or reasonably obtainable by the Issuer as
Creditanstalt and its Affiliates and subsequent holders of the Warrants
may reasonably request in availing itself of any rule or regulation of the
Commission allowing Creditanstalt and its Affiliates and subsequent
holders of the Warrants to sell any such securities without registration.
Section 15. Registration.
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(a) Upon the written demand of any Warrant Holder to the Issuer (a
"Demand") at any time and from time to time after the earlier of (i) six months
following an initial public offering of securities by the Issuer or (ii) three
years after the date hereof requesting that the Issuer effect the registration
under the Securities Act of Warrants or Non-Public Warrant Shares of such
Warrant Holder, the Issuer will promptly give written notice (a "Demand Notice")
of such Demand to all other Warrant Holders. Each other Warrant Holder may
request that the Issuer effect the registration under the Securities Act of
additional Warrants or Non-Public Warrant Shares of such Warrant Holder by
delivering written notice to the Issuer specifying such number of Warrants or
Non-Public Warrant Shares within 20 days of receipt of the Demand Notice. In the
event that the Issuer receives requests for the registration under the
Securities Act of at least an aggregate of 1,000 Warrants and/or Non-Public
Warrant Shares (or if less than an aggregate of 1,000 Warrants or Non-Public
Warrant Shares are outstanding, the remainder of the Non-Public Warrant Shares
then outstanding) within such 20-day period the Issuer shall give written notice
(a "Registration Notice") to all Warrant Holders that the Issuer will be filing
a registration statement pursuant to this subsection 15(a) and will thereupon
use its reasonable best efforts promptly to effect the registration under the
Securities Act of (i) the Warrants or Non-Public Warrant Shares which Warrant
Holders have requested to be registered within 20 days of the Demand Notice, and
(ii) additional Warrants or Non-Public Warrant Shares which Warrant Holders have
requested to be registered within 10 days of the Registration Notice. Promptly
within 20 days of the Registration Notice, the Issuer will notify all Warrant
Holders whose Warrants or Non-Public Warrant Shares are to be included in the
registration of the number of additional Warrants or Non-Public Warrant Shares
requested to be included therein by the other Warrant Holders. If the
registration of which the Issuer gives notice pursuant to subsection 15(a) is
for an underwritten public offering, only Warrants or Non-Public Warrant Shares
which are to be included in the underwriting may be included in such
registration, and the selling Warrant Holders shall, after reasonable
consultation with the Issuer, have the right to designate the managing
underwriter(s) in any such underwritten public offering with the consent of the
Issuer (which consent shall not be unreasonably withheld). Holders who include
Warrants or Warrant Shares in a registration pursuant to subsection 15(a) shall
bear the cost of any underwriters' discounts and commissions relating to their
Warrants or Warrant Shares which are sold. If a demand registration is made
prior to an initial public offering by the Issuer, the Issuer may, by written
notice to the Warrant Holders, convert
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such demand registration into a primary offering by the Issuer, and the Issuer
may include Common Stock to be issued by the Issuer in a registration pursuant
to the the provisions of subsection 15(c)(provided that any reduction in the
number of securities shall be on a pro rata basis) and such registration will
not constitute a demand registration under this subsection 15(a).
(b) The Issuer is obligated to effect not more than three (3) demand
registrations under subsection 15(a) and, with respect to each such
registration, the Issuer shall bear all expenses other than underwriting
discounts and commissions, if any, in connection with registrations, filings or
qualifications pursuant to subsection 15(a), including without limitation all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Issuer and the fees and disbursements
of one counsel for the selling Warrant Holders, provided that (i) a registration
will not constitute a demand registration under subsection 15(a) until it has
been declared effective under the Securities Act, (ii) if a registration
statement filed pursuant to subsection 15(a) is terminated or withdrawn by the
Issuer before all Warrants and Non-Public Warrant Shares covered thereby have
been sold, the Issuer shall be obligated to pay the expenses of an additional
demand registration under subsection 15(a), and (iii) no Person other than
holders of Warrants or Non-Public Warrant Shares and the Persons who have
registration rights on the date of this Warrant Agreement as described on
Schedule II hereto shall have any right to have securities included in any
registration under subsection 15(a); provided, however, that the Warrant Holder
acknowledges that the Issuer has the right, as provided in subsection 15(a), to
convert a demand registration that would be an initial public offering into a
primary offering by the Issuer with the Warrant Holder having piggyback
registration rights with respect thereto.
(c) If, at any time after the date hereof, the Issuer proposes to register
any of its securities under the Securities Act (except pursuant to a
registration statement filed on Form S-8 or Form S-4 or such other form as shall
be prescribed under the Act for substantially similar purposes), it will at each
such time give written notice (which notice shall state the intended method of
disposition thereof by the prospective sellers) to all holders of outstanding
Warrants and Non-Public Warrant Shares of its intention to do so and the
proposed minimum offering price per Warrant or Warrant Shares and upon the
written request of any holder thereof given within 10 days after the Issuer's
giving of such notice, the Issuer will use its reasonable best efforts to effect
the registration of the Warrants and/or Non-Public Warrant Shares which it shall
have been so requested to register by including the same in such registration
statement all to the extent required to permit the sale or other disposition
thereof in accordance with the intended method of sale or other disposition
given in each such request. If the registration of which the Issuer gives notice
pursuant to this subsection 15(c) is for an underwritten public offering, only
Warrants or Non-Public Warrant Shares which are to be included in the
underwriting may be included in such registration, and the Issuer shall have the
right to designate the managing underwriter(s) in any such underwritten public
offering; provided that (i) the Issuer shall use its best efforts to cause the
managing underwriter(s) to include the Warrants or Non-Public Warrant Shares
requested to be included in the registration in the underwriting; (ii) if the
managing underwriter(s) advises the holders of the Warrants or Non-Public
Warrant Shares and all other Persons seeking to
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include securities of the Issuer held by them in such registration statement
("Other Security Holders") in writing that the total amount of securities which
they and the Issuer and any Other Security Holders intend to include in such
offering is sufficiently large to materially and adversely affect the success of
such offering, the amount of securities to be offered shall be reduced (A) in
the case of an exercise of the Issuer's right to convert a demand registration
to a primary offering, pro rata among the Seller and the holders of Warrants or
Non-Public Warrant Shares, or (B) in any other case, pro rata among the holders
of Warrant Shares and Non-Public Warrant Shares and Other Security Holders
(based upon the amount of securities each such Person, other than the Issuer,
sought to include in the offering) to the extent necessary to reduce the total
amount of securities to be included in the offering to the amount recommended by
such managing underwriter(s) (which amount may be zero, if so recommended by
such managing underwriter(s)). Any registration statement filed pursuant to this
subsection 15(c) may be withdrawn at any time at the discretion of the Issuer.
(d) If a registration under subsection 15(a) or 15(c) shall be in
connection with an underwritten public offering, each holder of Warrants or
Non-Public Warrant Shares shall be deemed to have agreed by acquisition of such
Warrants or Non-Public Warrant Shares not to effect any sale or distribution,
including any sale pursuant to Rule 144 or Rule 144A, of any Warrants or
Non-Public Warrant Shares, and to use such holder's reasonable best efforts not
to effect any such sale or distribution of any other equity security of the
Issuer or of any security convertible into or exchangeable or exercisable for
any equity security of the Issuer (other than as part of such underwritten
public offering) within seven days before or 90 days after the effective date of
such registration statement (and the Issuer hereby also so agrees and agrees to
cause each holder of any equity security, or of any security convertible into or
exchangeable or exercisable for any equity security, of the Issuer purchased
from the Issuer at any time other than in a public offering, so to agree).
(e) As a condition to the inclusion of a holder's Warrants or Non-Public
Warrant Shares in any registration statements, each such holder of Warrants or
Non-Public Warrant Shares requesting registration thereof will furnish to the
Issuer such information with respect to such holder as is required to be
disclosed in the registration statement (and the prospectus included therein) by
the applicable rules, regulations and guidelines of the Commission. Failure of a
holder to furnish such information or agreement shall not affect the obligation
of the Issuer under this Section 15 to the remaining holders who furnish such
information.
(f) If and whenever the Issuer is required under this Section 15 to use
its reasonable best efforts to effect the registration of Warrants or Non-Public
Warrant Shares under the Securities Act, the Issuer shall:
(1) as expeditiously as possible and subject to the limitations set
forth in subsection 15(c), prepare and file with the Commission a
registration statement on the appropriate form with respect to such
Warrants or Non-Public Warrant Shares and use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing;
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(2) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering such
Warrants or Non-Public Warrant Shares and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and usable for resale for a period necessary to
complete the distribution of such securities, but in no event in excess of
24 months plus any period during which the holders of Warrants or Warrant
Shares are obligated to refrain from selling because the Issuer is
required to amend or supplement the prospectus under subsection 15(f)(iv),
and to comply with the provisions of the Securities Act with respect to
the disposition of all Warrants or Non-Public Warrant Shares covered by
such registration statement during such period in accordance with the
intended method of disposition of the sellers set forth therein;
(3) as expeditiously as possible, furnish to each seller of such
Warrants or Non-Public Warrant Shares registered, or to be registered
under the Securities Act, and to each underwriter, if any, of such
Warrants or Non-Public Warrant Shares such number of copies of a
prospectus and preliminary prospectus in conformity with the requirements
of the Securities Act, and such other documents as such seller or
underwriter may reasonably request in order to facilitate the public sale
or other disposition of such Warrants or Non-Public Warrant Shares;
(4) as expeditiously as possible, notify each seller of such
Warrants or Non- Public Warrant Shares if, at any time when a prospectus
relating to such Warrants or Non-Public Warrant Shares, is required to be
delivered under the Securities Act, any event shall have occurred as a
result of which the prospectus then in use with respect to such Warrants
or Non-Public Warrant Shares would include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or for
any other reason it shall be necessary to amend or supplement such
prospectus in order to comply with the Securities Act and prepare and
furnish to all sellers as promptly as possible, and in any event within
ninety (90) days of such notice, a reasonable number of copies of a
supplement to or an amendment of such prospectus which will correct such
statement or omission or effect such compliance;
(5) as expeditiously as possible, use its reasonable best efforts to
register or qualify such Warrants or Non-Public Warrant Shares under such
other securities or blue sky laws of such jurisdictions as such seller
shall reasonably request and do any and all other acts and things which
may be reasonably necessary to enable such seller to consummate the public
sale or other disposition in each such jurisdiction of the Warrants or
Non-Public Warrant Shares owned by such seller and included in such
registration statement, provided that the Issuer shall not be required to
consent to the general service of process or to qualify to do business in
any jurisdiction where it is not then qualified;
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(6) use its reasonable best efforts to keep the holders of such
Warrants or Non-Public Warrant Shares informed of the Issuer's best
estimate of the earliest date on which such registration statement or any
post-effective amendment or supplement thereto will become effective and
will promptly notify such holders and the managing underwriters, if any,
participating in the distribution pursuant to such registration statement
of the following: (A) when such registration statement or any
post-effective amendment or supplement thereto becomes effective or is
approved; (B) of the issuance by any competent authority of any stop order
suspending the effectiveness or qualification of such registration
statement or the prospectus then in use or the initiation or threat of any
proceeding for that purpose; and (C) of the suspension of the
qualification of any Warrants or Non-Public Warrant Shares included in
such registration statement for sale in any jurisdiction;
(7) make available to its security holders, as soon as practicable,
an earnings statement covering a period of at least twelve months which
satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(8) cooperate with the sellers of such Warrants or Non-Public
Warrant Shares and the underwriters, if any, of such Warrants or
Non-Public Warrant Shares; give each seller of such Warrants or Non-Public
Warrant Shares, and the underwriters, if any, of such Warrants or
Non-Public Warrant Shares and their respective counsel and accountants,
such access to its books and records and such opportunities to discuss the
business of the Issuer with its officers and independent public
accountants as shall be necessary to enable them to conduct a reasonable
investigation within the meaning of the Securities Act and, in the event
that Warrants or Non-Public Warrant Shares are to be sold in an
underwritten offering, enter into an underwriting agreement containing
customary representations and warranties, covenants, conditions and
indemnification provisions, including without limitation the furnishing to
the underwriters of a customary opinion of independent counsel to the
Issuer and a customary "comfort" letter from the Issuer's independent
public accountants;
(9) provide a CUSIP number for all Warrants and Non-Public Warrant
Shares not later than the effective date of the registration statement;
(10) as to all registrations under subsection 15(a) and all
registrations under subsection 15(c), pay all costs and expenses incident
to the performance and compliance by the Issuer of this Section 15,
including without limitation (A) all registration and filing fees; (B) all
printing expenses; (C) all fees and disbursements of counsel and
independent public accountants for the Issuer; (D) all blue sky fees and
expenses (including fees and expenses of counsel in connection with blue
sky surveys); (E) all transfer taxes; (F) the entire expense of any
special audits required by the rules and regulations of the Commission;
(G) the cost of distributing prospectuses in preliminary and final form as
well as any supplements thereto and (H) the fees and expenses of one
counsel for the holders of the Warrants or Non-Public Warrant Shares being
registered; and
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(11) as to the first registration under subsection 15(a) which is in
respect of an underwritten offering, as expeditiously as possible, take
such actions as the underwriters reasonably request in order to expedite
or facilitate the disposition of the Warrants or Non-Public Warrant Shares
to be included in such offering (including, without limitation, effecting
a stock split, stock dividend or a combination of shares of Common Stock).
(a)(i) The Issuer will indemnify and hold harmless each seller of
Warrants or Non-Public Warrant Shares, each director, officer, employee
and agent of each seller, and each other person, if any, who controls such
seller within the meaning of the Securities Act or the Exchange Act from
and against any and all losses, claims, damages, liabilities and legal and
other expenses (including costs of investigation) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement under which such Warrants or Non-Public Warrant
Shares were registered under the Securities Act, any prospectus or
preliminary prospectus contained therein or any amendment or supplement
thereto, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to such seller and furnished to the Issuer in writing by such
seller expressly for use therein, and provided that the Issuer will not be
liable to any Person who participates as an underwriter in the offering or
sale of Warrants or Non-Public Warrant Shares or any other Person, if
any, who controls such underwriter within the meaning of the Securities
Act under the indemnity agreement in this subsection 15(g) with respect to
any preliminary prospectus or the final prospectus or the final prospectus
as amended or supplemented, as the case may be, to the extent that any
such loss, claim, damage or liability of such underwriter or controlling
Person results from the sale by such underwriter of Warrants or Non-Public
Warrant Shares to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Issuer has previously furnished copies
thereof to such underwriter, or from a sale to a Person in a state where
the offering has not been registered or qualified, if the Issuer has
notified the seller and any underwriter involved in such sale of the
states where the offering has been registered or qualified.
(ii) It shall be a condition to the obligation of the Issuer to
effect a registration of Warrants or Non-Public Warrant Shares under the
Securities Act pursuant hereto that (X) each seller, severally and not
jointly, indemnify and hold harmless the Issuer and each person, if any,
who controls the Issuer within the meaning of the Securities Act or the
Exchange Act to the same extent as the indemnity from the Issuer in the
foregoing paragraph, but only with reference to any breach by such seller
of any agreement between such seller, and the Issuer with respect to the
offering and with reference to information relating to such seller
furnished to the Issuer in writing by
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such seller expressly for use in the registration statement, any
prospectus or preliminary prospectus contained therein or any amendment or
supplement thereto and (Y) each seller, in the event that Warrants or
Non-Public Warrant Shares are to be sold in an underwritten offering,
enters into an underwriting agreement containing customary representations
and warranties, covenants, conditions and indemnification provisions.
(iii) In case any claim shall be made or any proceeding (including
any governmental investigation) shall be instituted involving any
indemnified party in respect of which indemnity may be sought pursuant to
this subsection 15(g), such indemnified party shall promptly notify the
indemnifying party in writing of the same, provided that failure to notify
the indemnifying party shall not relieve it from any liability it may have
to an indemnified party otherwise than under this subsection 15(g). The
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party in such proceeding and shall pay the fees and
disbursements of such counsel. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (A) the indemnifying party shall have failed to retain
counsel for the indemnified party as aforesaid, (B) the indemnifying party
and such indemnified party shall have mutually agreed to the retention of
such counsel or (C) representation of such indemnified party by the
counsel retained by the indemnifying party would, in the reasonable
opinion of the indemnified party, be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding, provided that the
Issuer shall not be liable for the fees and disbursements of more than one
additional counsel for all indemnified parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection 15(g) is
due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Issuer or the applicable
sellers, as the case may be, shall contribute to the aggregate losses, claims,
damages and liabilities incurred (including legal or other expenses reasonably
incurred in connection with the investigating or defending of same) by the other
and for which such indemnification was sought. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
securities included in the registration statement (taking into account the
portion of the proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances; provided,
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however, that (i) in no case shall any seller of Warrants or Non-Public Warrant
Shares be required to contribute any amount in excess of the total public
offering price of the Warrants or Non-Public Warrant Shares sold by him and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
subsection 15(h), each person who controls any seller of Warrants or Non-Public
Warrant Shares or the Issuer shall have the same rights to contribution as such
seller or the Issuer. Any party entitled to contribution shall, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against the
Issuer or the seller of Warrants or Non-Public Warrant Shares under this
subsection 15(h), notify the Issuer or such seller, as the case may be, but the
omission to so notify the Issuer or such seller, as the case may be, shall not
relieve it from any other obligation it may have hereunder or otherwise.
(c) After the date hereof, the Issuer shall not grant to any holder of
securities of the Issuer any registration rights which have a priority greater
than or equal to those granted to holders of Warrants or Non-Public Warrant
Shares pursuant to this Section 15 without the prior written consent of the
holders of at least a majority of the aggregate outstanding Warrants and Non-
Public Warrant Shares, voting as a single group.
Section 16. Put Rights, Offer Rights and Exchange Rights.
--------------------------------------------
(a)(1) Subject to the limitations hereinafter set forth, (a)
Creditanstalt and its Affiliates shall have the right, if the outstanding
Warrant Shares issued or issuable upon exercise of the Warrants and held
by Creditanstalt and its Affiliates, when aggregated with all other
Warrant Shares or other shares of capital stock of the Issuer then or
previously held by Creditanstalt or its Affiliates (excluding
Non-Attributable Stock), would represent in excess of 24.99% of the Equity
of the Issuer, upon written notice to Issuer, to require the Issuer to
purchase that portion of such Warrant Shares as will reduce the Warrant
Shares held by or issuable to Creditanstalt and its Affiliates to 24.99%
of the Equity of the Issuer, excluding Non-Attributable Stock; and (b) any
holder of Warrants and/or Warrant Shares shall have the right at any time,
and from time to time, during the Put Period, at its option, upon written
notice to the Issuer, to require the Issuer to purchase all or a portion
of the Warrants and/or Warrant Shares held by such holder (any such right
being herein called a "Put Right"). The price to be paid to the holder
upon exercise of a Put Right or an Offer Right shall be an amount equal to
the Put Valuation Amount at the date the notice exercising such Put Right
or Offer Right is given to the Issuer or the holder, as the case may be,
multiplied by a fraction the denominator of which is the number of issued
and outstanding shares of Common Stock of the Issuer at such date,
calculated on a fully diluted basis in accordance with generally accepted
accounting principles (except that no Management Options that are not
Exempted Securities shall be treated as issued and outstanding), and the
numerator of which is (Y) the aggregate number of shares of Common Stock
of the Issuer (i) comprising the Warrant Shares to be purchased by the
Issuer, and/or (ii) issuable upon exercise of the Warrants to be
-33-
<PAGE>
purchased by the Issuer, and/or (iii) issuable upon conversion of the
Series B Preferred Stock comprising the Warrant Shares to be purchased by
the Issuer, and/or (iv) issuable upon conversion of the Series B Preferred
Stock issuable upon exercise of the Warrants to be purchased by the Issuer
(assuming Series B Preferred Stock, rather than Common Stock, is then
issuable under such Warrants)(the "Put Price").
(2) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to exercises of Put Rights and Offer Rights shall
take place on the thirtieth (30th) day following the date on which the
respective notice exercising such Put Right or Offer Right is given,
unless another date is mutually agreed upon by the Issuer and the selling
holder (the "Put Closing Date"). The Put Prices for all purchases and
sales pursuant to exercises of Offer Rights shall be paid by the Issuer to
the selling holder in immediately available funds on the Put Closing Date.
The Put Prices for all purchases and sales pursuant to exercises of Put
Rights shall be paid by the Issuer either (A) in immediately available
funds or (B) by issuing to the selling holder a promissory note (the
"Note") in the principal amount of such Put Price payable to the selling
holder, which Note shall accrue interest at a rate per annum equal to the
higher of 9% or the rate publicly announced from time to time in New York
by Creditanstalt as its "prime rate". The Note shall be governed by the
laws of the State of New York and shall be secured by all of the Warrants
so repurchased and will be subordinate in right of payment only to the
Issuer's then outstanding bank indebtedness. The principal amount of the
Note shall be payable in twelve (12) equal quarterly installments,
together with interest accrued on the principal balance to the respective
payment date, beginning on the first day of the fourth full calendar month
following such Put Closing Date and continuing on the first day of each
third calendar month thereafter to the first day of the twenty-fifth
(25th) full calendar month following the Put Closing Date. The principal
amount of the Notes may be prepaid without any penalty. The Put Price
shall be paid against delivery of certificates representing the Warrants
or Warrant Shares to be purchased, duly endorsed for transfer to the
Issuer.
(b) Subject to the limitations hereinafter set forth, at any time prior to
the effectiveness of a registration statement filed by the Issuer with the
Commission with respect to a public offering of shares of Common Stock, any
holder of Warrants or Warrant Shares shall not sell or transfer any such
Warrants or Warrant Shares without first offering, by written notice to the
Issuer, to sell such Warrants or Warrant Shares to the Issuer in accordance with
the terms of this Section 16. Issuer shall have thirty (30) days from the date
of such notice to exercise its right to purchase such Warrants or Warrant Shares
by written notice to such holder (such right being herein called an "Offer
Right"). If the Issuer does not so exercise its right to purchase such Warrants
or Warrant Shares within thirty (30) days from the date of holder's notice
hereunder, such holder shall be free to sell or otherwise transfer such Warrants
or Warrant Shares to any person, without restriction as to price or terms and
free and clear of any further restrictions on sale or transfer under this
subsection 16(b), at any time during the one hundred eighty (180) day period
commencing sixty (60) days after
-34-
<PAGE>
holder's notice to Issuer under this subsection 16(b). Notwithstanding the
foregoing, the provisions of this subsection 16(b) shall not apply to any sale
or transfer of Warrants or Warrant shares (i) to any Affiliate of the Issuer; or
(ii) pursuant to an effective registration statement filed by the Issuer with
the Commission.
(c) The Put Prices for all purchases and sales of Warrants and Warrant
Shares pursuant to exercises of Put Rights or Offer Rights shall be determined
and calculated in accordance with subsection 16(a) by the Issuer's regularly
engaged independent accountants. The Issuer shall cause such accountants to
deliver to the Issuer and the selling holder, not later than 15 days prior to
the completion of each purchase and sale under subsection 16(a), a written
statement, signed by such accountants, setting forth in reasonable detail the
respective purchase price and the calculation thereof and stating that such
calculation was based on the books and records of the Issuer and was made and
delivered pursuant to this Section 16.
(d) Creditanstalt and its Affiliates shall have the right, if the
outstanding Common Stock issued upon exercise of the Warrants and held by
Creditanstalt and its Affiliates at any time exceeds 4.99% of the aggregate
number of issued and outstanding shares of Common Stock, upon written notice to
Issuer, to require the Issuer to exchange that portion of such Common Stock for
Series B Preferred Stock as will reduce the shares of Common Stock held by
Creditanstalt and its Affiliates to 4.99% of the aggregate number of issued and
outstanding shares of Common Stock (such right being called an "Exchange
Right").
(e) As used in this Section 16, "Warrant Shares" shall include all shares
of Common Stock and/or Series B Preferred Stock and other securities of the
Issuer or its Affiliates issued to holders of the Issuer's Common Stock and/or
Series B Preferred Stock in respect of stock dividends, stock splits and other
distributions and any recapitalizations, to the extent the same were not
included in any adjustment of the Warrant Shares issuable upon exercise of
Warrants pursuant to Section 12 hereof.
(f) Except with the approval by vote or written consent of the holders of
at least a majority of the Warrants and outstanding Warrant Shares, voting
together as a class, so long as these Put Rights remain in effect, the Issuer
shall not (3) repurchase or redeem any shares of the capital stock of the
Issuer, except Warrants or Warrant Shares purchased pursuant to this Section 16
or (4) enter into any agreement or otherwise grant any right to any person to
require the Issuer to repurchase or redeem any such stock, rights, options or
warrants.
(g) The Put Rights described in subsection 16(a)(i)(B) shall terminate
upon the effectiveness of a registration statement filed by the Issuer with the
Commission with respect to a public offering of shares of Common Stock with
proceeds paid to the Issuer and any selling shareholders of not less than
$10,000,000.
(h) The certificates representing the Warrants and the Warrant Shares
shall bear a legend indicating that the Warrants and Warrant Shares are subject
to the provisions of this Section 16.
-35-
<PAGE>
(i) Notwithstanding any provision of this Warrant Agreement to the
contrary, all Warrants and Warrant Shares which are sold pursuant to an
effective registration statement under the Securities Act shall, upon such sale,
cease to be subject to the provisions of this Section 16.
Section 17. Amendments and Waivers. Any provision of this Warrant
----------------------
Agreement may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than a
majority of the outstanding Warrants (or in the case of Sections 14, 15 and 16,
the holders of a majority of the aggregate outstanding Warrants and Non-Public
Warrant Shares, voting as a single group), provided that (i) this Agreement may
not be amended, supplemented or waived so as to increase the Exercise Price,
reduce the number of Warrant Shares issuable upon exercise of any Warrants,
alter the period during which any Warrants may be exercised (except to provide
for a later Expiration Date), or reduce the Put Valuation Amount, in each case
without the consent of the holders of all outstanding Warrants (and, with
respect to any reduction in the Put Valuation Amount, all outstanding Non-Public
Warrant Shares), and (ii) this Section 17 may not be amended or supplemented
without the consent of the holders of all outstanding Warrants and Non-Public
Warrant Shares, voting as a single group, and no waiver of the requirements of
this Section 17 shall be binding upon any such holder without its consent.
Section 18. Specific Performance. The parties agree that irreparable
--------------------
damage will result in the event that the obligations of the Issuer under this
Warrant Agreement are not specifically enforced, and that any damages available
at law for a breach of any such obligations would be inadequate. Therefore, the
holders of the Warrants and/or Non-Public Warrant Shares shall have the right to
specific performance by the Issuer of the provisions of this Warrant Agreement,
and appropriate injunctive relief may be applied for and granted in connection
therewith. The Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law which
may be asserted as a bar to the remedy of specific performance in any action
brought against the Issuer for specific performance of this Warrant Agreement by
the holders of the Warrants and/or Non-Public Warrant Shares. Such remedies and
all other remedies provided for in this Warrant Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which may be available under this Warrant Agreement.
Section 19. Notices.
-------
(a) Any notice or demand to be given or made by the Warrant Holders or the
holders of Warrant Shares to or on the Issuer pursuant to this Warrant Agreement
shall be sufficiently given or made if sent by registered mail, return receipt
requested, postage prepaid, addressed to the Issuer at the Warrant Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall
-36-
<PAGE>
appear on the Warrant Register or the Common Stock or Series B Preferred Stock
registry of the Issuer, as the case may be.
Section 20. Binding Effect. This Warrant Agreement shall be binding upon
--------------
and inure to the sole and exclusive benefit of the Issuer, its successors and
assigns, Creditanstalt, Affiliates of Creditanstalt and the registered holders
from time to time of the Warrants and the Warrant Shares.
Section 21. Continued Validity. A holder of Warrant Shares shall continue
------------------
to be entitled with respect to such Warrant Shares to all rights and subject to
all obligations to which it would have been entitled or subject as a Warrant
Holder under Sections 14 through 24 of this Warrant Agreement. The Issuer will,
at the time of each exercise of any Warrant, in whole or in part, upon the
request of the holder of the Warrant Shares issued upon such exercise thereof,
acknowledge in writing, in form reasonably satisfactory to such holder, its
continuing obligation to afford to such holder all such rights, provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Issuer to afford to such
holder all such rights.
Section 22. Counterparts. This Warrant Agreement may be executed in one or
------------
more separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 23. New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT
------------
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 24. Benefits of This Warrant Agreement. Nothing in this Warrant
----------------------------------
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 25. Voting and Consents to be on a Fully Converted Basis. Wherever
----------------------------------------------------
this Warrant Agreement calls for the written consent or vote of any combinations
of the holders of the Warrants, any of the Warrant Shares and/or the Series B
Preferred Stock, voting as a single group, the Warrants shall be counted as if
they had been exercised for Common Stock and shares of Series B Preferred Stock
shall be counted as if they had been converted to Common Stock.
Section 26. Entire Agreement. This Second Amended and Restated Warrant
----------------
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior negotiations,
understandings and agreements between such parties in respect of such subject
matter, including, without limitation, the Original Warrant Agreement and the
Amended and Restated Warrant Agreement.
[Remainder of page intentionally left blank]
-37-
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement
to be duly executed and delivered by their proper and duly authorized officers,
as of the date and year first above written.
SATELLINK PAGING INC.
By: /s/ Jerry W. Mayfield
--------------------------------
Name: Jerry W. Mayfield
---------------------------
Title: President
--------------------------
Attest: /s/ David C. Massey
---------------------------
Name: David C. Massey
----------------------
Title: Secretary
---------------------
CREDITANSTALT AMERICAN CORPORATION
By:
--------------------------------
Name: Robert M. Biringer
Title: Senior Vice President
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement
to be duly executed and delivered by their proper and duly authorized officers,
as of the date and year first above written.
SATELLINK PAGING INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
---------------------------
Name:
----------------------
Title:
---------------------
CREDITANSTALT AMERICAN CORPORATION
By: /s/ Robert M. Biringer
--------------------------------
Name: Robert M. Biringer
Title: Senior Vice President
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement
to be duly executed and delivered by their proper and duly authorized officers,
as of the date and year first above written.
SATELLINK PAGING INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
-----------------------------
Name:
----------------------
Title:
---------------------
CREDITANSTALT AMERICAN CORPORATION
By: /s/ Robert M. Biringer
--------------------------------
Name: Robert M. Biringer
Title: Senior Vice President
By: /s/ John P. Macukas
--------------------------------
Name: John P. Macukas
---------------------------
Title: Senior Vice President
--------------------------
<PAGE>
EXHIBIT A
To Warrant Agreement
--------------------
FORM OF WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT
TO OTHER PROVISIONS OF THE SECOND AMENDED AND RESTATED WARRANT AGREEMENT, DATED
AS OF NOVEMBER 17, 1995, BETWEEN THE ISSUER AND CREDITANSTALT AMERICAN
CORPORATION, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN PUT RIGHTS
AND EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
DECEMBER 3, 2005
Warrant Certificate
This Warrant Certificate certifies that _______________________, or
registered assigns, is the registered holder of _____ Warrants (the "Warrants")
to purchase Class A Common Stock (the "Common Stock") or Series B Convertible
Preferred Stock (the "Series B Preferred Stock") of SATELLINK PAGING INC., a
Georgia corporation (the "Issuer"). Each Warrant entitles the holder, but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to below, to purchase from the Issuer before 5:00 P.M., New York time, on
December 3, 2005 (the "Expiration Date"), one (1) fully paid and nonassessable
share of the Common Stock or Series B Preferred Stock of the Issuer (the
"Warrant Shares") in the percentages and to the extent set forth in the Warrant
Agreement, at a price (the "Exercise Price") of $____________ per Warrant
payable in lawful money of the United States of America, upon surrender of this
Warrant Certificate, execution of the annexed Form of Election to Purchase and
payment of the Exercise Price at the office of the Issuer at 1100 Northmeadow
Parkway, Suite 100, Roswell, Georgia 30076, or such other address as the Issuer
may specify in writing to the registered holder of the Warrants evidenced hereby
(the "Warrant Office"). In lieu of exercising Warrants pursuant to the
immediately preceding sentence, the Warrant holder shall have the right to
require the Issuer
A-1
<PAGE>
to convert the Warrants, in whole or in part and at any time or times, into
Warrant Shares, by surrendering to the Issuer the Warrant Certificate evidencing
the Warrants to be converted, accompanied by the annexed Form of Notice of
Conversion which has been duly completed and signed. The Exercise Price and
number of Warrant Shares purchasable upon exercise of the Warrants are subject
to adjustment prior to the Expiration Date as set forth in the Warrant
Agreement. In no event shall this Warrant be exercisable for shares of Common
Stock or Series B Preferred Stock which, when aggregated with all other Warrant
Shares (as defined in the Warrant Agreement) previously issued (other than Non-
Attributable Stock (as defined in the Warrant Agreement)) would, upon issuance,
represent in excess of 24.99% of the Equity of the Issuer (defined in the
Warrant Agreement) unless such shares, when issued, would constitute Non-
Attributable Stock (as defined in the Warrant Agreement).
No Warrant may be exercised after 5:00 P.M., New York time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 P.M.,
New York time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned address, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants evidenced
hereby are to be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Second Amended and Restated Warrant Agreement, dated as of November __,
1995, between the Issuer and Creditanstalt American Corporation. Said Second
Amended and Restated Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Issuer and the holders.
A-2
<PAGE>
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
SATELLINK PAGING INC.
By: _______________________________
Name: _________________________
Title: ________________________
(CORPORATE SEAL)
ATTEST:
___________________________
Secretary
A-3
<PAGE>
ANNEX to Form
of Warrant
Certificate
-------------
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___ Warrant Shares* and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $____________ in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
____________________________ whose address is ____________________________ and
that such certificate be delivered to _______________ whose address is
____________________________. If said number of Warrant Shares is less than all
of the Warrant Shares purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of the Warrant Shares be
registered in the name of ____________________________ whose address is
____________________________ and that such Warrant Certificate be delivered to
____________________________ whose address is ____________________________.
Signature:
_________________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date: ______________
* Consisting of:
____ shares of Common Stock
____ shares of Series B Preferred Stock
A-4
<PAGE>
ANNEX to Form
of Warrant
Certificate
-------------
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert Warrants represented hereby
into ___ Warrant Shares* in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
____________________________ whose address is ____________________________ and
that such certificate be delivered to ____________________________ whose address
is ____________________________. If said number of Warrant Shares is less than
all of the Warrant Shares obtainable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of the Warrant Shares
be registered in the name of ____________________________ whose address is
____________________________ and that such Warrant Certificate be delivered to
____________________________ whose address is ____________________________.
Signature:
_________________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date: ______________
* Consisting of:
____ shares of Common Stock
____ shares of Series B Preferred Stock
A-5
<PAGE>
EXHIBIT B to
Warrant Agreement
-----------------
WARRANT REGISTER
----------------
Warrant Original Number Number of Names and
Certificate of Warrants and Warrants Addresses of
Number Warrant Shares Expired Warrant Holders
B-1
<PAGE>
SCHEDULE I
to Warrant Agreement
[list shares with exercise or conversion rights, referenced in definition of
Exempted Securities]
B-2
<PAGE>
SCHEDULE II
to Warrant Agreement
[list shares with registration rights]
B-3
<PAGE>
SCHEDULE I
to Warrant Agreement
Options, Warrants, Etc.
-----------------------
The Company has 7,360 shares of Series A Convertible Preferred Stock
outstanding, which shares are convertible into Class A Common Stock of the
Company.
The Company has issued an option to purchase 1,000 shares of Class A Common
Stock to Daniel D. Lensgraf.
The Company has issued a warrant to purchase 11,325 shares of Class A Common
Stock or, at the option of the holders, Series B Convertible Preferred Stock to
Creditanstalt American Corporation.
<PAGE>
SCHEDULE II
to Warrant Agreement
Warrant held by Creditanstalt American Corporation.
<PAGE>
EXHIBIT 4.5
FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED WARRANT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED WARRANT AGREEMENT (this
"Amendment") is made and entered into as of this 31st day of May 1996 by and
between SATELLINK PAGING INC., a Georgia corporation (the "Issuer"), and CREDIT
ANSTALT AMERICAN CORPORATION, having offices at 245 Park Avenue, New York 10167
("Creditanstalt").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the promissory Note dated as of December 3, 1992 (the
"Original Note") among the Issuer and Creditanstalt-Bankverein, an affiliate of
Creditanstalt (the "Bank"), the Bank made a loan to the Issuer upon the terms
set forth in the Original Note; and
WHEREAS, on December 23, 1992 the Issuer and the Bank entered into a
certain Loan and Security Agreement dated as of December 23, 1992 (the "Loan
Agreement") pursuant to which the loan evidenced by the Original Note was
superseded and replaced by a revolving credit facility; and
WHEREAS, in order to induce the Bank to structure and to provide the loan
pursuant to the Original Note the Issuer executed and delivered a Warrant
Agreement dated as of December 3, 1992 (the "Original Warrant Agreement") and
issued to the Bank 11,951 of the Warrants referred to herein; and
WHEREAS, the Bank assigned the Warrants issued under the Original Warrant
Agreement to Creditanstalt; and
WHEREAS, pursuant to the Consent, Waiver and Third Amendment to Loan and
Security Agreement dated as of December 23, 1994 (the "First Loan Agreement
Amendment") between the Issuer and the Bank, the Issuer and the Bank amended the
Loan Agreement to provide for the loan of additional funds and to make other
changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the First
Loan Agreement Amendment, the Issuer amended and restated the Original Warrant
Agreement in order to provide for additional Warrants and make certain other
changes therein pursuant to that certain Amended and Restated Warrant Agreement
dated as of December 23, 1994 (the "Amended and Restated Warrant Agreement");
and
WHEREAS, in connection with the Amended and Restated Loan and Security
Agreement dated as of November 17, 1995 (as the same may be amended,
supplemented or otherwise modified from time to time, the "restated Loan
Agreement") between the Issuer and the Bank, the Issuer and Creditanstalt
entered into a Securities Purchase Agreement dated as of November
<PAGE>
17, 1995 (the "Securities Purchase Agreement") in order to provide for the
purchase by Creditanstalt of additional capital stock of the Issuer; and
WHEREAS, in connection with and to induce Creditanstalt to enter into the
Securities Purchase Agreement, the Issuer further amended and restated the
Amended and Restated Warrant Agreement pursuant to that certain Second Amended
and Restated Warrant Agreement dated as of November 17, 1995 between Issuer and
Creditanstalt (as the same may be amended, supplemented or otherwise modified
from time to time, the "Warrant Agreement") in order to amend the terms of the
Warrant and make certain changes therein; and
WHEREAS, in connection with the Warrant Agreement, Creditanstalt returned
for cancellation by the Issuer nine (9) Warrant Shares (as defined in the
Warrant Agreement); and
WHEREAS, the Issuer and the Bank wish to enter into a First Amendment to
Amended and Restated Loan and Security Agreement dated of even date herewith (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Restated Loan Agreement Amendment") to provide for the loan of additional
funds and to make certain other changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the
Restated Loan Agreement Amendment, the Issuer has agreed to amend the Warrant
Agreement, as further set forth herein, in order to provide for the issuance of
certain additional Warrants and make certain other changes set forth herein;
NOW, THEREFORE, in consideration of the premises, the terms and conditions
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions. As used in this Amendment, unless otherwise
-----------
defined herein, terms defined in the Warrant Agreement shall have the meaning
set forth therein when used herein.
Section 2. Amendment of Definition of "Exercise Price". The term
------------------------------------------
"Exercise Price", as set forth in Section 1 of the Warrant Agreement, is hereby
deleted in its entirety and the following definition is substituted in lieu
thereof:
"Exercise Price" shall mean the exercise price of a Warrant,
which shall be (i) with respect to the Series A Warrants,
$.01 per Warrant; provided that in no event shall the
Exercise Price of all Series A Warrants exceed $100.00 in
the aggregate, and (ii) with respect to the Series B
Warrants, $200.00 per Warrant.
-2-
<PAGE>
Section 3. Definition of "Officer Options". Section 1 of the Warrant
-------------------------------
Agreement is hereby amended by adding following the definition of "Offer Right"
a new definition of "Officer Options" as follows:
"Officer Options" shall mean the options for 1000
---------------
shares of Common Stock issued to the chief financial officer
of the Issuer and listed on Schedule I hereto, which options
are scheduled to vest at the rate of 1/3 on August 1, 1996,
1/3 on August 1, 1997, and 1/3 on August 1, 1998, subject to
complete vesting of all such options upon the closing of an
initial public offering of the Common Stock of the issuer or
upon the sale of substantially all of the Common Stock or
assets of the Issuer.
Section 4. Definition of "Series A Warrants" and "Series B Warrants".
---------------------------------------------------------
Section 1 of the Warrant Agreement is hereby amended by adding following the
definition of "Series C Preferred Stock" new definitions of "Series A Warrants"
and "Series B Warrants" as follows:
"Series A Warrants" shall mean the stock purchase
-----------------
warrants issued pursuant to this Amended and Restated
Warrant Agreement entitling the record holders thereof to
purchase from the Issuer at the Warrant Office an aggregate
of 13,741 shares of Common Stock or Series B Preferred Stock
(in the percentages and to the extent provided in Section
6(e) and 6(f) hereof and subject in each case to adjustment
as provided in Section 12) at the Exercise Price therefor at
any time after November 17, 1995 and before 5:00 P.M., New
York time, on the Expiration Date; individually, a "Series A
Warrant"."
"Series B Warrants" shall mean the stock purchase
-----------------
warrants issued pursuant to this Amended and Restated
Warrant Agreement entitling the record holders thereof to
purchase from the Issuer at the Warrant Office an aggregate
of 333 shares of Common Stock or Series B Preferred Stock
(in the percentages and to the extent provided in Section
6(e) and 6(f) hereof and subject in each case to adjustment
as provided in Section 12) at the Exercise Price therefor at
any time after the Vesting Date therefor and before 5:00
P.M., New York time, on the Expiration Date; individually, a
"Series B Warrant"."
Section 5. Amendment of Definition of "Warrants". The term "Warrants', as
-------------------------------------
set forth in Section 1 of the Warrant Agreement, is hereby deleting in its
entirety and the following definition is substituted in lieu thereof:
"Warrants" shall mean the Series A Warrants and
--------
Series B Warrants, collectively; individually, a "Warrant".
-3-
<PAGE>
Section 6. Definition of "Vesting Date". Section 1 of the Warrant
----------------------------
Agreement is hereby amended by adding following the definition of "Subsidiary" a
new definition of "Vesting Date" as follows:
"Vesting Date" shall mean have the meaning given such term in
------------
Section 6(a)(ii) hereof.
Section 7. Exercise of Warrants. Section 6 of the Warrant Agreement is
--------------------
hereby amended to delete subsection (a) thereof in its entirety and to
substitute therefor a new subsection (a) to read as follow:
(a) (i) The Series A Warrants evidenced by a
Warrant Certificate shall be exercisable in whole or in part
by the registered holder thereof on any Business Day after
November 17, 1995 and on or before 5:00 P.M., New York time,
on the Expiration Date.
(ii) The Series B Warrants evidenced by a Warrant
Certificate shall be exercisable in whole or in part by the
registered holder thereof on any Business Day after the
Vesting Date applicable to such Series B Warrants and on or
before 5:00 P.M., New York time, on the Expiration Date. The
Series B Warrants shall vest, on a pro rata basis, on each
date (each such date being a "Vesting Date") that all or a
portion of the Officer Options vest, such that as a portion
of the Officer Options vest, an equal percentage of Series B
Warrants shall vest.
Section 8. Exercise of Warrants. Section 6 of the Warrant Agreement is
--------------------
is hereby further amended to delete therefrom clause (B) of the second proviso
to the first sentence of subsection (e) thereof in its entirety and to
substitute therefor a new clause (B) to read as follows:
. . . (B) in no event shall more than 14,074 shares of
Common Stock or Series B Preferred Stock (or a combination
thereof) in the aggregate, subject to adjustment pursuant to
Section 12, be issued upon exercise of the Warrants.
Section 9. Certain Corporate Actions. The Warrant Agreement is hereby
-------------------------
amended by deleting subsection 10(f) in its entirety and substituting therefor a
new subsection 10(f) to read as follows:
(f) The Issuer will take no action with respect to
its capital stock (including without limitation any purchase
of its shares or any combination of shares or reverse stock
split and elimination of fractional shares) if (i) the
effect of such action is to cause the percentage referred to
in clause (ii) below to increase, and (ii) after giving
effect to such
-4-
<PAGE>
action, the sum of the number of Warrant Shares therefore
issued, if any, plus the number of Warrant Shares then
issuable in respect of Warrants then outstanding (determined
without regard to the limitation on exercise set forth in
subsection 6(f) and the number of shares of other capital
stock of the Issuer at any time held by Creditanstalt or its
Affiliates (in each case other than Non-Attributable Stock)
would, upon issuance, represent in excess of 24.99% of the
Equity of the Issuer, unless in any such case the holders of
a majority of the outstanding Warrants and Warrant Shares
shall have given their prior written consent to such action.
Section 10. Amendment to Adjustment Provisions. Subsection 12(j) of the
----------------------------------
Warrant Agreement is hereby amended to delete therefrom the second proviso to
clause (2) of such subsection 12(j) in its entirety and to substitute therefor a
new clause (2) to read as follows:
. . . provided further that in such event, no adjustment in
the number of Warrant Shares purchasable shall be made by
the Issuer if such adjustment would cause the sum of the
number of Warrant Shares therefore issued, if any, plus the
number of Warrant Shares then issuable in respect of
Warrants then outstanding (determined without regard to the
limitation on exercise set forth in subsection 6(f) and the
number of shares of other capital stock of the Issuer at any
time held by Creditanstalt or its Affiliates (other than Non-
Attributable Stock) to represent in excess of 24.99% of the
Equity of the Issuer and in such event, the Issuer shall pay
a cash dividend to all holders of Warrants which dividend
shall be calculated as if the Warrants had been exercised.
Section 11. Cancellation Right. The Warrant Agreement is hereby further
------------------
amended by added at the end of Section 16 thereof a new subsection (j) to read
as follows:
(j) In the event and to the extent that the Officer
Options terminate without having vested, the holder shall
surrender for cancellation the Warrant Certificates
evidencing the Series B Warrants that had not vested prior
to the date the Officer Options terminated. If any Warrant
Certificate evidences both vested and unvested Series B
Warrants, a new Warrant Certificate shall be issued to the
holder surrendering such Warrant Certificate evidencing the
vested Series B Warrants.
Section 12. Exhibit A. The Warrant Agreement is hereby further amended by
---------
deleting EXHIBIT A thereto in its entirety and by substituting therefor a new
EXHIBIT A in the form attached as EXHIBIT A hereto.
Section 13. Representations and Warranties. The Issuer hereby represents
------------------------------
and warrants to Creditanstalt, for the benefit of Creditanstalt and any other
Warrant Holder, as follows:
-5-
<PAGE>
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Georgia, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Amendment and the Warrant Certificates, to issue the Series B Warrants and to
perform its obligations under the Warrant Agreement, as amended by this
Amendment, and the Warrant Certificates, has the corporate power and authority
and legal right to own and lease its properties and is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which it owns or
leases real property or in which the conduct of its business requires such
qualification, except where failure to be so qualified could not be reasonably
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of the Issuer and its Subsidiaries
taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
Amendment and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon the exercise of the Series B Warrants and
the issuance of Common Stock upon conversion of the Series B Preferred Stock
have been duly authorized by all necessary corporate action and do not and will
not violate, or result in a breach of, or constitute a default under, or require
any consent under, or result in the creation of any lien, charge or encumbrance
upon the assets of the Issuer pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Articles of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which their properties are bound.
(c) This Amendment has been duly executed and delivered by the Issuer and
constitutes a legal, valid, binding and enforceable obligation of the Issuer.
When the Series B Warrants and Warrant Certificates representing the Series B
Warrants have been issued as contemplated hereby, (i) the Series B Warrants and
the Warrant Certificates representing the Series B Warrants will constitute
legal, valid, binding and enforceable obligations of the Issuer, except as
enforcebility may be limited by bankruptcy and insolvency, and (ii) the Warrant
Shares, when issued upon exercise of the Series B Warrants in accordance with
the terms of the Warrant Agreement, and the Common Stock, when issued upon
conversion of the Series B Preferred Stock in accordance with the terms of the
Issuer's Articles of Incorporation relating to the Series B Preferred Stock,
will be duly authorized, validly issued, fully paid and nonassessable shares of
the Common Stock and Series B Preferred Stock, as applicable, with no personal
liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 5,000,000 shares
of Class A Common Stock, par value $.01 per share, of which 33,408.504 shares
are issued and outstanding and 20,000 shares of Class B Common Stock, par value
$.01 per share, of which 2,071.318 shares are issued and outstanding, 7,500
shares of Series A Convertible Preferred Stock, par value $.01 per share, of
which 7,360 shares are issued and outstanding, 30,000 shares of Series B
Convertible Preferred Stock, par value $.01 per share, none of which are issued
and
-6-
<PAGE>
outstanding, 3,500 shares of Series C Convertible Preferred Stock, par value
$.01 per share, 3,500 of which are issued and outstanding (which shares are
convertible as of the date hereof into 11,289.985 shares of Common Stock).
Except as set forth on SCHEDULE I to the Warrant Agreement, there are no
outstanding options, warrants subscriptions, rights, convertible or exchangeable
securities or other agreements or plans under which the Issuer may be or become
obligated to issue, sell or transfer shares of its capital stock of other
securities. The Series B Preferred Stock has no voting rights, except as
required by law, and is convertible on a share-for-share basis into Common Stock
of the Issuer. To the Issuer's best knowledge, there are no voting agreements,
voting trusts, proxies or other agreements or understandings with respect to the
voting of any capital stock of the Issuer or any Subsidiary.
(e) Except as set forth on SCHEDULE II to the Warrant Agreement, no holder
of securities of the Issuer has any right to the registration of such securities
under the Securities Act and any applicable state securities law.
Section 14. Expenses. Issuer agrees to pay, immediately upon demand by
--------
Creditanstalt, all costs, expenses, attorneys' fees, and other charges and
expenses incurred by Creditanstalt in connection with the negotiation,
preparation, execution and delivery of this Amendment and any other instrument,
document, agreement or amendment executed in connection with this Amendment.
Section 15. Limitation of Amendment. Except as expressly set forth herein,
-----------------------
this Amendment shall not be deemed to waive, amend or modify any term or
condition of the Warrant Agreement, each of which is hereby ratified and
reaffirmed and shall remain in full force and effect, nor to serve as a consent
to any matter prohibited by the terms and conditions thereof.
Section 16. Counterparts. This Amendment may be executed in any number of
------------
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which,
taken together, will be deemed but one and the same agreement.
Section 17. Governing Law: Jurisdiction. THIS AMENDMENT, AND THE RIGHTS AND
---------------------------
OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW).
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the date and year first written above.
"ISSUER"
SATELINK PAGING INC.
By: /s/ Jerry W. Mayfield
------------------------------------------
Jerry W. Mayfield
President
ATTEST: /s/ Daniel D. Lensgraf
--------------------------------------
Daniel D. Lensgraf
Secretary
(Signatures continued on next page)
<PAGE>
(Signatures continued from previous page)
"CREDITANSTALT"
CREDITANSTALT AMERICAN CORPORATION
By: /s/ Robert M. Biringer
------------------------------------------
Robert M. Biringer
Senior Vice President
By: [SIGNATURE ILLEGIBLE]
------------------------------------------
Name: [SIGNATURE ILLEGIBLE]
Title: Vice President
-9-
<PAGE>
EXHIBIT A
FORM OF [SERIES A/SERIES B] WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT
TO OTHER PROVISIONS OF THE SECOND AMENDED AND RESTATED WARRANT AGREEMENT, DATED
AS OF NOVEMBER 17, 1995, AS AMENDED BY THE FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED WARRANT AGREEMENT, DATED AS OF MAY 31, 1996, EACH BETWEEN THE ISSUER
AND CREDITANSTALT AMERICAN CORPORATION, A COMPLETE AND CORRECT COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN PUT RIGHTS
AND EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
DECEMBER 3, 2005
Warrant Certificate
[Date]
Certificate No.___
This Warrant Certificate certifies that _______________, or registered
assigns, is the registered holder of _______ Warrants (the "Warrants") to
purchase Class A Common Stock (the "Common Stock") or Series B Convertible
Preferred Stock (the "Series B Preferred Stock") of SATELLINK PAGING INC., a
Georgia corporation (the "Issuer"). Each Warrant entitles the holder, but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to below, to purchase from the Issuer before 5:00 P.M., New York time, on
December 3, 2005 (the "expiration Date"), one (1) fully paid and nonassessable
share of the Common Stock or Series B Preferred Stock of the Issuer (the
"Warrant Shares") in the percentages and to the extent set forth in the Warrant
Agreement, at a price (the "Exercise Price") of [$.01/$200.00] per Warrant
payable in lawful money of the United States of America, upon
A-1
<PAGE>
surrender of this Warrant Certificate, execution of the annexed Form of Election
to Purchase and payment of the Exercise Price at the office of the Issuer at
1100 Northmeadow Parkway, Suite 100, Roswell, Georgia 30076, or such other
address as the Issuer may specify in writing to the registered holder of the
Warrants evidenced hereby (the "Warrant Office"). In lieu of exercising Warrants
pursuant to the immediately preceding sentence, the Warrant holder shall have
the right to require the Issuer to convert the Warrants, in whole or in part and
at any time or times, into Warrant Shares, by surrendering to the Issuer the
Warrant Certificate evidencing the Warrants to be converted, accompanied by the
annexed Form of Notice of Conversion which has been duly completed and signed.
The Exercise Price and number of Warrant Shares purchasable upon exercise of the
Warrants are subject to adjustment prior to the Expiration Date as set forth in
the Warrant Agreement. In no event shall this Warrant be exercisable for shares
of Common Stock or Series B Preferred Stock which, when aggregated with all
other Warrant Shares (as defined in the Warrant Agreement) previously issued
(other than Non-Attributable Stock (as defined in the Warrant Agreement)) would,
upon issuance, represent in excess of 24.99% of the Equity of the Issuer
(defined in the Warrant Agreement) unless such shares, when issued, would
constitute Non-Attributable Stock (as defined in the Warrant Agreement).
[SERIES B WARRANTS ONLY:]
[THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON EXERCISE AND CERTAIN SURRENDER AND CANCELLATION RIGHTS MORE
FULLY SET FORTH IN THE WARRANT AGREEMENT.]
No Warrant may be exercised after 5:00 P.M., New York time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 P.M.,
New York time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned address, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants
A-2
<PAGE>
evidenced hereby are to be transferred, to the registered holder hereof, subject
to the limitations provided in the Warrant Agreement, without charge except for
any tax or other governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Second Amended and Restated Warrant Agreement, dated as of November 17,
1995, between the Issuer and Creditanstalt American Corporation, as amended by
the First Amendment to Second Amended and Restated Warrant Agreement, dated as
of May 31, 1996 between Issuer and Creditanstalt American Corporation (as so
amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Issuer and the holders.
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
SATELINK PAGING INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
(CORPORATE SEAL)
ATTEST:
___________________________________
Secretary
A-3
<PAGE>
ANNEX to Form
of Warrant
Certificate
------------------
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___ Warrant Shares" and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $ ____________ in accordance with the terms hereof. The
undersigned requests that a certificate for such Warrant Shares be registered
in the name of _________________________________________________________________
whose address is _____________________________________ and that such certificate
be delivered to ________________ whose address is ____________________________ .
If said number of Warrant Shares is less than all of the Warrant Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of the Warrant Shares be registered in the
name of _____________________________________________________ whose address is
_________________________________________________________ and that such Warrant
Certificate be delivered to ___________________________________ whose address is
____________________________________.
Signature:
_______________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date: __________
. Consisting of:
______ shares of Common Stock
______ shares of Series B Preferred Stock
A-4
<PAGE>
ANNEX to Form
of Warrant
Certificate
--------------
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert Warrants represented hereby
into ___ Warrant Shares* in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
_________________________________________________________________ whose address
is _____________________________________ and that such certificate be delivered
to ________________ whose address is ____________________________ . If said
number of Warrant Shares is less than all of the Warrant Shares obtainable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of the Warrant Shares be registered in the name of
_____________________________________________________ whose address is
_________________________________________________________ and that such Warrant
Certificate be delivered to ___________________________________ whose address is
____________________________________.
Signature:
_______________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date: __________
* Consisting of:
______ shares of Common Stock
______ shares of Series B Preferred Stock
A-5
<PAGE>
EXHIBIT A
FORM OF [SERIES A/SERIES B] WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT
TO OTHER PROVISIONS OF THE SECOND AMENDED AND RESTATED WARRANT AGREEMENT, DATED
AS OF NOVEMBER 17, 1995, AS AMENDED BY THE FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED WARRANT AGREEMENT, DATED AS OF MAY 31, 1996, EACH BETWEEN THE ISSUER
AND CREDITANSTALT AMERICAN CORPORATION, A COMPLETE AND CORRECT COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN PUT RIGHTS
AND EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
DECEMBER 3, 2005
Warrant Certificate
[Date]
Certificate No.___
This Warrant Certificate certifies that __________, or registered
assigns,is the registered holder of _____ Warrants (the "Warrants") to purchase
Class A Common Stock (the "Common Stock") or Series B Convertible Preferred
Stock (the "Series B Preferred Stock") of SATELLINK PAGING INC., a Georgia
corporation (the "Issuer"). Each Warrant entitles the holder, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
below, to purchase from the Issuer before 5:00 P.M., New York time, on December
3,2005 (the "Expiration Date"), one (1) fully paid and nonassessable share of
the Common Stock or Series B Preferred Stock of the Issuer (the "Warrant
Shares") in the percentages and to the extent set forth in the Warrant
Agreement, at a price (the "Exercise Price") of [$.01/$200.00] per Warrant
payable in lawful money of the United States of America, upon
A-1
<PAGE>
surrender of this Warrant Certificate, execution of the annexed Form of Election
to Purchase and payment of the Exercise Price at the office of the Issuer at
1100 Northmeadow Parkway, Suite 100, Roswell, Georgia 30076, or such other
address as the Issuer may specify in writing to the registered holder of the
Warrants evidenced hereby (the "Warrant Office"). In lieu of exercising Warrants
pursuant to the immediately preceding sentence, the Warrant holder shall have
the right to require the Issuer to convert the Warrants, in whole or in part and
at any time or times, into Warrant Shares, by surrendering to the Issuer the
Warrant Certificate evidencing the Warrants to be converted, accompanied by the
annexed Form of Notice of Conversion which has been duly completed and signed.
The Exercise Price and number of Warrant Shares purchasable upon exercise of the
Warrants are subject to adjustment prior to the Expiration Date as set forth in
the Warrant Agreement. In no event shall this Warrant be exercisable for shares
of Common Stock or Series B Preferred Stock which, when aggregated with all
other Warrant Shares (as defined in the Warrant Agreement) previously issued
(other than Non-Attributable Stock (as defined in the Warrant Agreement)) would,
upon issuance, represent in excess of 24.99% of the Equity of the Issuer
(defined in the Warrant Agreement) unless such shares, when issued, would
constitute Non-Attributable Stock (as defined in the Warrant Agreement).
[SERIES B WARRANTS ONLY:]
[THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON EXERCISE AND CERTAIN SURRENDER AND CANCELLATION RIGHTS MORE
FULLY SET FORTH IN THE WARRANT AGREEMENT.]
No Warrant may be exercised after 5:00 P.M., New York time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 P.M.,
New York time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned address, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants
A-2
<PAGE>
evidenced hereby are to be transferred, to the registered holder hereof, subject
to the limitations provided in the Warrant Agreement, without charge except for
any tax or other governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Second Amended and Restated Warrant Agreement, dated as of November 17,
1995, between the Issuer and Creditanstalt American Corporation, as amended by
the First Amendment to Second Amended and Restated Warrant Agreement, dated as
of May 31, 1996 between Issuer and Creditanstalt American Corporation (as so
amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Issuer and the holders.
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto.
SATELLINK PAGING INC.
By: ___________________________
Name:______________________
Title:_____________________
(CORPORATE SEAL)
ATTEST:
_________________________
Secretary
A-3
<PAGE>
ANNEX to Form
of Warrant
Certificate
-------------
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___ Warrant Shares and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $______ in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
_____________________ whose address is ____________________________ and that
such certificate be delivered to ____________________ whose address is
______________. If said number of Warrant Shares is less than all of the Warrant
Shares purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of the Warrant Shares be
registered in the name of ___________________________________________ whose
address is _______________________________________________ and that such Warrant
Certificate be delivered to ___________________________ whose address is
____________________.
Signature:
____________________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:____________
. Consisting of:
______ shares of Common Stock
______ shares of Series B Preferred Stock
A-4
<PAGE>
ANNEX to Form
of Warrant
Certificate
--------------
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert Warrants represented hereby
into ____ Warrant Shares* in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
__________________________________ whose address is ___________________________
and that such certificate be delivered to _____________ whose address is
______________. If said number of Warrant Shares is less than all of the
Warrant Shares obtainable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of the Warrant Shares be
registered in the name of ____________________________ whose address is
_______________ and that such Warrant Certificate be delivered to ____________
whose address is _________________________.
Signature:
_______________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:_____________
. Consisting of:
________ shares of Common Stock
________ shares of Series B Preferred Stock
A-5
<PAGE>
EXHIBIT 4.6
SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED WARRANT AGREEMENT
THIS SECOND AMENDMENT TO THE SECOND AMENDED AND RESTATED WARRANT
AGREEMENT (this "Amendment") is made and entered into as of this 27th day of
June, 1997 by and between SATELLINK COMMUNICATIONS, INC., a Georgia corporation
(the "Issuer") and CREDITANSTALT AMERICAN CORPORATION, having offices at 245
Park Avenue, New York, New York 10167 ("Creditanstalt").
WITNESSETH:
----------
WHEREAS, pursuant to the Promissory Note dated as of December 3, 1992
(the "Original Note") among the Issuer and Creditanstalt-Bankverein, an
affiliate of Creditanstalt (the "Bank"), the Bank made a loan to the Issuer
upon the terms set forth in the Original Note; and
WHEREAS, on December 23, 1992 the Issuer and the Bank entered into a
certain Loan and Security Agreement dated as of December 23, 1992 (the "Loan
Agreement") pursuant to which the loan evidenced by the Original Note was
superseded and replaced by a revolving credit facility; and
WHEREAS, in order to induce the Bank to structure and to provide the
loan pursuant to the Original Note, the Issuer executed and delivered a Warrant
Agreement dated as of December 3, 1992 (the "Original Warrant Agreement") and
issued to the Bank 11,951 of the Warrants hereinafter described; and
WHEREAS, the Bank assigned the Warrants issued under the Original
Warrant Agreement to Creditanstalt; and
WHEREAS, pursuant to the Consent, Waiver and Third Amendment to Loan
and Security Agreement dated as of December 23, 1994 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement Amendment") between the Issuer and the Bank, the Issuer and the Bank
amended the Loan Agreement to provide for the loan of additional funds and to
make other changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the
Loan Agreement Amendment, the Issuer amended and restated the Original Warrant
Agreement in order to provide for additional Warrants and make certain other
changes therein, such amended and restated warrant agreement dated as of
December 23, 1994 (the "Amended and Restated Warrant Agreement"); and
WHEREAS, in connection with the Amended and Restated Loan and Security
Agreement dated as of November 17, 1995 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Restated Loan
Agreement") between the Issuer and the Bank, the Issuer and Creditanstalt
entered into a Securities Purchase Agreement dated as of November 17, 1995
(the "Securities Purchase Agreement") in order to provide for the purchase by
Creditanstalt of additional capital stock of the Issuer; and
<PAGE>
WHEREAS, in connection with and to induce Creditanstalt to enter into
the Securities Purchase Agreement, the Issuer further amended and restated the
Amended and Restated Warrant Agreement pursuant to that certain Second Amended
and Restated Warrant Agreement dated as of November 17, 1995 between Issuer and
Creditanstalt (as the same may be amended, supplemented or otherwise modified
from time to time, the "Warrant Agreement") in order to amend the terms of the
Warrants and make certain changes therein; and
WHEREAS, in connection with the Warrant Agreement, Creditanstalt
returned for cancellation by the Issuer nine (9) Warrant Shares (as defined in
the Warrant Agreement); and
WHEREAS, the Issuer and the Bank entered into a First Amendment to
Amended and Restated Loan and Security Agreement on May 31, 1996 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Restated Loan Agreement Amendment") to provide for the loan of additional
funds and to make certain other changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the
Restated Loan Agreement Amendment, on May 31, 1996, the Issuer further amended
the Warrant Agreement pursuant to that certain First Amendment to Second
Amended and Restated Warrant Agreement to provide for the issuance of certain
additional Warrants and make certain other changes; and
WHEREAS, the Issuer and the Bank entered into a Second Amended and
Restated Loan and Security Agreement on January 31, 1997, as amended by that
certain First Amendment to Second Amended and Restated Loan and Security
Agreement dated as of June __, 1997 (as so amended, the "Second Restated Loan
Agreement") to increase the revolving line of credit and to make certain other
changes therein; and
WHEREAS, in connection with and to induce the Bank to enter into the
Second Restated Loan Agreement, the Issuer has agreed to further amend the
Warrant Agreement, as further set forth herein, in order to adjust certain put
provisions and amend certain regulatory provisions;
NOW, THEREFORE, in consideration of the premises, the terms, and
conditions herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Definitions. As used in this Amendment, unless otherwise
-----------
defined herein, terms defined in the Warrant Agreement shall have the meaning
set forth therein when used herein.
Section 2. Amendment of Definition of "Exempted Securities". The
-----------------------------------------------
definition of "Exempted Securities" as set forth in Section 1 of the Warrant
Agreement is hereby amended by deleting clause (C) thereof in its entirety and
substituting in lieu thereof the following:
(C) 4,000 shares of Class A Common Stock issued to employees of
the Issuer pursuant to options issued to employees of the Issuer
having an
2
<PAGE>
exercise or conversion price per share at least equal to the then
Current Market Price Per Share, and
Section 3. Definition of "Indebtedness," "Mandatory Exchange" and
------------------------------------------------------
"Mandatory Redemption". Section 1 of the Warrant Agreement is hereby amended by
--------------------
adding following the definition of "Expiration Date" new definitions of
"Indebtedness," "Mandatory Exchange" and "Mandatory Redemption" as follows:
"Indebtedness" shall mean, collectively but without duplication,
------------
(a) all indebtedness, obligations or other liabilities for borrowed
money or evidenced by debt securities, debentures, acceptances, notes
or other similar instruments, which would, in accordance with GAAP, be
classified as long-term debt, together with the current maturities
thereof, (b) all indebtedness outstanding under any revolving credit,
line of credit or similar agreement providing for borrowings (and
any extensions or renewals thereof), notwithstanding that any such
indebtedness is created within one year of the expiration of such
agreement; and (c) the principal component of Capital Lease
Obligations, in each case calculated on a consolidated basis for
Issuer and its Subsidiaries in accordance with GAAP.
"Mandatory Exchange" shall have the meaning given to such term
------------------
in subsection 16(d).
"Mandatory Redemption" shall have the meaning given to such
--------------------
term in subsection 16(a)(i).
Section 4. Amendment of Definition of "Put Period". The term "Put Period,"
--------------------------------------
as set forth in Section 1 of the Warrant Agreement, is hereby deleted in its
entirety and the following definition is substituted in lieu thereof:
"Put Period" shall mean the period commencing on November 17,
----------
2001 and ending at 5:00 p.m., New York time, on the Expiration Date,
provided that in the event that, on or before November 17, 2001, all
indebtedness outstanding under the Loans has been repaid in full and
all loan commitments under the Loan Agreement or the Commitment Letter
have been terminated, said period shall commence on the later of (a)
said repayment of indebtedness and termination of the loan commitments
or (b) November 17, 1999.
Section 5. Amendment of Definition of "Put Valuation Amount". The term "Put
------------------------------------------------
Valuation Amount" as set forth in Section 1 of the Warrant Agreement, is
hereby deleted in its entirety and the following definition is substituted in
lieu thereof:
"Put Valuation Amount" shall mean, as of any date, the greater
--------------------
of (x) zero or (y) an amount equal to Operating Cash Flow for the most
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<PAGE>
recently ended twelve months preceding the date of determination
multiplied by ten (10), less the principal amount of Indebtedness of
the Issuer on such date of determination, plus the aggregate amount of
cash and/or cash equivalents held by the Issuer on such date of
determination; provided, however, that if the holders exercise their
Put Right in connection with the termination of the Loan Agreement and
the repayment in full of the Loans thereunder, then, for purposes of
this definition, the amount of Indebtedness used to calculate the
Valuation Amount shall be the principal amount of Indebtedness
outstanding immediately prior to such repayment and termination.
Section 6. Definition of "Trigger Date". Section 1 of the Warrant Agreement
---------------------------
is hereby amended by adding following the definition of "Subsidiary" a new
definition of "Trigger Date" as follows:
"Trigger Date" shall have the meaning given to such term in
------------
subsection 16(a)(i).
Section 7. Duration and Exercise of Warrants. Section 6 of the Warrant
---------------------------------
Agreement is hereby amended to delete subsection (e) thereof in its entirety
and to substitute therefor a new subsection (e) to read as follows:
(e) At the election of a Warrant Holder made at the time of
exercise, the Warrant Shares to be issued upon such exercise may be
either Common Stock or Series B Preferred Stock (or a combination
thereof), provided that the Warrant Holder shall not have the right to
have issued to it upon exercise Common Stock which, when aggregated
with all other shares of Common Stock (other than shares of Non-
Attributable Stock) currently or previously held by or currently
issuable without restriction to the Warrant Holder, will exceed 4.99%
of the then outstanding Common Stock unless such Warrant Holder
certifies that such Warrants have previously been transferred either
(i) in a widely dispersed public offering of the Warrants, or (ii) in
a private placement in which no purchaser, individually or in concert
with others, would have acquired more than 2% of the outstanding
Common Stock if the Warrants so transferred had been exercised for
Common Stock, or (iii) in compliance with Rule 144 (or any rule which
is a successor thereto) of the Securities Act, or (iv) into the
secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0% of the shares outstanding
of the Issuer in any six month period; provided further that (A) if
the Warrant Holder is a bank or an Affiliate of a bank subject to the
provisions of the Bank Holding Company Act of 1956, as amended, such
Common Stock, together with all other shares of Common Stock currently
or previously held by or currently issuable without restriction to
such Warrant Holder and its Affiliates (not including Non-Attributable
Stock), will not exceed
4
<PAGE>
4.99% of the then outstanding Common Stock and (B) in no event shall
more than 14,074 shares of Common Stock or Series B Preferred Stock
(or a combination thereof) in the aggregate, subject to adjustment
pursuant to Section 12, be issued upon exercise of the Warrants. In
the event two or more Warrant Holders attempt to exercise Warrants for
Common Stock simultaneously and, if permitted, such exercises would
cause the 4.99% limitation to be exceeded, then the Issuer shall
notify the Warrant Holders who had attempted to exercise Warrants for
Common Stock and each such Warrant Holder shall be entitled to
exercise for Common Stock only such number of Warrants as shall equal
the product of (i) the number of Warrants the Warrant Holder sought to
exercise for Common Stock times (ii) a fraction, the numerator of
which is the maximum number of Warrants which may be exercised for
Common Stock without exceeding the 4.99% limitation and the
denominator of which is the number of Warrants sought to be exercised
for Common Stock by such Warrant Holders.
Section 8. Duration and Exercise of Warrants. Section 6 of the Warrant
---------------------------------
Agreement is hereby amended to delete subsection (f) thereof in its entirety
and to substitute therefor a new subsection (f) to read as follows:
(f) Notwithstanding the foregoing provisions of this Section
6, in no event shall any Warrant be exercisable for shares of Common
Stock or Series B Preferred Stock which, when aggregated with all
other capital stock of the Issuer (other than shares of Non-
Attributable Stock) currently held or previously held by or currently
issuable without restriction to Creditanstalt or its Affiliates,
would, upon issuance, represent in excess of 24.99% of the Equity of
the Issuer unless such shares, when issued, would constitute Non-
Attributable Stock.
Section 9. Certain Corporate Actions. Section 10 of the Warrant Agreement
-------------------------
is hereby amended to delete subsection (f) thereof in its entirety.
Section 10. Adjustment of Number of Warrant Shares Purchasable. Section
--------------------------------------------------
12 of the Warrant Agreement is hereby amended to delete therefrom the second
proviso of subsection (j)(2) thereof in its entirety and to substitute in lieu
thereof the following:
provided further that in such event, no adjustment in the number of
Warrant Shares purchasable shall be made by the Issuer if such
adjustment would cause the sum of the number of Warrant Shares
theretofore issued, if any, plus the number of Warrant Shares then
issuable in respect of Warrants then outstanding plus the number of
shares of other capital stock of the Issuer at any time held by
Creditanstalt or its Affiliates (other than Non-Attributable Stock) to
represent in excess of 24.99% of the Equity of the Issuer and in such
event, the Issuer shall have the option to either pay a cash dividend
to all holders of Warrants (which dividend shall be
5
<PAGE>
calculated as if the Warrants had been exercised) or redeem shares of
capital stock from Creditanstalt or its Affiliates pursuant to the
Mandatory Redemption provision found in Section 16.
Section 11. Notices to Warrant Notices of Issuances and Dividends.
-----------------------------------------------------
Section 13 of the Warrant Agreement is hereby amended to delete therefrom
subsection (d) thereof in its entirety and to substitute therefor a new
subsection (d) as follows:
(d) The Issuer shall not at any time declare any dividend (other
than dividends payable solely in Common Stock or any series of the
Preferred Stock) on, or make any payment on account of, or make any
other distribution in respect of any shares of any class of stock of
the Issuer, whether in cash or property or obligations of the Issuer
or any of its Subsidiaries without giving all Warrant Holders
written notice of the proposed declaration of such dividend on, or
the making of such payment or other distribution in respect of, the
Common Stock or Preferred Stock at least 10 days prior to the record
date set for such proposed dividend, payment or other distribution.
Section 12. Restrictions on Transfer. Section 14 of the Warrant Agreement
------------------------
is hereby amended by deleting the proviso in subsection (d) and substituting in
lieu thereof the following:
provided, however, that after two (2) years from the date of
issuance of any Warrants (or such shorter period as may be provided
by Rule 144(k) promulgated under the Securities Act), such
restrictions will automatically terminate (without the necessity of
any opinion of counsel) as to such Warrants and as to any Warrant
Shares issued in respect of such Warrants upon exercise of the
Conversion Right set forth in subsection 6(b) above...
Section 13. Mandatory Redemption, Put Rights, Offer Rights and Mandatory
------------------------------------------------------------
Exchange. Section 16 of the Warrant Agreement is hereby deleted in its entirety
--------
and the following shall be substituted in lieu thereof:
Section 16. Mandatory Redemption, Put Rights, Offer Rights and
--------------------------------------------------
Mandatory Exchange.
------------------
(a)(i) Subject to the limitations hereinafter set forth, (A)
if the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any
combination of shares or reverse stock split and elimination of
fractional shares) which would cause the capital stock currently or
previously held by or currently issuable without restriction to
Creditanstalt and its Affiliates (not including Non-Attributable
Stock) to exceed 24.99% of the Equity of the Issuer, then prior to
or simultaneously with such action, the Issuer shall purchase from
Creditanstalt and/or its Affiliates such number of Warrants, Warrant
Shares or other
6
<PAGE>
shares of capital stock as will reduce the shares of capital stock currently or
previously held by or currently issuable without restriction to Creditanstalt
and its Affiliates (not including Non-Attributable Stock) to 24.99% of the
Equity of the Issuer (any such mandatory purchase being herein called a
"Mandatory Redemption") and (B) any holder of Warrants and/or Warrant Shares
shall have the right at any time, and from time to time, during the Put Period,
at its option, upon written notice to the Issuer, to require the Issuer to
purchase all or a portion of the Warrants and/or Warrant Shares held by such
holder (any such right being herein called a "Put Right"). The price to be paid
to the holder upon a Mandatory Redemption or the exercise of a Put Right or an
Offer Right (as hereinafter defined) shall be an amount equal to the Put
Valuation Amount at the date the event causing such Mandatory Redemption occurs
or the date the notice exercising such Put Right or Offer Right is given to the
Issuer or the holder, as the case may be (the "Trigger Date"), multiplied by a
fraction the denominator of which is the number of issued and outstanding
shares of Common Stock of the Issuer at the Trigger Date, calculated on a fully
diluted basis in, accordance with generally accepted accounting principles, and
the numerator of which is (Y) the aggregate number of shares of Common Stock of
the Issuer (i) comprising the Warrant Shares to be purchased by the Issuer,
and/or (ii) issuable upon exercise of the Warrants to be purchased by the
Issuer, and/or (iii) issuable upon conversion of the Series B Preferred Stock
comprising the Warrant Shares to be purchased by the Issuer, and/or (iv)
issuable upon conversion of the Series B Preferred Stock issuable upon exercise
of the Warrants to be purchased by the Issuer (assuming Series B Preferred
Stock, rather than Common Stock, is then issuable under such Warrants), and/or
(v) comprising any other shares of capital stock of the Issuer then held or
previously held by Creditanstalt or its Affiliates (excluding Non-Attributable
Stock) (the "Put Price").
(ii) The completion of all purchases and sales of Warrants and Warrant
Shares pursuant to a Mandatory Redemption or the exercise of Put Rights and
Offer Rights shall take place on the thirtieth (30th) day following the
respective Trigger Date, unless another date is mutually agreed upon by the
Issuer and the selling holder (the "Put Closing Date"). The Put Prices for all
such purchases and sales pursuant to exercises of Offer Rights shall be paid by
the Issuer to the selling holder in immediately available funds on the Put
Closing Date. The Put Prices for all purchase and sales pursuant to Mandatory
Redemptions and exercises of Put Rights shall be paid by the Issuer either (A)
in immediately available funds or (B) by issuing to the selling holder a
promissory note (the "Note") in the principal amount of such Put Price payable
to the selling holder, which Note shall accrue interest at a rate per annum
equal to the higher of 9% or the rate publicly announced from time to time in
New York by Creditatistalt as its "prime rate." The Note shall be governed by
the laws of the State of New York and shall be secured by all of the Warrants
and/or Warrant Shares so repurchased and purchased and
7
<PAGE>
will be subordinate in right of payment only to the Issuer's then outstanding
bank indebtedness. The principal amount of the Note shall be payable in twelve
(12) equal quarterly installments, together with interest accrued on the
principal balance to the respective payment date, beginning on the first day of
the fourth full calendar month following such Put Closing Date and continuing
on the first day of each third calendar month thereafter to the first day on
the twenty-fifth (25th) full calendar month following the Put Closing Date.
The principal amount of the Notes may be prepaid without any penalty. The Put
Price shall be paid against delivery of certificates representing the Warrants
and/or Warrant Shares to be purchased, duly endorsed for transfer to the
Issuer.
(b) Subject to the limitations hereinafter set forth, at any time
prior to the effectiveness of a registration statement filed by the Issuer with
the Commission with respect to a public offering of shares of Common Stock, any
holder of Warrants or Warrant Shares shall not sell or transfer any such
Warrants or Warrant Shares without first offering, by written notice to the
Issuer, to sell such Warrants or Warrant Shares to the Issuer in accordance
with the terms of this Section 16. Issuer shall have thirty (30) days from the
date of such notice to exercise its right to purchase such Warrants or Warrant
Shares by written notice to such holder (such right being herein called an
"Offer Right"). If the Issuer does not so exercise its right to purchase such
Warrants or Warrant Shares within thirty (30) days from the date of holder's
notice hereunder, such holder shall be free to sell or otherwise transfer such
Warrants or Warrant Shares to any person, without restriction as to price or
terms and free and clear of any further restrictions on sale or transfer under
this subsection 16(b), at any time during the one hundred eighty (180) day
period commencing sixty (60) days after holder's notice to Issuer under this
subsection 16(b). Notwithstanding the foregoing, the provisions of this
subsection 16(b) shall not apply to any sale or transfer of Warrants or Warrant
Shares (i) to any Affiliate of Creditanstalt; or (ii) pursuant to an effective
registration statement filed by the Issuer with the Commission.
(c) The Put Prices for all purchases and sales of Warrants and Warrant
Shares pursuant to Mandatory Redemptions or exercises of Put Rights or Offer
Rights shall be determined and calculated in accordance with subsection 16(a)
by the Issuer's regularly engaged independent accountants. The Issuer shall
cause such accountants to deliver to the Issuer and the selling holder, not
later than 15 days prior to the completion of each purchase and sale under
subsection 16(a), a written statement, signed by such accountants, setting
forth in reasonable detail the respective purchase price and the calculation
thereof and stating that such calculation was based on the books and records of
the Issuer and was made and delivered pursuant to this Section 16.
8
<PAGE>
(d) If the Issuer takes any action with respect to its capital
stock (including without limitation any purchase of its shares or any
combination of shares or reverse stock split and elimination of
fractional shares) which would cause the Common Stock currently or
previously held by or currently issuable, without restriction to
Creditanstalt and its Affiliates (other than shares of Non-
Attributable Stock) to exceed 4.99% of the aggregate number of issued
and outstanding shares of Common Stock, prior to or simultaneously
with such action, the Issuer shall exchange such portion of Common
Stock for Series B Preferred Stock as will reduce the shares of Common
Stock currently or previously held by or currently issuable without
restriction to Creditanstalt and its Affiliates (not including "Non
Attributable Stock") to 4.99% of the aggregate number of issued and
outstanding shares of Common Stock (a "Mandatory Exchange").
(e) As used in this Section 16, "Warrant Shares" shall include
all shares of Common Stock and/or Series B Preferred Stock and other
securities of the Issuer or its Affiliates issued to holders of the
Issuer's Common Stock and/or Series B Preferred Stock in respect of
stock dividends, stock splits and other distributions and any
recapitalizations, to the extent the same were not included in any
adjustment of the Warrant Shares issuable upon exercise of Warrants
pursuant to Section 12 hereof.
(f) The Put Rights described in subsection 16(a)(i)(B) shall
terminate upon the effectiveness of a registration statement filed by
the Issuer with the Commission with respect to a public offering of
shares of Common Stock with proceeds paid to the Issuer and any
selling shareholders of not less than $10,000,000.
(g) The certificates representing the Warrants and the Warrant
Sham shall bear a legend indicating that the Warrants and Warrant
Shares are subject to the provisions of this Section 16.
(h) Notwithstanding any provision of this Warrant Agreement to
the contrary, all Warrants and Warrant Sham which are sold pursuant to
an effective registration statement under the Securities Act shall,
upon such sale, cease to be subject to the provisions of this Section
16.
Section 14. Representations and Warranties. The Issuer hereby represents
------------------------------
and warrants to Creditanstalt, for the benefit of Creditanstalt and any other
Warrant Holder, as follows:
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Georgia, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Amendment, to issue the Warrants and to perform its obligations under this
Amendment, has the corporate power and authority and legal right to own
9
<PAGE>
and lease its properties and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where failure to be so qualified could not be reasonably expected to
have a material adverse effect on the business, properties, financial condition
or results of operations of the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
Amendment, the issuance of the Warrants and the issuance of the Warrant Shares
upon the exercise of the Warrants and the issuance of Common Stock upon
conversion of the Series B Preferred Stock have been duly authorized by all
necessary corporate action and do not and will not violate, or result in a
breach of, or constitute a default under, or require any consent under, or
result in the creation of any lien, charge or encumbrance upon the assets of
the Issuer pursuant to, any law, statute, ordinance, rule, regulation, order or
decree of any court, governmental body or regulatory authority or
administrative agency having jurisdiction over the Issuer or its Subsidiaries
or the Issuer's Articles of Incorporation or any contract, mortgage, loan
agreement, note, lease or other instrument binding upon the Issuer or its
Subsidiaries or by which their properties are bound.
(c) This Amendment has been duly executed and delivered by the Issuer and
constitutes a legal, valid, binding and enforceable obligation of the Issuer.
When the Warrants and Warrant Certificates have been issued as contemplated
hereby, (i) the Warrants and the Warrant Certificates will constitute legal,
valid, binding and enforceable obligations of the Issuer, except as
enforceability may be limited by bankruptcy and insolvency, and (ii) the
Warrant Shares, when issued upon exercise of the Warrants in accordance with
the terms hereof, and the Common Stock, when issued upon conversion of the
Series B Preferred Stock in accordance with the terms of the Issuer's Articles
of Incorporation relating to the Series B Preferred Stock, will be duly
authorized, validly issued, fully paid and nonassessable shares of the Common
Stock and Series B Preferred Stock, as applicable, with no personal liability
to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 5,000,000 shares
of Class A Common Stock, par value $.01 per share, of which 34,944.171 shares
are issued and outstanding and 20,000 shares of Class B Common Stock, par value
$.01 per share, of which 535.651 share are issued and outstanding, 7,500 shares
of Series A Convertible Preferred Stock, par value $.01 per share, of which
7,360 shares are issued and outstanding, 30,000 shares of Series B Convertible
Preferred Stock, par value $.0l per share, none of which are issued, and
outstanding, 3,500 shares of Series C Convertible Preferred Stock, par value
$.01 per share, 3,500 of which are issued and outstanding. Except as set forth
on Schedule I of the Warrant Agreement and for options granted to certain
principals of the Breckenridge Group, Inc. (collectively, the "Breckenridge
Options"), there are no outstanding options, warrants, subscriptions, rights,
convertible or exchangeable securities or other agreements or plans under which
the Issuer may be or become obligated to issue, sell or transfer shares of its
capital stock of other securities. The Series B Preferred Stock has no voting
rights, except as required by law, and is convertible on a share-for-share
basis into Common Stock of the Issuer. To the Issuer's best knowledge, except
for that certain Stockholders Agreement, dated August 1, 1988, by and between
the Issuer and the Stockholders named in Annex A thereto, there are no voting
agreements, voting trusts,
10
<PAGE>
proxies or other agreements or understandings with respect to the voting of any
capital stock of the Issuer or any Subsidiary.
(e) Except as set forth (i) on Schedule II of the Warrant Agreement, (ii)
in the Breckenridge Options and (iii) in the designation of the Issuer's Series
C Preferred Stock, no holder of securities of the Issuer has any right to the
registration of such securities under the Securities Act and any applicable
state securities law.
Section 15. Expenses. Issuer agrees to pay, immediately upon demand by
--------
Creditanstalt, all costs, expenses, attorneys' fees, and other charges and
expenses incurred by Creditanstalt in connection with the negotiation,
preparation, execution and delivery of this Amendment and any other instrument,
document, agreement or amendment executed in connection with this Amendment.
Section 16. Limitation of Amendment. Except as expressly set forth herein,
-----------------------
this Amendment shall not be deemed to waive, amend or modify any term or
condition of the Warrant Agreement, each of which is hereby ratified and
reaffirmed and shall remain in full force and effect, nor to serve as a consent
to any matter prohibited by the terms and conditions thereof.
Section 17. Counterparts. This Amendment may be executed in any number of
------------
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which,
taken together, will be deemed but one and the same agreement.
Section 18. Governing Law: Jurisdiction. THIS AMENDMENT, AND THE RIGHTS
---------------------------
AND OBLIGATIONS OF PARTIES HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW).
[Remainder of page intentionally left blank]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
under seal as of the date and year first above written.
"ISSUER"
SATELLINK COMMUNICATIONS, INC.
By: /s/ Jerry W. Mayfield
------------------------------------
Jerry W. Mayfield
President
"CREDITANSTALT"
CREDITANSTALT AMERICAN CORPORATION
By:
------------------------------------
Robert M. Biringer
Senior Vice President
By:
------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this under seal as
of the date and year first above written.
"ISSUER"
SATELLINK COMMUNICATIONS, INC.
By:
-------------------------------------
Jerry W. Mayfield
President
"CREDITANSTALT"
CREDITANSTALT AMERICAN CORPORATION
By: /s/ Robert M. Biringer
-------------------------------------
Robert M. Biringer
Senior Vice President
By: /s/ Craig Stann
-------------------------------------
Name: Craig Stann
Title: Senior Associate
<PAGE>
EXHIBIT 4.7
[The Company has entered into agreements substantially similar in all
material respects to this agreement. A schedule of such similar agreements is
attached to this exhibit.]
SECURITIES PURCHASE AGREEMENT
Satellink Paging Inc.
Series C Convertible Preferred Stock
This Securities Purchase Agreement (this "Agreement") is made between Satellink
Paging Inc., a Georgia corporation (the "Seller"), and the undersigned
prospective purchaser (the "Purchaser") who is purchasing hereby shares (the
"Series C Shares") of the Seller's Series C Convertible Preferred Stock, which
has the rights, preferences and limitations set forth in the Designation of
Terms of Series C Convertible Preferred Stock attached hereto as Exhibit A. The
purchase price per share is $1,000.00. This Agreement is being entered into in
accordance with and subject to the terms and conditions described in this
Agreement.
In consideration of the premises and the mutual representations, warranties,
covenants and promises contained herein and other good and valuable
consideration, the parties hereto agree as follows:
A. SALE OF SERIES C SHARES AND CONSIDERATION
-----------------------------------------
The Purchaser hereby agrees to purchase the number of Series C Shares
indicated on the signature page hereto at a purchase price of $1,000.00
per Series C Share. Payment for the Series C Shares will be made by
wire transfer in accordance with the following instructions:
ABA#: Wachovia Bank of Georgia. ABA routing # 061000010
----------------------------------------------------------------
ACCOUNT #: for credit to account # 18-716-416
----------------------------------------------------------------
NAME: Wachovia Bank -- Satellink Paging Inc, Operating Account
----------------------------------------------------------------
B. REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
The Seller hereby represents and warrants to the Purchaser that:
(1) The Seller is a corporation duly incorporated and validly
existing and in good standing under the laws of Georgia.
(2) The Seller is duly authorized to execute and deliver this
Agreement.
(3) This Agreement is a legal, valid and binding obligation of the
Seller, enforceable
<PAGE>
against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors, rights generally
or general principles of equity (whether applied in an action at law or
in equity).
(4) The execution, delivery and performance of this Agreement will not
result in any violation of, be in conflict with, or constitute a
default under, with or without the passage of time or the giving of
notice; (i) any provision of the Articles of Incorporation, or By-laws
of the Seller, as amended, a copy of which By-laws are attached as
Exhibit C hereto (the "By-Laws"), or the articles of incorporation or
by-laws of any subsidiary of the Seller; (ii) any provision of any
judgment, decree or order to which the Seller or any of its
subsidiaries is a party or by which their respective property is bound;
(iii) any material contract, obligation or commitment to which the
Seller or any of its subsidiaries is a party or by which their
respective property is bound; or (iv) any statute, rule or governmental
regulation applicable to the Seller or any of its subsidiaries.
(5) No consent, approval, order or authorization of any court,
administrative agency, or other governmental entity or any other person
is required by or with respect to the Seller in connection with the
execution and delivery of this Agreement by the Seller; provided,
however, that the consent of the holders of the Series A Convertible
Preferred Stock is required in order to establish the senior priority
of the Series C Preferred Stock to such Series A Convertible Preferred
Stock, and such consent is a condition precedent to the consummation of
this Agreement.
(6) The authorized capital of the Seller consists of:
(a) Class A Common Stock. 5,000,000 shares of Common Stock (the
--------------------
"Class A Common Stock"). The Seller has reserved 10,860 shares
of Class A Common Stock for issuance upon conversion of the
Series A Preferred Stock and the Series C Convertible Preferred
Stock into Class A Common Stock;
(b) Class B Common Stock. 20,000 shares of Common Stock (the "Class
--------------------
B Common Stock");
(c) Series A Convertible Preferred Stock. 7,500 shares of Series A
------------------------------------
Convertible Preferred Stock. Each share of Series A Convertible
Preferred Stock is convertible into shares of Class A Common
Stock on the terms and conditions contained in the Seller's
Articles of Incorporation, a copy of which are attached as
Exhibit B hereto (the "Articles of Incorporation");
(d) Series B Convertible Preferred Stock. 30,000 shares of Series B
------------------------------------
Convertible Preferred Stock. Each share of Series B Convertible
Preferred Stock is convertible into shares of Common Stock on
the terms and conditions contained in the Seller's Articles of
Incorporation; and
2
<PAGE>
(e) Series C Convertible Preferred Stock. 3,500 shares of Series C
------------------------------------
Convertible Preferred Stock. Each share of Series C Convertible
Preferred Stock is convertible into shares of Class A Common
Stock or Series B Convertible Preferred Stock on the terms and
conditions contained in the Seller's Articles of Incorporation.
(7) Except for the conversion rights of the holders of the Series A
Preferred Stock, as set forth in the Articles of Incorporation and
except as set forth on Schedule I attached hereto, there are no
outstanding warrants, options, conversion privileges, preemptive rights
or other rights or agreements to purchase or otherwise acquire or issue
any equity securities of Seller.
(8) The Seller will not, as of the Closing, own or control or have any
investment in any corporations, associations or other business entities
other than those set forth in Schedule II hereto.
(9) The Series C Shares, when issued, sold and delivered in accordance with
the terms of and for the consideration expressed in this Agreement,
shall be duly and validly issued, fully-paid and non-assessable, and
neither the Seller nor the holder thereof shall be subject to any
preemptive or similar rights with respect thereto, except as set forth
in the Articles of Incorporation.
(10) Except for obligations under this Agreement, the contracts or
agreements listed on Schedule III, and except as disclosed in the
financial statements of the Seller, neither the Seller nor any of its
subsidiaries have any material debts, liabilities or obligations, fixed
or contingent, of whatever nature or character.
(11) Neither the Seller nor any of its subsidiaries is in violation of any
applicable local, state or federal law, ordinance, regulation, order,
injunction or decree, or any other requirement of any governmental
body, agency or authority or court binding on either of them, or
relating to their property or business, which violation would
materially adversely affect the assets or financial condition of the
Seller or any of its subsidiaries.
(12) There is no litigation, suit, action, proceeding, investigation or
indictment pending, or to the knowledge of the Seller, threatened,
before any court, public board or commission, against the Seller or any
of its subsidiaries. Further, there are no judgments, orders, writs,
injunctions, decrees, indictments or information, grand jury subpoenas
or civil investigative demands, plea agreements, stipulations or awards
(whether rendered by a court, commission, arbitration tribunal or
judicial, governmental or administrative department, body, agency
administrator or official, grand jury or any other form for the
resolution of grievances) against or relating to the Seller or
involving any of its property or business wherein an unfavorable
decision, ruling or finding would materially adversely affect the
assets or financial condition of the Seller or any of its subsidiaries.
(13) All federal and all material state, local and foreign tax returns and
reports
3
<PAGE>
required to be filed by the Seller or any of its subsidiaries have been
filed, and all taxes, interest, assessments or deficiencies, fees and
other governmental charges upon the Seller or any of its subsidiaries,
or upon any of their properties, income or franchises, shown in such
returns and on assessments received by the Seller or any of its
subsidiaries to be due and payable or claimed to be due and payable by
any governmental authority, have been paid except where the failure to
so pay any such amount would not have a material adverse effect on the
assets or financial condition of Seller. Neither the Seller nor any of
its subsidiaries is a party to any pending action or proceeding, nor,
to the knowledge of the Seller, is any such action or proceeding
threatened by any governmental authority for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies,
and no claim for assessment or collection of taxes, interest,
penalties, assessments or deficiencies has been asserted against the
Seller. No material issue has been raised by any federal, state, local
or foreign taxing authority as a result of an audit or examination of
the tax returns, reports, business or of the Seller or any of its
subsidiaries which has not been settled or resolved. Neither the Seller
nor any of its subsidiaries has agreed to extend the statute of
limitations with respect to any tax period or the review or audit of
any tax return. Neither the Seller nor any of its subsidiaries has made
or agreed (or been required) to make any adjustment or change in
accounting method, which adjustment or change has not been concurred in
by its independent certified public accountants. To the knowledge of
the Seller, no material special charges, penalties, fines, liens, or
similar encumbrances have been asserted against the Seller or any of
its subsidiaries with respect to the payment or failure to pay any
taxes which have not been paid or received without further liability to
the Seller. Proper and accurate amounts have been withheld by the
Seller and any of its subsidiaries from their respective employees for
all periods in material compliance with the withholding provisions of
applicable federal, state and local tax laws.
(14) Schedule III constitutes a full and complete list of each material
contract or agreement to which the Seller or any of its subsidiaries is
a party, by which the Seller or any of its subsidiaries is bound or
under which the Seller or any or its subsidiaries has any rights. To
the knowledge of the Seller, no third party has raised any claims,
dispute or controversy with respect to any of such contracts of the
Seller or any of its subsidiaries, and neither the Seller nor any of
its subsidiaries has received notice or warning of alleged material
nonperformance, delay or delivery or other noncompliance by the Seller
or any of its subsidiaries with respect to their obligations under any
of such contracts, which, in any case, would materially adversely
affect the business or financial condition of the Seller or any of its
subsidiaries.
(15) The Seller is not in violation of any term or provision of its Articles
of Incorporation or By-Laws, and, to the knowledge of the Seller,
neither the Seller nor any of its subsidiaries is in default under any
term or provision of any indebtedness, mortgage, indenture, contract,
agreement or judgment to which the Seller or any of its subsidiaries is
a party or by which the Seller or any of its subsidiaries is bound,
wherein a default would have a material adverse effect on
4
<PAGE>
the assets or financial condition of the Seller and its subsidiaries
taken as a whole.
(16) Schedule IV constitutes a full and complete fist of all policies of
insurance to which the Seller is a party or is a beneficiary or named
insured, and the Seller has in full force and effect, with all premiums
due thereon paid, the policies of insurance set forth therein.
(17) Subject to the accuracy of each of the Purchaser's representations in
Section D of this Agreement, the offer, sale and issuance of the Shares
constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities
Act"), Section 5 of the Georgia Securities Act of 1973, as amended
(O.C.G.A. Section 10-5-5) (the "Georgia Act"), Section 51:709(15) of
the Louisiana Securities Law, as amended (the "Louisiana Law") and
Section 705 of the Regulations adopted thereunder, and the securities
acts and laws of any other applicable jurisdictions.
(18) The Seller is under no contractual obligation to register under the
Securities Act any of its presently outstanding securities or any of
its securities that may subsequently be issued, except as set forth in
Schedule V hereto.
(19) There has been no declaration or payment by the Seller of any dividend,
nor any other distribution by the Seller of any assets of any kind, to
any of its stockholders except dividends on Series A Convertible
Preferred Stock.
(20) Except as set forth in Schedule VI hereto, neither the Seller nor any
of its subsidiaries is a party to or bound by any currently effective
employment contracts, deferred compensation agreements, bonus plans,
profit sharing plans, retirement agreements or other employee
compensation agreements.
(21) Neither the Seller's nor any of its subsidiaries's employees are
represented by any labor unions, and, to the Seller's knowledge, no
union organization campaign in progress. To the knowledge of the
Seller, none of the officers of the Seller or any of its subsidiaries
intend to terminate employment with the Seller or any of its
subsidiaries.
(22) The Seller has not incurred and will not incur, directly or indirectly,
any liability for any brokerage or finders' fees or agents commissions
or any similar charges in connection with this Agreement or any
transactions contemplated hereby.
(23) Except for (i) transactions entered into in the normal course of
business and (ii) the agreements listed on Schedule VII, none of the
officers or directors of the Seller is a party to any transactions with
the Seller or any of its subsidiaries.
(24) The Articles of Incorporation and By-Laws of the Seller are in the
forms set forth as Exhibits B and C, respectively. The minute books of
the Seller and any of its subsidiaries heretofore made available to the
Purchaser and its counsel for inspection contain accurate records in
all material respects of all meetings and
5
<PAGE>
other corporation actions taken by the directors and stockholders of
the Seller or any of its subsidiaries, as the case may be.
(25) No statement by the Seller contained in this Agreement, or the attached
exhibits or schedules or any written certificate furnished or to be
furnished to any of the Purchasers pursuant to this Agreement when read
together contains any known untrue statement of a material fact or
omits to state any material fact necessary to make the statements
contained therein or herein, in view of the circumstances under which
they were made, not misleading.
(26) All representations and warranties made herein which are to the
"knowledge" of the Seller or words of similar import are made only to
the extent of the actual as opposed to constructive knowledge of the
officers of the Seller.
(27) If the Seller fails or refuses to comply with or otherwise breaches the
agreements or representations contained in this Agreement in any
material respect and does not correct such failure or breach within 60
days after written notice of such failure or breach is delivered to the
Seller, then in addition to all other remedies available to the
Purchaser, the Purchaser may demand that the Seller repurchase all
Series C Shares acquired by the Purchaser at a price equal to the
liquidation price plus accrued dividends.
C. AGREEMENTS OF THE SELLER
------------------------
The Seller hereby covenants and agrees with the Purchaser as follows:
(1) For purposes of this Agreement:
(a) "Affiliate" of any Person (which shall include an
individual, a partnership, a limited liability company, a
corporation, a trust, a joint venture, an incorporated organization
or a government or any department or agency thereof) means any
other Person directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person. For
purposes of this definition, a Person shall be deemed to control
another Person if such first Person possesses directly or
indirectly the power to (i) vote 10% or more of the securities
having ordinary voting power for the selection of directors of such
Person or (ii) direct, or cause the direction of, the management
and policies of the second Person, whether through the ownership of
voting securities, by contract or otherwise. In addition, as to
Purchaser, "Affiliate" shall include any partnership a majority of
the partners of which are officers, directors, employees or
Affiliates of Purchaser, and as to the Seller, "Affiliate" shall
not include Purchaser or any Affiliate of Purchaser which is a
holder of any Securities of the Seller.
(b) "Closing" means the date, time and place of the purchase
and sale of the
6
<PAGE>
Series C Shares.
(c) "Closing Date" means the earlier of (i) November 17, 1995 or (ii) a date
specified by the Purchaser by notice to the Seller no less than two business
days prior thereto or (iii) such other date as the Purchaser and Seller shall
mutually agree.
(d) "Equity" of the Seller means the total shareholders' equity of the
Seller, determined in accordance with generally accepted accounting principles.
The amount of Equity of the Seller represented by any Series C Shares shall be
determined by subtracting from total Equity of the Seller the aggregate amount
distributable as a preference upon dissolution of the Seller to the holders of
any then outstanding shares of any class or series of preferred stock (other
than the Series C Shares), dividing the balance obtained by the number of
shares of Class A Common Stock then outstanding or issuable upon conversion of
any convertible preferred stock then outstanding, and multiplying that per
share amount by the aggregate number of such Series C Shares.
(e) "Non-Attributable Stock" means shares of Class A Common Stock which have
been previously sold, or were issued pursuant to the exercise of warrants which
were previously sold, either (a) in a widely dispersed public offering; (b) in
a private placement in which no purchaser, individually or in concert with
others, acquired warrants, Class A Common Stock, Series A Convertible Preferred
Stock, Series B Preferred Stock or any combination thereof, representing (upon
conversion, in the case of any convertible preferred stock, and upon exercise
for Class A Common Stock, in the case of any warrants) more than 2 % of the
outstanding Class A Common Stock; (c) in compliance with Rule 144 (or any rule
which is a successor thereto) of the Securities Act or (d) into the secondary
market in a market transaction executed through a registered broker-dealer in
blocks of no more than 2.0% of the shares outstanding of the Seller in any six
month period.
(f) "Regulated Investor" means the Purchaser or any of its Affiliates or
holder of any Series C Shares that is (or that is a subsidiary of a bank
holding company) subject to the various provisions of the Bank Holding Company
Act of 1956, as amended, or any similar, related or successor laws and
regulations regulating banks or bank holding companies, and that holds any
Securities of the Seller, so long as such Regulated Investor holds such
Securities; and
(g) "Regulatory Problem" means (A) any set of facts or circumstances wherein
it has been asserted by any governmental regulatory agency (or the Purchaser
reasonably believes that such assertion will be made) that the Purchaser is not
entitled to hold, or exercise any material right with respect to, all or any
portion of the Securities or (B) when the Purchaser and its Affiliates would
own, control or have power (including voting rights) over a greater quantity of
Securities of any kind than are permitted under any applicable law or
regulation or any requirement of any governmental authority;
7
<PAGE>
(h) "Securities" means, for purposes of this Agreement, the Seller's
capital stock or any options, warrants or other Securities which are
directly or indirectly convertible into, or exercisable or exchangeable
for, the Seller's capital stock (whether or not such derivative Securities
are issued by the Seller). Whenever a reference herein to Securities
refers to any derivative Securities, the rights of the Purchaser shall
apply to such derivative Securities and all underlying Securities directly
or indirectly issuable upon conversion, exchange or exercise of such
derivative Securities; and
(i) Capitalized terms used in this Agreement and not defined herein
shall have the meanings given to such terms in the Designation of Terms
of Series C Convertible Preferred Stock attached hereto as Exhibit A.
(2) The Seller shall furnish to each Purchaser:
(a) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Seller, either (A) a copy of the Seller's
Annual Report on Form 10-K (or any successor form) and any documents
incorporated by reference into such form for the prior fiscal year, as
filed with the Securities and Exchange Commission (the "Commission") under
the Securities Exchange Act of 1934 (the "Exchange Act"), or (B) a copy of
the consolidated balance sheet of the Seller and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statement of income and retained earnings and of cash flow for such year,
setting forth in each case in comparative form the figures for the
previous year certified by Arthur Andersen & Co., L.L.C. or by another
firm of nationally recognized independent certified public accountants,
and the consolidated balance sheet of the Seller and its consolidated
Subsidiaries as at the end of such fiscal year, showing inter-company
eliminations, and the related consolidating statements of income and
retained earnings and changes in financial position of the Seller and its
consolidated Subsidiaries for such year, showing inter-company
eliminations, setting forth in each case in comparative form the figures
for the previous fiscal year, certified by Arthur Andersen & Co., L.L.C.
or by another firm of nationally recognized independent certified public
accountants;
(b) as soon as available but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year
of the Seller, either (A) a copy of the Seller's Quarterly Report on Form
10-Q (or any successor form) for the preceding fiscal quarter, as filed
with the Commission under the: Exchange Act, or (B) the unaudited
consolidated balance sheet of the Seller and its consolidated Subsidiaries
as at the end of each such quarter and the related unaudited consolidated
statements of income and retained earnings and of cash flow of the Seller
and its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date setting forth in each case in comparative
form the figures for the same period of the previous fiscal year,
certified by the chief financial or accounting officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments);
8
<PAGE>
(c) promptly after the sending or filing thereof, as the case may be,
copies of any reports, certificates, budgets, definitive proxy statements
or financial statements which Seller sends to its shareholders and copies
of any regular periodic and special reports or registration statements
which Seller files with the Commission (or any governmental agency
substituted therefor), including, but not limited to, any report or
registration statement which Seller files with any national securities
exchange;
(d) no later than April 30 of each year, a certificate of the chairman,
president or chief financial officer of the Seller setting forth the
number of shares of Class A Common Stock or Series B Preferred Stock
purchasable upon conversion of each share of Series C Shares as of the end
of the preceding fiscal year and a description in reasonable detail of any
adjustments in such number during the preceding fiscal year; and
(e) if such holder is a Regulated Investor, such financial statements
and other information as such Regulated Investor may from time to time
reasonably request for the purpose of assessing the Seller's financial
condition for purposes of complying with applicable laws or regulations;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied
consistently throughout the periods reflected therein (except as approved
by such accountants and officer and disclosed therein).
(3) The Purchaser shall have the right to require the Seller to convert the
Series C Shares into Class A Common Stock or Series B Preferred Stock of
the Seller (the "Conversion Right") as provided in the Designation of
Terms of Series C Convertible Preferred Stock attached hereto as Exhibit
A.
(4) In the event that a Regulated Investor determines that it has a Regulatory
Problem, the Seller agrees to use commercially reasonable efforts to take
all such actions as are reasonably requested by such Regulated Investor in
order (i) to effectuate and facilitate any transfer by such Regulated
Investor of any Securities of the Seller then held by such Regulated
Investor to any Person designated by such Regulated Investor, and (ii) to
permit such Regulated Investor (or any Affiliate of such Regulated
Investor) to exchange all or any portion of the voting Securities then
held by such Person on a share-for-share basis for shares of a class of
non-voting Securities of the Seller, which non-voting Securities shall be
identical in all respects to such voting Securities, except that such new
Securities shall be non-voting and shall be convertible into voting
Securities on such terms as are requested by such Regulated Investor in
light of regulatory considerations then prevailing, and (iii) to continue
and preserve, to the extent not prohibited by any other provision of this
Agreement or by applicable law, the voting interests with respect to the
Seller provided for by virtue of such Regulated Investor's ownership of
the Seller's voting Securities. Such actions may include, but shall not
necessarily be limited to:
9
<PAGE>
(a) entering into such additional agreements as are requested
by such Regulated Investor to permit any Person(s) designated by
such Regulated Investor and reasonably acceptable to the Seller
to exercise any voting power which is relinquished by such
Regulated Investor upon any exchange of voting Securities for
non-voting Securities of the Seller; and
(b) entering into such additional agreements, adopting such
amendments to the certificate of incorporation and by-laws of the
Seller and taking such additional actions as are reasonably
requested by such Regulated Investor in order to effectuate the
intent of the foregoing.
In the event a Regulated Investor has the right to acquire any of
the Seller's Securities (as the result of a preemptive offer, pro
rata offer or otherwise), at such Regulated Investor's request the
Seller will offer to sell to such Regulated Investor non-voting
Securities on the same terms as would have existed had such
Regulated Investor acquired the Securities so offered and
immediately requested their exchange for non-voting Securities
pursuant to subsection C(4) above.
In the event that any Subsidiary of the Seller ever offers to sell
any of its Securities to a Regulated Investor, then the Seller will
cause such Subsidiary to enter into agreements with such Regulated
Investor substantially similar to those set forth in the above
provisions hereof.
D. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants to the Seller that:
(1) The Purchaser has been furnished with and has carefully read this
Agreement and is familiar with and understands the terms of the
purchase of the Series C Shares. The Purchaser has carefully
considered and has, to the extent the Purchaser believes such
discussion necessary, discussed with the Purchaser's professional
legal, tax, accounting and financial advisors the suitability of an
investment in the Series C Shares for the Purchaser's particular tax
and financial situation and has determined that the Series C Shares
being subscribed for by the Purchaser are a suitable investment for
the Purchaser.
(2) The Purchaser acknowledges that (i) the Purchaser has had the right
to request copies of any documents, records, and books pertaining to
this investment and (ii) any such documents, records and books which
the Purchaser requested have been made available for inspection by
the Purchaser, the Purchaser's attorney, accountant or adviser(s).
(3) The Purchaser and/or the Purchaser's attorney, accountant or
adviser(s) has/have had a reasonable opportunity to ask questions of
and receive answers from a person or persons acting on behalf of the
Seller concerning the purchase of the Series C Shares and all such
questions have been answered to the full satisfaction
10
<PAGE>
of the Purchaser.
(4) The Purchaser is not subscribing for series C Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, or similar media or broadcast over television
or radio or presented at any seminar or meeting.
(5) If the Purchaser is a natural person, the Purchaser has reached the age of
majority in the state in which the Purchaser resides, has adequate means
of providing for the Purchaser's current financial needs and
contingencies, is able to bear the substantial economic risks of an
investment in the Series C Shares for an indefinite period of time, has no
need for liquidity in such investment and, at the present time, could
afford a complete loss of such investment.
(6) The Purchaser or the Purchaser's purchaser representative, as the case may
be, has had such knowledge and experience in financial, tax and business
matters so as to enable the Purchaser to utilize the information made
available to the Purchaser in connection with the purchase of the Series C
Shares to evaluate the merits and risks of an investment in the Series C
Shares and to make an informed investment decision with respect thereto.
(7) The Purchaser will not sell or otherwise transfer the Series C Shares
without registration under the Securities Act or applicable state
securities laws or an exemption therefrom. None of the Series C Shares
have been registered under the Securities Act or under the securities laws
of any state. The Purchaser represents that the Purchaser is purchasing
the Series C Shares for the Purchaser's own account, for investment and
not with a view to resale or distribution except in compliance with the
Securities Act. The Purchaser is aware that there is currently no market
for the Series C Shares. The Purchaser is aware that an exemption from the
registration requirements of the Securities Act pursuant to Rule 144
promulgated thereunder is not presently available; and except as provided
in Section F hereof, the Seller has no obligation to register the Series
C Shares subscribed for hereunder, or any securities issuable upon
conversion of such Series C Shares, or to make available an exemption from
the Registration requirements pursuant to such Rule 144 or any successor
rule for resale of the Series C Shares or any such underlying securities.
(8) The Purchaser recognizes that investment in the Series C Shares involves
substantial risks, including the possible loss of the entire amount of
such investment.
(9) The Purchaser acknowledges that the certificate representing the Series C
Shares and any of the Class A Common Stock or Series B Preferred Stock
issued upon conversion thereof shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT
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BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), THE GEORGIA
SECURITIES ACT OF 1973, AS AMENDED (THE "GEORGIA ACT"), THE
LOUISIANA SECURITIES LAW, AS AMENDED (THE "LOUISIANA LAW"), OR
ANY OTHER STATE SECURITIES LAWS (COLLECTIVELY, THE "STATE
SECURITIES ACTS") AND HAVE BEEN OFFERED AND SOLD IN RELIANCE
UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACTS, INCLUDING, BUT NOT NECESSARILY LIMITED TO, THE
EXEMPTIONS CONTAINED IN SECTIONS 4(2) AND 4(6) OF THE
SECURITIES ACT AND RULE 505 OF REGULATION D THEREUNDER AND
SECTION 10-5-9(13) OF THE GEORGIA ACT AND SECTION 51:709(15)
OF THE LOUISIANA LAW AND SECTION 705 OF THE REGULATIONS
ADOPTED THEREUNDER. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN ANY MANNER EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
STATE SECURITIES ACTS; OR (II) UPON THE DELIVERY TO SATELLINK
PAGING INC. OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
SATELLINK PAGING INC., IN ITS SOLE DISCRETION, THAT SUCH
PROPOSED SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION WILL NOT
BE IN VIOLATION OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES ACTS."
The restrictions referred to in such legend shall terminate and cease to
be effective with respect to any Series C Shares or Class A Common Stock
which are registered under the Securities Act or upon receipt by the
Seller of an opinion of counsel reasonable acceptable to the Seller in
form and substance reasonably satisfactory to the Seller to the effect
that the Series C Shares or Class A Common Stock may be freely resold
without registration under the Securities Act and without compliance
with volume, manner of sale or current information requirements imposed
by Rule 144 under the Securities Act. Whenever such restrictions shall
so terminate, the holders of such Series C Shares or Class A Common
Stock shall be entitled to receive from the Seller, at the Seller's
expense, certificates representing such Series C Shares or Class A
Common Stock not bearing the legend set forth above.
(10) The Purchaser is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D promulgated pursuant to the Act ("Regulation
D"), by virtue of
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the fact that (mark applicable choice or choices):
(i) Individual accredited investors must initial at least one of the
----------------------------------------------------------------
following two statements:
------------------------
(A) The Purchaser had individual income of more than $200,000 (or
$300,000 including income attributable to spouse) in each of
the most recent two years and reasonably expects to have an
individual income in excess of $200,000 (or $300,000 including
income attributable to spouse) for the current year.
(B) The Purchaser has an individual net worth, or a combined net
worth with the Purchaser's spouse, in excess of $1,000,000. For
purposes of this Agreement, "individual net worth" means the
excess of total assets as fair market value, including homes
and personal property, over total liabilities.
(ii) Accredited partnerships, corporations, trusts or other equity
-------------------------------------------------------------
investors must initial one or more of the following three statements.
---------------------------------------------------------------------
(A) All of the individual equity owners of the Purchaser qualify as
accredited investors under statements (i)(A) or (i)(B) above.
(B) The Purchaser is a bank, savings and loan, or insurance company
as defined in the Act, or is a corporation, partnership, or
business trust with total assets in excess of $5,000,000.
(C) The Purchaser otherwise meets the definition of an accredited
investor set forth in Rule 501(a) of Regulation D, as follows
(explain briefly and contact the Seller prior to submission to
verify accredited investor status):
(11) If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust or estate: (i) such partnership,
corporation, trust or estate has the full legal right and power and
all authority and approval required (a) to execute and deliver, or
authorize execution and delivery of, this Stock Purchase Agreement and
all other instruments executed and delivered by or on behalf of such
partnership, corporation, trust or estate in connection with the
purchase of its Series C Shares, (b) to delegate authority pursuant to
power of attorney and (c) to purchase and hold such Series C Shares,
(ii) the signature of the party signing on behalf of such partnership,
corporation, trust or estate is binding upon such partnership,
corporation, trust or estate; and (iii) such partnership, corporation
or trust has not been formed for the specific purpose of acquiring
such Series C Shares, unless each beneficial owner of such entity is
qualified as an accredited investor within the meaning of Rule 501(a)
of Regulation D
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promulgated under the Securities Act and has submitted information
substantiating such individual qualification.
(12) If the Purchaser is a retirement plan or is investing on behalf of a
retirement plan, the Purchaser acknowledges that investment in the
Series C Shares poses risks including the inability to use losses
generated by an investment in the Series C Shares to offset taxable
income.
(13) This Agreement is a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally or general principles of equity (whether
applied in an action at law or in equity).
(14) Neither the execution of this Agreement nor the consummation by it of
the transactions contemplated hereby will constitute a violation of or
default under, or conflict with, any material contract, commitment,
agreement, understanding or restriction of any kind to which it is a
party or by which it is bound.
(15) No consent, approval, order or authorization of any court,
administrative agency, or other governmental entity or any other
person is required by or with respect to the Purchaser in connection
with the execution and delivery of this Agreement by the Purchaser.
E. UNDERSTANDINGS.
---------------
The Purchaser understands, acknowledges and agrees with the Seller as
follows:
(1) Except as required by law, the Purchaser is not entitled to cancel,
terminate or revoke this Agreement or any agreements of the Purchaser
hereunder and that this Agreement and such other agreements shall
survive the death or disability of the Purchaser and shall be binding
upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and
permitted assigns. If the Purchaser is more than one person, the
obligations of the Purchaser hereunder shall be joint and several and
the agreements, representations, warranties and acknowledgements
herein contained shall be deemed to be made by and be binding upon
each such person and his/her heirs, executors, administrators,
successors, legal representatives and permitted assigns.
(2) No federal or state agency has made any finding or determination as to
the terms of this purchase of Series C Shares for investment nor any
recommendation or endorsement of the Series C Shares.
(3) The offer and sale of the Series C Shares hereby is intended to be
exempt from registration under the Securities Act by virtue of
Sections 4(2) and 4(6) of the Securities Act and the provisions of
Regulation D thereunder, which is in part
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dependent upon the truth, completeness and accuracy of the statements
made by the Purchaser herein.
(4) There is no public or other market for the Series C Shares, and no
such public or other market may ever develop. There can be no
assurance that the Purchaser will be able to sell or dispose of the
Series C Shares. It is understood that in order not to jeopardize the
exempt status of the purchase of the Series C Shares under Section
4(2) of the Securities Act and Regulation D, any transferee may, at a
minimum, be required to fulfill the investor suitability requirements
thereunder.
(5) The Purchaser acknowledges that the Seller's Series B Preferred Stock,
into which the Series C Shares may be converted as provided herein,
ranks junior to all other classes of preferred stock of the Seller
and generally represents a common stock equivalent.
F. REGISTRATION RIGHTS
-------------------
(1) Upon the written demand of any Purchaser to the Seller (a "Demand") at
any time and from time to time after the earlier of (i) six months
following an initial public offering of securities by the Seller or
(ii) three years after the Closing Date requesting that the Seller
effect the registration under the Securities Act of Series C Shares or
of Class A Common Stock issued upon conversion thereof (hereinafter
collectively referred to as "Registrable Securities") of such
Purchaser, the Seller will promptly give written notice (a "Demand
Notice") of such Demand to all other Purchasers. Each other Purchaser
may request that the Seller effect the registration under the
Securities Act of additional Registrable Securities of such Purchaser
by delivering written notice to the Seller specifying such number of
Registrable Securities within 20 days of receipt of the Demand Notice.
In the event that the Seller receives requests for the registration
under the Securities Act of at least an aggregate of one-fifth of the
outstanding Registrable Securities, as adjusted pursuant to the
Designation of Terms of Series C Convertible Preferred Stock attached
hereto as Exhibit A (or if less than an aggregate of one-fifth of the
Registrable Securities are outstanding, the remainder of the
Registrable Securities then outstanding) within such 20-day period the
Seller shall give written notice (a "Registration Notice") to all
Purchasers that the Seller will be filing a registration statement
pursuant to this subsection F(1) and will thereupon use its
commercially reasonable efforts promptly to effect the registration
under the Securities Act of (i) the Registrable Securities which
Purchasers have requested to be registered within 20 days of the
Demand Notice, and (ii) additional Registrable Securities which
Purchasers have requested to be registered within 10 days of the
Registration Notice. Promptly within 20 days of the Registration
Notice, the Seller will notify all Purchasers whose Registrable
Securities are to be included in the registration of the number of
additional Registrable Securities requested to be included therein by
the other Purchasers. If the registration of which the Seller gives
notice pursuant to this subsection F(1) is for an
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<PAGE>
underwritten public offering, only Registrable Securities which are to
be included in the underwriting may be included in such registration,
and the selling Purchasers shall, after reasonable consultation with
the Seller, have the right to designate the managing underwriter(s) in
any such underwritten public offering with the consent of the Seller
(which consent shall not be unreasonably withheld). Holders who
include Registrable Securities in a registration pursuant to
subsection F(l) shall bear the cost of any underwriters' discounts and
commissions relating to their Registrable Securities which are sold.
Purchasers shall be limited to two (2) demand registrations under this
subsection F(l); provided, however, that if such demand registration
is made prior to an initial public offering by the Seller, the Seller
may, by written notice to Purchasers, convert such demand registration
into a primary offering by the Seller, and the Seller may include
Class A Common Stock to be issued by the Seller in a registration
pursuant to the provisions of subsection F(3) (provided that any
reduction in the number of securities shall be on a pro rata basis)
and such registration will not constitute a demand registration under
this subsection F(l).
(2) The Seller is obligated to effect not more than two (2) demand
registrations under subsection F(l) and, with respect to each such
registration, the Seller shall bear all expenses other than
underwriting discounts and commissions, if any, in connection with
registrations, filings or qualifications pursuant to subsection F(l),
including without limitation all registration, filing and
qualification fees, printers' and accounting fees, the fees and
disbursements of counsel for the Seller and the fees and disbursements
of one counsel for the selling Purchasers, provided that (i) a
registration will not constitute a demand registration under
subsection F(l) until it has been declared effective under the
Securities Act, (ii) no Person other than holders of Registrable
Securities shall have any right to have securities included in any
registration under subsection F(l); provided, however, that the
Purchaser acknowledges that the Seller has the right, as provided in
subsection F(l), to convert a demand registration that would be an
initial public offering by the Seller into a primary offering by the
Seller with the Purchaser having piggyback registration rights with
respect thereto.
(3) If, at any time after the date hereof, the Seller proposes to register
any of its securities under the Securities Act (except pursuant to a
registration statement filed on Form S-8 or Form S-4 or such other
form as shall be prescribed under the Act for substantially similar
purposes), it will at each such time give written notice (which notice
shall state the intended method of disposition thereof by the
prospective sellers) to all holders of outstanding Registrable
Securities of its intention to do so and the proposed minimum offering
price per Registrable Securities and upon the written request of any
holder thereof given within 10 days after the Seller's giving of such
notice, the Seller will use its reasonable best efforts to effect the
registration of the Registrable Securities which it shall have been so
requested to register by including the same in such registration
statement all to the extent required to permit the sale or other
disposition thereof in accordance with the intended method of sale or
other disposition given in each such request. If the registration of
which the Seller gives notice pursuant to this
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<PAGE>
subsection F(3) is for an underwritten public offering, only
Registrable Securities which are to be included in the underwriting
may be included in such registration, and the Seller shall have the
right to designate the managing underwriter(s) in any such
underwritten public offering; provided that (i) the Seller shall use
its commercially reasonable efforts to cause the managing
underwriter(s) to include the Registrable Securities requested to be
included in the registration in the underwriting; (ii) if the managing
underwriter(s) advises the holders of the Registrable Securities and
all other Persons seeking to include securities of the Seller held by
them in such registration statement ("Other Security Holders") in
writing that the total amount of securities which they and the Seller
intend to include in such offering is sufficiently large to materially
and adversely affect the success of such offering, the amount of
securities to be offered shall be reduced (A) in the case of an
exercise of the Seller's right to convert a demand registration to a
primary offering, pro rata among the Seller and the holders of
Registrable Securities, or (B) in any other case, pro rata among the
holders of the Registrable Securities and all Other Security Holders
(based upon the amount of securities each such Person, other than the
Seller, sought to include in the offering) to the extent necessary to
reduce the total amount of securities to be included in the offering
to the amount recommended by such managing underwriter(s) (which
amount may be zero, if so recommended by such managing underwriter(s).
Any registration statement filed pursuant to this subsection F(3) may
be withdrawn at any time at the discretion of the Seller.
(4) If a registration under subsection F(1) or F(3) shall be in connection
with an underwritten public offering, each holder of Registrable
Securities shall be deemed to have agreed by acquisition of such
Registrable Securities not to effect any sale or distribution,
including any sale pursuant to Rule 144 or Rule 144A, of any
Registrable Securities, and not to effect any such sale or
distribution of any other equity security of the Seller or of any
security convertible into or exchangeable or exercisable for any
equity security of the Seller (other than as part of such underwritten
public offering) within seven days before or 180 days after the
effective date of such registration statement (and the Seller hereby
also so agrees and agrees to cause each holder of any equity
security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Seller purchased from the
Seller at any time other than in a public offering, so to agree).
(5) As a condition to the inclusion of a holder's Registrable Securities
in any registration statements, each such holder of Registrable
Securities requesting registration thereof will furnish to the Seller
such information with respect to such holder as is required to be
disclosed in the registration statement (and the prospectus included
therein) by the applicable rules, regulations and guidelines of the
Commission. Failure of a holder to furnish such information or
agreement shall not affect the obligation of the Seller under this
Section F to the remaining holders who furnish such information.
(6) If and whenever the Seller is required under this Section F to use its
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<PAGE>
commercially reasonable efforts to effect the registration of Registrable
Securities under the Securities Act, the Seller shall:
(a) as expeditiously as possible and subject to the limitations set
forth in subsection F(3), prepare and file with the Commission a registration
statement on the appropriate form with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing;
(b) as expeditiously as possible, prepare and file with the Commission
such amendments and supplements (including post-effective amendments and
supplements) to the registration statement covering such Registrable Securities
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective and usable for resale for a period
necessary to complete the distribution of such securities, but in no event in
excess of 24 months plus any period during which the holders of Registrable
Securities are obligated to refrain from selling because the Seller is required
to amend or supplement the prospectus under subsection F(6)(d), and to comply
with the provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such registration statement during such
period in accordance with the intended method of disposition of the sellers set
forth therein;
(c) as expeditiously as possible, furnish to each seller of such
Registrable Securities registered, or to be registered under the Securities
Act, and to each underwriter, if any, of such Registrable Securities such
number of copies of a prospectus and preliminary prospectus in conformity with
the requirements of the Securities Act, and such other documents as such seller
or underwriter may reasonably request in order to facilitate the public sale or
other disposition of such Registrable Securities
(d) as expeditiously as possible, notify each seller of such
Registrable Securities if, at any time when a prospectus relating to such
Registrable Securities, is required to be delivered under the Securities Act,
any event shall have occurred as a result of which the prospectus then in use
with respect to such Registrable Securities would include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or for any
other reason it shall be necessary to amend or supplement such prospectus in
order to comply with the Securities Act and prepare and furnish to all sellers
as promptly as possible, and in any event within ninety (90) days of such
notice, a reasonable number of copies of a supplement to or an amendment of
such prospectus which will correct such statement or omission or effect such
compliance;
(e) as expeditiously as possible, use its reasonable best efforts to
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as such seller shall reasonably request and
do any and all other acts and things which may be reasonably necessary to
enable such seller to
18
<PAGE>
consummate the public sale or other disposition in each such jurisdiction of
the Registrable Securities owned by such seller and included in such
registration statement, provided that the Seller shall not be required to
consent to the general service of process or to qualify to do business in any
jurisdiction where it is not then qualified;
(f) use its reasonable best efforts to keep the holders of such
Registrable Securities informed of the Seller's best estimate of the earliest
date on which such registration statement or any post-effective amendment or
supplement thereto will become effective and will promptly notify such holders
and the managing underwriters if any, participating in the distribution
pursuant to such registration statement of the following: (A) when such
registration statement or any post-effective amendment or supplement thereto
becomes effective or is approved; (B) of the issuance by any competent
authority of any stop order suspending the effectiveness or qualification of
such registration statement or the prospectus then in use or the initiation or
threat of any proceeding for that purpose; and (C) of the suspension of the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction;
(g) make available to its security holders, as soon as practicable, an
earnings statement covering a period of at least twelve months which satisfies
the provisions of Section II (a), of the Securities Act and Rule 158
thereunder;
(h) cooperate with the sellers of such Registrable Securities and the
underwriters, if any, of such Registrable Securities; give each seller of such
Registrable Securities, and the underwriters, if any, of such Registrable
Securities and their respective counsel and accountants, such access to its
books and records and such opportunities to discuss the business of the Seller
with its officers and independent public accountants as shall be necessary to
enable them to conduct a reasonable investigation within the meaning of the
Securities Act and, in the event that Registrable Securities are to be sold in
an underwritten offering, enter into an underwriting agreement containing
customary representations and warranties, covenants, conditions and
indemnification provisions, including without limitation the furnishing to the
underwriters of a customary opinion of independent counsel to the Seller and a
customary "comfort" letter from the Seller's independent public accountants;
(i) provide a CUSIP number for all Registrable Securities not later
than the effective date of the registration statement;
(j) as to the two (2) permitted demand registrations under subsection
F(1) and all registrations under subsection F(3), pay all costs and expenses
incident to the performance and compliance by the Seller of this Section F,
including without limitation (A) all registration and filing fees; (B) all
printing expenses; (C) all fees and disbursements of counsel and independent
public accountants for the Seller; (D) all blue sky fees and expenses
(including fees and expenses of counsel in connection with blue sky surveys);
(E) all transfer taxes; (F) the entire expense
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of any special audits required by the rules and regulations of the
Commission; (G) the cost of distributing prospectuses in preliminary and
final form as well as any supplements thereto and (H) the fees and expenses
of one counsel for the holders of the Registrable Securities being
registered; and
(k) as to the first registration under subsection F(l) which is in
respect of an underwritten offering, as expeditiously as possible, take
such actions as the underwriters reasonably request in order to expedite or
facilitate the disposition of the Registrable Securities to be included in
such offering (including, without limitation, effecting a stock split,
stock dividend or a combination of shares of Common Stock).
(7) (i) The Seller will indemnify and hold harmless each seller of
Registrable Securities, each director, officer, employee and agent of each
seller, and each other person, if any, who controls such seller within the
meaning of the Securities Act or the Exchange Act from and against any and
all losses, claims, damages, liabilities and legal and other expenses
(including costs of investigation) caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act, any prospectus or preliminary prospectus contained therein
or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses are caused
by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to such seller and furnished to
the Seller in writing by such seller expressly for use therein, and
provided that the Seller will not be liable to any Person who participates
as an underwriter in the offering or sale of Registrable Securities or any
other Person, if any, who controls such underwriter within the meaning of
the Securities Act under the indemnity agreement in this subsection F(7)
with respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the
extent that any such loss, claim, damage or liability of such underwriter
or controlling Person results from the sale by such underwriter of
Registrable Securities to a Person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Seller has previously furnished copies
thereof to such underwriter, or from a sale to a Person in a state where
the offering has not been registered or qualified, if the Seller has
notified the seller and any underwriter involved in such sale of the states
where the offering has been registered or qualified.
(ii) It shall be a condition to the obligation of the Seller to effect
a registration of Registrable Securities under the Securities Act pursuant
hereto that (X) each seller, severally and not jointly, indemnify and hold
harmless the Seller and each person, if any, who controls the Seller within
the meaning of the Securities Act or the Exchange Act to the same extent as
the indemnity from the
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Seller in the foregoing paragraph, but only with reference to any breach by
such seller of any agreement between such seller, and the Seller with
respect to the offering and with reference to information relating to such
seller furnished to the Seller in writing by such seller expressly for use
in the registration statement, any prospectus or preliminary prospectus
contained therein or any amendment or supplement thereto and (Y) each
seller, in the event that Registrable Securities are to be sold in an
underwritten offering, enters into an underwriting agreement containing
customary representations and warranties, covenants, conditions and
indemnification provisions.
(iii) In case any claim shall be made or any proceeding (including any
governmental investigation) shall be instituted involving any indemnified
party in respect of which indemnity may be sought pursuant to this
subsection F(7), such indemnified party shall promptly notify the
indemnifying party in writing of the same, provided that failure to notify
the indemnifying party shall not relieve it from any liability it may have
to an indemnified party otherwise than under this subsection F(7). The
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party in such proceeding and shall pay the fees and
disbursements of such counsel. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (A) the indemnifying party shall have failed to retain counsel
for the indemnified party as aforesaid, (B) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel or (C) representation of such indemnified party by the counsel
retained by the indemnifying party would, in the reasonable opinion of the
indemnified party, be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding, provided that the Seller shall not be
liable for the fees and disbursements of more than one additional counsel
for all indemnified parties. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
(8) In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in subsection F(7) is due in
accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Seller or the applicable
sellers, as the case may be, shall contribute to the aggregate losses,
claims, damages and liabilities incurred (including legal or other expenses
reasonably incurred in connection with the investigating or defending of
same) by the other and for which such indemnification was sought. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by each
party from the offering of the securities included in the registration
statement (taking into account the portion of the proceeds of the
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offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances; provided, however, that (i) in no case shall any seller
of Registrable Securities be required to contribute any amount in
excess of the total public offering price of the Registrable Securities
sold by him and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this subsection F(8),
each person who controls any seller of Registrable Securities or the
Seller shall have the same rights to contribution as such seller or the
Seller. Any party entitled to contribution shall, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against the Seller or the seller of Registrable Securities under
this subsection F(8), notify the Seller or such seller, as the case may
be, but the omission to so notify the Seller or such seller, as the
case may be, shall not relieve it from any other obligation it may have
hereunder or otherwise.
(9) After the date hereof, the Seller shall not grant to any holder of
securities of the Seller any registration rights which have a priority
greater than or equal to those granted to holders of Registrable
Securities pursuant to this Section F without the prior written consent
of the holders of at least a majority of the aggregate outstanding
Registrable Securities, voting as a single group.
G. CONDITIONS OF PURCHASER'S OBLIGATIONS AT THE CLOSING
-------------------------------------------------
The obligations of each Purchaser under this Agreement to purchase Series C
Shares at the Closing are subject to the fulfillment at or before the
Closing of each of the following conditions, any of which may be waived in
writing by such Purchaser:
(1) The representations and warranties of the Seller contained in this
Agreement shall be true, correct and complete as of the Closing.
(2) The Seller shall have performed or fulfilled all agreements,
obligations and conditions contained herein required to be performed or
fulfilled by the Seller at the Closing.
(3) Such Purchaser shall be satisfied with its due diligence investigation
of the affairs of the Seller, including, without limitation, its review
of the interim unaudited financial statements of the Seller at and for
the two (2) months ended September 30, 1995. For purposes of this
subsection, a Purchaser shall be deemed to be satisfied with its due
diligence investigation unless, on or prior to November 14, 1995, such
Purchaser gives written notice to the Seller that such Purchaser is not
so satisfied and is electing not to consummate the transactions
contemplated
22
<PAGE>
hereby, which notice shall specify, with reasonable particularity,
the basis of such election. No waiver of rights for breach of
representations arises from such due diligence investigation.
(4) All corporate and legal proceedings taken by the Seller in
connection with the transactions contemplated hereby and all
documents and papers relating to such transactions shall be
satisfactory to the Purchasers, in the reasonable exercise of the
judgment of the Purchasers.
(5) The Purchasers shall have received a legal opinion from counsel to
the Seller substantially in the form set forth in Exhibit D hereto.
(6) The Articles of Incorporation and Bylaws of the Seller shall read in
their entirety substantially as set forth in Exhibits B and C
hereto, respectively, and shall be in full force and effect.
(7) The Seller shall have obtained all necessary Blue Sky permits and
qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Series C Shares.
(8) The Seller shall have delivered to the Purchaser on the date of
Closing:
(a) An Officer's Certificate dated the Closing Date, stating
that the conditions set forth in subsections (1), (2) and (6)
have been satisfied;
(b) Copies of the Articles of Incorporation and Bylaws of the
Seller, each certified by an officer of the Seller;
(c) Copies of the resolutions of the Seller's Board of
Directors, authorizing the transactions contemplated hereby; and
(d) Such other documents relating to the transactions
contemplated by this Agreement as such Purchaser or such
Purchaser's counsel may reasonably request.
(9) No Regulated Investor shall acquire any Series C Shares which, when
aggregated with all other Securities of the Seller then held by a
Regulated Investor or its Affiliates, would upon issuance represent
in excess of 24.99% of the Equity of the Seller unless such shares,
when issued, would constitute Non-Attributable Stock.
(10) An aggregate total of 3,500 shares of Series C Shares shall be sold
pursuant to this Agreement.
(11) The Articles of Incorporation and any other necessary documents
shall be amended to increase the number of authorized shares of
Series B Preferred Stock and to allow for issuance of the Series B
Preferred Stock upon conversion of the
23
<PAGE>
Series C Shares.
(12) The consent of the holders of the Series A Convertible Preferred
Stock required in order to establish the senior priority of the
Series C Preferred Stock to such Series A Convertible Preferred
Stock shall have been obtained.
(13) The Seller shall purchase from Creditanstalt American Corporation
538 Warrant Shares. The term "Warrant Shares" means the shares of
Common Stock or Preferred Stock issued or issuable upon exercise of
the Warrants, or Common Stock issued or issuable upon conversion of
the Preferred Stock, in each case as the same may be adjusted from
time to time pursuant to Section 12 of a Warrant Agreement between
the Seller and Creditanstalt American Corporation dated as of
December 3, 1992 and amended and restated as of December 23, 1994
and further amended and restated as of the date hereof and the
provisions of the Seller's Articles of Incorporation. The purchase
price for such Warrant Shares shall be $175.00 per Warrant Share and
shall be paid in cash at the Closing.
H. MISCELLANEOUS
-------------
(1) All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, singular or plural, as the
identity of the person or persons may require.
(2) Neither this Agreement nor any provision hereof shall be waived,
modified, changed, discharged, terminated, revoked or canceled
except by an instrument in writing signed by the party effecting
the same against whom any change, discharge or termination is
sought.
(3) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested,
addressed: (i) if to the Seller, to Satellink Paging Inc., 1100
Northmeadow Parkway, Suite 100, Roswell, Georgia 30076, Attention:
Daniel D. Lensgraf with a copy (which shall not constitute notice)
to Alston & Bird, One Atlantic Center, 1201 West Peachtree Street,
Atlanta, Georgia 30309, Attention: Sidney J. Nurkin, Esq., or (ii)
if to the Purchaser, to the address for correspondence set forth in
the Stock Purchase Agreement, or at such other address as may have
been specified by written notice given in accordance with this
Paragraph (3).
(4) Failure of the Seller or the Purchaser to exercise any right or
remedy under this Agreement or any other agreement between the
Seller and the Purchaser, or otherwise, or delay by the Seller or
the Purchaser in exercising such right or remedy, will not operate
as a waiver thereof. No waiver by the Seller or the Purchaser will
be effective unless and until it is in writing and signed by the
Seller or the Purchaser, as the case may be.
24
<PAGE>
(5) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Georgia, as
such laws are applied by the Georgia courts to agreements entered
into and to be performed in Georgia by and between residents of
Georgia, and shall inure to the benefit of and be binding upon the
Purchaser, the Purchaser's heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of and be
binding upon the Seller, its successors and assigns. If any
provision of this Stock Purchase Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed modified to conform with such statute or
rule of law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or
enforceability of any other provisions hereof.
(6) The Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties hereto.
(7) Each party hereto has had the opportunity to review this Agreement
with its separate legal counsel.
(8) The representations, warranties and agreements contained in this
Agreement shall survive the execution and delivery of this
Agreement.
(9) All nonpublic information disclosed by any of the parties hereto to
the representatives of the other parties shall be kept strictly
confidential.
(10) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. Telecopy transmission
of signatures shall be deemed originals.
I. SIGNATURE
---------
The signature of this Agreement is contained as part of the applicable
subscription package, entitled "Signature Page".
25
<PAGE>
SATELLINK PAGING INC.
SIGNATURE PAGE
The Purchaser hereby purchases for the number of Series C Shares as set forth
below.
1. Dated: November 17, 1995
2. Number of Series C Shares purchased : 1,000
-----------
3. Aggregate purchase price for number of Series C Shares purchased, at
$1,000.00 per Share:
$1,000,000.00
-------------
CREDITANSTALT AMERICAN
CORPORATION
By: /s/ Robert M. Biringer
-------------------------------
Name: Robert M. Biringer
Title: Senior Vice President
By: /s/ John P. Macukas
-------------------------------
Name: John P. Macukas
Title: Senior Vice President
Address: 245 Park Avenue
--------------------------
New York, NY 10167-0096
------------------------------
------------------------------
Taxpayer I.D. No. 13-2847463
-----------------
SATELLINK PAGING INC.
Dated: By: /s/ Jerry W. Mayfield
-------------------- ------------------------------
Chief Executive Officer
<PAGE>
The Company has entered into Series C Convertible Preferred Stock
Securities Purchase Agreements that are substantially similar in all material
respects except with respect to the purchaser and the number of shares
purchased. The material details in which such agreements differ From Exhibit 4.7
are as follows:
Purchaser: Number of Shares:
- --------- ----------------
Campbell Investment Group, Ltd. 500
Kellett Investment Corporation 2,000
<PAGE>
EXHIBIT 4.8
PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT
Satellink Communications, Inc.
This Preferred Stock and Warrant Purchase Agreement (this "Agreement") is made
between Satellink Communications, Inc., a Georgia corporation (the "Seller"),
and the undersigned prospective purchaser (the "Purchaser") who is purchasing
hereby shares of the Seller's Series D Redeemable Preferred Stock (referred to
herein at the "Series D Preferred Stock" or "Series D Shares"), together with
warrants (the "Warrants") to purchase shares of the Seller's Class A Common
Stock and/or Series B Preferred Stock. This Agreement is being entered into in
accordance with and subject to the terms and conditions described in this
Agreement.
In consideration of the premises and the mutual representations, warranties,
covenants and promises contained herein and other good and valuable
consideration, the parties hereto agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings indicated.
"Additional Securities" is defined in Section 2.08(b)(iv).
"Affiliate" of any Person (which shall include an individual, a
partnership, a limited liability company, a corporation, a trust, a joint
venture, an incorporated organization or a government or any department or
agency thereof) means any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such Person.
For purposes of this definition, a Person shall be deemed to control
another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting
power for the selection of directors of such Person or (ii) direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or
otherwise. In addition, as to Purchaser, "Affiliate" shall include any
partnership a majority of the partners of which are officers, directors,
employees or Affiliates of Purchaser, and as to the Seller, "Affiliate"
shall not include Purchaser or any Affiliate of Purchaser which is a holder
of any Securities of the Seller.
"Appraised Value" shall mean the value determined in accordance with the
following procedures. For a period of thirty (30) days after the date of a
Valuation Event (the "Negotiation Period"), each party to this Agreement
agrees to negotiate in good faith to reach agreement upon the Appraised
Value of the securities or property at issue, as of the date of the
Valuation Event, which will be the fair market value of such securities or
property, without premium for control or discount for minority interests,
illiquidity, or restrictions on transfer. In the event that the parties are
unable to agree upon the Appraised Value of such securities or other
property by the end of the Negotiation Period, then the Appraised Value of
such securities or property will be determined for purposes
<PAGE>
of this Agreement by an Appraiser. An "Appraiser" shall be a
recognized appraisal or investment firm with experience in making
determinations of value of the type required to be made under this
definition. If the Holders and the Company cannot agree on an Appraiser
within thirty (30) days after the end of the Negotiation Period, the
Company, on the one hand, and the Holders, on the other hand, shall each
select an Appraiser within forty (40) days after the end of the Negotiation
Period and those two Appraisers shall select within fifty (50) days after
the end of the Negotiation Period an independent Appraiser to determine the
fair market value of such securities or property, without premium for
control or discount for minority interests. Such independent Appraiser
shall be directed to determine fair market value of such securities or
property as soon as practicable, but in no event later than thirty (30)
days from the date of its selection. The determination by an Appraiser of
the fair market value will be conclusive and binding on all parties to this
Agreement. Appraised Value of each share of Common Stock at a time when
(i) the Company is not a reporting company under the Exchange Act and (ii)
the Common Stock is not traded in the organized securities markets, will,
in all cases, be calculated by determining the Appraised Value of the
entire Company taken as a whole (plus the exercise price of all options,
warrants and other rights to acquire Capital Stock of the Company having an
exercise price per share less than the Fair Market Value of such Capital
Stock) and dividing that value by the sum of (x) the number of shares of
Common Stock then outstanding plus (y) the number of shares of Common Stock
Equivalents, without premium for control or discount for minority
interests, illiquidity, or restrictions on transfer. The costs of the
Appraiser or Appraisers will be borne by the Company. In no event will the
Appraised Value of the Common Stock or Other Securities be less than the
per share consideration received or receivable with respect to the Common
Stock or securities or property of the same class as the Other Securities,
as the case may be, in connection with a pending transaction involving a
sale, merger, recapitalization, reorganization, consolidation, share
exchange, dissolution of the Company, sale or transfer of all or a majority
of its assets or revenue or income generating capacity, or similar
transaction. The prevailing market prices for any security or property
will not be dispositive of the Appraised Value thereof.
"Articles" shall mean the Articles of Incorporation, as amended, of the
Seller.
"Book Value" shall mean with respect to shares of Common Stock an amount
equal to the quotient determined by dividing (a) the sum of (x) the total
consolidated assets of the Seller shown on the most recent regularly
prepared consolidated balance sheet of the Seller prior to the date of the
Valuation Event in question minus (y) the total consolidated liabilities of
the Company as shown on the most recent regularly prepared consolidated
balance sheet of the Company prior to the date of the Valuation Event by
(b) the aggregate number of shares of Common Stock and Common Stock
Equivalents as of the date of the Valuation Event.
"Capital Stock" shall mean as to any Person, its common stock and any other
capital stock of such Person authorized from time to time, and any other
shares, options, interests, participations, or other equivalents (however
designated) of or in such Person, whether voting or nonvoting, including,
without limitation, common stock, options, warrants, preferred stock
(including the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, and Series D Preferred Stock), phantom stock, stock
appreciation rights, convertible notes or debentures, stock purchase
rights, and all
2
<PAGE>
agreements, instruments, documents, and securities convertible,
exercisable, or exchangeable, in whole or in part, into any one or more of
the foregoing.
"Closing" means the date, time and place of the purchase and sale of the
Series D Shares and the issuance of Warrant No. ___.
"Closing Date" shall mean April 3, 1998.
"Common Stock" shall mean the Class A Common Stock, $.01 par value, of the
Seller.
"Common Stock Equivalent" shall mean any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common
Stock.
"Commission" shall mean the Securities and Exchange Commission and any
successor federal agency having similar powers.
"Equity" of the Seller means the total shareholders' equity of the Seller,
determined in accordance with generally accepted accounting principles. The
amount of Equity of the Seller represented by any Series D Shares shall be
determined by subtracting from total Equity of the Seller the aggregate
amount distributable as a preference upon dissolution of the Seller to the
holders of any then outstanding shares of any class or series of preferred
stock (other than the Series D Shares), dividing the balance obtained by
the number of shares of Common Stock then outstanding or issuable upon
conversion of any convertible preferred stock then outstanding, and
multiplying that per share amount by the aggregate number of such Series D
Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exercise Price" shall mean the price per share specified in Section 2.04
as adjusted from time to time pursuant to the provisions of this Agreement.
"Fair Market Value" shall mean (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other
property, the fair market value of such securities or property as
determined in good faith by disinterested members of the Board of Directors
of the Seller at the time it authorizes the transaction (a "Valuation
Event") requiring a determination of Fair Market Value under this
Agreement; provided, however, that, at the election of the Holders or if
-------- -------
there are no disinterested members of the Board of Directors of the Seller,
the Fair Market Value of such securities and other property will be the
Appraised Value.
"Holders" shall mean the Purchaser, and all other Persons holding
Registrable Securities so long as such Purchasers or other Person holds
Registrable Securities, except that none of the Seller or any Affiliate of
the Seller will at any time be a Holder. Unless otherwise provided in this
Agreement, in each instance that the Purchaser is required to request or
consent to or otherwise approve an action, such Purchaser will be deemed to
have requested or consented to or otherwise approved such action if the
Holders of a majority-
3
<PAGE>
in-interest of the Registrable Securities initially issued to the
Purchaser on the date hereof so request, consent or otherwise approve.
"Indebtedness" shall mean, collectively but without duplication, (a) all
indebtedness, obligations or other liabilities for borrowed money or
evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, that would, in accordance with GAAP, be classified as
long-term debt, together with the current maturities thereof, (b) all
indebtedness outstanding under any revolving credit, line of credit or
similar agreement providing for borrowings (any extensions or renewals
thereof), notwithstanding that any such indebtedness is created within one
year of the expiration of such agreement, and (c) the principal component
of Capital Lease Obligations (as defined in the Loan Agreement), in each
case calculated on a consolidated basis for the Seller and its Subsidiaries
in accordance with GAAP.
"Initial Holders" shall mean the Purchaser and any Affiliate of the
Purchaser to which any of the Warrants or any part of or interest in the
Warrants is assigned.
"Issuable Warrant Shares" shall mean shares of Common Stock or Other
Securities issuable on exercise of the Warrants.
"Issued Warrant Shares" shall mean shares of Common Stock or Other
Securities issued on exercise of the Warrants.
"New Securities" shall mean any Capital Stock other than Warrant Shares and
the Permitted Stock.
"Non-Attributable Stock" means shares of Common Stock or Series B Preferred
Stock which have been previously sold, or were issued pursuant to the
exercise of Warrants which were previously sold, either (a) in a widely
dispersed public offering; (b) in a private placement in which no
purchaser, individually or in concert with others, acquired Warrants,
Common Stock, Series B Preferred Stock or any combination thereof,
representing (upon conversion, in the case of any convertible preferred
stock, and upon exercise for Common Stock, in the case of any warrants)
more than 2% of the outstanding Common Stock; (c) in compliance with Rule
144 (or any rule which is a successor thereto) of the Securities Act or (d)
into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0% of the shares
outstanding of the Seller in any six month period.
"Operating Cash Flow" shall mean, for any period for which the same is
computed, the sum of (i) the Seller's and its Subsidiaries' consolidated
net income (loss) for such period, plus (ii) the Seller's and its
Subsidiaries' interest expense for such period, plus (iii) the Seller's and
its Subsidiaries' depreciation and amortization for financial reporting
purposes for such period, plus (iv) the Seller's and its Subsidiaries'
income tax expense for such period, computed in each case on a consolidated
basis in accordance with generally accepted accounting principles.
4
<PAGE>
"Other Securities" shall mean any stock, other securities, property, or
other property or rights (other than Common Stock) that the Holders become
entitled to receive upon exercise of the Warrants, including, but not
limited to, the Series B Preferred Stock.
"Permitted Stock" shall mean (a) Warrant Shares, and shares of the Seller's
Capital Stock issuable upon exercise thereof; (b) Capital Stock of the
Seller issued as a dividend on shares of the Seller's Capital Stock or as a
result of a stock split with respect thereto; (c) Capital Stock of the
Seller issued upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock or the Series C Preferred Stock; (d) options and warrants
outstanding (or that the Seller's Board of Directors has approved for
issuance to specific employees) as of the date hereof to purchase the
Seller's Capital Stock, and shares of the Seller's Capital Stock issuable
upon exercise thereof; and (e) up to 157,617 shares of the Seller's Class A
Common Stock issued to employees of the Seller pursuant to options issued
under the Seller's 1997 Long-Term Incentive Plan and having an exercise
price per share at least equal to the Fair Market Value per share.
"Person" this term shall be interpreted broadly to include any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, company, institution, entity,
party, or government (whether national, federal, state, county, city,
municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body, or department of any of the
foregoing).
"Put Option" is defined in Section 5.01.
"Put Option Closing" is defined in Section 5.05.
"Put Option Period" is defined in Section 5.01.
"Put Price" is defined in Section 5.02.
"Put Shares" shall mean the Warrant Shares plus any other shares of Capital
Stock owned from time to time by a Purchaser which were issued in respect
of the Warrant Shares.
"Qualified Public Offering" shall mean an underwritten public offering
covering the offering and sale of Common Stock of the Seller in which the
aggregate gross proceeds to the Seller equals or exceeds $15,000,000.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" shall mean (a) the Issuable Warrant Shares and (b)
the Issued Warrant Shares.
"Regulated Holder" means any Holder subject to the various provisions of
(a) the Bank Holding Company Act of 1956, as amended, (b) Regulation Y of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 225),
or (c) any law, rule or regulation that is successor to either of the
foregoing.
5
<PAGE>
"Schedule of Exceptions" is defined in Section 3.01.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Series A Preferred Stock" shall mean the Series A Convertible Preferred
Stock $.01 par value, of the Seller having the rights, restrictions,
---
privileges and preferences of the series of preferred stock designated as
"Series A Preferred Stock" set forth in the Articles.
"Series B Preferred Stock" shall mean the Series B Convertible Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
---
privileges and preferences of the series of preferred stock designated as
"Series B Preferred Stock" set forth in the Articles.
"Series C Preferred Stock" shall mean the Series C Convertible Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
---
privileges and preferences of the series of preferred stock designated as
"Series C Preferred Stock" set forth in the Articles.
"Series D Preferred Stock" shall mean the Series D Redeemable Preferred
Stock, $.01 par value, of the Seller having the rights, restrictions,
---
privileges and preferences of the series of preferred stock designated as
"Series D Preferred Stock" set forth in the Articles.
"Subsidiary" shall mean each Person of which or in which the Company or its
other Subsidiaries own directly or indirectly fifty percent (50%) or more
of (i) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board
of directors or equivalent body of such Person, if it is a corporation or
similar person; (ii) the capital interest or profits interest of such
Person, if it is a partnership, joint venture, or similar entity; or (iii)
the beneficial interest of such Person, if it is a trust, association, or
other unincorporated organization.
"Valuation Amount" shall mean, as of any date, the greater of (x) zero or
(y) an amount equal to Operating Cash Flow for the most recently ended
twelve months preceding the date of determination multiplied by six (6),
less the principal amount of Indebtedness of the Company on such date of
----
determination, plus the aggregate amount of cash and/or cash equivalents
----
held by the Company on such date of determination.
"Valuation Event" is defined in the definition of Fair Market Value.
6
<PAGE>
"Warrant No. ___" as referred to in Section 2.01(a)(i), dated as of _____
__, 1998, issued to ___________ and all Warrants issued upon the
transfer or division of, or in substitution for, such Warrant No. ___.
"Warrant Shares" shall mean the Issued Warrant Shares and the Issuable
Warrant Shares.
"Warrants" shall mean Warrant No. ___ exercisable for the purchase of
_______ shares of Common Stock or Series B Preferred Stock (subject to
adjustment pursuant to Section 2.08).
Article II
The Warrants and the Series D Shares
2.01 The Warrants and the Series D Shares.
------------------------------------
(a) The Purchaser agrees to purchase from the Sellers at the purchase
price set forth below, and the Seller hereby agrees to issue to the
Purchaser, all in accordance with the terms and conditions of this
Agreement.
(i) _____ shares of Series D Preferred Stock at a purchase price
of ________ or $1,000.00 per share, having the rights, restrictions,
privileges and preferences set forth in the Designation of Terms of
Series D Redeemable Preferred Stock attached hereto as Exhibit A; and
---------
(ii) Warrant No.___ (relating to the Series D Preferred Stock),
in substantially the form attached to this Agreement as Exhibit B and
---------
incorporated in this Agreement by reference, to purchase, at a
purchase price of $6.00 per share, the number of shares of Common
Stock or Series B Preferred Stock set forth on the signature page of
this Agreement for such Warrant No. ___.
The Seller shall, on or before the Closing Date, duly authorize the Series
D Preferred Stock being purchased and sold pursuant to the terms of this
Agreement. On the Closing Date, the Seller will deliver to the Purchaser
(1) a certificate evidencing and representing the shares of Series D
Preferred Stock to be issued to such Purchaser and (2) one or more
certificates representing the Warrants, which certificate or certificates
shall be issued in such Purchaser's name or in the name of its designee.
(b) Payment for the Series D Shares will be made by wire transfer in accordance
with the following instructions:
ABA#: First Union National Bank, ABA routing # 061000227
------------------------------------------------------------
ACCOUNT #: for credit to account # 208-0000-508-368
------------------------------------------------------------
NAME: Wachovia Bank--Satellink Paging, LLC Operating Account
------------------------------------------------------------
7
<PAGE>
2.02 Legend. The Seller will deliver to the appropriate Purchaser on the
------
Closing Date one or more certificates representing Warrant No. ___ purchased by
the Purchasers, in such denominations as such Purchasers request. Additionally,
the Seller will deliver to the appropriate Holder on the Additional Warrant
Issue Date one or more certificates representing the Additional Warrants, in
such denominations as such Holder requests. Such certificates will be issued in
the Purchaser's name or, subject to compliance with transfer and registration
requirements under applicable federal and state securities laws, in the name or
names of its designee or designees. It is understood and agreed that the
certificates evidencing the Warrants will bear the following legends:
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED,
SOLD, OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE
STATE SECURITIES LAWS."
"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT DATED AS OF APRIL 3, 1998, BY AND AMONG SATELLINK COMMUNICATION
INC. (THE "COMPANY"), AND THE OTHER PARTIES LISTED ON THE SIGNATURE PAGES
TO SUCH AGREEMENT (AS SUCH AGREEMENT MAY BE SUPPLEMENTED, MODIFIED,
AMENDED, OR RESTATED FROM TIME TO TIME, THE "AGREEMENT"). COPIES OF THE
AGREEMENT ARE AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY."
"THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
It is further understood and agreed that the certificates evidencing the Series
D Preferred Stock issued under this Agreement will bear substantially the same
as the following legends:
"THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR
FOR SALE IN CONNECTION WITH THE DISTRIBUTION HEREOF. THESE SHARES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER
OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS."
8
<PAGE>
"THESE SHARES ARE SUBJECT TO THE TERMS AND PROVISIONS OF A PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT DATED AS OF APRIL 3, 1998, BY AND AMONG
SATELLINK COMMUNICATIONS, INC. (THE "COMPANY"), AND THE OTHER PARTIES
LISTED ON THE SIGNATURE PAGES TO SUCH AGREEMENT (AS SUCH AGREEMENT MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). COPIES OF THE AGREEMENT ARE AVAILABLE AT THE EXECUTIVE
OFFICES OF THE COMPANY."
"THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
2.03 Exercise Price. The Exercise Price per share will be $6.00 for each
--------------
share of Common Stock and/or Series B Preferred Stock covered by the Warrants.
2.04 Exercise of Warrants.
--------------------
(a) The Warrants may be exercised at any time on or after the Closing
Date until the tenth (10th) anniversary of the Closing Date on any day
that is a Business Day, for all of the number of Issuable Warrant Shares
purchasable upon its exercise. In order to exercise its Warrant, the
Holder will deliver to the Seller at the address designated by the Seller
pursuant to Section 8.05, (i) a written notice of such Holder's election to
exercise its Warrant, (ii) payment of the Exercise Price, in an amount
equal to the aggregate purchase price for all Issuable Warrant Shares, and
(iii) the Warrant. Such notice will be substantially in the form of the
Subscription Form appearing at the end of the Warrants. Upon receipt of
such notice, the Seller will, as promptly as practicable, and in any event
within ten (10) business days, execute, or cause to be executed, and
deliver to such Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock and Other Securities
issuable upon such exercise, as provided in this Agreement. The stock
certificate or certificates so delivered will be in such denominations as
may be specified in such notice and will be registered in the name of such
Holder, or, subject to compliance with transfer and registration
requirements under applicable federal and state securities laws, such other
name as designated in such notice. A Warrant will be deemed to have been
exercised, such certificate or certificates will be deemed to have been
issued, and such Holder or any other Person so designated or named in such
notice will be deemed to have become a holder of record of such shares for
all purposes, as of the date that such notice, together with payment of the
Exercise Price and the Warrant is received by the Seller.
(b) Payment of the Exercise Price will be made, at the option of the
Holder, by (i) company or individual check, certified or official check,
(ii) cancellation of any debt owed by the Seller to the Holder, or (iii)
cancellation of Warrant Shares, valued at Fair Market Value. If the Holder
surrenders a combination of cash or cancellation of any debt owed by the
Seller to the Holder or Warrants, the Holder will specify the respective
number of shares of Common Stock and/or Series B Preferred Stock to be
purchased with
9
<PAGE>
each form of consideration, and the foregoing provisions will be applied to
each form of consideration with the same effect as if the Warrant were
being separately exercised with respect to each form of consideration;
provided, however,that a Holder may designate that any cash to be remitted
-------- -------
to a Holder in payment of debt be applied, together with other monies, to
the exercise of the portion of the Warrant being exercised for cash.
(c) Any holder that is a Regulated Holder shall not have the right to
have issued to it upon exercise Common Stock which, when aggregated with
all other shares of Common Stock (other than shares of Non-Attributable
Stock) currently or previously held by or currently issuable without
restriction to such Regulated Holder, will exceed 4.99% of the then
outstanding Common Stock unless such Regulated Holder certifies that such
Warrants have previously been transferred either (i) in a widely dispersed
public offering of the Warrants, or (ii) in a private placement in which no
purchaser, individually or in concert with others, would have acquired more
than 2% of the outstanding Common Stock if the Warrants so transferred had
been exercised for Common Stock, or (iii) in compliance with Rule 144 (or
any rule which is a successor thereto) of the Securities Act, or (iv) into
the secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0% of the shares outstanding of
the Seller in any six month period. In the event that a Regulated Holder
and/or one or more Affiliates attempt to exercise Warrants for Common Stock
simultaneously and, if permitted, such exercises would cause the 4.99%
limitation to be exceeded, then the Seller shall notify such Regulated
Holders who had attempted to exercise Warrants for Common Stock and each
such Regulated Holder shall be entitled to exercise for Common Stock only
such number of Warrants as shall equal the product of (i) the number of
Warrants such Regulated Holder sought to exercise for Common Stock times
(ii) a fraction, the numerator of which is the maximum number of Warrants
which may be exercised for Common Stock without exceeding the 4.99%
limitation and the denominator of which is the maximum number of Warrants
sought to be exercised for Common Stock by such Regulated Holders.
(d) Notwithstanding the foregoing provisions of this Section 2.04, in
no event shall any Warrant be exercisable by any Regulated Holder and/or an
Affiliate for shares of Common Stock or Series B Preferred Stock which,
when aggregated with all other Capital Stock of the Seller (other than
shares of Non-Attributable Stock) currently held or previously held by or
currently issuable without restriction to such Regulated Holder, would,
upon issuance, represent in excess of 24.99% of the Equity of the Seller
unless such shares, when issued, would constitute Non-Attributable Stock.
2.05 Taxes. The issuance of any Common Stock or Other Securities upon the
-----
exercise of any of the Warrants will be made without charge to any Holder for
any tax, other than income taxes assessed on such Holder, in respect of such
issuance.
2.06 Register. The Seller will, at all times while any of the Warrants or
--------
Series D Shares remain outstanding, keep and maintain at its principal office a
register in which the registration, transfer, and exchange of the Warrants and
Series D Shares will be provided for. The Seller will not at any time except
upon the dissolution, liquidation, or winding up of the Seller, close such
register so as to result in preventing or delaying the exercise or transfer, as
the case may be, of any of the Warrants or Series D Shares.
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<PAGE>
2.07 Transfer and Exchange. The Warrants, all options and rights under
---------------------
the Warrants, and the Series D Shares are transferable, in whole or in part, in
person or by duly authorized attorney, on the books of the Seller upon surrender
of the Warrants or the Series D Shares, as the case may be, at the principal
offices of the Seller, together with the form of transfer authorization attached
to the Warrants duly executed or by endorsement of the certificates representing
the Series D Shares; provided, however, that such transfers of the Warrants and
-------- -------
Series D Shares will be made only to Persons that the transferor in good faith
believes to be an "accredited investor" as such term is defined in Regulation D
under the Securities Act. Absent any such transfer, the Seller may deem and
treat the registered Holders of the Warrants or the Series D Shares, as the case
may be, at any time as the absolute owners of the Warrants or the Series D
Shares, as the case may be, for all purposes and will not be affected by any
notice to the contrary. If any of the Warrants or Series D Shares are
transferred in part the Seller will, at the time of surrender of such Warrant or
Series D Shares, as the case may be, issue to the transferee a Warrant or a
certificate for Series D Shares, as the case may be, covering the number of
shares transferred and to the transferor a Warrant or a certificate for Series D
Shares, as the case may be, covering the number of shares not transferred.
2.08 Adjustments to Number of Shares Purchasable.
-------------------------------------------
(a) Unless and until the Series D Shares are redeemed by the Seller
and the redemption price is paid in full (pursuant to the terms and
conditions set forth in the Designation of Terms attached hereto at Exhibit
A), the number of shares of Common Stock issuable upon exercise of the
Warrants shall automatically increase as follows:
(i) If the Series D Shares issued to Purchaser have not been
redeemed on or before June 30, 1998, the number of shares of Common
Stock issuable upon exercise of the Warrants shall be increased by
multiplying the number of shares theretofore issuable thereunder by
one hundred fifty percent (150%), and the product derived thereby
shall thereafter be the number of shares issuable upon exercise of
the Warrants, without any adjustment in the per share exercise price
of the Warrants.
(ii) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 1998, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred thirty three and one-third percent
(133 1/3%), and the product derived thereby shall thereafter be the
number of shares issuable upon exercise of the Warrants, without any
adjustment in the per share exercise price of the Warrants.
(iii) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 1999, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred twenty five percent (125%), and the product
derived thereby shall thereafter be the number of shares issuable
upon exercise of the Warrants, without any adjustment in the per
share exercise price of the Warrants.
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<PAGE>
(iv) If the Series D Shares issued to Purchaser have not been
redeemed on or before December 31, 2000, the number of shares of
Common Stock issuable upon exercise of the Warrants shall be
increased by multiplying the number of shares theretofore issuable
thereunder by one hundred twenty percent (120%), and the product
derived thereby shall thereafter be the number of shares issuable
upon exercise of the Warrants, without any adjustment in the per
share exercise price of the Warrants.
(b) The Warrants will be exercisable for the number of shares of
Common Stock and/or Series B Preferred Stock in such manner that, following
the complete and full exercise of the Warrants of each Holder, the amount
of Common Stock and/or Series B Preferred Stock issued to all Holders will
equal the aggregate number of shares of Common Stock and/or Series B
Preferred Stock set forth in Warrant No. ___, as adjusted, to the extent
necessary, to give effect to the following events:
(i) In case at any time or from time to time, the holders of
any class of Common Stock or Common Stock Equivalent have received,
or (on or after the record date fixed for the determination of
shareholders eligible to receive) have become entitled to receive,
without payment therefor:
(A) consideration (other than cash) by way of dividend or
distribution; or
(B) consideration (including cash) by way of spin-off,
split-up, reclassification (including any reclassification in
connection with a consolidation or merger in which the Seller is
the surviving corporation), recapitalization, combination of
shares into a smaller number of shares, or similar corporate
restructuring;
other than additional shares of Common Stock issued as a stock
dividend or in a stock-split (adjustments in respect of which are
provided for in Sections 2.08(b)(ii) and (iii)), then, and in each
such case, the Holders, on the exercise of Warrants, will be entitled
to receive for each share of Common Stock issuable under the Warrants
as of the record date fixed for such distribution, the greatest per
share amount of consideration received by any holder of any class of
Common Stock or Common Stock Equivalent or to which such Holder is
entitled. All such consideration receivable upon exercise of such
Warrant with respect to such a distribution will be deemed to be
outstanding and owned by such Holder for purposes of determining the
amount of consideration to which such Holder is entitled upon
exercise of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock dividend
or distribution, reverse stock split, or other subdivision of the
Common Stock, then the number of shares of Common Stock to be
received by the Holder of the Warrant and the Exercise Price, subject
to the limitations set forth in this Agreement, will be
proportionately adjusted.
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<PAGE>
(iii) In case of any reclassification or change of outstanding
shares of any class of Common Stock or Common Stock Equivalent (other
than a change in par value, or from par value to no par value, or from
no par value to par value), or in the case of any consolidation of the
Seller with, or merger or share exchange of the Seller with or into,
another Person, or in case of any sale of all or a majority of the
property, assets, business, income or revenue generating capacity, or
goodwill of the Seller, the Seller, or such successor or other Person,
as the case may be, will provide that the Holder of this Warrant will
thereafter be entitled to receive the highest per share kind and
amount of consideration received or receivable (including cash) upon
such reclassification, change, consolidation, merger, share exchange,
or sale by any holder of any class of Common Stock or Common Stock
Equivalent that this Warrant entitles the Holder to receive
immediately prior to such reclassification, change, consolidation,
merger, share exchange, or sale (as adjusted pursuant to Section
2.08(b)(i) and otherwise in this Agreement). Any such successor
Person, which thereafter will be deemed to be the Seller for purposes
of the Warrants, will provide for adjustments that are as nearly
equivalent as may be possible to the adjustments provided for by this
Section 2.08.
(iv) If at any time the Seller issues or sells any shares of
any Common Stock or any Common Stock Equivalent (excluding any
Permitted Stock) at a per unit or share consideration (which
consideration will include the price paid upon issuance plus the
minimum amount of any exercise, conversion, or similar payment made
upon exercise or conversion of any Common Stock Equivalent) less than
the Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or Common
Stock Equivalent is issued or sold (the "Additional Securities"),
then:
(A) the Exercise Price will be reduced (but not increased)
to the lower of the prices calculated by:
(I) dividing (x) an amount equal to the sum of (1)
the number of shares of Common Stock outstanding on a
fully diluted basis immediately prior to such issuance or
sale multiplied by the then existing Exercise Price plus
(2) the aggregate consideration, if any, received by the
Seller upon such issuance or sale, by (y) the total number
of shares of Common Stock outstanding immediately after
such issuance or sale on a fully diluted basis; and
(II) multiplying the then existing Exercise Price by a
fraction, the numerator of which is (x) the sum of (1) the
number of shares of Common Stock outstanding on a fully
diluted basis immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of Common
Stock immediately prior to such issuance or sale, plus (2)
the aggregate consideration received by the Seller upon
such issuance or sale, (y) divided by the total number of
shares of Common Stock outstanding on a fully diluted
basis immediately after such issuance or sale, and the
denominator
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<PAGE>
of which is the Fair Market Value per share of Common
Stock immediately prior to such issuance or sale (for
purposes of this subsection (II), the date as of which the
Fair Market Value per share of Common Stock will be
computed will be the earlier of the date upon which the
Seller will (aa) enters into a firm contract for the
issuance of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock or Series B
Preferred Stock for which any of the Warrants may be exercised at
the Exercise Price resulting from the adjustment described in
subsection (A) above will be equal to the product of the number
of shares of Common Stock or Series B Preferred Stock purchasable
under such Warrants immediately prior to such adjustment
multiplied by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting from such
adjustment.
(v) In case any event occurs as to which the preceding Sections
2.08(b)(i) through (iv) are not strictly applicable, but as to which
the failure to make any adjustment would not fairly protect the
purchase rights represented by the Warrants in accordance with the
essential intent and principles of this Agreement, then, in each such
case, the Holders may appoint an independent investment bank or firm
of independent public accountants, which will give its opinion as to
the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Agreement, necessary to
preserve the purchase rights represented by the Warrants. Upon
receipt of such opinion, the Seller will promptly deliver a copy of
such opinion to the Holders and will make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants will be borne equally by the Holders
and the Seller.
(c) The Seller will not by any action including, without limitation,
amending, or permitting the amendment of, the charter documents, bylaws, or
similar instruments of the Seller or through any reorganization,
reclassification, transfer of assets, consolidation, merger, share
exchange, dissolution, issue or sale of securities, or any other similar
voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement or the Warrants, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect
the rights of the Holders against impairment or dilution. Without limiting
the generality of the foregoing, the Seller will (i) take all such action
as may be necessary or appropriate in order that the Seller may validly and
legally issue fully paid and nonassessable shares of Common Stock and Other
Securities, free and clear of all liens, encumbrances, equities, and
claims; (ii) use its best efforts to obtain all such authorizations,
exemptions, or consents from any public regulatory body having jurisdiction
as may be necessary to enable the Seller to perform its obligations under
the Warrants; and (iii) will take any action necessary to cause the par
value per share of the Seller's Common Stock or Series B Preferred Stock to
be less than or equal to the Exercise Price of the Warrants. Without
limiting the generality of the foregoing, the
14
<PAGE>
Seller represents and warrants that the board of directors of the Seller
has determined the Exercise Price to be adequate and the issuance of the
Warrants to be in the best interests of the Seller.
(d) Any calculation under this Section 2.08 will be made to the
nearest one ten-thousandth of a share and the number of Issuable Warrant
Shares resulting from such calculation will be rounded up to the next whole
share of Common Stock or Other Securities comprising Issuable Warrant
Shares.
(e) At any time prior to the redemption of all issued and outstanding
Series D Shares, the Seller will not, and will not permit any Subsidiary
to, issue any Capital Stock other than Common Stock and Common Stock
Equivalents.
2.09 Lost, Stolen, Mutilated, or Destroyed Instruments. If any of the
-------------------------------------------------
Warrants or certificates for Series D Shares are lost, stolen, mutilated, or
destroyed and if the Seller receives a lost security affidavit containing an
indemnification from the Holder of such Warrant or Series D Shares and
containing such other terms and providing for such bonding as may be reasonably
requested by the Seller, the Seller will issue a new Warrant or certificate for
Series D Shares, as the case may be, of like denomination, tenor, and date as
the Warrant or certificate for Series D Shares, as the case may be, so lost,
stolen, mutilated, or destroyed. Any such new Warrant or certificate for Series
D Shares, as the case may be, will constitute an original obligation of the
Seller, whether or not the allegedly lost, stolen, mutilated, or destroyed
Warrant or certificate for Series D Shares, as the case may be, is at any time
enforceable by any Person.
2.10 Mandatory Redemption and Mandatory Exchange.
-------------------------------------------
(a) (i) Subject to the limitations hereinafter set forth, (A) if the
Seller takes any action with respect to its Capital Stock (including
without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares)
which would cause the Capital Stock currently or previously held by
or currently issuable without restriction to any Regulated Holder
and/or its Affiliates (not including Non-Attributable Stock) to
exceed 24.99% of the Equity of the Seller, then prior to or
simultaneously with such action, the Seller shall purchase from such
Regulated Holder and/or its Affiliates such number of Warrants,
Warrant Shares or other shares of Capital Stock as will reduce the
shares of Capital Stock currently or previously held by or currently
issuable without restriction to such Regulated Holder and its
Affiliates (not including Non-Attributable Stock) to 24.99% of the
Equity of the Seller (any such mandatory purchase being herein called
a "Mandatory Redemption"). The price to be paid to the Holder upon a
Mandatory Redemption shall be an amount equal to the Valuation Amount
at the date of the event causing such Mandatory Redemption occurs
(the "Trigger Date"), multiplied by a fraction the denominator of
which is the number of issued and outstanding shares of Common Stock
of the Seller at the Trigger Date, calculated on a fully diluted
basis in accordance with generally accepted accounting principles,
and the numerator of which is (Y) the aggregate number of shares of
Common Stock of the Seller (i) comprising the Warrant Shares to be
purchased by the Seller, and/or (ii) issuable upon exercise of the
Warrants to be purchased by the Seller, (iii) issuable upon
conversion of the
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<PAGE>
Series B Preferred Stock comprising the Warrant Shares to be
purchased by the Seller; and/or (iv) issuable upon conversion of the
Series B Preferred Stock issuable upon exercise of the Warrants to be
purchased by the Seller (assuming Series B Preferred Stock, rather
than Common Stock, is then issuable under such Warrants), and/or (v)
comprising any other shares of Capital Stock of the Seller then held
or previously held by Purchaser or its Affiliates (excluding Non-
Attributable Stock) (the "Redemption Price").
(ii) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall take place on
the thirtieth (30th) day following the Trigger Date, unless another
date is mutually agreed upon by the Seller and the selling Holder
(the "Redemption Closing Date"). The Redemption Prices for all such
purchases and sales shall be paid by the Seller issuing to the
selling Holder in immediately available funds against delivery of
certificates representing the Warrants and/or Warrant Shares to be
purchased, duly endorsed for transfer to the Seller.
(b) The Redemption Prices for all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall be determined and
calculated in accordance with subsection 2.10(a) by the Seller's regularly
engaged independent accountants. The Seller shall cause such accountants to
deliver to the Seller and the selling holder, not later than 15 days prior
to the completion of each purchase and sale under subsection 2.10(a), a
written statement, signed by such accountants, setting forth in reasonable
detail the respective purchase price and the calculation thereof and
stating that such calculation was based on the books and records of the
Seller and was made and delivered pursuant to this Section 2.10.
(c) If the Seller takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any combination
of shares or reverse stock split and elimination of fractional shares)
which would cause the Common Stock currently or previously held by or
currently issuable without restriction to a Regulated Holder and its
Affiliates (other than shares of Non-Attributable Stock) to exceed 4.99% of
the aggregate number of issued and outstanding shares of Common Stock,
prior to or simultaneously with such action, the Seller shall exchange such
portion of Common Stock for Series B Preferred Stock as will reduce the
shares of Common Stock currently or previously held by or currently
issuable without restriction to such Regulated Holder and its Affiliates
(not including "Non-Attributable Stock") to 4.99% of the aggregate number
of issued and outstanding shares of Common Stock (a "Mandatory Exchange").
Article III
Representations and Warranties
3.01 Representations and Warranties of the Seller. Subject to and except
--------------------------------------------
as disclosed in the Schedule of Exceptions attached hereto as Schedule I (the
----------
"Schedule of Exceptions"), the Seller represents and warrants to each Purchaser
that:
16
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(a) The Seller is a corporation duly organized and existing and in
good standing under the laws of its state of incorporation and is qualified
or licensed to do business in all other countries, states, and
jurisdictions the laws of which require it to be so qualified or licensed,
except where the failure to be so qualified or licensed would not have a
material adverse effect on Seller's business, financial condition or
results of operations. Except for Satellink Paging, LLC, Direct Link, LLC,
NationsLink, LLC and NationsLink, L.P., the Seller has no Subsidiaries or
debt or equity investment in any Person. Giving effect to the transactions
contemplated herein, the Purchaser owns beneficially and of record the
number of shares in the aggregate of the issued and outstanding capital
stock or stock equivalents of the Seller on a fully converted and diluted
basis as of the Closing Date set forth under the signature of such
Purchaser on this Agreement, all being free and clear of all liens, claims
and encumbrances other than any lien, claim or encumbrance arising from any
action of such Purchaser. Other than Purchaser, and, except for any other
stock issuable under any employee or director stock plan or issuable upon
exercise of options granted to Daniel D. Lensgraf or principals of the
Breckenridge Group, which constitutes Permitted Stock, no Person has any
rights, whether granted by the Seller or any other Person, to acquire any
portion of the equity interest of the Seller or the assets of the Seller.
(b) The Seller has, and at all times that this Agreement is in force
will have, the right and power, and is duly authorized, to enter into,
execute, deliver, and perform this Agreement, the Series D Shares and the
Warrants, and the officers of Seller executing and delivering this
Agreement, the Series D Shares and the Warrants are duly authorized to do
so. This Agreement, the Series D Shares and the Warrants have been duly
and validly executed, issued, and delivered and constitute the legal,
valid, and binding obligations of Seller, enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditor's rights generally or general principles of equity (whether
applied in an action at law or in equity).
(c) The execution, delivery, and performance of this Agreement and the
Warrants will not, by the lapse of time, the giving of notice, or
otherwise, constitute a violation of any applicable provision contained in
the charter, bylaws, or organizational documents of the Seller or contained
in any material agreement, instrument, or document to which the Seller is
bound.
(d) As of the Closing Date, the authorized capital of the Seller
consists of:
(i) Class A Common Stock. 50,000,000 shares of Class A Common
--------------------
Stock (the "Common Stock"), of which 2,349,521.430 are issued and
outstanding upon the Closing. The Seller has reserved 705,900 shares
of Class A Common Stock for issuance upon conversion of the Series A
Preferred Stock and the Series C Convertible Preferred Stock into
Class A Common Stock;
(ii) Class B Common Stock. 20,000 shares of Common Stock (the
--------------------
"Class B Common Stock"), none of which are issued and outstanding as
of the Closing;
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<PAGE>
(iii) Series A Convertible Preferred Stock. 7,500 shares of
------------------------------------
Series A Convertible Preferred Stock, of which 7,360 are issued and
outstanding as of the Closing. Each share of Series A Convertible
Preferred Stock is convertible into shares of Common Stock on the
terms and conditions contained in the Seller's Articles;
(iv) Series B Convertible Preferred Stock. 30,000 shares of
------------------------------------
Series B Convertible Preferred Stock, none of which are issued and
outstanding as of the Closing. Each share of Series B Convertible
Preferred Stock is convertible into shares of Common Stock on the
terms and conditions contained in the Seller's Articles;
(v) Series C Convertible Preferred Stock. 3,500 shares of
------------------------------------
Series C Convertible Preferred Stock, 3,500 shares of which are issued
and outstanding as of the Closing. Each share of Series C Convertible
Preferred Stock is convertible into shares of Common Stock or Series B
Convertible Preferred Stock on the terms and conditions contained in
the Seller's Articles; and
(vi) Series D Redeemable Preferred Stock. 4,500 shares of
-----------------------------------
Series D Redeemable Preferred Stock, 4,500 of which are issued and
outstanding as of the Closing.
(e) Except for (i) the conversion rights of the holders of the Series
A Preferred Stock and Series C Preferred Stock, as set forth in the
Articles of Incorporation, (ii) options to purchase up to 112,383 shares of
Class A Common Stock granted to employees of Seller pursuant to Seller's
1997 Long-Term Incentive Plan, and (iii) options to purchase up to 65,000
shares of Class A Common Stock granted to the principals of The
Breckenridge Group, there are no outstanding warrants, options, conversion
privileges, preemptive rights or other rights or agreements to purchase or
otherwise acquire or issue any equity securities of the Seller. The Series
D Shares and the shares of Common Stock or Series B Preferred Stock
issuable upon exercise of the Warrants, when issued, sold and delivered in
accordance with the terms of and for the consideration expressed in this
Agreement, shall be duly and validly issued, fully-paid and non-assessable.
The Common Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock have been offered,
issued, sold, and delivered by the Seller free from preemptive rights,
rights of first refusal, antidilution rights, cumulative voting rights or
similar rights (except as otherwise provided in this Agreement, in the
powers, designations, rights and preferences contained in the Articles of
Incorporation or upon the waiver of such rights) and in compliance with
applicable federal and state securities laws. Except pursuant to this
Agreement and the Articles and except for the Permitted Stock the Seller is
not obligated to issue or sell any Capital Stock. The Seller is not, nor
will it be, a party to, or otherwise bound by, any agreement obligating it
to register any of its Capital Stock. There is no agreement, arrangement,
or understanding involving the Seller modifying, restricting, or in any way
affecting the rights of any security holder to vote securities of the
Seller, except for (i) that certain Stockholders' Agreement, dated August
1, 1988, and (ii) that certain Letter Agreement, dated November, 1995, by
and between the Seller and Kellett Investment Corporation.
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<PAGE>
(f) Except for the liens, pledges and security interests granted in
connection with the Third Amended and Restated Loan and Security Agreement,
dated as of June 27, 1997, the Seller has good, indefeasible, merchantable,
and marketable title to, and ownership of, all of its material assets
necessary for the conduct of its business free and clear of all liens,
pledges, security interests, claims.
(g) Subject to the accuracy of each of the Purchaser's representations
in Section 3.02 of this Agreement, the offer, sale and issuance of the
Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act, Section 5 of the Georgia Securities Act of
1973, as amended (O.C.G.A. Section 10-5-5) (the "Georgia Act"), and the
securities acts and laws of any other applicable jurisdictions.
(h) The Seller has delivered to the Purchaser unaudited financial
statements of the Seller at December 31, 1997, (the "Financial
Statements"). The Financial Statements are complete and correct in all
material respects, subject (in the case of the unaudited statements) to
normal year-end adjustments, and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. The Financial Statements accurately set
out, describe and fairly present the financial condition and operating
results of the Seller as of the dates, and for the periods, indicated
therein, subject (in the case of the unaudited statements) to normal year-
end audit adjustments.
(i) Since December 31, 1997, there has not been:
(A) except for the transactions contemplated by that certain
Merger Agreement, dated January 27, 1998, by and among the Seller,
Premier Paging, Inc. ("Premier"), Premier Paging of New Orleans, Inc.
("Premier New Orleans") and the shareholders of each of Premier and
Premier New Orleans (the "Premier Agreement"), any change in the
assets, liabilities, financial condition or operating results of the
Seller from that reflected in the Financial Statements, except changes
in the ordinary course of business that have not been, in the
aggregate, materially adverse;
(B) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the
Seller (as such business is presently conducted and as it is currently
proposed to be conducted);
(C) any amendments or changes in the Articles of Incorporation or
Bylaws of the Seller, except for the Amendment to the Articles of
Incorporation filed with the Georgia Secretary of State on March 31,
1998;
(D) any waiver or compromise by the Seller of a valuable right or
of a material debt owed to the Seller;
(E) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Seller, except in the
ordinary course of business
19
<PAGE>
and that is not material to the assets, properties, financial
condition, operating results or business of the Seller (as such
business is presently conducted and as it is currently proposed to be
conducted);
(F) any change or amendment to a material contract or arrangement
by which the Seller or any of its assets or properties is bound or
subject;
(G) except for the regular cash dividends declared and paid on
January 31, February 28, and March 31, 1998 to holders of the Seller's
Series C Preferred Stock in the amount of $8.333 per any declaration
or payment of any dividend or other distribution of the assets of the
Seller;
(H) any increase in or modification of the compensation or
benefits payable by the Seller to any of their directors or employees,
except in the ordinary course of business consistent with past
practice;
(I) any increase in or modification of any bonus, pension,
insurance or other employee benefit plan, payment or arrangement
(including, but not limited to, the granting of stock options,
restricted stock awards or stock appreciation rights) made to, for or
with any employee of the Seller, except in the ordinary course of
business consistent with past practice;
(J) except for the issuance of a Subordinate Promissory Note in
connection with the consummation of the transactions contemplated by
the Premier Agreement, any incurrence, assumption or guarantee by the
Seller of any debt for borrowed money; issuance or sale of any
securities convertible into or exchangeable for debt securities of the
Seller; or issuance or sale of options or other rights to acquire from
the Seller, directly or indirectly, debt securities of the Seller, or
any securities convertible into or exchangeable for any such debt
securities;
(K) any making of any loan, advance or capital contribution to
any person other than travel loans or advances made in the ordinary
course of business; or
(L) any labor dispute, other than routine individual grievances,
or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Seller.
(j) The Seller is not in material default under any contract,
agreement, instrument, license, or commitment that is material to the
Seller (collectively, the "Material Agreements"), and the Seller is not
aware of any material default by another party, either pending or
threatened, with respect to the Material Agreements. All the Material
Agreements are valid and binding obligations of the Seller, in full force
and effect in all material respects. The Seller does not intend to cancel,
withdraw, modify or amend any such Material Agreement and neither has been
notified that any other party to any such Material Agreement intends to
cancel, withdraw, modify or amend such Material Agreement. The Seller is
not a party to or bound by any material contract
20
<PAGE>
agreement or instrument, or subject to any restriction under its
certificate of incorporation or bylaws, that adversely affects its business
as presently conducted or as currently proposed to be conducted, its
properties or its financial condition.
(k) The Seller has no material liability or obligation, absolute or
contingent (individually or in the aggregate), that is not disclosed in the
Financial Statements, except (i) as contemplated under the Premier Merger
Agreement, or (ii) obligations and liabilities incurred after the date of
the Financial Statements in the ordinary course of business that are not
individually or in the aggregate material. The Seller after reasonable
investigation has no knowledge of any basis for any other claim against or
liability or obligation of the Seller.
(l) Set forth on the Schedule of Exceptions is a list of (a) all the
material obligations of the Seller to its officers, directors, shareholders
and employees, including any member of their immediate families (other than
normal accrued wages and benefits and travel expense vouchers) and (b) all
the obligations of the officers, directors, shareholders and employees of
the Seller, including any member of their immediate families (other than
expense advances made in the ordinary course of business) to the Seller,
which schedule is complete and correct in all material respects as of the
date of this Agreement.
(m) Neither the Seller nor any of its Subsidiaries has any collective
bargaining agreements with any of its employees and to the best of the
Seller's knowledge there is no labor-union-organizing activity pending or
threatened with respect to the Seller or its Subsidiaries.
(n) The Seller is not in violation of (i) any provisions of its
Articles or its bylaws as amended and in effect on and as of the Closing,
or (ii) any provisions of any instrument or contract to which it is a party
or any judgment, decree or order by which it is bound or any statute, rule
or regulation applicable to it except, in the case of this clause
(ii), where such violation would not have a material adverse effect on the
Seller's business, financial condition or results of operations. The
execution, delivery and performance of this Agreement and the issuance and
sale of the Series D Shares and Warrants pursuant hereto and the Issuable
Warrant Shares pursuant to the exercise of the Warrants, will not result in
any such violation or be in conflict with or constitute a default under any
such provisions or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any properties or assets of the Seller.
(o) To the best of the Seller's knowledge, there is no action,
proceeding or investigation pending or currently threatened against the
Seller before any court or administrative agency (or any basis therefor
known to the Seller) which, if decided adversely to the Seller, could
reasonably be expected to have a material adverse effect on the Seller's
business, financial condition or results of operation. The foregoing
includes, without limiting its generality, actions pending or threatened
(or any basis therefor known to the Seller) involving the prior employment
of any of the Seller's employees or their use in connection with the
Seller's business of any information or techniques allegedly proprietary to
any of their former employers. There is no action, proceeding or
investigation by the Seller currently pending or that the Seller intends to
initiate.
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(p) To the best of the Seller's knowledge, the Seller has sufficient
title and ownership of or is licensed under all patents, trademarks,
service marks, trade names, copyrights, and all registrations and
applications for registration of any of the foregoing, and all trade
secrets, information, inventions, computer programs owned or licensed by
the Seller, documentation, proprietary rights and processes (collectively,
"Intellectual Property") necessary for its business as now conducted
without any conflict with or without infringement of the rights of others.
There are no outstanding material options, licenses or agreements relating
to the foregoing nor is the Seller bound by or a party to any material
options, licenses or agreements with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or
entity. The Seller has not received any communications alleging that it
has violated or, by conducting its businesses as currently proposed, would
violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or entity.
(q) To the best of the Seller's knowledge, the Seller has not done
anything to compromise the secrecy, confidentiality or value of any of its
trade secrets, know-how, inventions, prototypes, designs, processes or
technical data required to conduct its business as now conducted or as
proposed to be conducted. The Seller has taken in the past and will take in
the future reasonable security measures to protect the secrecy,
confidentiality and value of all its trade secrets, know-how, inventions,
prototypes, designs, processes, and technical data important to the conduct
of its business.
(r) The Seller has accurately prepared and timely filed all United
States income tax returns and all state and municipal tax returns that are
required to be filed by it and has paid or made provision for the payment
of all taxes that have become due pursuant to such returns. No deficiency
assessment or proposed adjustment of the Seller's United States income tax
or state or municipal taxes is pending and the Seller has no knowledge of
any liability as of the date hereof for any tax for which there is not an
adequate reserve reflected in the Financial Statements.
(s) The Seller has fire, casualty and liability insurance policies
customary for the type and scope of its properties and business.
(t) All consents, approvals, orders or authorizations of, or
registrations, qualifications, designations, declarations or filings with
any federal or state governmental authority on the part of the Seller
required in connection with the valid execution and delivery of this
Agreement, the offer, sale or issuance of the Series D Shares, the
Warrants, or the consummation of any other transaction contemplated hereby
have been obtained, or will be obtained prior to the Closing, except for
notices required to be filed with certain state and federal securities
commissions after the Closing, which notices will be filed on a timely
basis.
(u) The Seller (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchaser
harmless of and from any liability for any commission or compensation in
the nature of a finder's fee to any broker or other
22
<PAGE>
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the Seller or any of its
employees or representatives is responsible.
(v) None of the documents, instruments, or other information furnished
to the Purchaser by the Seller contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make any
statements made therein not misleading. No representation, warranty, or
statement made by the Seller in this Agreement or in any applicable
document, certificate, exhibit or schedule attached hereto or thereto or
delivered in connection herewith or therewith, contains or, at the Closing
Date, will contain any untrue statement of a material fact, or, at the
Closing Date, omits or will omit to state a material fact necessary to make
any statements made herein or therein not misleading. There is no fact
that materially and adversely affects the condition (financial or
otherwise), results of operations, business, properties, or prospects of
the Seller or any of its Subsidiaries that has not been disclosed in the
documents provided to the Purchaser.
(w) If the Seller fails or refuses to comply with or otherwise
breaches the agreements or representations contained in this Agreement in
any material respect and does not correct such failure or breach within 60
days after written notice of such failure or breach is delivered to the
Seller, then in addition to all other remedies available to the Purchasers,
the Purchasers holding a majority of the Series D Shares may demand, in
writing, that the Seller repurchase all Series D Shares acquired by the
Purchaser at a price equal to the liquidation price plus accrued dividends.
3.02 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Seller:
(a) Unless such Purchaser is a natural person, it is a corporation,
limited partnership or limited liability company, as the case may be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) It has the right and power and is duly authorized to enter into,
execute, deliver, and perform this Agreement, and its officers, managers or
agents executing and delivering this Agreement are duly authorized to do
so. This Agreement has been duly and validly executed, issued, and
delivered and constitutes the legal, valid, and binding obligation of such
Purchaser, enforceable in accordance with their respective terms.
(c) It (i) is an "accredited investor," as that term is defined in
Regulation D under the Securities Act; (ii) has such knowledge, skill, and
experience in business and financial matters, based on actual
participation, that it is capable of evaluating the merits and risks of an
investment in the Seller and the suitability thereof as an investment for
each Purchaser; (iii) has received and reviewed all such financial and
other information and records of the Seller as it considered necessary or
appropriate in deciding whether to purchase the Series D Shares and the
Warrants and any securities issuable upon exercise of the Warrants, and the
Seller has made available to it the opportunity to ask questions of, and to
receive answers and to obtain additional information from, representatives
of the Seller; (iv) all such additional information has been provided to
and reviewed by it; and (v) it has the ability to bear the economic risks
of losing its entire investment in the
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<PAGE>
Series D Shares and the Warrants and any securities issuable upon exercise
of the Warrants.
(d) Except as otherwise contemplated by this Agreement, each Purchaser
is acquiring its Series D Shares, its Warrants and any securities issuable
upon exercise of the Warrants for investment for its own account and not
with a view to any distribution thereof in violation of applicable
securities laws.
(e) It agrees that the certificates representing its Series D Shares,
its Warrants, and any Issued Warrant Shares will bear the legends
referenced in this Agreement, and such Series D Shares, Warrants or
Issuable Warrant Shares, as the case may be, will not be offered, sold, or
transferred in the absence of registration or exemption under applicable
securities laws.
(f) It has no current contract, undertaking, agreement, arrangement or
understanding with any Person to sell, transfer, grant any participation
in, or otherwise distribute any of the Series D Shares, the Warrants or the
Issuable Warrant Shares to any Person.
Article IV
Covenants of the Seller
4.01. Financial Statements. The Seller will keep books of account and
--------------------
prepare financial statements and, except as such time as the Seller is subject
to the periodic reporting requirements of the Securities Exchange Act of 1934,
as amended, will cause to be furnished to each Purchaser and each other Holder
(all of the foregoing and following to be kept and prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis):
(a) As soon as available, but in any event within 90 days after the end
of each fiscal year of the Seller, either (A) a copy of the Seller's Annual
Report on Form 10-K (or any successor form) and any documents incorporated
by reference into such form for the prior fiscal year, as filed with the
Commission under the Exchange Act, or (B) a copy of the consolidated
balance sheet of the Seller and its consolidated Subsidiaries as at the end
of such year and the related consolidated statement of income and retained
earnings and of cash flow for such year, setting forth in each case in
comparative form the figures for the previous year certified by Arthur
Andersen & Co., L.L.C. or by another firm of nationally recognized
independent certified public accountants, and the consolidated balance
sheet of the Seller and its consolidated Subsidiaries as at the end of such
fiscal year, showing inter-company eliminations, and the related
consolidating statements of income and retained earnings and changes in
financial position of the Seller and its consolidated Subsidiaries for such
year, showing inter-company eliminations, setting forth in each case in
comparative form the figures for the previous fiscal year, certified by
Arthur Andersen & Co., L.L.C. or by another firm of nationally recognized
independent certified public accountants.
(b) As soon as available but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of
the Seller, either (A) a copy of the Seller's Quarterly Report on Form 10-Q
(or any successor form) for the preceding fiscal
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<PAGE>
quarter, as filed with the Commission under the Exchange Act, or (B) the
unaudited consolidated balance sheet of the Seller and its consolidated
Subsidiaries as at the end of each such quarter and the related unaudited
consolidated statements of income and retained earnings and of cash flow of
the Seller and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through such date setting forth in each case in
comparative form the figures for the same period of the previous fiscal
year, certified by the chief financial or accounting officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
(c) Promptly after the sending or filing thereof, as the case may be,
copies of any reports, certificates, budgets, definitive proxy statements
or financial statements which Seller sends to its shareholders and copies
of any regular periodic and special reports or registration statements
which Seller files with the Commission (or any governmental agency
substituted therefor), including, but not limited to, any report or
registration statement which Seller files with any national securities
exchange.
(d) If such holder is a Regulated Holder, such financial statements
and other information as such Regulated Holder may from time to time
reasonably request for the purpose of assessing the Seller's financial
condition for purposes of complying with applicable laws or regulations.
(e) All such financial statements to be prepared in reasonable detail
and in accordance with generally accepted accounting principles applied
consistently throughout the periods reflected therein (except as approved
by such accountants and officer and disclosed therein).
4.02 Inspection. The Seller will permit any representative designated by
----------
a Holder or Holders collectively holding at least 500 shares of Series D
Preferred Stock to (a) visit and inspect any of the properties of the Seller;
(b) examine the corporate and financial records of Seller and make copies
thereof or extracts therefrom; and (c) discuss the affairs, finances, and
accounts of the Seller with the directors, officers, key employees, and
independent accountants of the Seller. The inspections, examinations and
discussions provided for in the preceding sentence shall be conducted during
normal business hours, shall be reasonable in scope and shall not disrupt or
adversely affect any aspect of the operations of the Seller.
4.03 Notice.
------
(a) In the event of (i) any setting by the Seller of a record date
with respect to the holders of any class of Capital Stock for the purpose
of determining which of such holders are entitled to dividends, repurchases
of securities or other distributions, or any right to subscribe for,
purchase or otherwise acquire any shares of Capital Stock or other property
or to receive any other right; or (ii) any capital reorganization of the
Seller, or reclassification or recapitalization of the Capital Stock or any
transfer of all or a majority of the assets, business, or revenue or income
generating capacity of the Seller, or consolidation, merger, share
exchange, reorganization, or similar transaction involving the Seller; or
(iii) any voluntary or involuntary dissolution, liquidation, or winding up
of the Seller; or (iv) any proposed issue or grant by the Seller of any
Capital Stock, or any right or option to subscribe for, purchase, or
otherwise acquire any Capital Stock (other
25
<PAGE>
than the issue of Issuable Warrant Shares upon exercise of the Warrants or
pursuant to the Seller's 1997 Long-Term Incentive Plan), then, in each such
event, the Seller will deliver or cause to be delivered to the Holders a
notice specifying, as the case may be, (A) the date on which any such
record is to be set for the purpose of such dividend, distribution, or
right, and stating the amount and character of such dividend, distribution,
or right; (B) the date as of which the holders of record will be entitled
to vote on any reorganization, reclassification, recapitalization,
transfer, consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding-up; (c) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, conveyance, dissolution, liquidation, or winding-up is to take
place and the time, if any is to be fixed, as of which the holders of
record of any class of Capital Stock will be entitled to exchange their
shares of Capital Stock for securities or other property deliverable upon
such event; and (D) the amount and character of any Capital Stock property,
or rights proposed to be issued or granted, the consideration to be
received therefor, and, in the case of rights or options, the exercise
price thereof, and the date of such proposed issue or grant and the Persons
or class of Persons to whom such proposed issue or grant will be offered or
made. Any such notice will be deposited in the United States mail, postage
prepaid, at least thirty (30) days prior to the date therein specified, and
notwithstanding anything in this Agreement or the Warrants to the contrary
the Holders may exercise the Warrants within thirty (30) days from the
mailing of such notice. The Seller shall, promptly on request of a Holder,
provide such other information as the Holders may reasonably request.
(b) If there is any adjustment as provided above in Article II
(other than as provided in Section 2.08(a)), or if any Other Securities
become issuable in lieu of shares of such Common Stock upon exercise of the
Warrants, the Seller will immediately cause written notice thereof to be
sent to each Holder, which notice will be accompanied by a certificate of
the independent public accountants of the Seller setting forth in
reasonable detail the basis for the Holders' becoming entitled to receive
such Other Securities, the facts requiring any such adjustment in the
number of shares receivable after such adjustment, or the kind and amount
of any Other Securities so purchasable upon the exercise of the Warrants,
as the case may be. At the request of any Holder and upon surrender of the
Warrant of such Holder, the Seller will reissue such Warrant of such Holder
in a form conforming to such adjustments.
4.05 Warrant Rights. The Seller covenants and agrees that during the
--------------
term of this Agreement and so long as any of the Warrants are outstanding, (a)
the Seller will at all times have authorized and reserved a sufficient number of
shares of Common Stock and Series B Preferred Stock, to provide for the exercise
in full of the rights represented by the Warrants; (b) the Seller will not
increase or permit to be increased the par value per share or stated capital of
the Issuable Warrant Shares or the consideration receivable upon issuance of its
Issuable Warrant Shares; and (c) in the event that the exercise of the Warrants
would require the payment by the Holder of consideration for the Common Stock or
Series B Preferred Stock receivable upon such exercise of less than the par or
stated value of such Issuable Warrant Shares, subject to any required
shareholder approval, the Seller will promptly take such action as may be
necessary to change the par or stated value of such Issuable Warrant Shares to
an amount less than or equal to such consideration.
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4.06 Redemption of Series D Shares. The Series D Shares are subject to
-----------------------------
redemption as provided in the Designation of Terms of Series D Redeemable
Preferred Stock attached hereto as Exhibit A.
Article V
Put Option
5.01 Grant of Option. In the event that Seller has not completed a
---------------
Qualified Public Offering prior to the Put Option Period (as defined below),
each Purchaser shall have an option to sell to the Seller, and the Seller is
obligated to purchase from each Purchaser under such option (the "Put Option"),
all (or such portion as is designated by any such Purchaser pursuant to Section
5.03 below) of the Put Shares. The Put Option will be effective at any time
after the five-year anniversary of the Closing Date or at any earlier time or
times after the occurrence of one of the following events (the "Put Option
Period"):
(a) A merger, consolidation, share exchange, or similar transaction
involving the Seller, as a result of which stockholders of the Seller
immediately prior to such acquisition possess a minority of the voting
power of the acquiring entity immediately following such acquisition, or
sale in one or more related transactions of all or a substantial portion of
the assets, business, or revenue or income generating operations of the
Seller or any substantial change in the type of business conducted by the
Seller; or
(b) After any failure of the Seller in any material respect to
perform or comply with any of its obligations hereunder; provided, however,
-------- -------
that the Put Option Period will continue with respect to such default or
other failure, even after the same has been cured, if notice of exercise of
the Put Option by such Purchaser is provided pursuant to this Article V
during the continuance of such default or such other failure, as the case
may be.
5.02 Put Price. In the event that any Purchaser exercises the Put Option,
---------
the price (the "Put Price") to be paid to each such Purchaser pursuant to this
Agreement will be cash in the sum of the amount determined by (1) multiplying
the higher of (a) the Book Value or (b) the Fair Market Value per share of
Warrant Shares as of the end of the month immediately preceding the date notice
is given of the exercise of the Put Option pursuant to Section 5.03 times the
number of shares of Warrant Shares for which the Put Option is being exercised
by such Purchaser and (2) subtracting an amount equal to (a) the Exercise Price
multiplied by (b) the number of Issuable Warrant Shares.
5.03 Exercise of Put Option. The Put Option may be exercised during the
----------------------
Put Option Period with respect to all or any portion of the Put Shares. Such
option shall be exercised by such Purchaser giving notice to the Seller and each
other Purchaser during the Put Option Period of the Purchaser's election to
exercise the Put Option, and the date of the Put Option Closing, which will be
not less than fifteen (15) nor more than ninety (90) days after the date of such
notice. The Seller will provide each Purchaser desiring to exercise its Put
Option the name and address of each other Purchaser. Notwithstanding the
foregoing, if a Purchaser receives such notice of another Purchaser's exercise
of such other Purchaser's Put Option, the Purchaser receiving such notice may
elect to exercise its Put Option and designate a Put Option Closing simultaneous
and pari passu with that of such other Purchaser.
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<PAGE>
5.04 Certain Remedies. In the event that the Seller defaults in its
----------------
obligation to purchase all or any portion of the Put Shares upon exercise of the
Put Option, in addition to any other rights or remedies of each Purchaser, the
unpaid portion of the Put Price will bear interest at the lesser of (a) eighteen
percent (18%) per annum, compounded monthly, or (b) the highest rate permitted
by applicable law. The Seller will, upon the request of any Purchaser, execute
and deliver to such Purchaser a promissory note in form and substance
satisfactory to such Purchaser evidencing such obligation.
5.05 Put Option Closing. The closing for the purchase and sale of all or
------------------
such portion of the Put Shares as to which the Purchaser has notified the Seller
of its intention to exercise the Put Option, will take place at the office of
the Seller on the date specified in such notice of exercise (a "Put Option
Closing"). At any Put Option Closing, to the extent applicable, the Purchaser of
the Put Shares will deliver the certificate or certificates evidencing the Put
Shares being purchased, duly endorsed in blank. In consideration therefor, the
Seller will deliver to the Purchaser the Put Price, which will be payable in
cash.
Article VI
Registration Rights
6.01 Registration Rights.
-------------------
(a) If, at any time after the date hereof, the Seller proposes
to register any of its securities under the Securities Act (except pursuant
to a registration statement filed on Form S-8 or Form S-4 or such other
form as shall be prescribed under the Act for substantially similar
purposes), it will at each such time give written notice (which notice
shall state the intended method of disposition thereof by the prospective
sellers) to all holders of outstanding Registrable Securities of its
intention to do so and the proposed minimum offering price per Registrable
Securities and upon the written request of any holder thereof given within
10 days after the Seller's giving of such notice, the Seller will use its
reasonable best efforts to effect the registration of the Registrable
Securities which it shall have been so requested to register by including
the same in such registration statement all to the extent required to
permit the sale or other disposition thereof in accordance with the
intended method of sale or other disposition given in each such request. If
the registration of which the Seller gives notice pursuant to this
subsection (c) is for an underwritten public offering, only Registrable
Securities which are to be included in the underwriting may be included in
such registration, and the Seller shall have the right to designate the
managing underwriter(s) in any such underwritten public offering; provided
that (i) the Seller shall use its commercially reasonable efforts to cause
the managing underwriter(s) to include the Registrable Securities requested
to be included in the registration in the underwriting; (ii) if the
managing underwriter(s) advises the holders of the Registrable Securities
and all other Persons seeking to include securities of the Seller held by
them in such registration statement ("Other Security Holders") in writing
that the total amount of securities which they and the Seller intend to
include in such offering is sufficiently large to materially and adversely
affect the success of such offering, the amount of securities to be offered
shall be reduced pro rata among the holders of the Registrable Securities
and all Other Security Holders (based upon the amount of securities each
such Person, other than the Seller, sought to include in the offering) to
the extent necessary to
28
<PAGE>
reduce the total amount of securities to be included in the offering to the
amount recommended by such managing underwriter(s) (which amount may be
zero, if so recommended by such managing underwriter(s) [Priority vis-a-vis
other stockholders with registration rights to be discussed]. Any
registration statement filed pursuant to this subsection (c) may be
withdrawn at any time at the discretion of the Seller.
(b) If a registration under subsection (a) shall be in connection
with an underwritten public offering, each holder of Registrable Securities
shall be deemed to have agreed by acquisition of such Registrable
Securities not to effect any sale or distribution, including any sale
pursuant to Rule 144 or Rule 144A, of any Registrable Securities, and not
to effect any such sale or distribution of any other equity security of the
Seller or of any security convertible into or exchangeable or exercisable
for any equity security of the Seller (other than as part of such
underwritten public offering) within seven days before or 180 days after
the effective date of such registration statement (and the Seller hereby
also so agrees and agrees to cause each holder of any equity security, or
of any security convertible into or exchangeable or exercisable for any
equity security, of the Seller purchased from the Seller at any time other
than in a public offering, so to agree).
(c) As a condition to the inclusion of a holder's Registrable
Securities in any registration statements, each such holder of Registrable
Securities requesting registration thereof will furnish to the Seller such
information with respect to such holder as is required to be disclosed in
the registration statement (and the prospectus included therein) by the
applicable rules, regulations and guidelines of the Commission. Failure of
a holder to furnish such information or agreement shall not affect the
obligation of the Seller under this Section 6.01 to the remaining holders
who furnish such information.
(d) If and whenever the Seller is required under this Section 6.01
to use its commercially reasonable efforts to effect the registration of
Registrable Securities under the Securities Act, the Seller shall:
(i) as expeditiously as possible and subject to the limitations
set forth in subsection (a), prepare and file with the Commission a
registration statement on the appropriate form with respect to such
Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as practicable
after such filing;
(ii) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering
such Registrable Securities and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and usable for resale for a period necessary to complete the
distribution of such securities, but in no event in excess of 24
months plus any period during which the holders of Registrable
Securities are obligated to refrain from selling because the Seller is
required to amend or supplement the prospectus under subsection
(d)(iv), and to comply with the provisions of the Securities Act with
respect to the
29
<PAGE>
disposition of all Registrable Securities covered by such registration
statement during such period in accordance with the intended method of
disposition of the sellers set forth therein;
(iii) as expeditiously as possible, furnish to each seller of
such Registrable Securities registered, or to be registered under the
Securities Act, and to each underwriter, if any, of such Registrable
Securities such number of copies of a prospectus and preliminary
prospectus in conformity with the requirements of the Securities Act,
and such other documents as such seller or underwriter may reasonably
request in order to facilitate the public sale or other disposition of
such Registrable Securities
(iv) as expeditiously as possible, notify each seller of such
Registrable Securities if, at any time when a prospectus relating to
such Registrable Securities, is required to be delivered under the
Securities Act, any event shall have occurred as a result of which the
prospectus then in use with respect to such Registrable Securities
would include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or for any other reason it shall be
necessary to amend or supplement such prospectus in order to comply
with the Securities Act and prepare and furnish to all sellers as
promptly as possible, and in any event within ninety (90) days of such
notice, a reasonable number of copies of a supplement to or an
amendment of such prospectus which will correct such statement or
omission or effect such compliance;
(v) as expeditiously as possible, use its reasonable best
efforts to register or qualify such Registrable Securities under such
other securities or blue sky laws of such jurisdictions as such seller
shall reasonably request and do any and all other acts and things
which may be reasonably necessary to enable such seller to consummate
the public sale or other disposition in each such jurisdiction of the
Registrable Securities owned by such seller and included in such
registration statement, provided that the Seller shall not be required
to consent to the general service of process or to qualify to do
business in any jurisdiction where it is not then qualified;
(vi) use its reasonable best efforts to keep the holders of such
Registrable Securities informed of the Seller's best estimate of the
earliest date on which such registration statement or any post-
effective amendment or supplement thereto will become effective and
will promptly notify such holders and the managing underwriters, if
any, participating in the distribution pursuant to such registration
statement of the following: (A) when such registration statement or
any post-effective amendment or supplement thereto becomes effective
or is approved; (B) of the issuance by any competent authority of any
stop order suspending the effectiveness or qualification of such
registration statement or the prospectus then in use or the initiation
or threat of any proceeding for that purpose; and (c) of the
suspension of the qualification of any Registrable Securities included
in such registration statement for sale in any jurisdiction;
30
<PAGE>
(vii) make available to its security holders, as soon as
practicable, an earnings statement covering a period of at least
twelve months which satisfies the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(viii) cooperate with the sellers of such Registrable Securities
and the underwriters, if any, of such Registrable Securities; give
each seller of such Registrable Securities, and the underwriters, if
any, of such Registrable Securities and their respective counsel and
accountants, such access to its books and records and such
opportunities to discuss the business of the Seller with its officers
and independent public accountants as shall be necessary to enable
them to conduct a reasonable investigation within the meaning of the
Securities Act and, in the event that Registrable Securities are to be
sold in an underwritten offering, enter into an underwriting agreement
containing customary representations and warranties, covenants,
conditions and indemnification provisions, including without
limitation the furnishing to the underwriters of a customary opinion
of independent counsel to the Seller and a customary "comfort" letter
from the Seller's independent public accountants;
(ix) provide a CUSIP number for all Registrable Securities not
later than the effective date of the registration statement;
(x) as to all registrations under subsection (a), pay all
costs and expenses incident to the performance and compliance by the
Seller of this Section 6.01, including without limitation (A) all
registration and filing fees; (B) all printing expenses; (C) all fees
and disbursements of counsel and independent public accountants for
the Seller; (D) all blue sky fees and expenses (including fees and
expenses of counsel in connection with blue sky surveys); (E) all
transfer taxes; (F) the entire expense of any special audits required
by the rules and regulations of the Commission; (G) the cost of
distributing prospectuses in preliminary and final form as well as any
supplements thereto and (H) the fees and expenses of one counsel for
the holders of the Registrable Securities being registered; and
(e) (i) The Seller will indemnify and hold harmless each seller
of Registrable Securities, each director, officer, employee and agent
of each seller, and each other person, if any, who controls such
seller within the meaning of the Securities Act or the Exchange Act
from and against any and all losses, claims, damages, liabilities and
legal and other expenses (including costs of investigation) caused by
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Registrable
Securities were registered under the Securities Act, any prospectus or
preliminary prospectus contained therein or any amendment or
supplement thereto, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to such seller
and furnished to the Seller in writing by such seller expressly for
use therein, and provided that the Seller will not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if
31
<PAGE>
any, who controls such underwriter within the meaning of the
Securities Act under the indemnity agreement in this subsection (e)
with respect to any preliminary prospectus or the final prospectus or
the final prospectus as amended or supplemented, as the case may be,
to the extent that any such loss, claim, damage or liability of such
underwriter or controlling Person results from the sale by such
underwriter of Registrable Securities to a Person to whom there was
not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as
then amended or supplemented, whichever is most recent, if the Seller
has previously furnished copies thereof to such underwriter, or from a
sale to a Person in a state where the offering has not been registered
or qualified, if the Seller has notified the seller and any
underwriter involved in such sale of the states where the offering has
been registered or qualified.
(ii) It shall be a condition to the obligation of the Seller
to effect a registration of Registrable Securities under the
Securities Act pursuant hereto that (X) each seller, severally and not
jointly, indemnify and hold harmless the Seller and each person, if
any, who controls the Seller within the meaning of the Securities Act
or the Exchange Act to the same extent as the indemnity from the
Seller in the foregoing paragraph, but only with reference to any
breach by such seller of any agreement between such seller, and the
Seller with respect to the offering and with reference to information
relating to such seller furnished to the Seller in writing by such
seller expressly for use in the registration statement, any prospectus
or preliminary prospectus contained therein or any amendment or
supplement thereto and (Y) each seller, in the event that Registrable
Securities are to be sold in an underwritten offering, enters into an
underwriting agreement containing customary representations and
warranties, covenants, conditions and indemnification provisions.
(iii) In case any claim shall be made or any proceeding
(including any governmental investigation) shall be instituted
involving any indemnified party in respect of which indemnity may be
sought pursuant to this subsection (g), such indemnified party shall
promptly notify the indemnifying party in writing of the same,
provided that failure to notify the indemnifying party shall not
relieve it from any liability it may have to an indemnified party
otherwise than under this subsection (g). The indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party in such proceeding and shall pay the fees and disbursements of
such counsel. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and disbursements of
such counsel shall be at the expense of such indemnified party unless
(A) the indemnifying party shall have failed to retain counsel for the
indemnified party as aforesaid, (B) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel or (C) representation of such indemnified party by the counsel
retained by the indemnifying party would, in the reasonable opinion of
the indemnified party, be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding, provided that the
Seller shall not be liable for the fees and
32
<PAGE>
disbursements of more than one additional counsel for all indemnified
parties. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection (e)
is due in accordance with its terms but is for any reason held by a court
to be unavailable on grounds of policy or otherwise, the Seller or the
applicable sellers, as the case may be, shall contribute to the aggregate
losses, claims, damages and liabilities incurred (including legal or other
expenses reasonably incurred in connection with the investigating or
defending of same) by the other and for which such indemnification was
sought. In determining the amount of contribution to which the respective
parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the securities included in the
registration statement (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances;
provided, however, that (i) in no case shall any seller of Registrable
Securities be required to contribute any amount in excess of the total
public offering price of the Registrable Securities sold by him and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this subsection (f), each person who controls any seller of
Registrable Securities or the Seller shall have the same rights to
contribution as such seller or the Seller. Any party entitled to
contribution shall, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
for contribution may be made against the Seller or the seller of
Registrable Securities under this subsection (f), notify the Seller or such
seller, as the case may be, but the omission to so notify the Seller or
such seller, as the case may be, shall not relieve it from any other
obligation it may have hereunder or otherwise.
(g) After the date hereof, the Seller shall not grant to any holder of
securities of the Seller any registration rights which have a priority
greater than or equal to those granted to holders of Registrable Securities
pursuant to this Section 6.01 without the prior written consent of the
holders of at least a majority of the aggregate outstanding Registrable
Securities, voting as a single group.
Article VII
Conditions
The obligations of each Purchaser under this Agreement to purchase Series D
Shares and the Warrants at the Closing are subject to the fulfillment at or
before the Closing of each of the following conditions, any of which may be
waived in writing by such Purchaser:
33
<PAGE>
7.01 Representations and Agreements. The representations and
------------------------------
warranties of the Seller contained in this Agreement shall be true, correct and
complete as of the Closing. The Seller shall have performed or fulfilled all
agreements, obligations and conditions contained herein required to be performed
or fulfilled by the Seller at the Closing.
7.02 Due Diligence. The Purchaser shall be satisfied with its due
-------------
diligence investigation of the affairs of the Seller, including, without
limitation, its review of the interim unaudited financial statements of the
Seller at and for the two (2) months ended February 28, 1998. For purposes of
this section, a Purchaser shall be deemed to be satisfied with its due diligence
investigation unless, on or prior to March 31, 1998, such Purchaser gives
written notice to the Seller that such Purchaser is not so satisfied and is
electing not to consummate the transactions contemplated hereby, which notice
shall specify, with reasonable particularity, the basis of such election. No
waiver of rights for breach of representations arises from such due diligence
investigation.
7.03 Proceedings. All corporate and legal proceedings taken by the
-----------
Seller in connection with the transactions contemplated hereby and all documents
and papers relating to such transactions shall be satisfactory to the
Purchasers, in the reasonable exercise of the judgment of the Purchaser.
7.04 Opinion. The Purchasers shall have received a favorable legal
-------
opinion, dated the Closing Date, from counsel to the Seller, substantially in
the form attached as Exhibit C.
7.05 Blue Sky Qualifications. The Seller shall have obtained all
-----------------------
necessary Blue Sky permits and qualifications, or secured exemptions therefrom,
required by any state for the offer and sale of the Series D Shares and the
Warrants.
7.06 Reservation of Common Stock and Series B Preferred Stock. The
--------------------------------------------------------
Purchaser shall have received evidence satisfactory to the Purchaser that the
Seller has reserved a sufficient number of shares of Common Stock and Series B
Preferred Stock for the Purchaser to exercise the Warrants.
7.07 Amendment to Articles of Incorporation. The Articles of
--------------------------------------
Incorporation and any other necessary documents shall be amended to provide for
the Series D Preferred Stock and if necessary to increase the number of
authorized shares of Common Stock and/or Series B Preferred Stock to allow for
issuance of the Common Stock and/or Series B Preferred Stock upon exercise of
the Warrants
7.08 Consent of the holders of the Series A Preferred Stock and Series
-----------------------------------------------------------------
B Preferred Stock. The consent of the holders of the Series A Preferred Stock
- -----------------
and Series C Preferred Stock required in order to establish the rank and
priority of the Series D Preferred Stock with respect to such Series A Preferred
Stock and Series C Preferred Stock shall have been obtained.
7.09 Deliveries at Closing. The Seller shall have delivered to the
---------------------
Purchaser on the date of Closing:
(a) An Officer's Certificate dated the Closing Date, stating
that the conditions set forth in Section 7.01 have been satisfied;
34
<PAGE>
(b) Copies of the Articles of Incorporation and Bylaws of the
Seller, each certified by an officer of the Seller;
(c) Copies of the resolutions of the Seller's Board of
Directors, authorizing the transactions contemplated hereby; and
(d) Such other documents relating to the transactions
contemplated by this Agreement as such Purchaser or such Purchaser's
counsel may reasonably request.
Article VIII
Miscellaneous
8.01 Use of Pronouns. All pronouns and any variations thereof used
---------------
herein shall be deemed to refer to the masculine, feminine, singular or plural,
as the identity of the person or persons may require.
8.02 Amendments. Neither this Agreement nor any provision hereof
----------
shall be waived, modified, changed, discharged, terminated, revoked or canceled
except by an instrument in writing signed by the party effecting the same
against whom any change, discharge or termination is sought.
8.03 Headings. The headings in this Agreement are for convenience and
--------
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
8.04 Severability. The parties to this Agreement expressly agree that
------------
it is not the intention of any of them to violate any public policy, statutory
or common law rules, regulations, or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such policy, rule,
regulation, or decision, the provision, section, sentence, word, clause, or
combination thereof causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision, sentence, word, clause, or
combination thereof as may be valid and consistent with the intent of the
parties under this Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties, unless the inoperative provision would
cause enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
8.05 Notices. Notices required or permitted to be given hereunder
-------
shall be in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed: (i)
if to the Seller, to Satellink Communications, Inc., 1325 Northmeadow Parkway,
Suite 120, Roswell, Georgia 30076, Attention: Daniel D. Lensgraf, with a copy
(which shall not constitute notice) to Alston & Bird, One Atlantic Center, 1201
West Peachtree Street, Atlanta, Georgia 30309, Attention: Sidney J. Nurkin,
Esq., or (ii) if to the Purchaser, to the address for correspondence set forth
on the signature page to this Agreement, or at such other address as may have
been specified by written notice given in accordance with this Section 8.05.
35
<PAGE>
8.06 Remedies. Failure of the Seller or the Purchaser to exercise any
--------
right or remedy under this Agreement or any other agreement between the Seller
and the Purchaser, or otherwise, or delay by the Seller or the Purchaser in
exercising such right or remedy, will not operate as a waiver thereof. No
waiver by the Seller or the Purchaser will be effective unless and until it is
in writing and signed by the Seller or the Purchaser, as the case may be.
8.07 Choice of Law. This Agreement shall be enforced, governed and
-------------
construed in all respects in accordance with the laws of the State of Georgia,
as such laws are applied by the Georgia courts to agreements entered into and to
be performed in Georgia by and between residents of Georgia, and shall inure to
the benefit of and be binding upon the Purchaser, the Purchaser's heirs, estate,
legal representatives, successors and assigns and shall inure to the benefit of
and be binding upon the Seller, its successors and assigns. If any provision of
this Stock Purchase Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed modified to conform
with such statute or rule of law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provisions hereof.
8.08 Successors. This Agreement will be binding upon and inure to the
----------
benefit of the parties and their respective successors and assigns; provided,
--------
however, that no sale, assignment or other transfer by any party to this
- -------
Agreement of any of its Capital Stock or rights hereunder to another Person will
be valid and effective unless and until the transferee or assignee first agrees
in writing to be bound by the terms and conditions of this Agreement and the
agreements and instruments related hereto, in a form and substance reasonably
satisfactory to the Seller.
8.09 Survival. The representations, warranties and agreements
--------
contained in this Agreement shall survive the execution and delivery of this
Agreement.
8.10 Confidentiality. All nonpublic information disclosed by any of
---------------
the parties hereto to the representatives of the other parties shall be kept
strictly confidential.
8.11 Entire Agreement. The Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto.
8.12 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Telecopy transmission of
signatures shall be deemed originals.
36
<PAGE>
SATELLINK COMMUNICATIONS, INC.
SIGNATURE PAGE
The Purchaser hereby purchases for the number of Series D Shares Warrants as set
forth below.
1. Dated: April 3, 1998.
2. Number of Series D Shares purchased:
-------------
3. Number of Warrants purchased:
----------------
4. Aggregate purchase price for number of Series D Shares purchased, at
$1,000.00 per Share: $
------------------
5. Other Securities of Seller held by the Purchaser:
[PURCHASER]
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Address:
------------------------------
--------------------------------------
--------------------------------------
Taxpayer I.D. No.
--------------------
SATELLINK COMMUNICATIONS, INC.
Dated: By:
-------------------- -----------------------------------
Chief Executive Officer
37
<PAGE>
EXHIBIT A
Designation of Terms of Series D Redeemable Preferred Stock
<PAGE>
DESIGNATION OF TERMS OF
SERIES D REDEEMABLE PREFERRED STOCK
G. SERIES D REDEEMABLE PREFERRED STOCK. The authorized shares of
Preferred Stock of the Corporation shall include a series designated
as Series D Redeemable Preferred Stock (the "Series D Preferred
Stock"). The rights, preferences, privileges and restrictions granted
to and imposed upon the Series D Preferred Stock are:
Section 1. Designation and Rank.
--------- --------------------
The number of shares which shall constitute the Series D Preferred
Stock shall be 4,500 shares, $.01 par value per share. All shares of Series D
Preferred Stock shall rank equally and be identical in all respects. As long as
any shares of the Series D Preferred Stock are issued and outstanding, the
Corporation shall be restricted from issuing additional securities of any kind,
including shares of preferred stock of any class, series or designation, which
rank on a parity with or senior to the Series D Preferred Stock. Issuances of
the Series D Preferred shall be limited to issuances pursuant to the terms of
that certain Preferred Stock and Warrant Purchase Agreement (the "Purchase
Agreement") dated as of March ___, 1998, between the Corporation and each of
the purchasers named therein.
Section 2. Definitions.
--------- -----------
Unless the context otherwise requires, the terms defined in this
Section 2 shall have, for all purposes of this Article V.G., the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
"Business Day" shall mean a day other than a Saturday, a Sunday or any
other day on which banking institutions in Georgia generally are not open for
business.
"Series D Dividend Payment Date" shall mean the last day of each month
during the Series D Dividend Payment Period.
"Series D Dividend Payment Period" shall mean the period from, and
including, the Initial Issue Date to, but not including, the date all the
outstanding shares of Series D Preferred Stock are redeemed and the redemption
price is paid in full.
"Series D Dividend Period" shall mean a monthly dividend period
commencing on the Initial Issue Date and thereafter on the first day of each
month and ending on and including the day preceding the first day of the next
succeeding Series D Dividend Period.
<PAGE>
"Series D Dividend Record Date" shall mean the close of business on
the date that is one (1) Business Day prior to any Series D Dividend Payment
Date.
"Initial Issue Date" shall mean the date that shares of Series D
Preferred Stock are first issued by the Corporation.
"Liquidation Preference" shall mean, with respect to each share of
Series D Preferred Stock outstanding, $1,000.00 per share.
"Redemption Date" shall mean with respect to each share of Series D
Preferred Stock the date on which such share is redeemed and the redemption
price for such share is paid in full.
"Series D Preferential Amount" shall mean, with respect to each share
of Series D Preferred Stock outstanding, an amount equal to the Liquidation
Preference plus all accrued and unpaid dividends thereon.
Section 3. Dividends.
--------- ---------
(a) The holders of shares of the Series D Preferred Stock shall be
entitled to receive, when, as and if declared by the board of directors of the
Corporation out of funds legally available therefor, cumulative cash dividends
at an annual rate of 8.5% of the Liquidation Preference per share of the Series
D Preferred Stock. Such dividends shall be cumulative from the Initial Issue
Date, whether or not in any Series D Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of such dividends
and whether or not such dividends are declared, and shall be payable monthly,
when, as and if declared by the board of directors of the Corporation on a
Series D Dividend Payment Date. If such Series D Dividend Payment Date shall be
on a day other than a Business Day, then the Series D Dividend Payment Date
shall be on the next succeeding Business Day. Each such dividend shall be
payable in arrears to the holders of record of shares of the Series D Preferred
Stock, as they appear on the stock records of the Corporation at the Series D
Dividend Record Date. Dividends on the Series D Preferred Stock shall accrue
(whether or not declared) on a daily basis from the Initial Issue Date and
accrued dividends for each Series D Dividend Period shall accumulate to the
extent not paid on the Series D Dividend Payment Date first following the
Series D Dividend Period for which they accrue. As used herein, the term
"accrued" with respect to dividends includes both accrued and accumulated
dividends. Accrued and unpaid dividends for any past Series D Dividend Periods
may be declared and paid at any time, without reference to any regular payment
date, to holders of record on the applicable Series D Dividend Record Date, not
exceeding 45 days prior to the payment date thereof, as may be fixed by the
board of directors of the Corporation.
(b) The amount of dividends payable for each full Series D Dividend
Period for the Series D Preferred Stock shall be computed by dividing the
annual dividend rate (8.5%) by twelve (rounded down to the nearest cent). The
amount of dividends payable shall be computed on the basis of a 360-day year of
twelve 30-day months. The initial
2
<PAGE>
dividend payment will be calculated based on the number of days elapsed from
the Initial Issue Date until the first Series D Dividend Payment Date. The
final dividend payment will be calculated based on the number of days elapsed
from the most recent Series D Dividend Payment Date until the Redemption Date.
(c) Except as otherwise provided in this Article V, so long as any
shares of the Series D Preferred Stock are outstanding, no other stock of the
Corporation ranking on a parity with or junior to the Series D Preferred Stock
as to dividends or upon liquidation, dissolution or winding up shall be
redeemed, purchased or otherwise acquired for any consideration (except by
conversion into or exchange for shares of the Series C Preferred Stock or other
stock ranking junior to the Series D Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) and no dividends (other than dividends
or distributions paid in shares of or options, warrants or rights to purchase
shares of Class A Common Stock, Class B Preferred Stock or other stock ranking
junior to the Series D Preferred Stock) shall be declared or paid or set apart
for payment, unless in each case (i) the full cumulative dividends, if any,
accrued on all outstanding shares of the Series D Preferred Stock shall have
been paid or set apart for payment for all past Series D Dividend Periods and
(ii) sufficient funds shall have been set apart for the payment of the dividend
for the current Series D Dividend Period with respect to the Series D Preferred
Stock.
Section 4. Voting Rights
--------- -------------
(a) Except as otherwise provided in subsection 4(b) below or as
required by applicable law, prior to redemption as provided herein, the holders
of Series D Preferred Stock shall not be entitled to vote or give a consent to
or on any matters required or permitted to be submitted to the shareholders of
the Corporation for their approval.
(b) So long as any shares of the Series D Preferred Stock remain
outstanding, the consent of the holders of at least sixty-seven percent (67%)
of the shares of the Series D Preferred Stock outstanding at the time given in
person or by proxy either in writing (as permitted by law and the Articles of
Incorporation and Bylaws of the Corporation) or at any special or annual
meeting, shall be necessary to permit, effect or validate any one or more of
the following:
(i) the authorization, creation or issuance, or any increase
in the authorized or issued amount, of any class or series of stock,
or any security convertible into stock of such class or series,
ranking prior to or on a parity with the Series D Preferred Stock as
to dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Corporation;
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Articles
of Incorporation which would adversely affect any right, preference,
privilege or voting power of the Series D Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount
of authorized preferred stock or the
3
<PAGE>
creation and issuance of other series of preferred stock, or any
increase in the amount of authorized shares of such series or of any
other series of preferred stock, in each case ranking junior to the
Series D Preferred Stock with respect to the payment of dividends and
the distribution of assets upon liquidation, dissolution or winding
up, shall not be deemed to adversely affect such rights, preferences,
privileges or voting powers; or
(iii) any increase in the authorized number or reclassification
of the Series D Preferred Stock.
Section 5. Liquidation.
--------- -----------
The Series D Preferred Stock shall upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, rank pari passu with
---- -----
the Series C Preferred Stock and rank senior and prior to the Class A Common
Stock and any other outstanding class or classes of stock of the Corporation,
including the Corporation's Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock (collectively herein called the "Junior
Securities"), so that holders of shares of Series D Preferred Stock shall be
entitled to be paid before any distribution is made to the holders of the
Junior Securities upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation. The amount payable on each share of Series D
Preferred Stock in the event of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation shall be $1,000.00 per share. If,
upon any such liquidation, dissolution or winding up of the Corporation, its
net assets are insufficient to permit the payment in full of the amounts to
which the holders of all outstanding shares of Series D Preferred Stock and
Series C Preferred Stock are entitled as above provided, the entire net assets
of the Corporation remaining (after full payment is made on any class or
series of stock ranking prior to the Series D Preferred Stock) shall be
distributed among the holders of shares of Series D Preferred Stock in amounts
proportionate to the full preferential amounts to which they and holders of
shares of Series C Preferred Stock and any other preferred shares ranking in
parity with the Series D Preferred Stock are entitled. After such payment shall
have been made in full to the holders of the Series D Preferred Stock and the
Series C Preferred Stock, the holders of the outstanding Series D Preferred
Stock shall be entitled to no further participation in such distribution of the
assets of the Corporation and the remaining assets of the Corporation shall be
divided and distributed among the holders of the other classes of stock then
outstanding according to their respective rights and shares. For the purpose of
this Section 5, the voluntary sale, lease, exchange or transfer, for cash,
shares of stock, securities or other consideration, of all or substantially all
the Corporation's property or assets to, or its consolidation or merger with,
one or more corporations shall not be deemed to be a liquidation, dissolution
or winding up of the Corporation, voluntary or involuntary.
Section 6. Redemption.
--------- ----------
4
<PAGE>
(a) The Corporation shall redeem the Series D Preferred Stock upon the
completion of a Qualified Public Offering (as defined below), in whole but not
in part (the "Mandatory Redemption"), out of funds legally available therefor,
subject to the notice provisions of this Section 6 at a redemption price per
share equal to the Series D Preferential Amount. "Qualified Public Offering"
shall mean an underwritten public offering covering the offering and sale of
Common Stock of the Corporation in which the aggregate gross proceeds to the
Corporation equals or exceeds $15,000,000.
(b) At anytime and from time to time after the first anniversary of
the Initial Issue Date, the Corporation may redeem (subject to the legal
availability of funds), in whole or in part, but in any event in increments of
not less than the lesser of (i) $500,000 or (ii) the amount necessary to redeem
all Series D Preferred Stock, at a redemption price per share equal to the
Series D Preferential Amount.
(c) At anytime after the fifth anniversary of the Initial Issue Date,
the holders of shares of Series D Preferred Stock then outstanding shall have
the option of demanding redemption of the Series D Preferred Stock held by such
holders upon the terms and conditions set forth in this subparagraph 6(c). In
the event the holders of twenty (20%) of the Series D Preferred Stock then
outstanding shall demand such redemption, notice of such demand for redemption
(the "Redemption Demand") shall be given to the Corporation by first class
mail, postage prepaid, mailed not less than 40 nor more than 60 days prior to
the redemption date, as specified by such holders in such notice, to the
Corporation at the address provided in Section 7 hereof.
(d) Not less than 5 days prior to the anticipated, date of a Qualified
Public Offering or within 10 days after the receipt of a Redemption Demand, as
the case may be, the Corporation shall give notice (the "Redemption Notice") to
each holder of record of shares to be redeemed at such holder's address as the
same appears on the stock records of the Corporation. Each such Redemption
Notice shall state: (i) the Redemption Date; (ii) the number of shares of
Series D Preferred Stock to be redeemed; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed shall cease to accrue on such Redemption Date. Redemption Notice
having been mailed as aforesaid, from and after the Redemption Date, unless the
Corporation shall be in default in providing money for the payment of the
redemption price (including any accrued and unpaid dividends to (and including)
the date fixed for redemption), (i) dividends on the shares of the Series D
Preferred Stock so called for redemption shall cease to accrue, (ii) said
shares shall be deemed no longer outstanding, and (iii) all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the moneys payable upon redemption without interest
thereon) shall cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall deposit with a bank or trust
company having an office in Atlanta, Georgia, and having a capital and surplus
of at least $50,000,000, funds necessary for such redemption (and so as to be
and continue to be available therefor), with irrevocable instructions and
authority to such bank or trust company that such funds be applied to the
redemption of
5
<PAGE>
the shares of Series D Preferred Stock. Any interest accrued on such funds
shall be paid to the Corporation from time to time. Any funds so deposited and
unclaimed at the end of three years from such Redemption Date shall be released
or repaid to the Corporation, after which, subject to any applicable laws
relating to escheat or unclaimed property, the holder or holders of such shares
of Series D Preferred Stock so called for redemption shall look only to the
Corporation for payment of the redemption price. Notwithstanding the foregoing,
a Mandatory Redemption pursuant to Section 6(a) is expressly conditioned upon
the completion of a Qualified Public Offering.
(e) Upon surrender in accordance with said Redemption Notice of the
certificates for any such shares so redeemed, such shares shall be redeemed by
the Corporation at the redemption price aforesaid.
Section 7. Form of Notice.
---------- ---------------
Except as may be otherwise provided for herein, all notices referred
to herein shall be in writing, and all notices hereunder shall be deemed to
have been given upon receipt, in the case of a Redemption Demand given to the
Corporation as contemplated in Section 6 hereof, or, in all other cases, upon
the earlier of receipt of such notice or three Business Days after the mailing
of such notice if sent by registered mail or overnight delivery (unless
first-class mail shall be specifically permitted for such notice) with postage
prepaid, addressed: if to the Corporation, to its offices at 1325 Northmeadow
Parkway, Suite 120, Roswell, Georgia 30076 Attention: Daniel D. Lensgraf, or if
to any holder of Series D Preferred Stock, to such holder at the address of
such holder as listed in the stock record books of the Corporation (which may
include the records of any transfer agent for the Series D Preferred Stock); or
to such other address as the Corporation or holder, as the case may be, shall
have designated by notice similarly given.
6
<PAGE>
EXHIBIT B
Warrant Certificate
<PAGE>
EXHIBIT B
---------
FORM OF WARRANT
----------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION
WITH THE DISTRIBUTION HEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD,
OFFERED FOR SALE, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE
SECURITIES LAWS.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT
TO THE TERMS AND PROVISIONS OF PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT, DATED AS OF MARCH __, 1998, BY AND AMONG SATELLINK
COMMUNICATIONS, INC. (THE "COMPANY"), AND THE OTHER PARTIES LISTED ON THE
SIGNATURE PAGES TO SUCH AGREEMENTS (AS SUCH AGREEMENTS MAY BE SUPPLEMENTED,
MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE "PURCHASE
AGREEMENT"). COPIES OF THE PURCHASE AGREEMENT ARE AVAILABLE AT THE
EXECUTIVE OFFICES OF THE COMPANY.
[________] shares of
Common Stock and/or Series B Preferred Stock,
par value $.01 per share,
of the Company Warrant No. [__]
WARRANT TO PURCHASE COMMON STOCK
AND/OR SERIES B PREFERRED STOCK
OF SATELLINK COMMUNICATIONS, INC.
This is to certify that, for good and valuable consideration, which is
hereby acknowledged as received, ("Purchaser"), its successors and registered
assigns, is entitled at any time after April 3, 1998 and prior to 12:00
midnight, New York time, on April 3, 2008, to exercise this Warrant to purchase
shares of the Class A Common Stock, par value $.01 per share, or Series B
Convertible Preferred Stock, par value $.01 per share, of Satellink
Communications, Inc., a Georgia corporation (the "Company"), as the same shall
be adjusted from time to time pursuant to the provisions of the Purchase
Agreement at a price per share as specified in the Purchase Agreement and to
exercise the
<PAGE>
other rights, powers, and privileges hereinafter provided, all on the terms and
subject to the conditions specified in this Warrant and in the Purchase
Agreement. If the Purchaser is a Regulated Holder (as defined in the Purchase
Agreement), then in no event shall this Warrant be exercisable for shares of
Common Stock and/or Series B Preferred Stock which, when aggregated with all
other capital stock of the Company (other than shares of Non-Attributable Stock)
then held or previously held by or currently issuable without restriction to
Purchaser or its Affiliates would, upon issuance, represent in excess of 24.99%
of the Equity of the Company unless such shares, when issued, would constitute
Non-Attributable Stock.
This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in the Purchase Agreement, to all
terms and provisions of which the registered holder of this Warrant, by
acceptance of this Warrant, assents. Reference is hereby made to the Purchase
Agreement for a more complete statement of the rights and limitations of rights
of the registered holder of this Warrant and the rights and duties of the
Company under this Warrant. Copies of the Purchase Agreement are on file at the
office of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of April 3, 1998.
SATELLINK COMMUNICATIONS, INC.
By:
------------------------------
ATTEST:
- -------------------------
Secretary
<PAGE>
SUBSCRIPTION FORM
-----------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for and purchases __________________ shares of Common Stock and/or
__________ shares of Series B Preferred Stock of Satellink Communications, Inc.
purchasable with this Warrant, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock and/or Series B Preferred Stock
hereby purchased (and any securities or other property issuable upon such
exercise) be issued in the name of ________________________ and delivered to
_________________________________, whose address is
___________________________________, and if such shares of Common Stock and/or
Series B Preferred Stock do not include all of the shares of Common Stock and/or
Series B Preferred Stock issuable as provided in this Warrant, then a new
Warrant of like tenor and date for the balance of the shares of Common Stock
and/or Series B Preferred Stock issuable thereunder to be delivered to the
undersigned.
Dated:
---------------,-------------.
------------------------------------------------
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock and/or Series B Preferred Stock set forth below:
Class of Stock No. of Shares Name and Address of Assignee
- -------------- ------------- ----------------------------
and does hereby irrevocably constitute and appoint as attorney ________________
_______________ to register such transfer on the books of
_______________________ maintained for the purpose, with full power of
substitution in the premises.
Dated:
--------------,---------------.
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT 5
[ALSTON & BIRD LLP LETTERHEAD APPEARS HERE]
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-4777
www.alston.com
April 8, 1998
Satellink Communications, Inc.
1325 NorthMeadow Parkway
Suite 120
Roswell, Georgia 30075
Re: Registration Statement on Form S-1 (No. 333-________)
Ladies and Gentlemen:
We have acted as counsel to Satellink Communications, Inc., a Georgia
corporation (the "Company"), and certain shareholders of the Company (the
"Selling Shareholders") named in Schedule II to the Underwriting Agreement
referred to herein in connection with the filing of the above-referenced
Registration Statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") to register under the Securities Act of
1933, as amended (the "Act"), __________ shares of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), for issuance and sale by the
Company (the "Company Shares") and __________ shares of Common Stock for sale by
the Selling Shareholders (the "Selling Shareholder Shares") (the Company Shares
and the Selling Shareholder Shares being hereinafter referred to collectively as
the "Shares"). The Company and the Selling Shareholders intend, following the
effectiveness of the Registration Statement, to sell the Shares to the several
underwriters (the "Underwriters") named in Schedule I to the Underwriting
Agreement (the "Underwriting Agreement") to be entered into by and among the
Company, the Selling Shareholders and the Underwriters.
We have examined the Restated Articles of Incorporation of the Company, as
amended, the Amended and Restated Bylaws of the Company, records of proceedings
of the Board of Directors, or committees thereof, and the shareholders of the
Company deemed by us to be relevant to this opinion letter, the Registration
Statement and the proposed form of Underwriting Agreement. We also have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such other corporate records of the Company, such other
agreements and instruments, such certificates of public officials, officers of
the Company, the Selling Shareholders and other persons, and such other
documents as we have deemed necessary or appropriate as a basis for the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all
<PAGE>
Satellink Communications, Inc.
April __, 1998
Page 2
signatures, the legal capacity of all natural persons, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, conformed,
photostatic or facsimile copies, and the authenticity of the originals of such
copies, and we have assumed all certificates of public officials to have been
properly given and to be accurate.
As to factual matters relevant to this opinion letter, we have relied
upon the representations and warranties of the Company and the Selling
Shareholders as to factual matters contained in the Underwriting Ageement and in
certificates and statements of officers of the Company and certain public
officials. Except to the extent expressly set forth herein, we have made no
independent investigations with regard thereto, and, accordingly, we do not
express any opinion as to matters that might have been disclosed by independent
verification.
On the basis of the foregoing, and subject to the limitations set
forth herein, we are of the opinion that, upon due execution and delivery of the
Underwriting Agreement by the parties thereto and upon delivery of the Shares
against payment therefor as provided in the Underwriting Agreement, the Shares
will be validly issued, fully paid and nonassessable by the Company.
Members of this firm are licensed to practice law in the State of
Georgia and before the federal courts having jurisdiction in the State of
Georgia, and we express no opinion with regard to any law other than the laws of
the State of Georgia.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus constituting a part thereof. In giving such consent,
we do not thereby admit that we are within the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
<PAGE>
Satellink Communications, Inc.
April __, 1998
Page 3
This opinion letter is being furnished by us to the Company and the
Commission solely for the benefit of the Company and the Commission in
connection with the Registration Statement and is not to be used, circulated,
quoted or otherwise relied upon by any other person, or by the Company or the
Commission for any other purpose, without our express written consent. The only
opinion rendered by us consists of those matters set forth in the fourth
paragraph hereof, and no opinion may be implied or inferred beyond those
expressly stated. This opinion letter is rendered as of the date hereof, and we
have no obligation to update this opinion letter.
Sincerely,
ALSTON & BIRD LLP
By:
-----------------------------------
M. Hill Jeffries
Partner
Prepared by: Selina D. Barnett
Reviewed by: Sidney J. Nurkin
<PAGE>
EXHIBIT 10.1
SATELLINK COMMUNICATIONS, INC.
1997 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the Satellink Communications, Inc. 1997
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of Satellink Communications, Inc. (the "Company"), by linking the
personal interests of its employees, officers and directors to those of the
stockholders and by providing such persons with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract, and retain the services of persons upon
whose judgment, interest, and special effort the successful conduct of its
operation is largely dependent. Accordingly, the Plan permits the grant of
incentive awards from time to time to selected employees, officers and
directors.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon which
it shall be approved by the Board. However, the Plan shall be submitted to the
stockholders of the Company for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within l2 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
<PAGE>
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" means the committee of the Board described in
Article 4.
(f) "Company" means Satellink Communications, Inc., a Georgia
corporation.
(g) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3), provided that no employee shall be a Covered Employee
until the deduction limitations of Section 162(m) are applicable to the
Company and any reliance period under Section 162(m) has expired, as
described in Section 16.15.
(h) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Company, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in the
judgment of the Committee, is permanent and continuous in nature. The
Committee may require such medical or other evidence as it deems necessary
to judge the nature and permanency of the Participant's condition.
(i) "Dividend Equivalent" means a right granted to a Participant
under Article 11.
(j) "Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 25% or more of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition by a
Person who is on the Effective Date the beneficial owner of 25% or
more of the Outstanding Company Voting Securities, (ii) any
acquisition directly from the Company, (iii) any acquisition by the
-2-
<PAGE>
Company, (iv) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company. or (v) any acquisition by
any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this definition;
or
(2) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power
of the then outstanding voting securities entitled to vote generally
in the election of directors of the corporation resulting from such
Business Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of
the Outstanding Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination, and (iii) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
-3-
<PAGE>
(k) "Effective Date" has the meaning assigned such term in Section
2.1.
(l) "Fair Market Value", on any date, means (i) if the Stock is
listed on a securities exchange or is traded over the Nasdaq National
Market, the closing sales price on such exchange or over such system on
such date or, in the absence of reported sales on such date, the closing
sales price on the immediately preceding date on which sales were
reported, or (ii) if the Stock is not listed on a securities exchange or
traded over the Nasdaq National Market, the mean between the bid and
offered prices as quoted by Nasdaq for such date, provided that if it is
determined that the fair market value is not properly reflected by such
Nasdaq quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor
provision thereto.
(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a
Participant under Article 12, that relates to or is valued by reference to
Stock or other Awards relating to Stock.
(q) "Parent" means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the Company.
For Incentive Stock Options, the term shall have the same meaning as set
forth in Code Section 424(e).
(r) "Participant" means a person who, as an officer, employee,
consultant or director of the Company or any Parent or Subsidiary, has
been granted an Award under the Plan.
(s) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which
is contingent upon achieving certain performance goals established by the
Committee.
(t) "Plan" means the Satellink Communications, Inc. 1996 Long-Term
Incentive Plan, as amended from time to time.
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(u) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(v) "Retirement" means a Participant's termination of employment
with the Company, Parent or Subsidiary after attaining any normal or early
retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company, or, in the event of the
inapplicability thereof with respect to the person in question, as
determined by the Committee in its reasonable judgment.
(w) "Stock" means the $0.01 par value Class A Common Stock of the
Company and such other securities of the Company as may be substituted for
Stock pursuant to Article 14.
(x) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(y) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Company. For Incentive Stock Options, the term shall have the meaning set
forth in Code Section 424(f).
(z) "1933 Act" means the Securities Act of 1933, as amended from
time to time.
(aa) "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board who
are both (i) "outside directors" as that term is used in Section 162(m) of the
Code and the regulations promulgated thereunder, to the extent Section 162(m) is
applicable to the Company as described in Section 16.15 hereof and (ii)
"Non-Employee Directors" as that term is defined in Rule 16b-3 promulgated under
the 1934 Act, if and when such rule applies with respect to officers and
directors of the Company. Until such time as there shall be a Compensation
Committee of the Board, the Plan shall be administered by the full Board and it
shall have all the powers of the Committee hereunder, and any reference herein
to the Committee (other than in this Section 4.1) shall include the Board.
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4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Parent or Subsidiary, the Company's independent certified public accountants, or
any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants:
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price, grant price,
or purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof based in
each case on such considerations as the Committee in its sole discretion
determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines:
(f) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid
in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award:
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(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan, and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1.,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 1,000,000.
5.2. LAPSED AWARDS. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, the maximum number of shares of Stock
with respect to one or more Options and/or SARs that may be granted during any
one calendar year under the Plan to any one Covered Employee shall be 250,000.
The maximum fair market value of any Awards (other than Options and SARs) that
may be received by a Covered Employee (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$200,000.
ARTICLE 6
ELIGIBILITY
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6.1. GENERAL. Awards may be granted only to individuals who are
employees, officers or directors of the Company or a Parent or Subsidiary. From
and after the date, if any, upon which the Stock shall be traded on a national
securities exchange or on the Nasdaq National Market, non-employee directors and
consultants of the Company will also be eligible to receive Awards under the
Plan.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock under an
Option shall be determined by the Committee.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon such factors as the Committee may determine in
its sole discretion so that the Option becomes exercisable at an earlier
date.
(c) PAYMENT. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of
Stock shall be delivered or deemed to be delivered to Participants.
Without limiting the power and discretion conferred on the Committee
pursuant to the preceding sentence, the Committee may, in the exercise of
its discretion, but need not, allow a Participant to pay the Option price
by directing the Company to withhold from the shares of Stock that would
otherwise be issued upon exercise of the Option that number of shares
having a Fair Market Value on the exercise date equal to the Option price,
all as determined pursuant to rules and procedures established by the
Committee.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions as may be specified by the
Committee.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
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(a) EXERCISE PRICE. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date
of the grant.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3), (4) and (5) above,
it will automatically become a Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years after it
is granted, unless an earlier time is set in the Award Agreement.
(3) If the Participant terminates employment for any reason
other than as provided in paragraph (4) or (5) below, the Incentive
Stock Option shall lapse, unless it is previously exercised, three
months after the Participant's termination of employment; provided,
however, that if the Participant's employment is terminated by the
Company for cause or by the Participant without the consent of the
Company, the Incentive Stock Option shall (to the extent not
previously exercised) lapse immediately.
(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination
of employment.
(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's
death. Upon the Participant's death, any exercisable Incentive Stock
Options may be exercised by the Participant's beneficiary.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised only
with respect to the shares that were otherwise vested on the Participant's
termination of employment.
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(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of
stock of the Company or any Subsidiary unless the exercise price per share
of such Option is at least 110% of the Fair Market Value per share of
Stock at the date of grant and the Option expires no later than five years
after the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.
(h) DIRECTORS. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Company or Parent or
Subsidiary but only in that individual's position as an employee and not
as a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the Fair
Market Value of one share of Stock on the date of grant in the case
of any SAR related to an Incentive Stock Option.
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(b) OTHER TERMS. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods
of settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined
by the Committee at the time of the grant of the Award and shall be
reflected in the Award Agreement.
ARTICLE 9
PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Shares in its discretion which, depending on the extent to which
they are met, will determine the number and value of Performance Shares that
will be paid to the Participant.
9.3. OTHER TERMS. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
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10.3. FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Option Award or SAR Award, as
determined by the Committee. The Committee may provide that Dividend Equivalents
be paid or distributed when accrued or be deemed to have been reinvested in
additional shares of Stock, or otherwise reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
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13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 13.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Parent or Subsidiary on the grant or exercise of an Award may be
made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
13.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Parent or Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Parent or Subsidiary. No unexercised
or restricted Award shall be assignable or transferable by a Participant other
than by will or the laws of descent and distribution or, except in the case of
an Incentive Stock Option, pursuant to a domestic relations order which would
satisfy Section 414(p)(l)(A) of the Code if such Section applied to an Award
under the Plan; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not result in accelerated taxation, (ii) does not cause any Option intended to
be an incentive stock option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any state or
federal securities laws applicable to transferable Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the
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Participant's death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights under the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If no
beneficiary has been designated or survives the Participant, payment shall be
made to the Participant's estate. Subject to the foregoing, a beneficiary
designation may be changed or revoked by a Participant at any time provided the
change or revocation is filed with the Committee.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
13.8 ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability during his employment or service as a
director, all outstanding Options, Stock Appreciation Rights, and other Awards
in the nature of rights that may be exercised shall become fully exercisable and
all restrictions on outstanding Awards shall lapse. Any such Option, Stock
Appreciation Rights or other Awards shall thereafter continue or lapse in
accordance with the other provisions of the Plan and the Award Agreement. To the
extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options.
13.9. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however, that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10.ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in
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its sole discretion declare all outstanding Options, Stock Appreciation Rights,
and other Awards in the nature of rights that may be exercised to be fully
exercisable, and/or all restrictions on all outstanding Awards to have lapsed,
in each case as of such date as the Committee may, in its sole discretion,
declare, which may be on or before the consummation of such transaction or
event. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options.
13.11. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an event
has occurred as described in Section 13.9 or 13.10 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.11.
13.12 EFFECT OF ACCELERATION. If an Award is accelerated under Section
13.9. 13.10 or 13.11 the Committee may, in its sole discretion, provide (i) that
the Award will expire after a designated period of time after such acceleration
to the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
13.13. PERFORMANCE GOALS. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company or a Parent or Subsidiary of a specified
target return, or target growth in return, on equity or assets, (b) the
Company's, Parent's or Subsidiary's stock price, (c) the achievement by a
business unit of the Company, Parent or Subsidiary of a specified target, or
target growth in, net income or earnings per share, or (d) any combination of
the goals set forth in (a) through (c) above. Furthermore, the Committee
reserves the right for any reason to reduce (but not increase) any Award,
notwithstanding the achievement of a specified goal. If an Award is made on such
basis, the Committee shall establish goals prior to the beginning of the period
for which such performance goal relates (or such later date as may be permitted
under Code Section 162(m) or the regulations thereunder). Any payment of an
Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.
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13.14. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Company to one of its Parents or Subsidiaries, transfers from a Parent
or Subsidiary to the Company, or transfers from one Parent or Subsidiary to
another Parent or Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, there shall be substituted for each such share
of Stock then subject to each Award the number and class of shares into which
each outstanding share of Stock shall be so exchanged, all without any change in
the aggregate purchase price for the shares then subject to each Award.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without shareholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that such amendment, modification or
termination shall not, without the Participant's consent, reduce or diminish the
value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination.
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or any employee, officer,
consultant or director shall have any claim to be granted any Award under the
Plan, and neither the company nor the Committee is obligated to treat
Participants or employees, officers, directors or consultants uniformly.
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16.2. NO SHAREHOLDER RIGHTS. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Parent or Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of the Plan. With respect
to withholding required upon any taxable event under the Plan, the Committee
may, at the time the Award is granted or thereafter, require that any such
withholding requirement be satisfied, in whole or in part, by withholding shares
of Stock having a Fair Market Value on the date of withholding equal to the
amount to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
16.4. NO RIGHT TO EMPLOYMENT OR DIRECTORSHIP. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Parent or Subsidiary to terminate any Participant's employment or
status as a director or consultant at any time, nor confer upon any Participant
any right to continue in the employ or directorship of the Company or any Parent
or Subsidiary.
16.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Parent or Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee shall be indemnified and held harmless by the Company
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
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savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Parent or Subsidiary unless provided otherwise in such other plan.
16.8. EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
1933 Act, any of the shares of Stock paid under the Plan. If the shares paid
under the Plan may in certain circumstances be exempt from registration under
the 1933 Act, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Georgia.
16:14 ADDITIONAL PROVISIONS. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.
16.15 CODE SECTION 162(m). The deduction limits of Code Section 162(m) and
the regulation thereunder do not apply to the Company until such time, if any,
as any class of the Company's common equity securities is registered under
Section 12 of the 1934 Act or the Company otherwise meets the definition of a
"publicly held corporation" under Treasury Regulation l.l62-27(c) or any
successor provision. Upon becoming a publicly held corporation, the deduction
limits of Code Section 162(m) and the regulations thereunder shall not apply to
compensation payable under this Plan until the expiration of the reliance period
described in Treasury Regulation 1.162-27(f) or any successor regulation.
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<PAGE>
The foregoing is hereby acknowledged as being the Satellink
Communications. Inc. 1997 Long-Term Incentive Plan as adopted by the Board of
Directors of the Company on September 18, 1997.
SATELLINK COMMUNICATIONS. INC.
By: ______________________________
Its: _____________________________
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<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
under the
SATELLINK COMMUNICATIONS, INC.
1997 LONG-TERM INCENTIVE PLAN
Optionee:_____________________________
Number Shares Subject to Option:_____________________
Exercise Price per Share:________________________________
Date of Grant:________________________________
1. Grant of Option. Satellink Communications, Inc. (the "Corporation")
hereby grants to the Optionee named above (the "Optionee"), under the Satellink
Communications, Inc. 1997 Long-Term Incentive Plan (the "Plan"), an Incentive
Stock Option to purchase, on the terms and conditions set forth in this
agreement (this "Option Agreement"), the number of shares indicated above of the
Corporation's $0.01 par value Class A common stock (the "Stock"), at the
exercise price per share set forth above (the "Option"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned such terms in
the Plan.
2. Vesting of Option. Unless the exercisability of the Option is
accelerated in accordance with Article 13 of the Plan, the Option shall vest
(become exercisable) in accordance with the following schedule:
Years of Service Percent of Option Shares
After Date of Grant Vested
------------------- ------
Less than 1 0%
1 25%
2 50%
3 75%
4 100%
3. Period of Option and Limitations on Right to Exercise. The Option will,
to the extent not previously exercised, lapse under the earliest of the
following circumstances; provided, however, that the Committee may, prior to the
lapse of the Option under the circumstances described in paragraphs (b), (c) and
(d) below, provide in writing that the Option will extend until a later date,
but if Option is exercised after the dates specified in paragraphs (b), (c) and
(d) above, it will automatically become a Non-Qualified Stock Option:
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
under the
SATELLINK COMMUNICATIONS, INC.
1997 LONG-TERM INCENTIVE PLAN
Optionee:_____________________________
Number Shares Subject to Option:_____________________
Exercise Price per Share:________________________________
Date of Grant:_______________________________
1. Grant of Option. Satellink Communications, Inc. (the "Corporation")
hereby grants to the Optionee named above (the "Optionee"), under the Satellink
Communications. Inc. 1997 Long-Term Incentive Plan (the "Plan"), an Incentive
Stock Option to purchase, on the terms and conditions set forth in this
agreement (this "Option Agreement"), the number of shares indicated above of the
Corporation's $0.01 par value Class A common stock (the "Stock"), at the
exercise price per share set forth above (the "Option"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned such terms in
the Plan.
2. Vesting of Option. Unless the exercisability of the Option is
accelerated in accordance with Article 13 of the Plan, the Option shall vest
(become exercisable) in accordance with the following schedule:
Years of Service Percent of Option Shares
After Date of Grant Vested
------------------- ------
Less than 1 0%
1 25%
2 50%
3 75%
4 100%
3. Period of Option and Limitations on Right to Exercise. The Option will,
to the extent not previously exercised, lapse under the earliest of the
following circumstances: provided, however, that the Committee may, prior to the
lapse of the Option under the circumstances described in paragraphs (b), (c) and
(d) below, provide in writing that the Option will extend until a later date,
but if Option is exercised after the dates specified in paragraphs (b). (c) and
(d) above, it will automatically become a Non-Qualified Stock Option:
<PAGE>
(a) The Option shall lapse as of 5:00 p.m., Eastern Time, on the day
immediately prior to the tenth anniversary of the date of grant [fifth
anniversary if the Optionee owns 10% or more of the voting control of the
Corporation] (the "Expiration Date").
(b) The Option shall lapse three months after the Optionee's
termination of employment for any reason other than the Optionee's death
or Disability; provided, however, that if the Optionee's employment is
terminated by the Corporation for cause or by the Optionee without the
consent of the Corporation, the Option shall lapse immediately.
(c) If the Optionee's employment terminates by reason of Disability,
the Option shall lapse one year after the date of the Optionee's
termination of employment.
(d) If the Optionee dies while employed, or during the three-month
period described in subsection (b) above or during the one-year period
described in subsection (c) above and before the Option otherwise lapses,
the Option shall lapse one year after the date of the Optionee's death.
Upon the Optionee's death, the Option may be exercised by the Optionee's
beneficiary.
If the Optionee or his beneficiary exercises an Option after termination
of employment, the Option may be exercised only with respect to the shares that
were otherwise vested on the Optionee's termination of employment (including
vesting by acceleration in accordance with Article 13 of the Plan).
4. Exercise of Option. The Option shall be exercised by written notice
directed to the Secretary of the Corporation at the principal executive offices
of the Corporation, in substantially the form attached hereto as Exhibit A, or
such other form as the Committee may approve. Such written notice shall be
accompanied by full payment in cash, shares of Stock previously acquired by the
Optionee, or any combination thereof for the number of shares specified in such
written notice; provided, however, that if shares of Stock are used to pay the
exercise price, such shares must have been held by the Optionee for at least six
months. The Fair Market Value of the surrendered Stock as of the date of the
exercise shall be determined in valuing Stock used in payment of the exercise
price. To the extent permitted under Regulation T of the Federal Reserve Board,
and subject to applicable securities laws, the Option may be exercised through a
broker in a so-called "cashless exercise" whereby the broker sells the Option
shares and delivers cash sales proceeds to the Corporation in payment of the
exercise price.
Subject to the terms of this Option Agreement, the Option may be exercised
at any time and without regard to any other option held by the Optionee to
purchase stock of the Corporation.
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<PAGE>
5. Limitation of Rights. The Option does not confer to the Optionee or
the Optionee's personal representative any rights of a shareholder of the
Corporation unless and until shares of Stock are in fact issued to such person
in connection with the exercise of the Option. Nothing in this Option Agreement
shall interfere with or limit in any way the right of the Corporation or any
Subsidiary to terminate the Optionee's employment at any time, nor confer upon
the Optionee any right to continue in the employ of the Corporation or any
Subsidiary.
6. Stock Reserve. The Corporation shall at all times during the term of
this Option Agreement reserve and keep available such number of shares of Stock
as will be sufficient to satisfy the requirements of this Option Agreement.
7. Changes in Capitalization. The Committee may proportionately adjust the
number of shares of Stock covered by the Option and the exercise price for any
increase or decrease in the number of issued shares of Stock covered by the
Option (without any change in the aggregate price to be paid upon exercise of
all of the shares of Stock covered by the Option) resulting from an event
described in Article 14 of the Plan. Any adjustment pursuant to this Section 7
may provide, in the Committee's discretion, for the elimination of any
fractional shares that might otherwise become subject to the Option without
payment therefor.
8. Optionee's Covenant. The Optionee hereby agrees to use his best efforts
to provide services to the Corporation in a workmanlike manner and to promote
the Corporation's interests.
9. Restrictions on Transfer and Pledge. The Option may not be pledged,
encumbered, or hypothecated to or in favor of any party other than the
Corporation or a Parent or Subsidiary, or be subject to any lien, obligation, or
liability of the Optionee to any other party other than the Corporation or a
Parent or Subsidiary. The Option is not assignable or transferable by the
Optionee other than by will or the laws of descent and distribution. The Option
may be exercised during the lifetime of the Optionee only by the Optionee.
10. Legends. Each certificate representing the shares of Stock purchased
upon exercise of this Option shall be endorsed with the following legend and
Optionee shall not make any transfer of the shares of Stock covered by this
Option without first complying with the restrictions on transfer described in
such legend:
TRANSFER IS RESTRICTED
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER SET FORTH IN AN INCENTIVE STOCK OPTION AGREEMENT DATED _________. 1997,
A COPY OF WHICH IS AVAILABLE FROM THE CORPORATION.
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<PAGE>
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION UNDER SUCH ACT
COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR (3) THE ISSUER RECEIVES AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT.
Optionee agrees that the Corporation may also endorse any other legends
required by applicable federal or state securities laws.
The Corporation shall not be required (a) to transfer on its books any
shares of Stock covered by the Option that have been sold or transferred in
violation of the provisions of this Agreement (including the foregoing legends),
or (b) to treat the owner of the shares of Stock covered by the Option, or
otherwise to accord voting or dividend rights to, any transferee to whom the
shares of Stock covered by the Option have been transferred in contravention of
this Agreement (or such legends).
11. Removal of Legend and Transfer Restrictions.
(a) Any legend endorsed on a certificate pursuant to Section 10
hereof and the stop transfer instructions with respect to the shares of
Stock covered by the Option shall be removed and the Corporation shall
issue a certificate without such legend to the holder thereof if such
shares of Stock are registered under the Securities Act of 1933 and a
prospectus meeting the requirements of Section 10 of the Securities Act of
1933 is available.
(b) The restrictions described in the second sentence of the legend
set forth in Section 10 hereof may be removed at such time as permitted by Rule
144 promulgated under the Securities Act of 1933.
12. Restrictions on Issuance of Shares. If at any time the Board shall
determine in its discretion, that listing, registration or qualification of the
shares of Stock covered by the Option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition to the exercise of the Option,
the Option may not be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
13. Plan Controls. The terms contained in the Plan are incorporated into
and made a part of this Option Agreement and this Option Agreement shall be
governed by and construed in accordance with the Plan. In the event of any
actual or alleged conflict between
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<PAGE>
the provisions of the Plan and the provisions of this Option Agreement, the
provisions of the Plan shall be controlling and determinative.
14. Successors. This Option Agreement shall be binding upon any successor
of the Corporation, in accordance with the terms of this Option Agreement and
the Plan.
15. Severability. If any one or more of the provisions contained in this
Option Agreement are invalid, illegal or unenforceable, the other provisions of
this Option Agreement will be construed and enforced as if the invalid, illegal
or unenforceable provision had never been included.
16. Notice. Notices and communications under this Option Agreement must be
in writing and either personally delivered or sent by registered or certified
United States mail, return receipt requested, postage prepaid. Notices to the
Corporation must be addressed to:
Satellink Communications, Inc.
Attn: Daniel D. Lensgraf
Chief Financial Officer
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30075
or any other address designated by the Corporation in a written notice to the
Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Corporation, or at any other address
given by the Optionee in a written notice to the Corporation.
17. Interpretation. It is the intent of the parties hereto that the Option
qualify for incentive stock option treatment pursuant to, and to the extent
permitted by, Section 422 of the Code. All provisions hereof are intended to
have, and shall be construed to have, such meanings as are set forth in
applicable provisions of the Code and Treasury Regulations to allow the Option
to so qualify.
18. Governing Law. This Option Agreement shall be construed, administered
and enforced according to the laws of the State of Georgia.
SIGNATURES ON FOLLOWING PAGE
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<PAGE>
IN WITNESS WHEREOF, Satellink Communications, Inc., acting by and through
its duly authorized officers, has caused this Option Agreement to be executed,
and the Optionee has executed this Option Agreement, all as of the day and year
first above written.
SATELLINK COMMUNICATIONS, INC.
By: __________________
Name:
Title:
OPTIONEE:
______________________
{{name}}
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<PAGE>
EXHIBIT A
---------
NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK OF
SATELLINK COMMUNICATIONS, INC.
Name __________________________________
Address:
_______________________________________
_______________________________________
Date __________________________________
Satellink Communications, Inc.
Attn: Daniel D. Lensgraf
Chief Financial Officer
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30075
Re: Exercise of Incentive Stock Option
I elect to purchase ________________ shares of Class A Common Stock of
Satellink Communications, Inc. pursuant to the Satellink Communications, Inc.
Incentive Stock Option Agreement dated ______________ and the Satellink
Communications, Inc. 1997 Long-Term Incentive Plan. The purchase will take place
on the Exercise Date which will be as soon as practicable following the date
this notice and all other necessary forms and payments are received by
Satellink, unless I specify a later date (not to exceed 30 days following the
date of this notice).
On or before the Exercise Date, I will pay the full exercise price in the
form specified below (check one):
[ ] Cash Only: by delivering a check to Satellink Communications, Inc.
for $__________.
[ ] Cash and Shares: by delivering a check to Satellink Communications.
Inc. for $__________ for the part of the exercise price. I will pay
the balance of the exercise price by delivering to Satellink a stock
certificate with my endorsement for shares of Satellink Stock that I
have owned for at least six months. If the number of shares of
Satellink Stock represented by such stock certificate exceeds the
number needed to pay the exercise price. Satellink will issue me a
new stock certificate for the excess.
<PAGE>
[] Shares Only: by delivering to Satellink a stock certificate with my
endorsement for shares of Satellink Stock that I have owned for at
least six months. If the number of shares of Satellink Stock
represented by such stock certificate exceeds the number needed to
pay the exercise price, Satellink will issue me a new stock
certificate for the excess.
[] Cash From Broker: by delivering the purchase price from
__________________________ a broker, dealer or other "creditor"
as defined by Regulation T issued by the Board of Governors of
the Federal Reserve System (the "Broker"). I authorize Satellink
to issue a stock certificate in the number of shares indicated
above in the name of the Broker in accordance with instructions
received by Satellink from the Broker and to deliver such stock
certificate directly to the Broker (or to any other party
specified in the instructions from the Broker) upon receiving
the exercise price from the Broker.
Please deliver the stock certificate to me (unless I have chosen to pay
the purchase price through a broker).
Very truly yours,
_____________________________
AGREED TO AND ACCEPTED:
SATELLINK COMMUNICATIONS, INC.
By:____________________________
Title:_________________________
Number of Option Shares
Exercised:_____________________
Number of Option Shares
Remaining:_____________________
Date:__________________________
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<PAGE>
EXHIBIT 10.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
SATELLINK PAGING LLC
"PURCHASER"
AND
SANER COMMUNICATIONS, INC.
"SELLER"
AND
MICHAEL J. SANER
"SHAREHOLDER"
EFFECTIVE AS OF FEBRUARY 1, 1997
<PAGE>
EXECUTION COPY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 PURCHASE AND SALE OF ASSETS...................................... 1
1.1 Purchase and Sale of Acquired Assets............................ 1
1.2 Excluded Assets of Seller....................................... 3
1.3 Non-Compete..................................................... 4
1.4 Sub-Lease....................................................... 4
1.5 Letter Agreement................................................ 4
ARTICLE 2 ASSUMPTION OF LIABILITIES........................................ 4
2.1 Assumption of Liabilities of Seller............................. 4
2.2 Excluded Liabilities of Seller.................................. 4
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE........................ 4
3.1 Purchase Price.................................................. 4
3.2 Payment of Purchase Price....................................... 5
3.3 Transfer Expenses............................................... 5
3.4 Allocation of Purchase Price.................................... 5
ARTICLE 4 PROCEDURE FOR CLOSINGS........................................... 5
4.1 Time and Place of Closing....................................... 5
4.2 Condition to Closing............................................ 6
4.3 Transactions at the Closing..................................... 6
4.5 Certain Consents................................................ 8
4.6 Further Assurances.............................................. 9
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER......... 9
5.1 Organization and Qualification.................................. 9
5.2 Authority....................................................... 9
5.3 Financial Statements............................................ 10
5.4 Inventories..................................................... 11
5.5 Accounts Receivable............................................. 11
5.6 Personal Property............................................... 11
5.7 Real Property................................................... 12
5.8 Contracts....................................................... 12
5.9 Intellectual Property........................................... 14
</TABLE>
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<PAGE>
EXECUTION COPY
<TABLE>
<S> <C>
5.10 Insurance....................................................... 15
5.11 Environmental Matters........................................... 15
5.12 Litigation...................................................... 16
5.13 Absence of Changes.............................................. 16
5.14 Brokers and Finders............................................. 18
5.15 Labor Matters................................................... 18
5.16 Governmental Approval and Consents.............................. 19
5.17 Taxes........................................................... 19
5.18 Employee Benefit Plans.......................................... 20
Code .......................................................... 21
Employee Benefit Plan............................................. 21
ERISA .......................................................... 21
ERISA Affiliate................................................... 21
ERISA Plan........................................................ 21
Governmental Authority............................................ 21
5.19 Compliance with Laws............................................ 21
5.20 Governmental Approval and Consents.............................. 22
5.21 Adequacy of Acquired Assets..................................... 22
5.22 Title to Assets................................................. 22
5.23 Correctness of Representations.................................. 22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 22
6.1 Organization and Qualification.................................. 23
6.2 Authority....................................................... 23
6.3 Litigation...................................................... 23
6.4 Correctness of Representations.................................. 23
6.5 Brokers and Finders............................................. 23
6.6 Governmental Approval and Consents.............................. 24
ARTICLE 7 COVENANTS........................................................ 24
7.1 Mutual Covenants................................................ 24
7.2 Conditions Precedent............................................ 24
ARTICLE 8 POST CLOSING MATTERS............................................. 24
8.1 Employment of Employees......................................... 24
8.2 Seller's Benefit Plans.......................................... 24
8.3 Maintenance of Books and Records................................ 24
8.4 Payments Received............................................... 25
8.6 Covenant to Pay Debts........................................... 25
</TABLE>
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<PAGE>
EXECUTION COPY
<TABLE>
<S> <C>
ARTICLE 9 INDEMNIFICATION.................................................. 26
9.1 Definitions..................................................... 26
9.2 Agreement of Indemnitors to Indemnify........................... 26
9.3 Procedures for Indemnification.................................. 27
9.4 Third Party Claims.............................................. 27
9.5 Indemnification Exclusive Remedy................................ 29
9.6 Survival........................................................ 29
9.7 Time Limitations................................................ 29
9.8 Subrogation..................................................... 30
9.9 Purchaser's Right of Set-Off.................................... 30
ARTICLE 10 GENERAL PROVISIONS............................................... 30
10.1 Fees and Expenses............................................... 30
10.2 Notices......................................................... 30
10.3 Assignment; Binding Effect...................................... 32
10.4 No Benefit to Others............................................ 32
10.5 Headings, Gender, Person and Affiliate.......................... 32
10.6 Counterparts.................................................... 33
10.7 Integration of Agreement........................................ 33
10.8 Time of Essence................................................. 33
10.9 Governing Law................................................... 33
10.10 Partial Invalidity.............................................. 33
10.11 Investigation................................................... 33
10.12 Public Announcements............................................ 33
10.13 Arbitration..................................................... 34
</TABLE>
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<PAGE>
EXECUTION COPY
TABLE OF EXHIBITS
Exhibit A Form of Non-Compete Agreement
Exhibit B Form of Sublease Agreement
Exhibit C Form of Letter Agreement
Exhibit D Form of Promissory Note
Exhibit E Seller Opinion
Exhibit F Purchaser Opinion
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<PAGE>
EXECUTION COPY
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.2 Excluded Assets
Schedule 3.1 Purchase Price Allocation
Schedule 5.3 Financial Statements
Schedule 5.6.1 Equipment
Schedule 5.6.2 Furniture and Fixtures
Schedule 5.6.3 Leases for Furniture, Fixtures and Equipment
Schedule 5.7 Defects in Real Property
Schedule 5.8.1 Contracts
Schedule 5.8.2 List of Customers and Form of Customer Agreements
Schedule 5.8.3 Commitment for Capital Expenditures
Schedule 5.9 Intellectual Property
Schedule 5.13 Material Adverse Change
Schedule 5.16 Permits
Schedule 5.17.1 Taxes and Assessments Contests
Schedule 5.17.2 Federal and State Tax Disputes
Schedule 5.18.1 Employee Benefit Plans
Schedule 5.18.2 Employee Benefit Plans Compliance With Laws
</TABLE>
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<PAGE>
EXECUTION COPY
CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
Accounts Receivable Section 1.1(j)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Agreement Preamble
Assumed Liabilities Section 2.1
Books and Records Section 1.1(f)
Business Preamble
CERCLA Section 5.11(c)
Closing Section 4.1
Closing Date Section 4.1
Code Section 5.18(g)
Contract(s) Section 1.1(c)
Deferred Payment Section 3.2(b)
defined benefit plan Section 5.18(e)
Effective Time Section 4.1
Employee Benefit Plan Section 5.18(g)
Equipment Section 1.1(a)
ERISA Section 5.18(g)
ERISA Affiliate Section 5.18(g)
ERISA Plan Section 5.18(g)
Excess Amount Section 3.3
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Financial Statements Section 5.3
Furniture and Fixtures Section 1.1(h)
GAAP Section 5.3
Goods Contracts Section 5.8(a)(iii)
Governmental Authority Section 5.18(g)
hazardous Section 5.11(d)
Hazardous Materials Section 5.11(d)
Indemnification Claim Section 9.1(a)
Indemnitees Section 9.1(b)
Indemnitors Section 9.1(c)
Intellectual Property Section 1.1(e)
Inventory Section 1.1(d)
Labor Claims Section 5.15
Letter Agreement Section 1.5
Losses Section 9.1(d)
multiemployer plan Section 5.18(e)
Non-Compete Section 1.3
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<PAGE>
EXECUTION COPY
obligation to contribute Section 5.18(e)
Office Lease Section 1.2(a)
Permits Section 1.1(g)
Purchaser Preamble
Purchase Price Section 3.1
Purchaser Opinion Section 4.3(b)(v)
RCRA Section 5.11(c)
Real Property Leases Section 5.7(b)
Seller Preamble
Seller Opinion Section 4.3(a) (vii)
Services Contracts Section 5.8(a) (iii)
Shareholder Preamble
Shortfall Section 3.3
Statement Section 3.3
Sublease Agreement Section 1.4
Third Party Claim Section 9.1(e)
toxic Section 5.11(d)
Transfer Expenses Section 3.4
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<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is effective as of
the 1st day of February, 1997, by and among SATELLINK PAGING LLC, a Georgia
limited liability company ("Purchaser") and SANER COMMUNICATIONS, INC., a
Georgia corporation ("Seller") and MICHAEL J. SANER ("Shareholder").
A. Seller is engaged in the business of selling or licensing paging
devices, providing one way paging, ,as a reseller of certain carriers providing
airtime for paging transmissions pursuant to licenses issued by the Federal
Communications Commission, and providing voice mail services to the general
public within certain areas in the state of Georgia under the "Message World"
name (the "Business").
B. Shareholder owns all of the issued and outstanding capital stock
of Seller.
C. Purchaser desires to purchase from Seller all of Seller's
operating assets related to the Business on and subject to the terms and
conditions contained in this Agreement.
D. Seller desires to sell to Purchaser all of Seller's operating
assets related to the Business on and subject to the terms and conditions
contained in this Agreement.
E. Shareholder will directly benefit from Purchaser's purchase of
such assets.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Acquired Assets. At the Closing (as
-------------------------------------
hereinafter defined), on and subject to the terms and conditions of this
Agreement, Seller shall sell, assign, transfer, convey, and deliver to
Purchaser, and Purchaser shall purchase, acquire, and accept from Seller, all of
the right, title, and interest of Seller in and to (i) the Business, (ii) except
as set forth in Section 1.2(f) hereto the name "Message World" and any other
name or names under which Seller has conducted the Business and all goodwill
associated therewith, and (iii) the following assets, properties, and rights of
Seller, free and clear of all liens, claims, charges, security interests, and
encumbrances of any kind or nature, as the same shall exist at the Closing Date
(as hereinafter defined):
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(a) All equipment and computer software utilized in billing the
customers and the like, wherever located, reflected on the books and records of
Seller (even if carried at no value) and related to the Business, and any and
all assignable warranties of third parties with respect thereto (the
"Equipment");
(b) All of Seller's right, title and interest in that certain Lease
dated November 10, 1994, between Seller and Norwest Equipment Finance related to
the MVP Voice Messaging System (the "MVP Lease"), together with all of Seller's
right, title and interest in the MVP Voice Messaging System and all related
equipment described in the MVP Lease.
(c) All of the contracts, airtime purchase agreements, leases,
warranties, commitments, agreements, arrangements and purchase and sales orders,
whether oral or written, pursuant to which Seller enjoys any right or benefit in
connection with the Business, whether or not reflected upon the books and
records of the Seller, together with the right of Seller to receive income in
respect of such contracts, leases, warranties, commitments, agreements,
arrangements, and purchase and sales orders on and after the Closing Date
(individually, a "Contract" and collectively, the "Contracts");
(d) All stock of pagers and spare or replacement parts therefore,
wherever located, reflected on the books and records of Seller (the
"Inventory"), together with all rights of Seller against suppliers of the
Inventory including, without limitation, Seller's rights under express or
implied warranties with respect to such Inventory and Inventory previously sold
by Seller and Seller's rights to receive refunds or rebates in connection with
its purchase of Inventory;
(e) All trademarks and service marks owned or held by Seller and
related to the Business; all registrations thereof and applications therefor,
both registered and unregistered, foreign and domestic; all computer software
utilized for customer billing (including documentation and related object and,
if applicable, source codes) owned by or belonging to Seller and related to the
Business; and all confidential or proprietary information that are either (i)
owned by Seller and related to the Business, whether or not reflected on the
books and records of Seller, or (ii) as to which Seller has rights as licensee,
constituting all of the intellectual property of Seller used exclusively in the
Business (the "Intellectual Property");
(f) All existing data, data bases, books, records, correspondence,
business plans and projections, records of sales, customer and vendor lists,
files, and papers in the possession of Seller and related to the Business;
including without limitation, all manuals and printed instructions of Seller
relating to the Acquired Assets (as hereinafter defined) and to the operation of
the Business (the "Books and Records");
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(g) All licenses, permits, certificates, and governmental
authorizations of Seller and related to the Business, including pending
applications therefor (the "Permits"); and
(h) All accounts, notes and other receivables of Seller reflected on
the books and records of Seller and related to or arising from the Business (the
"Accounts Receivable").
All of the items described in this SECTION 1.1 to be purchased by
Purchaser and which are not Excluded Assets as defined in SECTION 1.2 are
hereinafter collectively referred to as the "Acquired Assets."
1.2 Excluded Assets of Seller. Seller shall not sell and Purchaser
--------------------------
shall not purchase or acquire and the Acquired Assets shall not include:
(a) Except as set forth in SECTION 1.4, all of Seller's rights in, to,
and under Seller's office lease, together with all of Seller's right, title, and
interest in the buildings, fixtures and improvements, including construction-in-
progress, and appurtenances thereto, located on the real property subject to
such lease, and any and all assignable warranties of third parties with respect
thereto (the "Office Lease");
(b) All cash and cash equivalents of Seller on hand or on deposit as
of the close of business on the Closing Date.
(c) The assets of any employee benefit plan maintained by or covering
any employees of Seller or to which Seller has made any contribution;
(d) Seller's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Seller's organization or stock capitalization;
(e) Any rights which accrue or will accrue to Seller under this
Agreement;
(f) Any rights to any of Seller's claims for any federal, state,
local, or foreign tax refund relating to any period ending prior to the Closing
Date;
(g) Any right or claim of Seller to the use of the "Message World"
name in Charlotte, North Carolina; and
(h) Except as set forth on SCHEDULE 1.2, the assets, properties, and
rights not related to the Business, including but not limited to the $.0001 par
value common stock of Preferred Networks, Inc. held in the name of "Saner
Communications,
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Inc.," accounts receivable from employees, deposits and all furniture, fixtures
and equipment.
All of the assets described in this SECTION 1.2 are hereinafter
collectively referred to as the "Excluded Assets."
1.3 Non-Compete. At the Closing Seller and Shareholder shall enter
------------
into, execute and deliver the Non-Compete Agreement attached as EXHIBIT A hereto
(the "Non-Compete").
1.4 Sublease. At the Closing, Purchaser, Seller and Lessor shall
---------
enter into, execute and deliver the Sublease Agreement attached as EXHIBIT B
hereto (the "Sublease").
1.5 Letter Agreement. At the Closing, Purchaser, Seller and
-----------------
Preferred Technical Services, Inc. shall enter into, execute and deliver the
Letter Agreement attached as EXHIBIT C hereto (the "Letter Agreement").
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities of Seller. Subject to SECTION 2.2
------------------------------------
hereof, as of the Closing Date, Purchaser shall assume responsibility for the
performance and satisfaction of the executory obligations and liabilities of
Seller arising from and after the Effective Time pursuant to the Contracts
assigned pursuant to SECTION 1.1(C), but excluding any obligations or
liabilities arising from or relating to any breach or violation of such
Contracts by Seller or default under such Contracts by Seller. The executory
obligations and liabilities of Seller specifically assume pursuant to this
SECTION 2.1 are hereinafter referred to as the "Assumed Liabilities."
2.2 Excluded Liabilities of Seller. Purchaser shall not assume or
-------------------------------
become liable for any obligations, commitments, or liabilities of Seller,
whether known or unknown, absolute, contingent, or otherwise, and whether or not
related to the Acquired Assets except for the liabilities specifically described
in SECTION 2.1 above (the obligations and liabilities of Seller not assumed by
Purchaser are hereinafter referred to as the "Excluded Liabilities"). Without
limiting the generality of the foregoing, Excluded Liabilities shall include any
liabilities related to or arising out of the Excluded Assets.
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. The aggregate consideration to be paid to
---------------
Seller for the sale, transfer, and conveyance of the Acquired Assets and the
Non-Compete Agreement
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(the "Purchase Price") shall be ONE MILLION FOUR HUNDRED THOUSAND DOLLARS
($1,400,000).
3.2 Payment of Purchase Price.
--------------------------
(a) Subject to the fulfillment of the conditions set forth herein, on
the Closing Date Purchaser shall pay to Seller ONE MILLION EIGHTY THOUSAND
DOLLARS ($1,080,000) by check or by wire transfer in immediately available funds
to an account designated in writing by Seller; and
(b) Subject to the fulfillment of the conditions set forth herein on
or before the six month anniversary of the Closing Date, on the six month
anniversary of the Closing Date, Purchaser shall pay to Seller THREE HUNDRED
TWENTY THOUSAND DOLLARS ($320,000), plus accrued interest at eight percent (8%)
per annum (the "Deferred Payment"), as evidenced by a promissory note
substantially in the form of EXHIBIT D (the "Promissory Note").
3.3 Transfer Expenses. Seller shall pay any sales and use,
------------------
transfer or recording, documentary, or other taxes or charges levied on the
transfer of the Acquired Assets (the "Transfer Expenses"). All Inventory shall
be claimed as exempt from sales or use tax by Purchaser and Purchaser shall
furnish Seller at the Closing with sales tax exemption certificates.
3.4 Allocation of Purchase Price. The parties hereto agree that
-----------------------------
the Purchase Price will be allocated among the Acquired Assets as set forth on
SCHEDULE 3.4.__The consideration paid for the Non-Compete Agreement and the
Acquired Assets (which shall equal the Purchase Price) shall be allocated among
the Non-Compete and the Acquired Assets in accordance with the provisions
contained in Treasury Regulation Section 1.1060-1T(d). The parties agree to be
bound by such allocation and to report the transaction contemplated herein for
federal income tax purposes in accordance with such allocation. In furtherance
of the foregoing, the parties hereto agree to execute and deliver Internal
Revenue Service Form 8594 reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSINGS
4.1 Time and Place of Closing. The closing for the purchase and
--------------------------
sale contemplated by this Agreement (the "Closing") shall be held at the offices
of Alston & Bird, One Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia 30309, on February 3, 1997, commencing at 1:00 p.m., Atlanta time, or
at such other time and place as the parties hereto may agree in writing (the
date on which the Closing actually occurs is hereinafter referred to as the
"Closing Date"). Subject to the consummation of the Closing on the Closing
Date, the sale, assignment, transfer, and conveyance to Purchaser
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of the Acquired Assets will be effective as of 12:01 a.m. Eastern Daylight Time
on February 1, 1997 (the "Effective Time").
4.2 Condition to Closing. The parties' obligations hereunder shall
--------------------
be conditioned on:
(a) Purchaser's receipt prior to the Closing of Uniform Commercial
Code searches of filings made pursuant to Article 9 thereof in all jurisdictions
where any of the Acquired Assets are located, in form, scope, and substance
reasonably satisfactory to Purchaser and its counsel, which searches shall
reflect the release or termination of liens, claims, security interests, or
encumbrances against any of the Acquired Assets disclosed thereby, and to the
extent any such release or termination is not reflected of record, Purchaser
shall have received evidence satisfactory to it, that all such liens and
encumbrances against the Acquired Assets have been released or terminated prior
to or at the Closing or that the underlying obligations have been paid in full
pursuant to SECTION 8.5.
(b) The approval of the Manager of Purchaser of the transactions
contemplated by this Agreement .
(c) The approval of the Board of Directors and Shareholders of Seller
of the transactions contemplated by this Agreement.
4.3 Transactions at the Closing. At the Closing, each of the
----------------------------
following items shall be delivered:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale, assignments, endorsements, and other good
and sufficient instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall be necessary and
effective to transfer and assign to, vest in, and purchase all of Seller's
right, title, and interests in and to the Acquired Assets;
(ii) the Non-Compete Agreement;
(iii) the Sublease Agreement;
(iv) the Letter Agreement;
(v) a certificate of incumbency of the Seller executed by a
Secretary or Assistant Secretary thereof listing the officers authorized to
execute this
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Agreement and certifying the authority of each such officer to execute the
agreements, documents, and instruments on behalf of Seller in connection with
the consummation of the transactions contemplated herein;
(vi) a certificate of the Secretary of Seller containing a true and
correct copy of the resolutions duly adopted by the board of directors and
shareholders of Seller approving and authorizing each Acquisition Document (as
hereinafter defined) and the transactions contemplated hereby and thereby
certifying that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect;
(vii) the opinion of counsel to Seller in substantially the form of
EXHIBIT E hereto (the "Seller Opinion");
(viii) a true and correct copy of each consent and waiver that is
required for the assignment of the Contracts, Permits, Intellectual Property,
the MVP Lease and other agreements and assets or otherwise required for the
execution, delivery, and performance of this Agreement by Seller, along with a
certificate dated as of the Closing Date, executed by an authorized officer of
Seller to the foregoing effect;
(ix) certificates of existence or certificates of good standing of
Seller, as of a date within ten (10) days prior to the Closing Date, from the
State of Georgia; and
(x) such other certificates, instruments or evidence of the
performance by Seller of all covenants and the satisfaction by Seller of all
conditions required by this Agreement to be performed or satisfied by Seller at
or prior to the Closing Date as Purchaser or its counsel may reasonably require.
The documents and certificates to be delivered hereunder by or on
behalf of Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Subject to the receipt and sufficiency of the items set forth in
SECTION 4.2(A) above, Purchaser shall deliver to or for the account of Seller
the following:
(i) a check or wire transfer in the amount equal to a portion of the
Purchase Price as set forth in SECTION 3.2(A) in immediately available funds to
an account designated in writing by Seller;
(ii) an instrument or instruments of assumption of the Assumed
Liabilities, duly executed by Purchaser, and reasonably satisfactory in form and
substance to Seller and its counsel;
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(iii) a certificate executed by the Manager of Purchaser containing a
true and correct copy of resolutions duly adopted by the Manager of Purchaser
approving and authorizing this Agreement and each of the other Acquisition
Documents (as hereinafter defined) to which Purchaser is a party and each of the
transactions contemplated hereby and thereby certifying that such resolutions
have not been rescinded, revoked, modified, or otherwise affected and remain in
full force and effect;
(iv) a certificate of incumbency of the Manager of Purchaser executed
by the President and attested by the Secretary or Assistant Secretary of the
Manager of Purchaser listing the officers of the Manager authorized to execute
this Agreement and the other Acquisition Documents to which Purchaser is a party
and the instruments of assumption on behalf of Purchaser and certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of Purchaser in connection with the consummation of the
transactions contemplated herein;
(v) the opinion of counsel to Purchaser in substantially the form of
EXHIBIT F hereto (the "Purchaser Opinion");
(vi) certificates of existence or certificates of good standing of
Purchaser, as of a date within ten (10) days prior to the Closing Date, from the
State of Georgia; and
(vii) the Non-Compete Agreement;
(viii) the Sublease Agreement;
(ix) the Letter Agreement;
(x) the Promissory Note; and
(xi) such other certificates, instruments or evidence of the
performance by Purchaser of all covenants and satisfaction by Purchaser of all
of the conditions required by this Agreement to be performed or satisfied by
Purchaser at or before the Closing Date, as Seller or its counsel may reasonably
require.
The documents and certificates to be delivered to Seller hereunder by
or on behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to Seller and its counsel.
4.5 Certain Consents. To the extent that the rights of Seller
----------------
under any agreement, Contract, commitment, lease, Permit, Real Property Lease
(as hereinafter defined), or other Acquired Asset to be assigned to Purchaser by
Seller hereunder may not be assigned without the consent of another person which
has not been obtained prior
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to the Closing Date, and which is materially important to the ownership, use or
disposition by Purchaser of an Acquired Asset, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its expense, shall
use its best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights under the
Acquired Asset in question so that Purchaser would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law and
the specific Acquired Asset and at Seller's expense, shall act after the Closing
as Purchaser's agent in order to obtain for Purchaser the benefits thereunder,
and Seller shall cooperate, to the maximum extent permitted by law and the
specific Acquired Assets, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser, including any sublease,
subcontract or similar arrangement.
4.6 Further Assurances. Seller and Shareholder from time to time
-------------------
after the Closing Date, at Purchaser's request, shall execute, acknowledge, and
deliver to Purchaser such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications, and further assurances as Purchaser may require in order to vest
more effectively in Purchaser, or to put Purchaser more fully in possession of,
any of the Acquired Assets or to better enable Purchaser to complete, perform,
or discharge any of the Assumed Liabilities. Each of the parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
Seller and Shareholder, jointly and severally, represent and warrant
to Purchaser that:
5.1 Organization and Qualification. Seller is a corporation duly
-------------------------------
organized, validly existing, and in good standing under the laws of the State of
Georgia.
5.2 Authority. Seller and Shareholder have full power and
----------
authority to enter into this Agreement and the agreements contemplated hereby,
or respectively executed by it in connection herewith (collectively, this
Agreement and such other agreements shall be referred to hereinafter as the
"Acquisition Documents"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Seller of each of the
Acquisition Documents to which it is a party has been duly and validly
authorized and approved by all necessary action on the part of Seller. Each of
the Acquisition Documents to which Seller and Shareholder is a party is the
legal, valid, and
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binding obligation of Seller and Shareholder, enforceable against Seller and
Shareholder, in accordance with its terms, except as enforceability may be
limited by applicable equitable principles (whether applied in a proceeding at
law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, to the exercise of judicial
discretion in accordance with general equitable principles, and to equitable
defenses that may be applied to the remedy of specific performance. Neither the
execution and delivery by Seller and Shareholder, respectively, of any of the
Acquisition Documents to which it is a party nor the consummation by Seller or
Shareholder of the transactions contemplated thereby will (i) violate the
Articles of Incorporation or Bylaws of Seller and Shareholder, (ii) violate any
provisions of law or any order of any court or any governmental entity to which
Seller or Shareholder is subject, or by which the Acquired Assets, may be bound,
(iii) conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, contract, warranty, agreement, arrangement, purchase
or sale order or other instrument to which Seller is a party or by which it or
any of the Acquired Assets may be bound, or (iv) result in the creation of any
lien, charge, or encumbrance upon any of the Acquired Assets or increase or
adversely affect the obligations of Seller or Purchaser under any of the Assumed
Liabilities.
5.3 Financial Statements. Attached as SCHEDULE 5.3 are true,
---------------------
correct, and complete copies of the unaudited balance sheet and the related
statements of income and cash flows for Seller as at and for the fiscal years
ended December 31, 1993, 1994, 1995 and for the period ending October 30, 1996
(collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller, and present fairly in all
material respects the financial position and results of operation of Seller on a
combined basis as at and for the periods indicated. Seller has not received any
advice or notification from its independent certified public accountants that
Seller has used any improper accounting practice that would have the effect of
not reflecting or incorrectly reflecting in the Financial Statements or the
books and records, any properties, assets, liabilities, revenues, or expenses.
Except for any consulting fees, commissions, or other compensation recorded in
the Financial Statements from Voice Information Systems, Inc., a Georgia
corporation, Preferred Networks, Inc., a Delaware corporation, Paging Services,
Inc., a Georgia corporation, IAX, Ltd., a Georgia corporation, and any and all
proceeds from the sale of certain assets by Seller located in Laurel, Maryland,
the Financial Statements do not contain any items of special or nonrecurring
income, or other income not earned in the ordinary course of business,
individually in excess of $1,000 and in the aggregate in excess of $10,000. The
books, records, and accounts of Seller accurately and fairly reflect, in all
material respects, the transactions and the assets and liabilities of Seller.
Seller has not engaged in any transaction, maintained any bank account, or used
any of the funds of Seller, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of Seller.
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5.4 Inventories. All Inventory reflected on the Financial
------------
Statements, or acquired since the date thereof: (a) was acquired and has been
maintained in the ordinary course of the Business; (b) is of good and
merchantable quality, consists substantially of a quality, quantity and
condition usable, leasable or salable in the ordinary course of the Business;
(c) is valued at the lesser of cost or net realizable value; and (d) is not
subject to any write-down or write-off. Seller is not under any liability or
obligation with respect to the return of Inventory in the possession of
wholesalers, retailers or other customers. None of the Inventory is held by
Seller on consignment from others.
5.5 Accounts Receivable. All Accounts Receivable of Seller shown
--------------------
on the Financial Statements represent, and the Accounts Receivable of Seller
outstanding on the Closing Date will represent, sales actually made or services
actually performed in the ordinary course of business in bona fide transactions
completed in accordance with the terms and provisions contained in any documents
relating thereto. The Accounts Receivable outstanding on the Closing Date are
subject to no defenses, counterclaims, or rights of setoff other than those
arising in the ordinary course of business.
5.6 Personal Property.
-----------------
(a) SCHEDULE 5.6.1 contains a true and correct list of all Equipment
owned by Seller and included in the Acquired Assets, and SCHEDULE 5.6.2 contains
a true and correct list of all Furniture and Fixtures and all other items of
personal property (excluding items of Furniture and Fixtures and other personal
property having a value of less than $1,000 individually, or $10,000 in the
aggregate), which are owned by Seller and included in the Acquired Assets.
(b) SCHEDULE 5.6.3 contains a list of all leases for Equipment,
Furniture and Fixtures, or other items of personal property (except
miscellaneous leases having an aggregate value, if capitalized, of less than
$10,000) leased by Seller and included in the Acquired Assets. True and correct
copies of each lease listed on SCHEDULE 5.6.3 and any amendments, extensions,
and renewals thereof are attached thereto. Each of the leases described on
SCHEDULE 5.6.3 is in full force and effect and there are no existing defaults or
events of default, real or claimed, or events which with notice or lapse of time
or both would constitute defaults. No rights of Seller under such leases have
been assigned or otherwise transferred as security for any obligation of Seller.
Except as described on SCHEDULE 5.6.3, all such leases are fully assignable
without the consent of any third party.
(c) All of the Equipment is in good operating condition and state of
repair and, except as described on SCHEDULE 5.6.3, no repair or replacement of
any thereof is contemplated or will, within the one (1) year period following
the Closing Date, be required, other than routine maintenance and repairs
consistent with past experience.
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5.7 Real Property.
--------------
(a) Seller does not own any real property.
(b) A true and correct copy of the Office Lease and any amendments,
extensions, and renewals thereof have been delivered to the Purchaser. The
Office Lease is in full force and effect and there is no existing default or
event of default, real or claimed, or event which with notice or lapse of time
or both would constitute a default thereunder by Seller or any other party to
such Office Leases. The Sublease Agreement shall not cause a breach, default, or
event of default thereunder.
(c) Seller has received no written notice from governmental
authorities alleging that the improvements on any property that is subject to
the Office Lease are in violation of any applicable use and occupancy laws, use
restrictions, building ordinances, zoning ordinances and health and safety
ordinances.
(d) Seller has not received any written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
any property that is subject to the Office Lease.
(e) To the best of Seller and Shareholder's knowledge and belief,
there is no unrecorded private restrictive covenant on all or any portion of the
property that is subject to the Office Lease which prohibits the current use of
the such property.
(f) To the best of Seller and Shareholder's knowledge and belief, all
Permits required for Seller's occupancy and operation of any property that is
subject to the Office Lease have been obtained and are in full force and effect,
and Seller has received no notices of violations in connection with such items.
(g) Seller does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the property that is subject to the Office Lease and to Seller's
knowledge, no such defects exist except as set forth on SCHEDULE 5.7.
5.8 Contracts.
---------
(a) SCHEDULE 5.8.1 contains a true and correct list of all Contracts
other than Contracts with customers not otherwise listed on SCHEDULES 5.6.3,
5.7.1 AND 5.9, together with a true and correct copy (and, if oral, a
description) of each such Contract that (i) has a duration of twelve (12) months
or more, (ii) requires or could require any party thereto to pay $10,000 or
more, or (iii) is between either Seller and any officer, stockholder, director,
employee, or affiliate thereof or any other party hereto or any officer,
stockholder, director, employee or affiliate of any such other party, and all
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modifications, amendments, renewals, or extensions thereof. SCHEDULE 5.8.2
contains a true and correct list of all customers who subscribe for paging
services and/or voice mail services of Seller related to the Business as of the
date hereof together with a true and correct copy of each form of agreement
currently in effect with any such customer. Each of the Contracts listed or
described in SCHEDULES 5.8.1 or 5.8.2 was entered into prior to the Closing Date
in the ordinary course of business on terms substantially consistent with such
Seller's practice prior thereto. Except as listed on SCHEDULES 5.6.3, 5.7.1,
5.8.1, 5.8.2 AND 5.9, Seller is not a party to any written or legally binding
oral contract of the following type:
(i) agreement, contract, or commitment with any present or former
employee or consultant or for the employment of any person;
(ii) agreement, contract, or commitment for the future purchase of, or
payment for, supplies or products, or for the performance of services by a third
party which supplies, products or services are used in the conduct of the
Business involving in any one case $10,000 or more;
(iii) agreement, contract or commitment to sell or supply products
related to the Business ("Goods Contracts") or to perform maintenance, services
or similar duties ("Services Contracts") related to the Business involving in
any one case $10,000 or more;
(iv) distribution, dealer, representative, or sales agency agreement,
contract, or commitment relating to the Business;
(v) lease under which Seller is lessor relating to the Acquired Assets
or any property at which the Acquired Assets are located;
(vi) note, debenture, bond, equipment trust agreement, letter of
credit agreement, loan agreement, or other contract or commitment for the
borrowing or lending of money relating to the Business or agreement or
arrangement for a line of credit or guarantee, pledge, or undertaking of the
indebtedness of any other person relating to its business;
(vii) agreement, contract, or commitment for any charitable or
political contribution;
(viii) agreement, contract, or commitment limiting or restraining
Seller from engaging or competing in any manner or in any business, nor, to the
knowledge of Seller is any employee of Seller subject to any such agreement,
contract, or commitment; or
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(ix) material agreement, contract, or commitment relating to its
business not made in the ordinary course of business.
(b) SCHEDULE 5.8.3 contains a true and correct list of all commitments
for capital expenditures related to the Business that have been approved or made
prior to the date of this Agreement in excess of $10,000 by Seller and that
remain outstanding as of the date hereof.
(c) Each of the Contracts is in full force and effect and there exists
no breach or violation of or default under any of such Contracts by Seller or,
to Seller's knowledge, any other party to such Contracts or any event which,
with notice or the lapse of time, or both, will create a breach or violation
thereof or default thereunder by Seller or any other party to such Contracts.
Except as set forth on SCHEDULES 5.8.1 AND 5.8.2, each Contract listed therein
is fully assignable without the consent of any third party.
(d) There exists no actual or threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have an adverse effect on the business or condition, financial or
otherwise, of the Business, including, without limitation, (i) the business
relationship of Seller with any customer, distributor, or related group of
customers or distributors, (ii) the requirements of any customer or related
group of customers of the Business.
(e) Seller has not granted any power of attorney affecting or with
respect to the Business or the Acquired Assets that remains outstanding.
5.9 Intellectual Property. SCHEDULE 5.9 contains a true and
----------------------
correct list of all Intellectual Property owned or used by Seller or any
affiliate of Seller relating to or used or useful in connection with the
Business, containing a brief description of each item of Intellectual Property
and the nature of Seller's interest therein. The Acquired Assets include and,
upon the purchase of those assets, Purchaser will own or have the uncontested
right to use all trademarks and service marks, and confidential or proprietary
information necessary for the conduct of the Business as presently conducted.
No claim is pending or, to the knowledge of Seller threatened, and Seller has
not received notice that the conduct of the Business (including without
limitation, Seller's use of any Intellectual Property) infringes upon or
conflicts with any rights claimed therein by any third party, nor is Seller
aware of any unasserted claim the assertion of which is probable. No use by
Seller of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. No claim is pending, or to the
knowledge of Seller threatened, which alleges that any Intellectual Property
owned or licensed by Seller for use in the Business or which Seller otherwise
has the right to use is invalid or unenforceable by Seller, nor is Seller aware
of any such claim that is unasserted, but the assertion of which is probable.
With respect to the Business, Seller does not manufacture products which are the
subject of patents, patent applications, copyrights, copyright applications,
trademarks, trademark applications, trade styles, service marks, or trade
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secrets owned by or licensed from third parties. No royalties or fees are
payable by Seller to anyone for use of the Intellectual Property. True, correct,
and complete copies of all agreements pursuant to which Seller has any license
or right to use any Intellectual Property are attached to SCHEDULE 5.9. To the
best of Seller's and Shareholders' knowledge and belief, all such agreements are
in full force and effect and there are no existing defaults or events of
default, real or claimed, or events which with or without notice or lapse of
time or both would constitute defaults under such agreements that would give the
non-defaulting party a right to terminate such agreement or a right to receive
any payment pursuant to such agreement. With respect to the Business, Seller has
not received any notice that any operation or machinery employed by Seller,
violates or infringes upon any claims of any United States or foreign patent or
patent application owned or held by any third party, nor is Seller aware of any
unasserted claim the assertion of which is probable. All Intellectual Property
and registrations, applications, and agreements related thereto are fully
assignable to Purchaser without the consent of any third party.
5.10 Insurance. The tangible Acquired Assets are insured under
----------
various policies of general liability and other forms of insurance, which
policies are in adequate amounts. Seller has not been refused any insurance
with respect to the Business by any insurance carrier to which it has applied
for insurance or with which it has carried insurance during the past five (5)
years. There are no outstanding requirements or recommendations by any current
insurer or underwriter with respect to the Business or the Acquired Assets which
require or recommend changes in the conduct of Business, or require any repairs
or other work to be done with respect to any of the Acquired Assets.
5.11 Environmental Matters.
----------------------
(a) There are no above-ground and underground storage tanks located on
any of the property leased by Seller.
(b) Except as may arise by automatic operation of law, to the best of
Seller and Shareholder's knowledge and belief, no lien has arisen on any of the
property leased by Seller or any facilities or properties used by the Seller for
or in connection with its business under or as a result of any federal, state,
or local law, rule, or regulation relating to environmental protection.
(c) The Seller has not been, and currently is not, a "generator" of
"hazardous waste," as those terms are defined by the Resource Conservation and
Recovery Act as amended, 42 U.S.C. (S) 6901 et seq. and the regulations
------
promulgated thereunder ("RCRA"), for the purposes of obtaining an EPA
identification number under 40 C.F.R. (S)262.12(a) or complying with the
manifest system under Subpart 8 of 40 C.F.R. Part 262, and the Seller has not
(A) been notified that it is potentially liable under or (B) received any
requests for information or other correspondence concerning any site or facility
under, nor has Seller any reason to believe that the Company is considered
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potentially liable under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq. and the
------
regulations promulgated thereunder ("CERCLA") or any similar state or local law.
(d) To the best of Seller and Shareholder's knowledge and belief,
there has been no disposal, release, burial, or placement of Hazardous Materials
on, in, at, or about any of the property leased by Seller or any facilities or
properties used by the Seller for or in connection with its business that could
subject Purchaser to damages, costs, penalties or expenses, or recovery or
remediation requirements under any federal, state or local law, rule or
regulation. As used in this Agreement, the term "Hazardous Materials" shall
mean any hazardous or toxic substance or waste, asbestos, PCBs, agricultural
chemicals, oil, petroleum, and petroleum products and constituents thereof, or
any other substances, wastes, or chemicals defined as "hazardous" or "toxic"
under RCRA, CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. (S)
1802, or any applicable state or local law.
5.12 Litigation. There are no material arbitrations, grievances,
-----------
actions, suits, or other proceedings pending or to the knowledge of Seller
threatened against, or adversely affecting the Business or any of the Acquired
Assets purported to be owned or used by Seller, at law or in equity or
admiralty, nor to the Seller's knowledge is there any investigation pending or
threatened, before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, related to the Business. Seller is not in default under or in
violation of any order, writ, injunction, or decree of any federal, state,
municipal court, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, affecting the Business or the
Acquired Assets purported to be owned or used by Seller.
5.13 Absence of Changes. Except as set forth on SCHEDULE 5.13,
-------------------
since January 1, 1997, there has not been any transaction or occurrence in which
Seller has:
(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of the
Business nor has there been any event which has had or may reasonably be
expected to have a material adverse effect on any of the foregoing;
(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of the Business, consistent
with past practice, or increased (or experienced any change in the assumptions
underlying or the methods of calculating) any bad debt, contingency, or other
reserve, other than in the ordinary course of the Business consistent with past
practice;
(c) paid, discharged, or satisfied any claim, lien, encumbrance,
obligation, or liability (whether absolute, accrued, contingent, and whether due
or to
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become due), other than the payment, discharge, or satisfaction in the ordinary
course of the Business consistent with past practice of claims, liens,
encumbrances, obligations, or liabilities of the type reflected or reserved
against in the Financial Statements or which were incurred since January 1,
1997, in the ordinary course of the Business;
(d) permitted, allowed, or suffered any of its properties or assets
(real, personal or mixed, tangible, or intangible) to be subjected to any
mortgage, pledge, lien, encumbrance, restriction, or charge of any kind except
as incurred in the ordinary course of business;
(e) written down or written up the value of any Inventory (including
write-downs by reason of shrinkage or markdowns), determined as collectible any
Accounts Receivable or any portion thereof which were previously considered
uncollectible, or written off as uncollectible any Accounts Receivable or any
portion thereof, except for write-downs, write-ups, and write-offs in the
ordinary course of the Business consistent with past practice, none of which is
material in amount;
(f) canceled any debts or waived any claims or rights in excess of
$3,000.00 individually or $10,000.00 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of any
patent, trademark, assumed name, service mark, trade name, copyright, license,
or application therefor or disposed of or disclosed to any person not authorized
to have such information any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain;
(h) except for the capital expenditure commitments described on
SCHEDULE 5.8.3, made any significant capital expenditure or commitment for
additions to property, plant, equipment, intangible, or capital assets or for
any other purpose, other than for emergency repairs or replacement;
(i) incurred any long term indebtedness;
(j) paid, loaned, distributed, advanced any amounts to, sold,
transferred, leased any properties or assets (real, personal or mixed, tangible
or intangible) to, purchased, leased, licensed, or otherwise acquired any
properties or assets from, or entered into any other agreement or arrangement
with (i) any stockholder, officer, employee, or director of Seller, or (ii) any
person controlling, controlled by, or under common control with Seller except
for routine travel advances to officers and employees of Seller in the ordinary
course of business;
(k) entered into any collective bargaining or labor agreement (oral
and legally binding or written), or experienced any organized slowdown, work
interruption, strike, or work stoppage;
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(l) sold, transferred, or otherwise disposed of any of the Acquired
Assets except in the ordinary course of business;
(m) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Seller (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business;
(n) made any material change in any method of accounting or accounting
principle, practice, or policy;
(o) suffered any casualty loss or damage in excess of $10,000 in the
aggregate (whether or not insured against);
(p) made or agreed to make any charitable contributions or incurred or
agreed to incur any non-business expenses in excess of $10,000 in the
aggregate;
(q) taken any other action neither in the ordinary course of the
Business and consistent with past practice nor provided for in this Agreement;
or
(r) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this SECTION 5.13 and not
otherwise permitted by this Agreement.
5.14 Brokers and Finders. Neither Seller nor Shareholder nor any
--------------------
affiliate of either of them, has incurred any obligation or liability to any
party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated by this Agreement.
5.15 Labor Matters. Seller has not, within the last three (3)
-------------
years, experienced or been threatened with any organized slowdown, work
interruption, strike, or work stoppage by its employees. Seller is not a party
to any collective bargaining agreements. Neither Seller nor any of its
officers, directors, or employees has been charged or threatened with the charge
of any unfair labor practice within the last two (2) years. Seller is in
compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. There are no
pending or threatened claims, investigations, charges, citations, hearings,
consent decrees, or litigation concerning wages, compensation, bonuses,
commissions, awards, or payroll deductions; equal employment or human rights
violations regarding race, color, religion, sex, national origin, age, handicap,
veteran's status, marital status, disability, or any other recognized class,
status,
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or attribute under any federal, state, local or foreign equal employment
law prohibiting discrimination; representation petitions of unfair labor
practices; grievances or arbitrations pursuant to current or expired collective
bargaining agreements; occupational safety and health; workers' compensation;
wrongful termination, negligent hiring, invasion of privacy or defamation;
immigration or any other claim based on the employment relationship or
termination of the employment relationship (collectively, "Labor Claims").
Seller is not liable for any unpaid wages, bonuses, or commissions (other than
those not yet due) or any tax, penalty, assessment, or forfeiture for failure to
comply with any of the foregoing.
5.16 Governmental Approval and Consents. To the best of Seller and
-----------------------------------
Shareholder's knowledge and belief, Seller has obtained all Permits required for
the lawful operation of the Business as presently conducted. SCHEDULE 5.16
contains a true and correct copy of each such Permit.
5.17 Taxes.
-----
(a) Seller has timely filed all federal and foreign income tax
returns, and all state, county, and local income, franchise, property, sales,
use, unemployment, and other tax returns in each state and jurisdiction where
such returns are required to be filed on or prior to the Closing Date, taking
into account any extensions of the filing deadlines which have been validly
granted to Seller, and such returns are and will be true and correct in all
material respects. Seller has paid all federal, state, county, and local
income, franchise, property, sales, use, and all other taxes and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due with respect to any period ended on or prior to the Closing Date
whether shown as due on such returns or not, or is contesting in good faith such
taxes and assessments, in which event Seller has disclosed the details of such
contests on SCHEDULE 5.17.1.
(b) SCHEDULE 5.17.2 provides a brief description of all pending
federal and state tax disputes in which Seller is alleged to be liable or in
which Seller is claiming a refund, including the nature and amount of the
controversy, the respective positions of the parties as to any amounts claimed
to be due thereunder, and the current status thereof.
(c) All taxes required to be withheld on or prior to the Closing Date
from employees of Seller for income taxes and social security taxes have been
properly withheld and, if required on or prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(d) No claim or investigation is pending or threatened by any state,
local, or other jurisdiction alleging that Seller has a duty to file tax returns
and pay taxes or is otherwise subject to the taxing authority of any
jurisdiction not included in SCHEDULES 5.17.1 or 5.17.2 with respect to any
taxes covered by SECTION 5.17(A) nor has Seller received any notice or
questionnaire from any such jurisdiction which suggests or
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asserts that Seller may have a duty to file such returns and pay such taxes, or
otherwise is subject to the taxing authority of such jurisdiction.
5.18 Employee Benefit Plans.
----------------------
(a) SCHEDULE 5.18.1 hereto lists every Employee Benefit Plan (as
hereinafter defined) of the Seller. True and complete copies of the Employee
Benefit Plans listed on SCHEDULE 5.18.1 hereto have heretofore been furnished to
Purchaser.
(b) Except as disclosed in SCHEDULE 5.18.2 hereto, all of the Employee
Benefit Plans and any related trusts (to the extent applicable) comply with and
have been administered in compliance with (i) the provisions of ERISA (as
hereinafter defined), (ii) all provisions of the Code (as hereinafter defined)
relating to qualification and tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended tax consequences, (iii) the
written terms of the Employee Benefit Plan, and (iv) all other applicable laws,
rules, regulations or ordinances, and the Seller has not received any notice
from any Governmental Authority (as hereinafter defined) questioning or
challenging such compliance.
(c) Seller has neither maintained in the past nor currently maintains
an Employee Benefit Plan providing welfare benefits (as defined in ERISA Section
3(1)) to employees after retirement or other separation of service except to the
extent required under Part 6 of Title I of ERISA or Code Section 4980B or their
successors.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions provided for herein will (i) entitle any
current or former employee or director of the Seller to severance pay,
unemployment compensation or any payment contingent upon a change in control or
ownership of the Seller, (ii) increase or enhance any benefits payable under any
Employee Benefit Plan, or (iii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or former
employee.
(e) Neither the Seller nor its ERISA Affiliates have at any time
sponsored, contributed to, or been obligated under Title I or Title IV of ERISA
to contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
On or after September 26, 1980, neither the Seller nor its ERISA Affiliates have
had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(f) All liabilities arising out of or related to Employee Benefit
Plans of the Seller are reflected on the Financial Statements in accordance with
GAAP.
(g) When used in this SECTION 5.18, the words and phrases set forth
below shall have the following meanings:
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"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Employee Benefit Plan" means collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by the Seller for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee of the Seller, or any
dependent or beneficiary thereof, maintained by the Seller or under which the
Seller has any obligation or liability, whether or not they are or are intended
to be (i) covered or qualified under the Code, ERISA or any other applicable
law, (ii) written or oral, (iii) funding or unfunded, (iv) actual or contingent,
or (v) generally available to any or all employees (or former employees) of the
Seller (or their beneficiaries or dependents), including, without limitation,
all incentive, bonus, deferred compensation, flexible spending accounts,
cafeteria plans, vacation, holiday, medical, disability, share purchase or other
similar plans, policies, programs, practices or arrangements.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Code Section 414.
"ERISA Plan" means any Employee Benefit Plan which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA.
"Governmental Authority" means any federal, state, county, local,
foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
5.19 Compliance with Laws. To the best of Seller and Shareholders'
---------------------
knowledge and belief, Seller is now with respect to the Acquired Assets to be
transferred
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at the Closing in compliance with all laws, statutes, ordinances, or regulations
applicable to the Business and the Acquired Assets. Neither Seller nor any of
the Acquired Assets is subject to any judgment, order, writ, injunction, or
decree issued by any court or any governmental or administrative body or agency.
Seller possesses all Permits required for the operation of the Business as
presently conducted. Seller has not at any time during the last five (5) years
(i) made any unlawful contribution to any political candidate, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal, state or local governmental, regulatory or administrative officer
or official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
5.20 Governmental Approval and Consents. Except for consents
-----------------------------------
contemplated by this Agreement, no consent, approval, or authorization of or
declaration, filing, or registration with any governmental or regulatory
authority is required in connection with the execution, delivery, and
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
5.21 Adequacy of Acquired Assets. The Acquired Assets include all
----------------------------
rights, properties, interests in properties, and assets necessary to permit
Purchaser to carry on the Business as presently conducted by Seller.
5.22 Title to Assets. Seller has good and marketable title to the
----------------
Acquired Assets, free and clear of all liens, claims, charges, encumbrances and
security interests of any kind or nature. All security interests and
encumbrances of record against the Acquired Assets shall be released, terminated
or discharged at the Closing by delivery to the Purchaser at the Closing of
executed discharges, UCC termination or partial release statements signed by the
secured party.
5.23 Correctness of Representations. No representation or warranty
-------------------------------
of Seller in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto, contains any untrue statement of material
fact or omits to state any fact necessary in order to make the statements
contained therein not misleading in any material respect, which misstatement or
omission could reasonably be expected to result in the loss of twenty five
thousand dollars ($25,000), and all such statements, representations,
warranties, Exhibits, certificates, and Schedules are true and complete in all
material respects. True copies of all mortgages, indentures, notes, leases,
agreements, plans (except Company Benefit Plans), Contracts, and other
instruments listed on the Schedules delivered or furnished to Purchaser pursuant
to this Agreement have been delivered to Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a limited
-------------------------------
liability company duly organized, validly existing, and in good standing under
the laws of the State of Georgia and has all corporate power and authority to
conduct its business, to own, lease, or operate its properties in the places
where such business is conducted and such properties are owned, leased, or
operated.
6.2 Authority. Purchaser has full power and authority to enter into
----------
this Agreement and each of the other Acquisition Documents to which it is a
party and consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Purchaser of this Agreement and each of
the other Acquisition Documents to which Purchaser is a party have been duly and
validly authorized and approved by all necessary action on the part of
Purchaser. This Agreement and each of the other Acquisition Documents to which
Purchaser is a party are the legal, valid, and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by the exercise of judicial discretion in
accordance with equitable principles. Neither the execution and delivery by
Purchaser of this Agreement or any of the other Acquisition Documents to which
Purchaser is a party nor the consummation by Purchaser of the transactions
contemplated hereby or thereby will (i) violate Purchaser's Articles of
Incorporation or Bylaws, (ii) violate any provisions of law or any order of any
court or any governmental unit to which Purchaser is subject, or by which its
assets are bound, or (iii) conflict with, result in a breach of, or constitute a
default under any indenture, mortgage, lease, agreement, or other instrument to
which Purchaser is a party or by which its assets or properties are bound.
6.3 Litigation. There is no suit, action, proceeding, claim or
-----------
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which would affect the consummation of the transactions contemplated
hereby.
6.4 Correctness of Representations. No representation or warranty
-------------------------------
of Purchaser in this Agreement or in any Exhibit, certificate, or Schedule
attached hereto or furnished pursuant hereto contains any untrue statement of
material fact or omits to state any fact necessary in order to make the
statements contained therein not misleading in any material respect, and all
such statements, representations, Exhibits, and certificates are true and
complete.
6.5 Brokers and Finders. Except for any fees payable to The
--------------------
Breckenridge Group, Inc., Resurgens Plaza, Suite 2100, 945 E. Paces Ferry Road,
Atlanta, Georgia 30326, with respect to the transactions provided for herein,
which fee shall be paid by Purchaser, neither Purchaser nor any affiliate of
Purchaser has incurred any obligation or
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liability to any party for any brokerage fees, agent's commissions, or finder's
fees in connection with the transactions contemplated by the Acquisition
Documents.
6.6 Governmental Approval and Consents. No consent, approval, or
-----------------------------------
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance by Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE 7
COVENANTS
7.1 Mutual Covenants. Purchaser, on the one hand, and Seller and
-----------------
Shareholder, on the other hand, shall each take all actions contemplated by this
Agreement, and do all things reasonably necessary to effect the consummation of
the transactions contemplated by this Agreement. Except as otherwise provided
in this Agreement, Purchaser and Seller and Shareholder shall each refrain from
knowingly taking or failing to take any action which would render any of the
representations or warranties contained in Articles 5 or 6 of this Agreement in
any material respect inaccurate as of the Closing Date. Each party shall
promptly notify the other party of any action, suit, or proceeding that shall be
instituted or threatened against such party to restrain, prohibit, or otherwise
challenge the legality of any transaction contemplated by this Agreement.
7.2 Conditions Precedent. Seller shall use its best efforts to
---------------------
satisfy the conditions enumerated in Article 8 hereof.
ARTICLE 8
POST CLOSING MATTERS
8.1 Employment of Employees. Purchaser shall have no obligation to
------------------------
employ or to offer employment to any of the employees of Seller. Seller shall be
responsible for the payment of all wages, commissions, severance pay, accrued
but unpaid wages, vacation pay, sick pay, and holiday pay to the employees of
Seller, up to and including the date Seller terminates the employment of such
employees. Seller shall be responsible for the payment of any amounts due to its
employees pursuant to any benefit plans of Seller as a result of the employment
of its employees.
8.2 Seller's Benefit Plans. Purchaser shall assume no
-----------------------
responsibility with regard to any benefit plans of Seller.
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8.3 Maintenance of Books and Records.
---------------------------------
(a) Seller and Purchaser shall preserve until the sixth anniversary of
the Closing Date all Books and Records possessed or to be possessed by such
party relating to any of the assets, liabilities or business of Seller prior to
the Closing Date. Seller shall give Purchaser written notice of any Books and
Records discovered by Seller that were not transferred to Purchaser. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
of such party and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Business prior to the Closing
Date, and the other parties and their representatives shall have the right to
make copies of such books and records; provided, however, the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided, as
to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 30th day after such notice is given unless another
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(b) Purchaser shall fully cooperate with Seller in the preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Purchaser also shall make available to Seller such information as may be
reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible. Purchaser shall
provide within a reasonable time after the receipt of a written request all
information contained in its files necessary for the preparation by Seller of a
Form W-2 for the calendar year in which the Closing occurs for each Hired
Employee.
8.4 Payments Received. Seller and Purchaser agree that after the
------------------
Effective Time they will hold and will promptly transfer and deliver to the
proper recipient thereof, from time to time as and when received by them, any
cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash), or other property that they may receive on or
after the Effective Time which properly belongs to the other party, including
without limitation, any insurance proceeds, and will account to the other for
all such receipts. From and after the Effective Time, Purchaser shall have
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the right and authority to endorse without recourse the name of Seller on any
check or any other evidences of indebtedness received by Purchaser on account of
the Business and the Acquired Assets transferred to Purchaser hereunder.
8.5 Covenant to Pay Debts. Promptly following the Closing Seller
----------------------
will pay in full all indebtedness of Seller to third parties (including, without
limitation, trade payables, accrued taxes, amounts due to employees, bank
indebtedness and all other indebtedness, whether secured or unsecured) owed by
Seller on or as of the Closing Date, and to the extent any of the Acquired
Assets are security for any such indebtedness, obtain the release of all liens,
claims, charges, encumbrances or security interests in such Acquired Assets and
deliver evidence (which shall be in form reasonably satisfactory to Purchaser
and its counsel) of such release or that the underlying obligations have been
paid in full pursuant to SECTION 8.5 to Purchaser at the Closing.
ARTICLE 9
INDEMNIFICATION
9.1 Definitions
-----------
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(b) "Indemnitees" shall mean the Purchaser and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(c) "Indemnitors" shall mean Seller and Shareholder.
(d) "Losses" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(e) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
9.2 Agreement of Indemnitors to Indemnify
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Subject to the terms and conditions of this Article, Indemnitors agree
to indemnify, defend, and hold harmless Indemnitees, and each of them, from,
against, for, and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(a) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of the Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Schedule, or Exhibit furnished by
Indemnitors in connection herewith;
(b) a breach of or failure to perform any material covenant or
agreement of Indemnitors made in this Agreement;
(c) the failure to comply with the Bulk Sales Act or any comparable
law to the extent such act or law is or may be deemed to be applicable to the
transactions provided for herein; and
(d) any Excluded Liability.
9.3 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 9.4 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in SECTION
10.13 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or
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by any other final adjudication, Indemnitor shall pay the amount of such
Indemnification Claim within ten (10) days of the date such amount is
determined.
9.4 Third Party Claims . The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in SECTION 9.3 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party Claim
or the litigation or resolution thereof involves an issue or matter which could
have a material adverse effect on the business, operations, assets, properties
or prospects of Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of Indemnitee),
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by Indemnitor, and the costs and
expenses of Indemnitee in connection therewith shall be included as part of the
indemnification obligations of Indemnitor hereunder. If Indemnitee shall elect
to exercise such right, Indemnitors shall have the right to participate in, but
not control, the defense, compromise and settlement of such Third Party Claim at
its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitor under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $10,000.00 or less where Indemnitor has not responded within five
(5) business days of notice of a proposed
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settlement. If Indemnitor assumes the defense of such a Third Party Claim, (a)
no compromise or settlement thereof may be effected by Indemnitor without
Indemnitee's consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect on
any other claim that may be made against Indemnitee (ii) the sole relief
provided is monetary damages that are paid in full by Indemnitor and (iii) the
compromise or settlement includes, as an unconditional term thereof, the giving
by the claimant or the plaintiff to Indemnitee of a release, in form and
substance satisfactory to Indemnitee, from all liability in respect of such
Third Party Claim, and (b) Indemnitee shall have no liability with respect to
any compromise or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
(e) Seller and Shareholder shall not have any liability for
indemnification pursuant to this Section, unless and until, Third Party Claims
exceed $25,000 in the aggregate.
9.5 Indemnification Exclusive Remedy. In the absence of fraud,
---------------------------------
indemnification pursuant to Article 9 shall be the sole and exclusive remedy of
the parties for any breach of any representation, warranty, covenant or
agreement contained in this Agreement.
9.6 Survival . All representations, warranties and agreements
--------
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Closings notwithstanding any investigation conducted
with respect thereto or any knowledge acquired as to the accuracy or inaccuracy
of any such representation or warranty.
9.7 Time Limitations. Indemnitor shall have no liability under
----------------
clause (a) of SECTION 9.2 with respect to: (a) the breach of any representation
or warranty, other than those set forth in SECTIONS 5.1, 5.2, 5.11, 5.17, 5.18,
and 5.22 hereof, unless on or before two (2) years after the Closing Date
Indemnitor is given notice asserting an Indemnification Claim with respect
thereto, and (b) the breach of the representations and warranties of Indemnitor
contained in SECTIONS 5.11, 5.17 and 5.18 hereof, unless notice asserting an
Indemnification Claim based thereon is given to Indemnitor prior to the
expiration of the applicable statute of limitations for the assertion of
liability against the
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Purchaser based upon the matters that are the subject of the representations and
warranties contained in such Sections. An Indemnification Claim based upon a
breach of the representations and warranties set forth in SECTIONS 5.1, 5.2 and
5.22 or based upon the failure of Indemnitor to perform the covenants and
agreements to be performed by them hereunder or based upon clause (c) of SECTION
9.2 hereof may be made at any time.
9.8 Subrogation. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitor shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
9.9 Purchaser's Right of Set-Off. Notwithstanding anything to the
-----------------------------
contrary herein contained, Purchaser shall have the right to set-off against and
deduct from the Deferred Payment (a) any amount which any Indemnitor becomes
obligated (whether by agreement between one or more of the Indemnitors and the
Purchaser or by arbitration award) to pay to Purchaser hereunder, and (b) any
other amounts which may be payable by Seller to Purchaser under this Agreement
or by virtue of the transactions provided for herein. Purchaser's right of set-
off shall be superior to any right of Seller to request or direct payment of any
part or all of the Deferred Payment to or for the account of Seller. Prior to
exercising the aforementioned right of set-off, Purchaser shall give Seller five
(5) days written notice of its intent to exercise such right. If within five
(5) days of receiving such notice, Seller objects in writing to Purchaser's
exercise of its right of set-off, then Purchaser shall set aside and hold the
disputed amount free of any obligation to pay over the disputed amount to or at
the direction of Seller, and Purchaser's asserted right of set-off will be
submitted to arbitration pursuant to SECTION 10.13 hereof. Notwithstanding
anything to the contrary in this Agreement, all amounts set aside and held
pending the resolution of arbitration shall remain set aside and held until the
final resolution of such arbitration pursuant to SECTION 10.13 hereof. If at
the time for payment of the Deferred Payment, an Indemnification Claim has been
asserted by Purchaser but the Indemnitors obligation with respect thereto has
not been finally determined or agreed upon, Purchaser may withhold payment of
such portion of the Deferred Payment as shall be sufficient to pay and reimburse
Purchaser for all losses upon which the Indemnification Claim is based and shall
not be required to pay such withheld amount over to Seller until five (5) days
following the final determination or agreement that the Indemnitors are not
obligated to the Indemnitees with respect to such Indemnification Claim or if
obligated the Indemnitors have paid and satisfied such Indemnification Claim in
full.
ARTICLE 10
GENERAL PROVISIONS
10.1 Fees and Expenses. Except as otherwise specifically provided
------------------
in this Agreement, Seller, on the one hand, and Purchaser, on the other hand,
shall pay their
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respective legal, accounting and other fees and expenses in connection with the
transactions contemplated by this Agreement.
10.2 Notices. All notices, request, demands, and other
--------
communications hereunder shall be in writing and shall be delivered (a) in
person or by courier, (b) mailed by first class registered or certified mail, or
(c) delivered by facsimile transmission, as follows:
(a) If to Seller:
Saner Communications, Inc.
6760 Jimmy Carter Boulevard
Norcross, Georgia 30071
Attn: Mr. Michael J. Saner
Telephone: (770) 368-4649
Telecopier: (770) 447-5367
with a copy (which shall not constitute notice) to:
Mark B. Jones, Esq.
6760 Jimmy Carter Boulevard
Suite 130
Norcross, Georgia 30071
Telephone: (770) 368-4649
Telecopier: (770) 447-5367
Michael J. Saner
6760 Jimmy Carter Boulevard
Suite 130
Norcross, Georgia 30071
Telephone: (770) 368-4649
Telecopier: (770) 447-5367
(b) If to Purchaser:
Satellink Paging LLC
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attn: Mr. Jerry W. Mayfield
Telephone: (770) 772-9909
Telecopier: (770) 664-2650
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with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: S.J. Nurkin, Esq.
Telephone: (404) 881-7000
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this SECTION 10.2. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
10.3 Assignment; Binding Effect. Except as provided in this
---------------------------
SECTION 10.3, prior to the Closing, this Agreement shall not be assignable by
any of the parties hereto without the written consent of the other; provided,
however, that Purchaser may assign all of its rights hereunder to any subsidiary
of Purchaser, but such assignment shall not relieve Purchaser of its obligations
hereunder in the event such assignee shall fail timely to perform any of such
obligations From and after any such assignment, the word "Purchaser" shall
include assignee.
10.4 No Benefit to Others. The representations, warranties,
--------------------
covenants, and agreements contained in this Agreement are for the sole benefit
of the parties hereto and, in the case of Article 9 hereof, Indemnitee and its
heirs, executors, administrators, legal representatives, successors and assigns,
and they shall not be construed as conferring any rights on any other persons.
10.5 Headings, Gender, "Person" and "Affiliate". All section
------------------------------------------
headings contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity,
and any reference to an "affiliate," whether or not such term is capitalized,
with respect to a person shall mean a person or entity that is controlled by,
under common control with or controls such person.
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10.6 Counterparts. This Agreement may be executed in two (2) or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one counterpart has been signed by each party
and delivered to the other party hereto.
10.7 Integration of Agreement. This Agreement supersedes all prior
-------------------------
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
10.8 Time of Essence. Time is of the essence in this Agreement.
----------------
10.9 Governing Law. This Agreement shall be construed under the laws
--------------
of the State of Georgia.
10.10 Partial Invalidity. Whenever possible, each provision hereof
-------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
10.11 Investigation. No inspection, preparation, or compilation of
-------------
information or Schedules, or audit of the inventories, properties, financial
condition, or other matters relating to Seller conducted by or on behalf of
Purchaser pursuant to this Agreement shall in any way limit, affect, or impair
the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller set forth herein. Any disclosure made on
one Schedule shall not be deemed made on any other Schedule, unless appropriate
cross-referencing is made. The covenants and representations and warranties of
Seller and Purchaser shall survive the Closing and the execution and delivery of
all instruments of conveyance for the periods set forth in SECTION 9.7.
10.12 Public Announcements. Seller and Purchaser will consult with
---------------------
each other before issuing any press releases or otherwise making any public
statements or filings with governmental entities with respect to this Agreement
or the transactions contemplated hereby and shall not issue any press releases
or make any public statements or filings with governmental entities prior to
such consultation and shall modify any
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portion thereof if the other party reasonably objects thereto, unless the same
may be required by applicable law.
10.13 Arbitration. The parties agree that any dispute between or
-----------
among them arising out of or based upon this Agreement, the remaining
Acquisition Documents or the consummation of the transactions provided for
herein shall be submitted to and resolved by arbitration in Atlanta, Georgia in
accordance with the rules and procedures of the American Arbitration
Association, and the decision of the arbiter(s) in such dispute shall be final
and binding on the parties to such arbitration proceeding. Except as the
arbiter(s) may otherwise award or assess the expenses of any such proceeding,
each party shall bear its own costs and expenses, including the expense of its
counsel, in any such arbitration proceeding.
[SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PURCHASER:
(SEAL) SATELLINK PAGING LLC
By: /s/ Jerry W. Mayfield
-----------------------------
Title: President
-----------------------------
SELLER:
(SEAL)
SANER COMMUNICATIONS, INC.
By: /s/ Michael J. Saner
-----------------------------
Title: President
-----------------------------
SHAREHOLDER:
/s/ Michael J. Saner
---------------------------------
Michael J. Saner
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EXHIBIT 10.3
EXECUTION COPY
MERGER AGREEMENT
BY AND AMONG
SATELINK PAGING, INC.
MR. A. LEE PICKARD
AND
SATELLINK PAGING LLC
DATED AS OF MAY 23, 1997
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TABLE OF CONTENTS
Page
----
ARTICLE 1 CERTAIN DEFINITIONS..................................... 1
ARTICLE 2 MERGER.................................................. 5
2.01 Merger.................................................. 5
2.02 Time and Place of Closing............................... 5
2.03 Effective Time.......................................... 5
2.04 Articles of Incorporation............................... 6
2.05 Bylaws.................................................. 6
2.06 Manager................................................. 6
2.07 Name of Surviving Entity................................ 6
ARTICLE 3 MANNER OF CONVERTING SHARES............................. 6
3.01 Conversion of Shares in Merger.......................... 6
3.02 Exchange Procedures and Payments at Closing............. 6
3.03 Determination of Amount of Common Stock Payment......... 6
3.04 Rights of Former Target Shareholders.................... 8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF TARGET 8
AND SHAREHOLDER.................................................
4.01 Organization and Good Standing, Power and Authority..... 8
4.02 Capitalization and Ownership............................ 8
4.03 Qualification........................................... 9
4.04 No Violation of applicable Laws or Agreements........... 9
4.05 Financial Statements.................................... 9
4.06 Absence of Undisclosed Liabilities...................... 10
4.07 Absence of Certain Changes.............................. 10
4.08 Tax Matters............................................. 10
4.09 Pending Litigation or Proceedings....................... 11
4.10 Compliance With Applicable Laws......................... 12
4.11 Assets.................................................. 12
4.12 Contracts............................................... 13
4.13 Intellectual Property................................... 13
4.14 Consents and Approvals.................................. 14
4.15 Employee Benefit Plans.................................. 14
4.16 Compensation Arrangements; Bank Accounts; Officers and
Directors............................................... 16
4.17 Transactions With Related Parties....................... 16
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4.18 Labor Relations......................................... 16
4.19 Brokerage............................................... 17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER................. 17
5.01 Organization and Good Standing; Power and Authority..... 17
5.02 No Violation of Applicable Laws or Agreements........... 17
5.03 Pending Litigation or Proceedings....................... 17
5.04 Brokerage............................................... 18
5.05 Consents and Approvals.................................. 18
ARTICLE 6 CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS............. 18
6.01 Operation of Business Pending Closing................... 18
6.02 Access to Information................................... 19
6.03 Schedules............................................... 19
6.04 Best Efforts............................................ 19
6.05 Exclusive Dealings...................................... 20
6.06 Expenses................................................ 20
6.07 Financing............................................... 20
6.08 Prepayment Penalties.................................... 20
6.09 Assignment of Radio Permit.............................. 20
6.10 Abatement of Tax Penalties.............................. 21
ARTICLE 7 CONDITIONS TO CLOSING................................... 21
7.01 Conditions To Obligations Of Buyer...................... 21
7.02 Conditions to Obligations of Target..................... 23
ARTICLE 8 TERMINATION............................................. 24
8.01 When Agreement May be Terminated........................ 24
8.02 Effect of Termination................................... 24
ARTICLE 9 INDEMNIFICATION......................................... 25
9.01 Definitions............................................. 25
9.02 Agreement of Indemnitors to Indemnify................... 25
9.03 Procedures for Indemnification.......................... 26
9.04 Third Party Claims...................................... 26
9.05 Other Rights and Remedies Not Affected.................. 28
9.06 Time Limitations........................................ 28
9.07 Subrogation............................................. 28
9.08 Buyer's Right of Set-Off................................ 28
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ARTICLE 10 MISCELLANEOUS........................................... 29
10.01 Nature And Survival Of Representations.................. 29
10.02 Amendment............................................... 29
10.03 Waiver.................................................. 30
10.04 Governing Law........................................... 30
10.05 Notices................................................. 30
10.06 Invalid Provision....................................... 31
10.07 Assignment.............................................. 31
10.08 Binding Effect.......................................... 32
10.09 Further Assurances...................................... 32
10.10 Headings................................................ 32
10.11 Person and Gender....................................... 32
10.12 Entire Agreement........................................ 32
10.13 Interpretations......................................... 32
10.14 Arbitration............................................. 32
10.15 Execution in Counterparts............................... 32
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EXHIBITS:
A Lease Agreement
B Reseller Agreement
C Target Legal Opinion
D Non-Compete Agreement
E Buyer Legal Opinion
SCHEDULES:
4.01 Articles and Bylaws
4.04(e) Licenses
4.05 Financial Statements
4.08 Tax Matters
4.10(a) Compliance With Applicable Laws
4.10(b) Compliance With Applicable Laws
4.12 Material Contracts
4.13 Intellectual Property
4.14 Consents and Approvals
4.15 Employee Benefit Plans
4.16 Compensation Arrangements; Bank Accounts; Officers and Directors
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is made as of May 23rd, 1997
by and among SATELLINK PAGING LLC, a Georgia limited liability company
("BUYER"), SATELINK PAGING, INC., a Louisiana corporation ("TARGET") and Mr. A.
----- ------
Lee Pickard, a resident of the state of Louisiana ("SHAREHOLDER").
-----------
BACKGROUND
----------
The Manager and the Board of Directors of Buyer and Target,
respectively, are of the opinion that the transactions described herein are in
the best interests of the parties hereto and their respective members and
shareholders. This Agreement provides for the acquisition of Target by Buyer
pursuant to the merger of Target with and into Buyer. At the effective time of
such merger, each outstanding share of common stock of Target shall, subject to
the terms and conditions of this Agreement, be converted into the right to
receive a cash payment from Buyer and Target shall be merged with and into
Buyer. Shareholder is the record and beneficial owner of all of the issued and
outstanding shares of Target capital stock (the "SHARES"). Shareholder desires
------
to sell and Buyer desires to purchase all of the Shares, upon the terms and
conditions set forth in this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein and in the Schedules and Exhibits hereto, the following
terms have the following respective meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION PROPOSAL" is defined in Section 6.05.
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"AGREEMENT" means this Merger Agreement and all Schedules and Exhibits
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hereto, as the same may be supplemented, modified or amended from time to time.
"AFFILIATE" is defined in Section 4.15(g).
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"APPLICABLE LAW" means all applicable provisions of constitutions,
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statutes, laws, rules, regulations and orders of all Governmental Authorities.
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"ASSETS" of a Person shall mean all of the assets, properties,
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businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, movable or immovable, corporeal or
incorporeal, tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or indirectly, in
whole or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of any such Person and wherever
located, including goodwill.
"BENEFIT PLANS" is defined in Section 4.15(a).
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"BUYER" is defined in the first paragraph of this Agreement.
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"CLOSING" means the consummation of the transactions described in this
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Agreement, and "CLOSING DATE" means the date upon which such consummation
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occurs.
"CLOSING BALANCE SHEET" is defined in Section 3.03(a).
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"CLOSING FINANCIAL DATA" is defined in Section 3.03(a).
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"CODE" means the Internal Revenue Code of 1986, as amended, and the
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rules and regulations promulgated thereunder.
"COMMON STOCK" means the issued and outstanding common stock of
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Target, no par value.
"COMMON STOCK PAYMENT" is defined in Section 3.01.
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"CONFIDENTIAL INFORMATION" means any confidential or proprietary
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information about Target, provided that it does not include information which
Buyer can demonstrate (i) is or becomes generally available to or known by the
public other than as a result of improper disclosure by Buyer or (ii) is
obtained by Buyer from a source other than Target, provided that such source was
not bound by a duty of confidentiality to Target with respect to such
information or (iii) Buyer independently develops, without recourse to the
Confidential Information.
"DETERMINATION" is defined in Section 3.03(b).
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"EBITDA" means Target's earnings before interest, taxes, depreciation
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and amortization, as determined in accordance with GAAP.
"EFFECTIVE TIME" means the date and time on which the Merger becomes
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effective with the Secretary of State of Georgia.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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in effect from time to time.
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"ESTIMATED BALANCE SHEET" is the unaudited balance sheet of Target,
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dated as of April 30, 1997.
"ESTIMATED COMMON STOCK PAYMENT" an amount equal to the Net Equity
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Value of Target as shown on the Estimated Balance Sheet.
"FCC" means the Federal Communications Commission.
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"FINANCING" is defined in Section 6.07.
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"FINANCIAL STATEMENTS" is defined in Section 4.05.
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"FORMER AFFILIATE" is defined in Section 4.15(g).
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"GAAP" consists of the official publications of the American
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Institute of Certified Public Accountants. These official publications consist
of Accounting Principles, Board Opinions, Financial Accounting Standards Board
Statements, and Accounting Research Bulletins. In the event there is no official
pronouncement, the consensus of the accounting profession, as manifested in
textbooks, for example, determines GAAP.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, local,
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foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
"GROSS ENTERPRISE VALUE" of Target shall be $1,650,000.
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"HART-SCOTT ACT" means the Hart-Scott-Rodino Antitrust Improvements
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Act of 1976, as amended, and all regulations promulgated thereunder.
"INDEMNIFICATION CLAIM" is defined in Section 9.01.
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"INDEMNITEES" is defined in Section 9.01.
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"INDEMNITORS" is defined in Section 9.01.
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"INTELLECTUAL PROPERTY" means all patents, designs, art work, designs-
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in progress, formulations, know-how, prototypes, inventions, trademarks, trade
names, trade styles, service marks, and copyrights owned or held by Target and
related to Target's business; all registrations thereof and applications
therefor, both registered and unregistered, foreign and domestic; all trade
secrets or processes owned by or belonging to Target and related to Target's
business; all computer software (including documentation and related object and,
if applicable, source codes) owned by or belonging to Target and related to
Target's business; and all confidential or proprietary information that are
either (i) owned
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by Target and related to Target's business, whether or not reflected on the
books and records of Target, or (ii) as to which Target has rights as licensee,
constituting all of the intellectual property of Target used exclusively in
Target's business.
"KNOWLEDGE" with respect to Target, means those facts known by
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Shareholder and, with respect to Buyer, means those facts known by Jerry W.
Mayfield or Daniel D. Lensgraf.
"LETTER OF INTENT" means that certain Letter of Intent dated by Buyer
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on November 14, 1996 and approved and accepted by Shareholder on November 15,
1996.
"LOSSES" is defined in Section 9.01.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect to the
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property, business, operations, or financial condition of Target or Buyer, as
the case may be.
"MATERIAL CONTRACTS" is defined in Section 4.12.
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"MERGER" means the merger of Target with and into Buyer in accordance
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with this Agreement and the Georgia Business Corporation Code.
"NET EQUITY VALUE" of Target is the amount equal to the Gross
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Enterprise Value less all liabilities of Target which are required by GAAP to be
reflected on Target's balance sheet.
"NOTIFICATION PERIOD" is defined in Section 3.03(b).
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"PERMITTED ENCUMBRANCES" means (i) liens for taxes not yet due and
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payable, (ii) personal property leases, and (iii) with respect to Real Property,
privileges, easements, rights of way, licenses, covenants, zoning and other
restrictions of record, which individually or in the aggregate do not affect the
current uses of the Real Property.
"PERSON" means an individual, corporation, partnership, association,
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trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"PRIME RATE" means the prime rate as published in the "Money Rates"
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column of The Wall Street Journal, Eastern Edition; in the event that more than
one such rate is reported, the Prime Rate shall equal the average of such rates.
"PURCHASE ADJUSTMENT AMOUNT" is defined in Section 3.03.
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"RADIO PERMIT" means all of the right, title and interest of Target
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and/or Shareholder in and to licenses, permits, certificates and governmental
authorizations of Target and/or Shareholder related to the operation of a radio
station, including, without
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limitation, licenses for call signs WNHU977, WNVK659, WPAF 675 and WNZK555
issued by the FCC.
"RELATED PARTY" means any of the officers or directors of any of
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Target; any affiliate or relative of any such person; or any business or entity
in which Target or any affiliate or relative of any such person has any direct
or material indirect interest.
"SHAREHOLDER" is defined in the first paragraph of this Agreement.
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"SHARES" is defined in the second paragraph of this Agreement.
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"SURVIVING ENTITY" means the entity surviving the Merger.
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"TARGET" is defined in the first paragraph of this Agreement.
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"TAX RETURNS" means all returns or reports, including accompanying
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schedules, with respect to Taxes.
"TAXES" means all federal, state, local and foreign income, premium,
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payroll, withholding, excise, sales, use, real and personal property, use and
occupation, mercantile, capital stock, franchise and other taxes, including
interest and penalties thereon and all estimated taxes.
"THIRD PARTY CLAIM" is defined in Section 9.01.
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ARTICLE 2
MERGER
2.01 Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time, Target shall be merged with and into Buyer in
accordance with the applicable provisions of the Georgia Business Corporation
Code and the Louisiana Business Corporation Law. Buyer shall be the Surviving
Entity resulting from the Merger and shall continue to be governed by the laws
of the State of Georgia. The Merger shall be consummated pursuant to the terms
of this Agreement, which has been approved by the Manager and Board of Directors
of Buyer and Target, respectively.
2.02 Time and Place of Closing. The Closing will take place at
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9:00 AM (Atlanta, Georgia time) on June 2, 1997. The place of the Closing will
be at the offices of Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree
Street, Atlanta, Georgia 30309-3424, or such other place as may be mutually
agreed upon by the parties.
2.03 Effective Time. The Merger and other transactions
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contemplated by this Agreement shall become effective on the date and at the
time the Articles of Merger become effective with the Secretary of State of
Georgia. Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon by the parties in writing, the
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parties shall use their reasonable efforts to cause the Effective Time to occur
at the close of business on the Closing Date.
2.04 Articles of Organization. The articles of organization of
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Buyer in effect immediately prior to the Effective Time shall be the articles of
organization of the Surviving Entity at the Effective Time.
2.05 Operating Agreement. The operating agreement of Buyer in
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effect immediately prior to the Effective Time shall be the operating agreement
of the Surviving Entity at the Effective Time.
2.06 Manager. From and after the Effective Time, the Manager of
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Buyer in office immediately prior to the Effective Time shall remain the Manager
of the Surviving Entity and shall continue to hold such office from the
Effective Time until its successor is appointed in the manner provided by the
operating agreement of the Surviving Entity.
2.07 Name of Surviving Entity. The name of the Surviving Entity
will be Satellink Paging LLC.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.01 Conversion of Shares in Merger. Subject to the provisions of
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this Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of the Shareholder the Shares issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted into and
exchanged for the right to receive from Buyer an aggregate payment (the "COMMON
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STOCK PAYMENT") equal to a cash payment of $1,650,000, less the estimated amount
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of the liabilities of Target as of the Closing Date.
3.02 Exchange Procedures and Payments at Closing. At the Closing,
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Shareholder shall surrender the certificate or certificates representing the
Shares issued and outstanding at the Effective Time to Buyer, all such
certificates to be duly endorsed in blank or accompanied by a duly executed
assignment separate from such certificate. Shareholder shall, upon surrender of
such certificate or certificates, receive in exchange therefor on the Closing
Date an amount equal to ninety percent (90%) of the Common Stock Payment.
3.03 Determination of Amount of Common Stock Payment.
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(a) Within thirty (30) days after the Closing Date, Shareholder will
cause to be prepared and delivered to Buyer an audited balance sheet of Target
as of the close of business on the Closing Date (the "CLOSING BALANCE SHEET"),
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which Closing Balance Sheet shall be accompanied by a Schedule setting forth the
difference, if any, between the Net Equity Value of Target based on the Closing
Balance Sheet and the Net
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Equity Value of Target based on the Estimated Balance Sheet (collectively, the
"CLOSING FINANCIAL DATA"), prepared in accordance with GAAP.
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(b) Within thirty (30) days after receipt of the Closing Financial
Data (the "NOTIFICATION PERIOD"), Buyer will notify Shareholder in writing of
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any objections Buyer may have to the Closing Financial Data. In the absence of
such written objections timely made, Buyer shall be deemed to have approved the
Closing Financial Data for purposes of the adjustment, if any, to be made
pursuant to this SECTION 3.03 on the expiration of the Notification Period. If
Buyer timely notifies Shareholder in writing of objections to the Closing
Financial Data, and if any such objections cannot be resolved by Shareholder and
Buyer within thirty (30) days after receipt by Shareholder of such objections,
such dispute shall immediately be referred to a mutually satisfactory
independent certified public accounting firm of national reputation which has
not been employed by either Buyer or Target, or any affiliate of either Buyer or
Target, during the one (1) year preceding the date of such referral and which
has agreed to meet the time deadlines imposed herein. The determination of such
firm with respect to such dispute (the "DETERMINATION"), which shall occur on or
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prior to ninety (90) days after the Closing Financial Data has been received by
Buyer, shall be conclusive and binding on the parties hereto. Buyer and
Shareholder shall each pay one-half of the fees of such firm incurred in
resolving such dispute. Target shall, upon request of Buyer make available to
Arthur Andersen & Co., accountants for Buyer, all work papers prepared in
connection with the preparation of the Closing Balance Sheet.
(c) If the Common Stock Payment based upon the Net Equity Value of
Target based on the Closing Balance Sheet (as the same may be adjusted as a
result of any agreement between Shareholder and Buyer with respect to any
objection raised by Buyer or as a result of the Determination) is greater than
the Estimated Common Stock Payment based upon the Net Equity Value of Target
based on the Estimated Balance Sheet, Buyer shall pay to Shareholder an amount
equal to such difference. Such payment shall be made by wire transfer within
two (2) business days following the earliest to occur of (i) final approval of
the Closing Financial Data by Buyer, (ii) expiration of the Notification Period
with no written objections being received by Shareholder, or (iii) receipt by
Shareholder and Buyer of the Determination. If, however, the Common Stock
Payment based on the Net Equity Value of Target based on the Closing Balance
Sheet (as the same may be adjusted as a result of any agreement between
Shareholder and Buyer with respect to any objection raised by Buyer or as a
result of the Determination) is less than the Estimated Common Stock Payment
based on the Net Equity Value of Target based on the Estimated Balance Sheet,
Shareholder shall pay to the Buyer an amount equal to such difference. Such
payment shall be made (A) first by reduction of the Purchase Adjustment Amount
(as defined herein), and (B) the balance, if any, by wire transfer to the
account of Buyer within two (2) business days following the earliest to occur of
(i) final approval of the Closing Financial Data by Buyer, (ii) expiration of
the Notification Period with no written objections being received by
Shareholder, or (iii) receipt by Shareholder and Buyer of the Determination.
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(d) To secure the payment of any amounts to which Shareholder may be
entitled if the Common Stock Payment is less than the Estimated Common Stock
Payment, ten percent (10%) of the Common Stock Payment shall be retained by
Buyer until the six month anniversary of the Closing Date (the "PURCHASE
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ADJUSTMENT AMOUNT"). Upon the six month anniversary of the Closing Date, any
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portion of the Purchase Adjustment amount to which Buyer is not entitled
pursuant to SECTION 3.03(C) shall be paid to Shareholder by wire transfer.
3.04 Rights of Former Target Shareholders. At the Effective Time,
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the stock transfer books of Target shall be closed and no transfer of Common
Stock of Target shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of SECTION 3.02 of this Agreement,
each certificate theretofore representing shares of Common Stock of Target shall
from and after the Effective Time represent for all purposes only the right to
receive the Common Stock Payment.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF TARGET AND SHAREHOLDER
Target and Shareholder, jointly and severally, hereby represent and
warrant to Buyer as of the date hereof as follows:
4.01 Organization and Good Standing; Power and Authority. Target
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is a corporation duly organized, validly existing and in good standing under the
laws of the state of Louisiana. Target has the requisite corporate power and
authority to own or lease its properties and assets. Target has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Target of its
obligations under this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action on the part of Target. This Agreement has been duly and
validly executed and delivered by Target and constitutes Target's valid and
binding obligation, and is enforceable against Target in accordance with its
terms. The copies of the articles of incorporation and bylaws of Target, as
amended to date, which are attached as SCHEDULE 4.01, and copies of the
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corporate minutes of Target, which have been made available to Buyer for review,
are correct and complete and are in full force and effect. The stock record
books of Target, which have been made available to Buyer for review, contain
complete and accurate records of the stock ownership of Target.
4.02 Capitalization and Ownership. Target's authorized capital
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stock consists of five hundred (500) shares of Common Stock, no par value, of
which one hundred (100) shares are currently issued and outstanding and none of
which are held in its treasury. All of such outstanding shares of Target have
been duly authorized, validly issued and are fully paid and nonassessable. None
of the outstanding shares of capital stock of Target
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has been issued in violation of any preemptive rights of the current or past
shareholders of Target. There are no outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of Target and no securities convertible into or exchangeable for
any of such capital stock. Shareholder owns all of the issued and outstanding
shares of Common Stock, free and clear of all liens, privileges, pledges,
mortgages, claims, charges, security interests and other encumbrances or adverse
claims of any kind or nature. Target does not, directly or indirectly, own any
stock of, or any other interest in, any Person.
4.03 Qualification. Target is duly qualified or licensed to do
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business and is in good standing as a foreign corporation in each jurisdiction
in which such qualification or licensing is necessary under Applicable Law.
4.04 No Violation of Applicable Laws or Agreements. The execution
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and delivery of this Agreement by Target do not, and the consummation of the
Merger and the other transactions contemplated by this Agreement and the
compliance with the terms, conditions and provisions of this Agreement by
Target, will not (a) violate or conflict with any provision of Target's articles
of incorporation or bylaws; (b) violate, conflict with or result in the breach
or termination of, or otherwise give any contracting party (which has not
consented to such execution, delivery and consummation) the right to change the
terms of, or to terminate or accelerate the maturity of, or constitute a default
under the terms of, any indenture, mortgage, loan or credit agreement or any
other material agreement (including, but not limited to airtime purchase
agreements, tower leases and rental agreements) or instrument to which Target is
a party or by which Target or any of its assets may be bound or affected; (c)
violate any Applicable Law; (d) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon Target's assets or
give to others any interests or rights therein; other than any such conflicts,
breaches, terminations, accelerations, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect; or (e) except
for those licenses described on SCHEDULE 4.04(e) as to which governmental
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approval is required in connection with the Merger, result in the revocation or
suspension of any license or permit held by Target.
4.05 Financial Statements. Attached hereto as SCHEDULE 4.05 are
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(a) the unaudited consolidated balance sheets of Target as of December 31, 1996,
1995 and 1994 and the related consolidated statements of income, stockholders'
equity and statements of cash flows of Target for the years ended December 31,
1996, 1995 and 1994 (the "FINANCIAL STATEMENTS"). The Financial Statements (a)
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have been prepared in accordance with GAAP consistently applied (except as may
be indicated therein or in the notes thereto), (b) present fairly the financial
position of Target as of the dates indicated and present fairly the results of
Target operations for the periods then ended, (c) are in accordance with the
books and records of Target, which have been properly maintained and are
complete and correct in all material respects, and (d) the aggregate reserve
reflected therein was determined in accordance with generally accepted actuarial
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standards consistently applied (except as otherwise noted therein), is fairly
stated in accordance with sound actuarial principles and is in conformance with
GAAP.
4.06 Absence of Undisclosed Liabilities. Target does not have any
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liabilities, whether absolute, contingent or conditional, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Target, except liabilities which are accrued or reserved against in the
consolidated balance sheets of Target as of December 31, 1996, included in the
Financial Statements or reflected in the notes thereto. Target has not incurred
or paid any liability, whether absolute, contingent or conditional, since
January 1, 1997, except for such liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Target or (ii) in connection with the transactions
contemplated by this Agreement. Target is not directly or indirectly liable, by
guarantee, indemnity or otherwise, upon or with respect to, or obligated, by
discount or repurchase agreement or in any other way, to provide funds in
respect to, or obligated to guarantee or assume any liability, whether absolute
or contingent, known or unknown, of any other Person.
4.07 Absence of Certain Changes. Since January 1, 1997 (a) there
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have been no events, changes or occurrence having, or which would reasonably be
expected to result in, a Material Adverse Effect upon Target, and (b) Target has
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken or omitted after the date of this
Agreement, would represent or result in a breach or violation of any of the
covenants and agreements of Target provided in Article 6. Since January 1,
1997, the business of Target has been conducted only in the ordinary and usual
course consistent with past practice, except with respect to the transactions
contemplated in this Agreement.
4.08 Tax Matters.
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(a) All Tax Returns required to be filed by or on behalf of Target
have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before December 31, 1995,
and on or before the date of the most recent applicable year end immediately
preceding the Effective Time, and all Tax Returns filed are complete and
accurate. All Taxes and other related liabilities due and owing with respect to
periods preceding the Effective Time have been paid, accrued on the Financial
Statements or, in the case of financial statements Target prepared in the
ordinary course of business covering the period from January 1, 1997 through the
Effective Time, will be accrued on such financial statements, whether or not
such Taxes or other liabilities are shown on filed Tax Returns. As of the date
of this Agreement, there is no audit examination, deficiency, or refund
litigation pending or, threatened with respect to any Taxes, except as reserved
against in the Financial Statements. All Taxes and other liabilities due with
respect to completed and settled examinations or concluded litigation regarding
Tax Returns have been paid. Target has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a tax
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assessment or deficiency. There are no liens, privileges, pledges, mortgages or
security interests on any of the assets of Target resulting from any failure (or
alleged failure) to pay any Tax. Attached to SCHEDULE 4.08 are correct and
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complete copies of Target federal and state income tax returns for the years
ended December 31, 1993, 1994 and 1995.
(b) Target has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for Target
for the period or periods through and including the Effective Date has been
made.
(d) Deferred Taxes of Target have been provided for on the Financial
Statements in accordance with GAAP.
(e) Target is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local tax laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code
(f) Target has not (i) filed any consent or agreement under Section
341(f) of the Code, (ii) applied for any tax ruling, (iii) entered into a
closing agreement with any taxing authority, (iv) filed an election under
Section 338(g) or 338(h)(10) of the Code (nor has a deemed election under
Section 338(e) of the Code occurred), (v) made any payments, or been a party to
an agreement (including this agreement) that under any circumstance would
obligate Target or the Surviving Corporation, to make payments that will not be
deductible because of Section 280G or 162(m) of the Code, or (vi) been a party
to any tax allocation or tax sharing agreement. Target is not a "United States
Real Property Holding Company" within the meaning of Section 897 of the Code.
Target has disclosed in accordance with applicable law on its federal income tax
returns all positions therein that could give rise to an understatement of
federal income tax.
(g) Target has not (i) been a member of an affiliated group filing a
consolidated federal income tax return or (ii) been liable for taxes of any
person or entity under Treas. Reg. (S) 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor, by contract, or
otherwise.
4.09 Pending Litigation or Proceedings. There are no claims,
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suits, actions, proceedings, arbitrations or investigations pending or
threatened, against or otherwise relating to or involving Target or any of its
properties, the outcome of which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse
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Effect or to affect the ability of Target to consummate the transactions
contemplated by this Agreement.
4.10 Compliance With Applicable Laws. Neither Target nor
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Shareholder is in violation of any Applicable Law. Target and/or Shareholder
holds all licenses, permits, registrations and other authorizations required to
conduct Target's business, and all such licenses, permits, registrations and
other authorizations are listed on SCHEDULE 4.10(a) and, except as set forth on
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SCHEDULE 4.10(b), are valid and in full force and effect and there has occurred
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no default under any such license, permit, registration or other authorization
is in compliance with all such licenses, permits, registrations and
authorizations. Neither Target nor Shareholder is subject to any judgment,
order, writ, injunction or decree issued by any court or any governmental
agency.
4.11 Assets.
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(a) Target has good, valid and merchantable and marketable title, free
and clear of all liens, pledges, mortgages, claims, charges, security interests
and other encumbrances of any kind or nature to all of its respective Assets.
To Target's Knowledge, all tangible and/or corporeal properties used in the
business of Target are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Target's past
practices.
(b) All items of inventory of Target reflected on the most recent
balance sheet included in the Financial Statements delivered prior to the date
of this Agreement and prior to the Effective Time consisted and will consist, as
applicable, of items of a quality and quantity usable and saleable in the
ordinary course of business and conform to generally accepted standards in the
industry in which Target is a part.
(c) The accounts receivable of Target as set forth on the most recent
balance sheet included in the Financial Statements delivered prior to the date
of this agreement or arising since the date thereof are valid and genuine; have
arisen solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of business
consistent with past practice; are not subject to valid defenses, set-offs or
counterclaims; and are collectible within 90 days after billing at the full
recorded amount thereof less, in the case of accounts receivable appearing on
the most recent balance sheet included in the Financial Statements delivered
prior to the date of this Agreement, the recorded allowance for collection
losses on such balance sheet. The allowance for collection losses on such
balance sheet has been determined in accordance with GAAP.
(d) All Assets which are material to Target's business on a
consolidated basis, held under leases or subleases by Target are held under
valid Contracts enforceable in accordance with their respective terms, and each
such Contract is in full force and effect.
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(e) Target currently maintains insurance similar in amounts, scope,
and coverage to that maintained by other peer organizations. Target has not
received notice from any insurance carrier that (i) any policy of insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by
Target under such policies.
(f) The Assets of Target include all Assets required to operate the
business of Target as presently conducted.
4.12 Contracts. The Assets of Target include all of the contracts,
---------
airtime purchase agreements, leases, warranties, commitments, agreements,
arrangements and purchase and sales orders, whether oral or written, pursuant to
which Target enjoys any right or benefit in connection with Target's business,
whether or not reflected upon the books and records of the Target, together with
the right of Target to receive income in respect of such contracts, leases,
warranties, commitments, agreements, arrangements, and purchase and sales orders
on and after the Closing Date. SCHEDULE 4.12 contains a correct and complete
-------------
list of all contracts, leases, warranties, legal commitments, agreements,
arrangements, whether oral or written, pursuant to which Target enjoys any
rights or benefits or undertakes any obligations or liabilities that (i) have a
duration of twelve (12) months or more and which are not terminable by Target
without penalty upon thirty (30) days or less prior written notice, (ii) require
or could reasonably be expected to require any party thereto to pay $5,000 or
more, or (iii) are between Target and any shareholder or employee thereof or
Related Party (collectively, the "MATERIAL CONTRACTS"). Except as set forth on
------------------
SCHEDULE 4.12, all Material Contracts are in full force and effect, and none of
- -------------
the parties thereto is in default under nor has any event occurred which with
the passage of time or giving notice or both would result in any party to a
Material Contract being in default under any of the terms thereof.
4.13 Intellectual Property. SCHEDULE 4.13 contains a true and
--------------------- -------------
correct list of all Intellectual Property owned or used by Target or any
affiliate of Target relating to or used or useful in connection with the
Target's business, containing a brief description of each item of Intellectual
Property and the nature of Target's interest therein. The Assets include and,
upon the consummation of the transactions contemplated by this Agreement, Buyer
will own or have the uncontested right to use all patents, designs, art work,
designs-in-progress, formulations, know-how, inventions, trademarks, trade
names, trade styles, service marks, copyrights, manufacturing processes, and
confidential or proprietary information necessary for the conduct of Target's
business as presently conducted. No claim is pending or, to the Knowledge of
Target threatened, and Target has not received notice that the conduct of
Target's business (including without limitation, Target's use of any
Intellectual Property) infringes upon or conflicts with any rights claimed
therein by any third party, nor is Target aware of any unasserted claim the
assertion of which is probable. No use by Target of any Intellectual Property
licensed to it violates the terms of any agreement pursuant to which it is
licensed. No claim is
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pending, or to the knowledge of Target threatened, which alleges that any
Intellectual Property owned or licensed by Target for use in Target's business
or which Target otherwise has the right to use is invalid or unenforceable by
Target, nor is Target aware of any such claim that is unasserted, but the
assertion of which is probable. With respect to Target's business, Target does
not manufacture products which are the subject of patents, patent applications,
copyrights, copyright applications, trademarks, trademark applications, trade
styles, service marks, or trade secrets owned by or licensed from third parties.
No royalties or fees are payable by Target to anyone for use of the Intellectual
Property. True, correct, and complete copies of all agreements pursuant to which
Target has any license or right to use any Intellectual Property are attached to
SCHEDULE 4.13. All such agreements are in full force and effect and there are
- -------------
no existing defaults or events of default, real or claimed, or events which with
or without notice or lapse of time or both would constitute defaults under such
agreements that would give the non-defaulting party a right to terminate such
agreement or a right to receive any payment pursuant to such agreement. With
respect to Target's business, Target has not received any notice that any
operation or machinery employed by Target, violates or infringes upon any claims
of any United States or foreign patent or patent application owned or held by
any third party, nor is Target aware of any unasserted claim the assertion of
which is probable. All Intellectual Property and registrations, applications,
and agreements related thereto are fully assignable to Buyer without the consent
of any third party.
4.14 Consents and Approvals. Except as set forth on SCHEDULE 4.14,
---------------------- -------------
the execution, delivery and performance of this Agreement by Target and the
consummation of the transactions contemplated hereby do not require any consent,
approval or authorization of, or registration or filing with, any Person or
Governmental Authority.
4.15 Employee Benefit Plans.
----------------------
(a) The only employee pension benefit plans (as defined in Section
3(2) of ERISA), welfare benefit plans (as defined in Section 3(1) of ERISA),
bonus, stock purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plan or arrangement, and other material employee
fringe benefit plans presently maintained by, or contributed to by Target for
the benefit of any current or former employee of Target, other than a
multiemployer plan as defined in Section 3(37) of the ERISA, are those listed on
SCHEDULE 4.15 (the "BENEFIT PLANS").
- ------------- -------------
(b) Target and each of the Benefit Plans are in compliance with the
applicable provisions of ERISA, and those provisions of the Code applicable to
the Benefit Plans.
(c) All contributions to, and payments from, the Benefit Plans which
may have been required to be made in accordance with the Benefit Plans and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made.
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(d) There are (i) no pending investigations by any Governmental
Authority involving the Benefit Plans, (ii) no termination proceedings involving
the Benefit Plans, (iii) no threatened or pending claims (except for claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan which could give rise to any material liability,
and (iv) no facts which could give rise to any material liability in the event
of such investigation, claim, suit or proceeding.
(e) Neither the Benefit Plans, Target, nor any employee of Target nor
any trusts created thereunder or any trustee, administrator or other fiduciary
thereof, has engaged in a "prohibited transaction" (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which could subject Target to
the tax or penalty on prohibited transactions imposed by such Section 4975 or
the sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any
such trust has been terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereunder) with respect to
either thereof.
(f) No Benefit Plan subject to Title IV of ERISA has incurred any
material liability to the Pension Benefit Guaranty Corporation other than for
the payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed by
Section 412 of the Code. Target has furnished to Buyer the most recent
actuarial report with respect to each Benefit Plan that is a defined benefit
pension plan as defined by Section 3(35) of ERISA. The information supplied to
the actuary by Target for use in preparing those reports was complete and
accurate and Target has no reason to believe that the conclusions expressed in
those reports are incorrect.
(g) At no time for which any relevant statute of limitations remains
open have (a) Target, (b) any employer that is, together with Target, treated as
a "single employer" under Section 414(b), 414(c) or 414(m) of the Code (an
"AFFILIATE"), or (c) any employer that was at any time after September 2, 1984,
---------
an Affiliate of Target (a "FORMER AFFILIATE"), incurred any liability which
----------------
could subject Buyer or Target to liability under Section 4062, 4063 or 4064 of
ERISA.
(h) At no time for which any relevant statute of limitations remains
open has Target or any Affiliate or Former Affiliate been required to contribute
to, or incurred any withdrawal liability within the meaning of Section 4201 of
ERISA, to any multiemployer pension plan, within the meaning of Section 3(37) of
ERISA, which liability has not been fully paid as of the date hereof.
(i) Target has complied with the notice and continuation coverage
requirements of Section 4980B of the Code and the regulations thereunder with
respect to each Benefit Plan that is, or was during any taxable year of Target
for which the statute of limitations on the assessment of federal income taxes
remains open, by consent or otherwise, a group health plan within the meaning of
Section 5000(b)(1) of the Code.
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(j) Target has not incurred or is reasonably likely to incur any
liability that is or could reasonably be expected to become a liability of
Target with respect to any plan or arrangement that would be included within the
definition of "Benefit Plan" hereunder but for the fact that such plan or
arrangement was terminated before the date of this Agreement.
(k) No payment which is or may be made by Target, or from any Benefit
Plan, to any employee, former employee, director or agent of Target under the
terms of any Benefit Plan, either alone or in conjunction with any other
payment, will or could be characterized as an excess parachute payment under
Section 280G of the Code.
(l) Target has not incurred any liability to provide death or medical
benefits with respect to any current or former employee of Target beyond
retirement or other termination of employment other than as required by Section
4890B of the Code, benefit provisions under any employee pension benefit plan,
deferred compensation accrued on Target's books, disability benefits which have
been fully provided for by insurance or otherwise, or a severance pay plan.
4.16 Compensation Arrangements; Bank Accounts; Officers and
------------------------------------------------------
Directors. SCHEDULE 4.16 sets forth the following information including, where
- --------- -------------
applicable, a copy of any relevant document reflecting such information:
(a) the name and current annual salary, including any bonus, if
applicable, of each of the present officers and employees of Target whose
current annual salary, including any promised or customary bonus, equals or
exceeds $50,000, together with a statement of the full amount of all cash
remuneration paid by Target to each such person and to any director of Target,
during the twelve-month period preceding the date hereof;
(b) the name of each bank, brokerage house or other financial
institution in which Target has an account or safe deposit box, the identifying
numbers thereof, and the names of all persons authorized to draw thereon or to
have access thereto; and
(c) the name and title of each director and officer of Target and of
each trustee, fiduciary or plan administrator of each Benefit Plan.
4.17 Transactions With Related Parties. No Related Party:
---------------------------------
(a) has borrowed money or loaned money to Target which will not be
repaid on or before Closing;
(b) has any contractual or other claim against Target; or
(c) had, since January 1, 1993, any interest in any property or assets
used by Target in its business.
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4.18 Labor Relations. (a) no employee of Target is represented by
---------------
any union or other labor organization; (b) there is no unfair labor practice
complaint against Target pending or overtly threatened before the National Labor
Relations Board; and (c) there is no labor strike, dispute, slow down or
stoppage actually pending or threatened against or involving Target.
4.19 Brokerage. Neither Target nor Shareholder has made any
---------
agreement or taken any other action which might cause anyone to become entitled
to a broker's fee or commission as a result of the transactions contemplated
hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Target and Shareholder as of
the date hereof and in all cases to the Knowledge of Buyer as follows:
5.01 Organization and Good Standing; Power and Authority. Buyer is
---------------------------------------------------
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Georgia. Buyer has the requisite power
and authority to own or lease its assets as now owned or leased, and to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Buyer of its obligations under this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary action on the part of Buyer. This Agreement has
been duly and validly executed and delivered by Buyer and constitutes Buyer's
valid and binding obligation, enforceable against Buyer in accordance with its
terms.
5.02 No Violation of Applicable Laws or Agreements. The execution
---------------------------------------------
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Buyer will not, (a) violate or conflict with any
provision of Buyer's articles of organization or operating agreement, as the
case may be; (b) violate, conflict with or result in the breach or termination
of, or otherwise give any contracting party (which has not consented to such
execution, delivery and consummation) the right to change the terms of, or to
terminate or accelerate the maturity of, or constitute a default under the terms
of, any indenture, mortgage, loan or credit agreement or any other material
agreement or instrument to which Buyer is a party or by which any of its assets
may be bound or affected; (c) violate any Applicable Law, other than any such
conflicts, breaches, terminations, accelerations, defaults or violations that
would not, individually or in the aggregate, have a Material Adverse Effect.
5.03 Pending Litigation or Proceedings. There are no claims,
---------------------------------
suits, actions, proceedings, arbitrations or investigations pending or, to the
knowledge of Buyer, threatened, against or otherwise relating to or involving
Buyer or any of its properties, the
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outcome of which would reasonably be expected to affect the ability of Buyer to
consummate the transactions contemplated by this Agreement.
5.04 Brokerage. Buyer has not made any agreement or taken any
---------
other action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereby.
5.05 Consents and Approvals. Except as set forth on SCHEDULES
----------------------
4.04(e) AND 4.14, the execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby do not
require any consent, approval or authorization of, or registration or filing
with, any Person or Governmental Authority.
ARTICLE 6
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
6.01 Operation of Business Pending Closing.
-------------------------------------
(a) Prior to the Closing Date, except as set forth in subsection (b)
below and except as necessary to effect the transactions contemplated by this
Agreement, or except with the prior consent of Buyer, Target shall conduct its
business in the usual and ordinary course as currently being conducted, and
without limiting the generality of the foregoing clause, Target shall not do any
of the following:
(i) amend its articles of incorporation or bylaws, or merge,
consolidate, liquidate or dissolve;
(ii) issue any capital stock, any securities convertible or
exchangeable into capital stock, or any options, warrants or rights with respect
to capital stock, or split, subdivide or reclassify its capital stock;
(iii) declare or pay any dividend or make any other
distribution on its capital stock;
(iv) increase the compensation or benefits of officers or
employees of Target or pay any bonuses except for normal and customary increases
made or bonuses paid or accrued in accordance with past practices;
(v) create or incur any lien, encumbrance, mortgage, pledge,
charge or security interest whatsoever on any of its properties; or, except for
the issuance of insurance contracts or policies and the settlement of insurance
claims in the ordinary course of business, incur or assume any guaranty or other
liability to discharge an obligation of another, or incur or assume any
obligations for money borrowed, or cancel or discount any material debt owed to
it;
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(vi) enter into or terminate any Material Contract;
(vii) make any expenditure for fixed assets in excess of $1,000
for any single item or $10,000 in the aggregate;
(viii) do or fail to do anything that will cause a breach of,
or default under, any Material Contract; or
(ix) make any change (whether or not material) in its accounting
procedures, methods, policies or practices or the manner in which Target
maintains its records.
(b) Notwithstanding subsection (a) above, prior to the Effective Time,
Target shall pay all accrued but unpaid bonuses owed by Target to its employees.
6.02 Access to Information. Subject to the terms of the Letter of
---------------------
Intent and the confidentiality agreement contemplated thereby, Target and
Shareholder shall give to Buyer and their authorized representatives, during
normal business hours, access to all of Target's contracts, books and records,
and Target shall furnish to Buyer and its authorized representatives such
additional financial, legal and other information with respect to Target that
Buyer may reasonably request. Except as and to the extent required by law,
Buyer shall not disclose or use any Confidential Information with respect to
Target furnished, or to be furnished, by its representatives to Buyer or its
representatives in connection herewith at any time or in any manner other than
in connection with its evaluation and/or consummation of the transactions
contemplated by this Agreement.
6.03 Schedules. At any time and from time to time between the date
---------
hereof and the date that is two business days prior to the Closing Date, Target
shall have the right and the continuing obligation to supplement any of the
Schedules contained in Article 4 hereof, respectively, with respect to any
matter arising or coming to the Knowledge of Target, respectively, after the
date hereof that, if existing, occurring or known at such date, would have been
required to be set forth or described in such Schedules. If, in the recipient
party's reasonable determination, any such supplements provided by the other
party reveal any Material Adverse Effect or any condition or event that would be
reasonably likely to result in a Material Adverse Effect, the recipient party
may terminate this Agreement.
6.04 Best Efforts. Each of the parties hereto agrees to use its
------------
best efforts to take, or to cause to be taken, all reasonable actions and to do,
or to cause to be done, all reasonable things necessary, proper or advisable
under Applicable Laws to perform their respective agreements, undertakings and
obligations hereunder and to consummate the transactions contemplated by this
Agreement. None of the parties hereto will intentionally take or intentionally
permit to be taken any action that would be in breach of
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the terms or provisions of this Agreement or that would cause any of the
representations contained herein to be or become untrue.
6.05 Exclusive Dealings. Unless and until this Agreement is
------------------
terminated prior to Closing pursuant to Article 8, neither Target nor any of its
affiliates, officers, directors, agents, advisers or shareholders shall (i)
solicit submissions of proposals of offers from any Person other than Buyer
relating to any acquisition or purchase of all or any material part of the
capital stock, assets or properties of Target, the sale or issuance of any
capital stock of Target or of any corporation formed by Target or any affiliate
to which any of the capital stock, assets or properties of Target may be
contributed, or any merger or consolidation of Target or of any corporation
formed by Target or any affiliate to which any assets or properties of Target
may be contributed (each an "ACQUISITION PROPOSAL"); (ii) participate in any
--------------------
discussions or negotiations regarding, or furnish any information to any Person
other than Buyer, or otherwise cooperate in any way or assist, facilitate or
encourage any Acquisition Proposal by any Person other than Buyer; or (iii)
enter into any agreement or understanding, whether oral or written, that would
prevent the consummation of the transaction proposed hereby.
6.06 Expenses. If Closing does not occur as set forth in this
--------
Agreement, the expenses of the parties hereto shall be paid as provided in
SECTION 8.03 If Closing occurs, Shareholder shall pay or reimburse all expenses
of Target incurred in connection with the transactions contemplated hereby and
Buyer shall pay or reimburse all expenses of Buyer incurred in connection with
the transactions contemplated hereby.
6.07 Financing. Buyer shall use its reasonable best efforts to
---------
obtain the consent of its lenders to consummate the transactions contemplated by
this Agreement or otherwise arrange to enter into borrowing arrangements at the
Closing Date pursuant to which Buyer shall have the ability to borrow money on
commercially reasonable terms, including the ability to borrow under such
arrangements such amounts as may be required, when aggregated with other funds
on hand or available to Buyer (including funds available immediately following
the Closing Date) to pay in full all amounts payable by Buyer pursuant to
Article 3 hereof (collectively, the "FINANCING"). Buyer shall promptly notify
---------
Target if Buyer shall reasonably conclude that Buyer will not be able to
conclude the Financing on or prior to June 2, 1997.
6.08 Prepayment Penalties. Target will promptly reimburse Buyer
--------------------
for any penalties, surcharges, termination amounts or other amounts owed as a
result of Buyer's prepayment of any liability for borrowed money of Target
within six (6) months after the Closing Date.
6.09 Assignment of Radio Permits. Promptly upon receipt of notice
---------------------------
from Buyer of the arrangement of the Financing:
(a) Target and Shareholder shall file or cause to be filed all
applications and any amendments thereto or additional applications that may be
necessary to obtain
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temporary operating authority from the FCC for the call signs WNHU977, WNVK659,
WPAF675 and WNZK555 pursuant to Section 90.159 of the Rules and Regulations of
the FCC for a period not to exceed 180 days, unless extended by the FCC.
(b) Target and Shareholder agree to file or cause to be filed all
applications and any amendments thereto or additional applications, that may be
necessary to obtain the FCC's consent to the assignment of the Radio Permit to
Buyer. Buyer agrees to cooperate with Target and Shareholder in discharging
this responsibility.
(c) In the event Buyer's conditional, temporary operating authority is
canceled or the assignment applications are dismissed or denied, authority to
operate the stations shall revert to Shareholder. Upon the occurrence of such
event, Buyer and Shareholder agree to enter into, execute and deliver the Lease
Agreement substantially in the form of EXHIBIT A and the Reseller Agreement
---------
substantially in the form of EXHIBIT B.
---------
6.10 Abatement of Tax Penalties. Until the fifth anniversary of
the Closing Date, Buyer will promptly reimburse Shareholder the full amount of
any funds received from any section of the U.S. Department of the Treasury -
Internal Revenue Service and/or the State of Louisiana Department of Revenue and
Taxation resulting from an abatement of any penalties or the return of any tax
overages paid to the government(s) of the United States or the State of
Louisiana prior to the Closing Date. Buyer designates and authorizes
Shareholder, as an independent contractor, to pursue on behalf of Buyer as
successor in interest to Target all claims related to or arising from such
penalties or tax overages, including filing amendments or supplements to
previous filings, provided however, that nothing in this Section 6.10 shall
create an employment relationship between Buyer and Shareholder, provided
further, that Shareholder shall have no authority to act on Buyer's behalf with
respect to matters other than those specifically set forth in this Section 6.10.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Buyer. The obligations of Buyer
----------------------------------
to proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by Buyer at Buyer's option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of Target and Shareholder contained in this Agreement shall be
true and correct on and as of the time of Closing, with the same force and
effect as though such representations and warranties had been made on, as of and
with reference to such time and Buyer shall have received certificates to such
effect signed by each of Shareholder and an authorized officer of Target.
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(b) Performance and Compliance. Target shall have performed all of
--------------------------
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing, and Buyer shall
have received a certificate to such effect signed by an authorized officer of
Target.
(c) Opinion of Counsel. Buyer shall have received from Powers, Clegg
------------------
& Willard, L.L.P., counsel for Target, an opinion dated the Closing Date
substantially in the form of EXHIBIT C.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on Target's and Shareholder's part to effectuate and consummate the transactions
contemplated hereby shall be delivered to Buyer and shall be in form and
substance reasonably satisfactory to Buyer and its counsel.
(e) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby or
which would limit or materially adversely affect Buyer's ownership or control of
Target or the business of Target, and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any Governmental
Authority (i) challenging any of the transactions contemplated by this Agreement
or seeking monetary relief by reason of the consummation of such transactions or
(ii) which might have a Material Adverse Effect on the future conduct of the
business of Target.
(f) No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect with respect to Target, or any condition or event which
is reasonably likely to result in a Material Adverse Effect, subsequent to
January 1, 1997.
(g) Incumbency Certificate. Target shall have delivered to Buyer an
----------------------
incumbency certificate dated the Closing Date certifying the incumbency of all
officers of Target who have executed this Agreement or any of the other
agreements, documents or instruments required to be delivered hereunder. These
certificates shall contain specimens of the signatures of each of such officers
and shall be executed by an officer of Target other than an officer whose
incumbency or authority is certified.
(h) Certificate of Existence. Target shall have delivered to Buyer,
------------------------
with respect to Target, a certificate of the Secretary of State of Louisiana,
dated not more than 10 days before the Closing Date, stating that Target is a
corporation in existence under the laws of such state and has paid all
applicable Taxes due to such state.
(i) Certified Copies of Resolutions. Target shall have delivered to
-------------------------------
Buyer copies, certified by the duly qualified and acting Secretary or Assistant
Secretary of Target, of resolutions adopted by the Board of Directors of Target,
and of resolutions adopted by the shareholders of Target, approving this
Agreement and the consummation of the transactions contemplated hereby.
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(j) Delivery of Original Records. Target shall have delivered to
----------------------------
Buyer the original corporate minute books for Target, along with the
certificates representing the issued and outstanding shares of capital stock of
Target.
(k) Financing. Buyer shall have secured the Financing contemplated
---------
by Section 6.07.
(l) Non-Compete. Shareholder shall have entered into, executed and
-----------
delivered the Non-Compete Agreement substantially in the form of EXHIBIT D
---------
hereto.
(m) Certificate of Compliance. Target shall have delivered to Buyer a
-------------------------
certificate, executed by the President of Target and attested by the Secretary
or Assistant Secretary of Target, stating that Target has strictly complied with
Article VII of Target's Articles of Incorporation and Article IX of Target's
Bylaws regarding sales and transfers of stock.
7.02 Conditions to Obligations of Target. The obligations of
-----------------------------------
Target and Shareholder to proceed with the Closing under this Agreement are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Target or
Shareholder at Target's or Shareholder's option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of Buyer contained in this Agreement shall be true and correct on
and as of the time of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time, and Target shall have received a certificate to such effect signed by
authorized officers of Buyer.
(b) Performance and Compliance. Buyer shall have performed all of the
--------------------------
covenants and complied with all of the provisions required by this Agreement to
be performed or complied with by it on or before the Closing, and Target shall
have received a certificate to such effect signed by authorized officers of
Buyer.
(c) Opinion of Counsel. Target shall have received from Alston & Bird
------------------
LLP, counsel for Buyer, an opinion dated the Closing Date substantially in the
form of EXHIBIT E.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on Buyer's part to effectuate and consummate the transactions contemplated
hereby shall be delivered to Target and shall be in form and substance
reasonably satisfactory to Target and its counsel.
(e) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby,
and there shall not have been threatened, nor shall there be pending, any action
or proceeding by or before
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any Governmental Authority challenging any of the transactions contemplated by
this Agreement or seeking monetary relief by reason of the consummation of such
transactions.
(f) Incumbency Certificate. Buyer shall have delivered to Target an
----------------------
incumbency certificate dated the Closing Date certifying the incumbency of all
officers of the Manager of Buyer who have executed this Agreement or any of the
other agreements, documents or instruments required to be delivered hereunder.
These certificates shall contain specimens of the signatures of each of such
officers and shall be executed by officers of the Manager of Buyer other than an
officer whose incumbency or authority is certified.
(i) Certificate of Existence. Buyer shall have delivered to Target a
------------------------
certificate of the Secretary of State of Georgia, dated not more than 10 days
before the Closing Date, stating that Buyer is a limited liability company in
existence under the laws of the State of Georgia.
(j) Certified Copies of Resolutions. Buyer shall have delivered to
-------------------------------
Target copies, certified by the duly qualified and acting Secretary or Assistant
Secretary of Buyer, of resolutions adopted by the Manager of Buyer approving
this Agreement and the consummation of the transactions contemplated hereby.
ARTICLE 8
TERMINATION
8.01 When Agreement May be Terminated. This Agreement may be
--------------------------------
terminated at any time prior to Closing:
(a) By Buyer (i) at any time if any representation and warranty of
Target contained in Article 4 was incorrect in any material respect when made or
becomes incorrect in any material respect at any time after the date hereof and
prior to the Effective Time, (ii) at any time if Target fails to comply in any
material respect with any provision of Article 6 binding upon it, or (iii) upon
written notice to Target given on or at any time after January 31, 1997 if all
the conditions precedent set forth in SECTION 7.01 to be performed by Target
have not been performed by that date; or
(b) By Buyer upon written notice to Target given at any time if Buyer
reasonably believes that the Financing will not be received by Buyer on or prior
to June 2, 1997.
(c) In accordance with SECTION 6.03.
(d) By Target upon written notice from Buyer provided in accordance
with SECTION 6.07.
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8.02 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Buyer on the one hand, or Target, on the other, as provided
above, this Agreement shall forthwith terminate and there shall be no liability
on the part of any party or any party's officers or directors, except for
liabilities arising from a breach of this Agreement prior to such termination,
liabilities set forth in SECTION 8.03 below and liabilities and obligations
under the confidentiality agreements referred to in the Letter of Intent. The
provisions of SECTION 8.03, together with each of the confidentiality agreements
referred to in the Letter of Intent, shall survive termination of this Agreement
and shall not be extinguished thereby.
8.03 Payment of Expenses on Termination. If this Agreement is
----------------------------------
terminated by Buyer pursuant to SECTION 8.01(A) or (C) Target shall pay and
reimburse Buyer for all expenses such parties incurred prior to such termination
in connection with the preparation of this Agreement and the transactions
contemplated hereby. If this Agreement is terminated by Buyer pursuant to
SECTION 8.01(B) each party shall bear its own expenses incurred in connection
with the preparation of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE 9
INDEMNIFICATION
9.01 Definitions
-----------
For the purposes of this Article:
(a) "INDEMNIFICATION CLAIM" shall mean a claim for
---------------------
indemnification hereunder.
(b) "INDEMNITEES" shall mean Buyer and its agents, representatives,
-----------
employees, officers, directors, shareholders, controlling persons and
affiliates.
(c) "INDEMNITORS" shall mean Target and Shareholder.
-----------
(d) "LOSSES" shall mean any and all demands, claims, actions or causes
------
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(e) "THIRD PARTY CLAIM" shall mean any claim, suit or proceeding
-----------------
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
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9.02 Agreement of Indemnitors to Indemnify
-------------------------------------
Subject to the terms and conditions of this Article, Indemnitors
agree, jointly and severally, to indemnify, defend, and hold harmless
Indemnitees, and each of them, from, against, for, and in respect of any and all
Losses asserted against, or paid, suffered or incurred by, an Indemnitee and
resulting from, based upon, or arising out of:
(a) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Indemnitors contained in or made pursuant to this
Agreement or in any certificate, Schedule, or Exhibit furnished by Indemnitors
in connection herewith; and
(b) a breach of or failure to perform any material covenant or
agreement of Indemnitors made in this Agreement.
9.03 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 9.04 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in SECTION
10.14 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or by any other final adjudication, Indemnitor shall pay the amount of
such Indemnification Claim in accordance with the instructions of the Indemnitee
within ten (10) days of the date such amount is determined.
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9.04 Third Party Claims. The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in SECTION 9.03 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party Claim
or the litigation or resolution thereof involves an issue or matter which could
have a material adverse effect on the business, operations, assets, properties
or prospects of Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of Indemnitee),
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by Indemnitor, and the costs and
expenses of Indemnitee in connection therewith shall be included as part of the
indemnification obligations of Indemnitor hereunder. If Indemnitee shall elect
to exercise such right, Indemnitors shall have the right to participate in, but
not control, the defense, compromise and settlement of such Third Party Claim at
its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitor under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $50,000.00 or less where Indemnitor has not responded within five
(5) business days of notice of a proposed settlement. If Indemnitor assumes the
defense of such a Third Party Claim, (a) no compromise or settlement thereof may
be effected by Indemnitor without Indemnitee's consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any person and no effect on any other claim that may be made against
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Indemnitee (ii) the sole relief provided is monetary damages that are paid in
full by Indemnitor and (iii) the compromise or settlement includes, as an
unconditional term thereof, the giving by the claimant or the plaintiff to
Indemnitee of a release, in form and substance satisfactory to Indemnitee, from
all liability in respect of such Third Party Claim, and (b) Indemnitee shall
have no liability with respect to any compromise or settlement thereof effected
without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
9.05 Other Rights and Remedies Not Affected. The rights of
--------------------------------------
Indemnitee under this Article 9 are independent of and in addition to such
rights and remedies as Indemnitee may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or the failure to fulfill any
agreement or covenant hereunder on the part of Indemnitor, including without
limitation the right to seek specific performance, recession or restitution,
none of which rights or remedies shall be affected or diminished hereby.
9.06 Time Limitations. Indemnitor shall have no liability under
----------------
clause (a) of SECTION 9.02 with respect to: (a) the breach of any
representation or warranty, other than those set forth in SECTIONS 4.02, 4.04,
4.08, 4.10, 4.11 and 4.15 hereof, unless on or before one (1) year after the
Closing Date Indemnitor is given notice asserting an Indemnification Claim with
respect thereto; (b) the breach of the representations and warranties of
Indemnitor contained in SECTION 4.08 hereof, unless notice asserting an
Indemnification Claim based thereon is given to Indemnitor prior to the
expiration of the period of time when deficiencies may be assessed against
Target with respect to any tax period ended on or prior to the Effective Time;
and (c) the breach of the representations and warranties of Indemnitor contained
in SECTION 4.15, unless on or before five (5) years after the Closing Date
Indemnitor is given notice asserting an Indemnification Claim with respect
thereto. An Indemnification Claim based upon a breach of the representations
and warranties set forth in SECTIONS 4.02, 4.04, 4.10 and 4.11 or based upon the
failure of Indemnitor to perform the covenants and agreements to be performed by
them hereunder or based upon clause (c) of SECTION 9.02 hereof may be made at
any time.
9.07 Subrogation. Upon payment in full of any Indemnification
-----------
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, Indemnitor
shall be subrogated to the extent of such payment to the rights of Indemnitee
against any person or entity with respect to the subject matter of such
Indemnification Claim or Third Party Claim.
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9.08 Buyer's Right of Set-Off. Notwithstanding anything to the
-------------------------
contrary herein contained, Buyer shall have the right to set-off against and
deduct from the Purchase Adjustment Amount (a) any amount which any Indemnitor
becomes obligated (whether by agreement between one or more of the Indemnitors
and Buyer or by arbitration award) to pay to Buyer hereunder, and (b) any other
amounts which may be payable by the Indemnitors to Buyer under this Agreement or
by virtue of the transactions provided for herein. Buyer's right of set-off
shall be superior to any right of Indemnitors to request or direct payment of
any part or all of the Purchase Adjustment Amount to or for the account of
Indemnitors. Prior to exercising the aforementioned right of set-off, Buyer
shall give Indemnitors five (5) days written notice of its intent to exercise
such right. If within five (5) days of receiving such notice, Indemnitors
object in writing to Buyer's exercise of its right of set-off, then Buyer shall
set aside and hold the disputed amount free of any obligation to pay over the
disputed amount to or at the direction of Indemnitors, and Buyer's asserted
right of set-off will be submitted to arbitration pursuant to SECTION 10.14
hereof. Notwithstanding anything to the contrary in this Agreement, all amounts
set aside and held pending the resolution of arbitration shall remain set aside
and held until the final resolution of such arbitration pursuant to SECTION
10.14 hereof. If at the time for payment of the Purchase Adjustment Amount, an
Indemnification Claim has been asserted by Buyer but the Indemnitors obligation
with respect thereto has not been finally determined or agreed upon, Buyer may
withhold payment of such portion of the Purchase Adjustment Amount as shall be
sufficient to pay and reimburse Buyer for all losses upon which the
Indemnification Claim is based and shall not be required to pay such withheld
amount over to Shareholder until five (5) days following the final determination
or agreement that the Indemnitors are not obligated to the Indemnitees with
respect to such Indemnification Claim or if obligated the Indemnitors have paid
and satisfied such Indemnification Claim in full.
ARTICLE 10
MISCELLANEOUS
10.01 Nature and Survival of Representations. The representations,
--------------------------------------
warranties, covenants and agreements contained in this Agreement shall survive
the Closing until that date which is one year after the Closing Date, except
that: (i) the representations and warranties contained in SECTION 4.08 shall
survive the Closing until the expiration of the period of time when deficiencies
may be assessed against Target with respect to any tax period ended on or prior
to the Effective Time; (ii) the representations and warranties contained in
SECTION 4.15 shall survive the Closing until the fifth anniversary of the
Closing Date; and (iii) the representations and warranties contained in SECTIONS
4.02, 4.04, 4.10 and 4.11 shall survive indefinitely. Buyer acknowledges that
it has been afforded the opportunity to perform such investigation of Target as
it deems necessary or appropriate; however, no investigation by Buyer will
diminish or obviate any of the representations, warranties, covenants or
agreements or Buyer's right to rely upon such representations, warranties,
covenants and agreements.
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10.02 Amendment. This Agreement may not be amended or modified
---------
without the prior written consent of all parties.
10.03 Waiver. Failure to insist upon strict compliance with any of
------
the terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
10.04 Governing Law. Notwithstanding the place where this Agreement
-------------
may be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Louisiana, without regard for its conflict of
laws doctrine.
10.05 Notices. Any notice or other communication to be given
-------
hereunder shall be in writing and shall be deemed sufficient when (i) mailed by
United States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
If to Buyer:
Satellink Paging LLC
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attention: Mr. Jerry W. Mayfield
Telephone: (770) 664-2640
Telecopy: (770) 664-2651
with a copy (which shall not constitute notice) to:
Alston & Bird LLP
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
Attention: Sidney J. Nurkin
Telephone: (404) 881-7000
Telecopy: (404) 881-7777
If to Target:
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Satelink Paging, Inc.
11740 Coursey Boulevard
Suite F1
Baton Rouge, Louisiana 78016
Attention: Mr. Lee Pickard
Telephone:
-----------------
Telecopy:
-----------------
with a copy (which shall not constitute notice) to:
Powers, Clegg & Willard, L.L.P.
7967 Office Park Boulevard
Post Office Box 15948
Baton Rouge, Louisiana 70895
Telephone: (504) 928-1951
Telecopy: (504) 929-9834
If to Shareholder:
Mr. A. Lee Pickard
11740 Coursey Boulevard
Suite F1
Baton Rouge, Louisiana 78016
Telephone:
-----------------
Telecopy:
-----------------
with a copy (which shall not constitute notice) to:
Powers, Clegg & Willard, L.L.P.
7967 Office Park Boulevard
Post Office Box 15948
Baton Rouge, Louisiana 70895
Telephone: (504) 928-1951
Telecopy: (504) 929-9834
10.06 Invalid Provision. If any provision of this Agreement shall
-----------------
be determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
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10.07 Assignment. This Agreement may not be assigned or delegated
----------
by any party without the prior written consent of all other parties, which
consent shall not be unreasonably withheld or delayed. In the event of
assignment of this Agreement the original parties shall remain bound to the
obligations, terms, conditions and provisions of this Agreement.
10.08 Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
10.09 Further Assurances. Each party agrees to execute and deliver
------------------
all such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
10.10 Headings. Headings and captions contained in this Agreement
--------
are inserted only as a matter of convenience and for reference and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.
10.11 Person and Gender. The masculine gender shall include the
-----------------
feminine and neuter genders and the singular shall include the plural.
10.12 Entire Agreement. This Agreement, together with its Schedules
----------------
and Exhibits, and the Letter of Intent and confidentiality agreement referenced
therein, constitute the entire agreement of the parties with respect to matters
set forth in this Agreement and the Letter of Intent, and supersede any prior
understanding or agreement, oral or written, with respect to such matters. To
the extent that the provisions of this Agreement and the Letter of Intent may be
inconsistent, the provisions of this Agreement shall control.
10.13 Interpretations. Neither this Agreement nor any uncertainty
---------------
or ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
10.14 Arbitration. The parties agree that any dispute between or
-----------
among them arising out of or based upon this Agreement, or the consummation of
the transactions provided for herein shall be submitted to and resolved by
arbitration in Baton Rouge, Louisiana in accordance with the rules and
procedures of the American Arbitration Association, and the decision of the
arbiter(s) in such dispute shall be final and binding on the parties to such
arbitration proceeding. Except as the arbiter(s) may otherwise award or assess
the expenses of any such proceeding, each party shall bear its own costs and
expenses, including the expense of its counsel, in any such arbitration
proceeding.
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10.15 Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
SATELLINK PAGING LLC
By: SATELLINK COMMUNICATIONS, INC.,
its Manager
By: /s/ Jerry W. Mayfield
-------------------------------
Name: Jerry W. Mayfield
-----------------------------
Title: President
----------------------------
SATELINK PAGING, INC.
By: /s/ A. Lee Pickard
-------------------------------
Name: A. Lee Pickard
-----------------------------
Title: President
----------------------------
SHAREHOLDER
/s/ A. Lee Pickard
----------------------------------
Mr. A. Lee Pickard
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Exhibit 10.4
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into effective as of
---------
25th day of May 1995, between CR, INC., a Texas corporation (the "CR"), CAPE
--
FEAR PAGING COMPANY OF NORTH CAROLINA, a North Carolina corporation ("Cape
----
Fear") and SATELLINK PAGING, INC., a Georgia corporation (a "Satellink").
---- ---------
A corporation named Nations Link, Inc. (the "Company") has been
-------
incorporated under the laws of the State of Texas. CR, Cape Fear and Satellink
will become Shareholders in the Company, and desire to promote their mutual
interests and the interests of the Company by imposing certain restrictions and
obligations on themselves and the shares of stock of the Company.
ACCORDINGLY, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties to this Agreement agree as follows:
SECTION I DEFINITIONS
As used herein, the following terms shall have the respective meanings
indicated:
1.1 "Book Value" means, (a) with respect to each share of Stock
----------
described in clause (a) of Section 1.21, (1) the consolidated net worth of the
---------- ------------
Company and its subsidiaries, if any, the accounts of which are consolidated
with those of the Company for financial reporting purposes, minus the
liquidation value of capital stock having a preference upon liquidation over
such share, divided by (2) the number of shares of Stock and Stock equivalents
outstanding, excluding those shares of stock having a liquidation preference,
all as determined in accordance with GAAP and reflected on the Company's
customary financial statements that are prepared as of a date and for the
period ended on or most recently prior to the occurrence of the Exercise Event
giving rise to the need to determine Book Value, and (b) with respect to each
share of Stock described in clause (b) of Section 1.21, the amount reasonably
---------- ------------
determined by the Board of Directors of the Company to be its book value,
determined in accordance with GAAP and reflected on the Company's customary
financial statements that are prepared as of a date and for the period ended on
or most recently prior to the occurrence of the Exercise Event giving rise to
the need to determine Book Value.
1.2 "Bankruptcy" is defined in Section 1.5(b).
---------- --------------
1.3 "Closing" is defined in Section 6.1.
------- -----------
1.4 "Event Notice" is defined in Section 4.1.
------------ -----------
1.5 "Exercise Event" means the occurrence of any of the following
--------------
events with respect to a Shareholder:
(a) The dissolution of the Shareholder occurs, or the Shareholder
is no longer qualified or authorized to own Stock (a "Shareholder's
-------------
Disqualification");
----------------
(b) The entry of an order, judgment, or decree by any court of
competent jurisdiction approving a petition appointing a trustee,
receiver or liquidator of all or a substantial part of the
Shareholder's assets; the entry of an order for relief based upon an
involuntary petition filed against the Shareholder under any
bankruptcy or debtor relief laws; the assignment or attempted
assignment by the Shareholder for the benefit of creditors; or the
institution or attempted institution of voluntary bankruptcy
proceedings by the Shareholder (each of the foregoing being a
"Bankruptcy");
----------
SHAREHOLDER AGREEMENT -- Page 1 of 11
<PAGE>
(c) The occurrence of any voluntary or involuntary Transfer of
any shares of Stock of the Shareholder, other than a Transfer
associated with an event described in clauses (a) or (b) above or a
-----------
Permitted Transfer (an "Other Transfer");
--------------
(d) The receipt by the Shareholder of a bona fide offer from a
third party to acquire shares of Stock from the Shareholder if the
Shareholder intends to Transfer shares of Stock pursuant to that
offer, other than a Transfer made pursuant to Section 6 (a "Third
--------- -----
Party Offer");
-----------
(e) The Shareholder constitutes a "Defaulting Partner" under the
terms of and as defined in the Partnership Agreement (a "Shareholder's
-------------
Default"); or
-------
(f) At least 66%, but less than 100% of the Shareholders agree to
(i) a sale of all or substantially all of the assets of the
Partnership or (ii) the grant of a lien or mortgage upon all or
substantially all the assets of the Partnership ("Shareholder
-----------
Disagreement").
------------
1.6 "Exercise Notice" means, with respect to any option that becomes
---------------
exercisable hereunder, a written notice given by an Optionee pursuant to this
Agreement, identifying the Optionee, the Seller, the Exercise Event upon which
the option is based and the number of Optioned Shares that the Optionee will
purchase.
1.7 "Exercise Period" means, with respect to each option that is
---------------
exercisable hereunder based upon the occurrence of an Exercise Event, the
period beginning on the date upon which the Event Notice pertaining thereto is
given properly or an Optionee otherwise acquires actual knowledge of that
occurrence and ending after the expiration of the respective number of days
thereafter set forth below:
==============================================================================
OPTION ARISING AS A RESULT OF NUMBER OF DAYS
==============================================================================
Shareholder's Disqualification 180 days
------------------------------------------------------------------------------
Bankruptcy 90 days
------------------------------------------------------------------------------
Other Transfer 90 days
------------------------------------------------------------------------------
Third Party Offer 14 days or 14 days
after the
determination of the
Non-cash Appraised
Value, if any, in
accordance with
Section 4.2
-----------
------------------------------------------------------------------------------
Shareholder's Default 60 days
------------------------------------------------------------------------------
Shareholder Disagreement 30 days
==============================================================================
Each Exercise Event shall require the determination of the appropriate Exercise
Period for each option that becomes exercisable as a result thereof (even if an
Exercise Period for an option was previously determined in connection with the
occurrence of an earlier Exercise Event).
SHAREHOLDER AGREEMENT -- Page 2 of 11
<PAGE>
1.8 "Exercise Price" means, with respect to each Optioned Share
--------------
subject to any option that becomes exercisable hereunder, the amount set forth
below with respect to the Exercise Event out of which the option arises:
===============================================================================
OPTION ARISING AS A RESULT OF EXERCISE PRICE IS
===============================================================================
Shareholder's Disqualification 50% of Book Value
-------------------------------------------------------------------------------
Bankruptcy Book Value
-------------------------------------------------------------------------------
Other Transfer 50% of Book Value
-------------------------------------------------------------------------------
Third Party Offer Offered Price
-------------------------------------------------------------------------------
Shareholder's Default 50% of Book Value
-------------------------------------------------------------------------------
Shareholder Disagreement Fair Market Value
===============================================================================
Each Exercise Event shall require the determination of the appropriate Exercise
Price of each Optioned Share subject to the option that becomes exercisable as
a result thereof (even if the Exercise Price of the Optioned Shares was
previously determined in connection with the, occurrence of an earlier Exercise
Event).
1.9 "Fair Market Value" means the fair market value of the
-----------------
Shareholder's stock interest in the Company as determined by a big six
accounting firm taking into account the book value, the off book values and the
nature of the minority interest held by the Shareholder in question. The
Shareholders who are purchasing shall provide all relevant information to the
big six accounting firm they select and the big six firm shall determine the
Fair Market Value of the shares of Shareholder(s) whose shares are being
purchased along with the value of such Shareholders limited partnership
interest in the Partnership. Such determination shall be delivered on a date
within 45 days of the date the Shareholders elected to purchase. If the selling
Shareholder disagrees with the valuation, the selling Shareholder shall procure
a valuation from a big six accounting firm. Such valuation shall be paid for by
the selling Shareholder and shall be delivered within thirty days of the
delivery of the first valuation. Upon delivery of the second valuation, the
parties shall average the two valuations and the dissenting Shareholder(s)
shall sell its shares and limited partnership interest for such amount.
1.10 "GAAP" means generally accepted accounting principles,
----
consistently applied with the principles customarily used by the Company in
preparing its financial statements for financial reporting purposes.
1.11 "Non-cash Appraised Value" is defined in Section 4.2.
------------------------ -----------
1.12 "Offered Price" means, with respect to each Optioned Share owned
-------------
by a Seller that is subject to a Third Party Offer, the per share consideration
specified in the Event Notice given in connection with that Third Party Offer,
which consideration shall have a value equal to the quotient of (a) the sum of
all cash plus the Non-cash Appraised Value, if any, as estimated in the Event
Notice (subject to adjustment pursuant to the terms of Section 4.2) divided by
-----------
(b) the aggregate number of Optioned Shares that are subject to the Third Party
Offer.
1.13 "Optioned Shares" means, with respect to an option that becomes
---------------
exercisable hereunder (a) in the case of an option arising out of a Third Party
Offer, the number of shares of Stock owned by the Seller that are subject to
that Third Party Offer and (b) in all other cases, all shares of Stock owned
(legally, beneficially, as community property or otherwise) by the Seller.
1.14 "Optionee" means, with respect to any option that becomes
--------
exercisable hereunder, those one or more Shareholders that are not the subject
of the relevant Exercise Event (provided that, if more than one such
SHAREHOLDER AGREEMENT -- Page 3 of 11
<PAGE>
Shareholder becomes an Optionee, those shareholders shall each participate in
the rights of an Optionee separately and on a pro rata basis, based upon their
--------
respective ownership percentages of the Shares that are not Optioned Shares).
1.15 "Other Transfer" is defined in Section 1.5(c).
-------------- --------------
1.16 "Partnership" means Nations Link, Ltd., a Texas limited
-----------
partnership comprised of the Company (or any Substitute General Partner, as
defined in the Partnership Agreement), as general partner, and CR, Cape Fear
and Satellink (or any Substitute Limited Partner, as defined in the Partnership
Agreement), as limited partners, and including any reconstituted limited
partnership established pursuant to the terms of the Partnership Agreement.
1.17 "Partnership Agreement" means the Agreement of Limited
---------------------
Partnership of Nations Link, Ltd. entered into on the date hereof between the
Company, as general partner, and CR, Cape Fear and Satellink, as limited
partners, as hereafter amended, modified, supplemented or restated, and
including any substitute partnership agreement evidencing the Partnership.
1.18 "Permitted Transfer" means any of the following Transfers
------------------
(provided that, at the time of the Transfer, if the Company has made or is
eligible to make an election to be an S corporation during the then current tax
year under the terms and provisions of the Internal Revenue Code, the
Transferee is not a Person that, as a Shareholder, would cause the Company to
be ineligible to be an S corporation):
(a) A Transfer made to one or more Optionees pursuant to the
terms of this Agreement;
(b) A Transfer made after the occurrence of a Third Party
Offer, but only if (1) the Event Notice is given properly, (2) the
Optionee fails to exercise properly the option with respect to the
Optioned Shares, (3) the Transfer is made to the Transferee named in
the Event Notice within 60 days following the expiration of the
applicable Exercise Period, (4) the terms of the Transfer are no more
favorable to the Transferee than those specified in the Event Notice
and (5) the Transferee executes and delivers a Transferee Agreement;
or
(c) A Transfer made after the occurrence of an Exercise Event
(other than a Third Party Offer), but only if (1) each Event Notice is
given properly, (2) the Optionees fail to exercise properly the
option with respect to any of the Optioned Shares (the "available
---------
shares"), (3) the Transfer of the available shares is made pursuant to
------
the Persons who succeed to the rights and interests of the Shareholder
by operation of law, and (4) each Transferee executes and delivers a
Transferee Agreement.
1.19 "Person" means any individual, partnership, corporation, trust,
------
or other entity or association.
1.20 "Section" means a Section of this Agreement.
-------
1.21 "Seller" means and includes, with respect to any option that
------
becomes exercisable hereunder, the Shareholder who is the subject of the
Exercise Event.
1.22 "Shareholder" means, at the time of any determination thereof, a
-----------
Person that at that time owns, legally or beneficially, any shares of Stock.
1.23 "Shareholder's Default" is defined in Section 1.5(e).
--------------------- --------------
1.24 "Shareholder's Disagreement" is defined in Section 1.5(f).
-------------------------- --------------
1.25 "Shareholder's Disqualification" is defined in Section 1.5(a).
------------------------------ --------------
SHAREHOLDER AGREEMENT -- Page 4 of 11
<PAGE>
1.26 "Stock" means (a) common stock, par value $0.0001 per share, of
-----
the Company outstanding on the date of this Agreement, (b) all additional
common stock of the Company, together with all shares of capital stock of the
Company of any class, that may hereafter be issued and outstanding and (c) any
other issued and outstanding securities of the Company (or another entity) into
which the Stock is changed, reclassified, split, combined or converted or for
which it is exchanged by amendment to the Company's Certificate of
Incorporation or by consolidation, merger or otherwise, and any securities paid
as a dividend thereon. Appropriate adjustment shall be made to the terms of
this Agreement to give effect to each such change, reclassification, split,
combination, conversion, exchange or dividend.
1.27 "Third Party Offer" is defined in Section 1.5(d).
----------------- --------------
1.28 "Transfer" means (a) any sale, hypothecation, transfer, pledge,
--------
encumbrance, gift, donation, assignment, or other disposition, whether
voluntary or involuntary, including, but not limited to, any transfer by
operation of law, by court order, by judicial process, or by foreclosure, levy,
or attachment, or (b) the act of making any of the foregoing transfers.
1.29 "Transferee" means any Person to whom a Transfer of sham of Stock
----------
is made.
1.30 "Transferee Agreement" means an agreement in form and substance
--------------------
satisfactory to the Company that is similar to this Agreement except that (a)
the Transferee is a party to such agreement and is subject to all of the
restrictions and obligations imposed on the Shareholder under this Agreement,
(b) if the Transferee is an individual, (1) the Transferee Agreement contains
additional provisions, as reasonably required by the remaining Shareholders (A)
describing Exercise Events, Exercise Notices and Exercise Prices pertaining to
the death of the Transferee and a marital termination affecting the Transferee
and (B) addressing any community property interest held or obtained by a spouse
of the Transferee and (2) the spouse of the Transferee, if any, executes and
delivers a spousal consent thereto in form and substance acceptable to the
remaining Shareholders and (c) the Transferee Agreement contains such other
term as the Company or any of the other Shareholders reasonably deems necessary
or desirable to avoid dealing with other Persons as shareholders of the
Company.
SECTION 2 INITIAL PURCHASE OF SHARES
The Company has an authorized capitalization of 1,000 shares of Stock.
In connection with execution of this Agreement (a) CR agrees that it shall
purchase 333 1/3 shares of Stock for the purchase price of $334.00, (b) Cape
Fear agrees that it shall purchase 333 1/3 shares of Stock for the purchase
price of $333.00 and (c) Satellink agrees that it shall purchase 333 1/3 shares
of Stock for the purchase price of $333.00.
SECTION 3 GRANT OF OPTION; RESTRICTIONS ON TRANSFER OF SHARES
3.1 Grant of Options. Each Optionee is hereby granted an option to
----------------
purchase, for the price and upon the terms set forth in this Agreement, a pro
rata (based on percentage of outstanding stock of optionees owned by each
Optionee) portion of the shares of Stock that the Seller now or hereafter owns
(legally, beneficially or otherwise) and that are or become Optioned Shares;
provided that, in the case of an option arising based upon the occurrence of a
Third Party Offer, the Optionee(s) collectively must purchase all or none of
the Optioned Shares. In the event there are two (2) Optionees, the Optionees
shall have the right to purchase the Optional Shares on a pro rata basis. In
the event one of the Optionees elects to purchase less than it pro rata share,
the other Optionee shall have the right to purchase the remaining Optioned
Shares.
3.2 Restrictions on Transfers. No Shareholder shall make or suffer
-------------------------
any Transfer (other than a Permitted Transfer) of all or any part of its shares
of Stock, whether now owned or hereafter acquired by that Shareholder.
SHAREHOLDER AGREEMENT -- Page 5 of 11
<PAGE>
3.3 Legend on Certificates. Each certificate representing shares of
----------------------
Stock subject to this Agreement now or hereafter held directly or indirectly by
a Shareholder shall be stamped or imprinted with the following legend or any
other legend deemed necessary by the Company under applicable law to give
effect to this Agreement:
These shares are issued by a close corporation as defined by the Texas
Business Corporation Act. Under that Act, a shareholders' agreement
may provide for management of a close corporation by the shareholders
or in other ways different from an ordinary corporation. This may
subject the holder of this certificate to certain obligations and
liabilities not otherwise imposed on shareholders of an ordinary
corporation. On any sale or transfer of these shares, the transferor
is obligated to deliver to the transferee a complete copy of any
shareholders' agreement. The shares of stock represented by this
certificate are subject to a Shareholder Agreement (and to all
amendments thereto), and such shares may not be sold, transferred,
assigned, pledged or otherwise disposed of except in strict accordance
with the terms of that Shareholder Agreement.
SECTION 4 DELIVERY OF EVENT NOTICE; SUSPENSION OF VOTING RIGHTS
4.1 Generally. Upon the occurrence of an Exercise Event, the
---------
Shareholder that is the subject of that Exercise Event shall promptly give to
each other Shareholder notice (the "Event Notice") of the occurrence of that
Exercise Event and the date of that occurrence. From and after the time of the
occurrence of an Exercise Event other than a Third Party Offer or Shareholder
Disagreement, the Shareholder that is the subject of the Exercise Event shall
not be entitled to vote its shares of Stock, and those shares of Stock owned by
that Shareholder shall not be counted in determining the total number of
outstanding shares of Stock, in connection with any and all matters that may be
required or permitted to be voted on consented to by the Shareholders
(including without limitation the adoption of any amendment to this Agreement).
Each of those shares of Stock, and that Shareholder, shall remain so
disqualified until the earlier to occur (as may be applicable on a share by
share basis) of (a) the transfer of those shares of Stock to another
Shareholder in connection with the exercise of an option under this Agreement,
(b) in the case of an Exercise Event occurring based upon the Shareholder
constituting a Defaulting Shareholder, that Shareholder no longer constitutes a
Defaulting Shareholder or (c) in the case of other Exercise Events, the
Exercise Period expires and the Shareholder continues to rightfully own shares
of Stock under this Agreement because the option to purchase those shares is
not exercised by any Optionee.
4.2 Event Notice Pertaining to Third Party Offer. Any Event Notice
--------------------------------------------
delivered as a result of the occurrence of a Third Party Offer shall contain a
copy of a proposed third party purchase and shall also state the number of
shares of Stock that are the subject of the proposed Transfer, the identity of
the proposed Transferee(s), and the other terms and conditions of the proposed
Transfer (including the Offered Price). If the proposed Transfer is to be
wholly or partly for a consideration other than cash (with checks being
considered cash for this purpose, but promissory notes and other deferred
payments of cash not being considered cash for this purpose), the Event Notice
shall include the good faith, reasonable estimate of the fair market value of
such other consideration as determined by the Shareholder. If any Optionee,
within ten days after receipt of the Event Notice, gives written notice to the
Shareholder that it does not agree with that estimate and, within ten days
after that notice is delivered to the Shareholder, the Optionee and the
Shareholder are unable to agree in writing on the fair market value of that
other consideration, the Optionee may select, in its good faith discretion, a
reputable big six accounting firm experienced in such matters. The Optionee
shall use every reasonable effort to cause that accounting firm to prepare
promptly its estimate of the fair market value of the non-cash consideration
and to give a written notice of that estimate to the Optionee and the
Shareholder. That accounting firm's estimate shall be deemed to supplement the
Event Notice delivered as a result of the Exercise Event and to supersede the
Shareholder's estimate contained therein. The value of the non-cash
consideration that is so included in that Event Notice, as so supplemented (to
the extent it is so supplemented in accordance with the terms hereof), is
herein called the "Non-cash Appraised Value".
------------------------
SHAREHOLDER AGREEMENT -- Page 6 of 11
<PAGE>
SECTION 5 EXERCISE OF OPTION
5.1 Exercisability of Option. The options granted hereunder shall
------------------------
become exercisable by an Optionee upon each occurrence of any Exercise Event
out of which that Optionee's option arises.
5.2 Intention to Exercise Option. Prior to the expiration of the
----------------------------
Exercise Period applicable to an option based upon a particular Exercise Event,
the Optionee who desires to purchase Optioned Shares shall deliver its Exercise
Notice to the Seller and the Company. The number of Optioned Shares to be
purchased by the Optionee, as set forth in the Exercise Notice, shall be
allocated to that Optionee for purposes of this Agreement.
5.3 Binding Obligation. If any Optionee is allocated Optioned Shares
------------------
in accordance with this Agreement, such Optionee shall be obligated to
consummate the purchase of such Optioned Shares on the terms set forth herein.
5.4 Cooperation by Company; Notice of Book Value. The Company shall
--------------------------------------------
make its books and records available to each Shareholder or third parties,
retained by Shareholder, to the extent they are deemed necessary or desirable
by that Shareholder in connection with the exercise of its rights or the
performance of its obligations hereunder. The Company shall, promptly upon
receipt of a request therefor from any Shareholder, deliver a notice setting
forth the most recently available Book Value to the Person so requesting it.
Further, the Company shall, promptly upon receipt of a notice of the occurrence
of an Exercise Event or an Exercise Notice, deliver to the Seller and each
Optionee a notice setting forth the relevant Book Value.
SECTION 6 THE CLOSING
6.1 Closing Time and Place. Unless otherwise mutually agreed to by
----------------------
the Seller and the Optionees who have been allocated Optioned Shares, (a) the
consummation of the sale and purchase of the Optioned Sham hereunder upon
exercise of an option granted pursuant to the term hereof (the "Closing") will
-------
occur on the tenth business day after the date (1) the Company delivers to the
Seller and the Optionee the notice of Book Value in accordance with Section 5.4
-----------
or (2) the Optionee delivers to the Seller an Exercise Notice with respect to
the exercise of an option arising out of a Third Party Offer and (b) the
Closing will be held at the offices of the Company.
6.2 Closing Deliveries.
------------------
(a) The Exercise Price. The Exercise Price shall be paid in
------------------
cash or by certified bank or cashier's check at the Closing by the Optionees
who have been allocated Optioned Shares; provided that, if any Optionee has
been allocated Optioned Shares and the Seller owes any amount to that Optionee,
that Optionee may offset against the Exercise Price the amount so owed by the
Seller. (If Stock is changed, reclassified, split, combined, converted or
exchanged for other securities or any securities are paid as dividends on the
Stock after the date as of which the Exercise Price is determined and before
the Closing of the sale of the Optioned Shares, appropriate adjustment shall be
made to the Exercise Price to give effect to such change, reclassification,
split, combination, conversion, exchange or dividend.)
(b) The Optioned Shares. At the Closing, the Seller shall
-------------------
deliver to the Optionee the certificates representing the Optioned Shares being
purchased by that Optionee, duly endorsed for transfer or accompanied by a duly
executed stock power. The Seller shall covenant that the Optioned Shares sold
are, and the Optioned Shares sold by the Seller shall be, free and clear of all
liens, claims, and encumbrances of any nature whatsoever (although those
Optioned Shares shall remain subject to the terms of this Agreement).
SHAREHOLDER AGREEMENT -- Page 7 of 11
<PAGE>
(c) Other. All other action shall be taken at the Closing as
-----
the Seller or any Optionee who has been allocated Optioned Shares shall
reasonably request to effect the purchase and sale of the Optioned Shares.
SECTION 7 VOTING
The Shareholders agree that the number of directors constituting the
Board of Directors of the Company shall be three (3) unless increased by the
affirmative vote of the holders of all of the shares of Stock. Each Shareholder
agrees to vote all of the shares of Stock owned by such Shareholder and
entitled to vote for the election of directors of the Company to fix the number
of directors in accordance with the preceding sentence, and to elect and
qualify a Board of Directors consisting of one (1) person nominated by CR, one
(1) person nominated by Cape Fear and one (1) person nominated by Satellink,
with each such director to serve until the next annual meeting of the
Shareholders of the Company or until such director's successor is elected and
qualified. In the event any Shareholder's percentage ownership of Stock falls
below twenty percent (20%) due to the sale of Optioned Shares to a third party
in response to a Third Party Offer (after following all of the procedures
relating to Third Party Offers set forth in this Agreement), such Shareholder
and third party shall be entitled, by majority vote, to nominate a director,
and all of the Shareholders shall vote all of their shares of Stock to elect
the nominee of such Shareholder and third party. In the event any Shareholder's
percentage ownership of Stock falls below twenty percent (20%) due to the sale
of Optioned Shares in response to a Third Party Offer but such Optioned Shares
are purchased by Optionees rather than the third party making the Third Party
Offer, such Shareholder shall forfeit the right to nominate a director and the
Shareholders shall elect the director by majority vote. If a vacancy on the
Board of Directors shall occur by reason of the death, resignation or removal
of any director elected as herein provided, the Shareholder having the right to
nominate the director whose place is so vacated shall nominate the successor to
such director, and each Shareholder agrees to vote all shares of Stock owned by
such Shareholder and entitled to vote for the election of such successor
director for the election of the person so nominated to fill such vacancy, or
if such vacancy is filled by the vote of the remaining in members of the Board
of Directors, to cause each remaining director nominated by such Shareholder to
vote for the election of the person so nominated to fill such vacancy.
SECTIONS 8 MISCELLANEOUS PROVISIONS
8.1 Specific Performance. Each party declares that it is impossible
--------------------
to measure in money the damages that will accrue to the other parties hereto by
reason of a failure to perform or a breach in the performance of any of its
obligations under this Agreement, and each party (a) agrees that the other
parties to this Agreement shall be entitled to specific performance of the
terms of this Agreement and injunctive and other equitable relief in case of
any failure, breach or attempted breach and (b) waives any reimbursement for
the securing or posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief. If any party to this Agreement
institutes any action or proceeding to specifically enforce the provisions
hereof (a "plaintiff"), any party against whom that action or proceeding is
---------
brought (a "defendant") waives the claim or defense that the plaintiff has an
---------
adequate remedy at law, and the defendant will not urge in any such action or
proceeding the claim or defense that such remedy at law exists.
8.2 Notices. Whenever any notice is required or permitted hereunder,
-------
that notice must be in writing. Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered, given and received on the
date it is personally received by (and receipt acknowledged in writing by) the
Person who is to receive it or, if mailed, whether actually received or not, on
the third business day after it is deposited in the United States mail,
certified or registered mail, return receipt requested, postage prepaid,
addressed to the Person who is to receive it at the address that such Person
has theretofore specified by written notice delivered in accordance herewith.
Any Person entitled to receive notice hereunder may change, at any time and
from time to time, by written notice to the other parties, the address that
such party had theretofore specified for receiving notices. Until changed in
SHAREHOLDER AGREEMENT -- Page 8 of 11
<PAGE>
accordance herewith, each party hereby specifies as such party's address for
receiving notices the address adjacent to such party's name on the signature
page hereof. In the event more than one Person is to receive notice hereunder,
notice shall not be deemed delivered or received until delivery is deemed to be
made to the last Person who is to receive that notice (provided that any such
Person may agree that notice shall be deemed to be delivered or received by
that Person as of any earlier date).
8.3 Failure to Give Event Notice; Transferees Failing to Execute
------------------------------------------------------------
Agreement. If any Transfer (other than a Permitted Transfer) is purported to be
---------
made or suffered without the giving of the appropriate Event Notice required by
this Agreement, such purported Transfer shall be null and void ab initio and of
---------
no force or effect; furthermore, the appropriate Event Notice shall be deemed
to have been given to the Persons who were to have received such Event Notice
pursuant to the terms and provisions of this Agreement as of the latest date on
which any Person who was to receive such Event Notice first learns of such
purported Transfer, and thereafter the provisions of this Agreement shall be
fully applicable to such shares as if such Event Notice had actually been
given. In addition, any Transferee who is required by this Agreement to execute
a Transferee Agreement shall be bound by all of the terms and provisions of
such an agreement and the shares Transferred shall be and remain subject to all
of the terms and provisions of such an agreement, notwithstanding the failure
of such Transferee to execute a Transferee Agreement.
8.4 Right of First Refusal. If, under federal bankruptcy law, similar
----------------------
debtor relief laws, or other federal or state laws affecting the transfer of
shares of Stock, any option to purchase such shares granted under this
Agreement is voided, avoided, nullified, invalidated or otherwise unenforceable
as to any of such shares, the other Shareholders shall have a right of first
refusal to purchase any or all such shares in the event of any proposed
Transfer thereof by any trustee, receiver, conservator, liquidator, guardian or
other Transferee of the Person holding such shares who is, or whose assets are,
subject to such laws. Under this right of first refusal, those Shareholders may
purchase such shares at the same price and on the same terms as such shares are
proposed to be sold by such trustee, receiver, conservator, liquidator,
guardian or other Transferee.
8.5 Continuation of Rights. The failure or refusal of an Optionee to
----------------------
exercise any right granted in this Agreement With respect to any of the
Optioned Shares shall not be a waiver of the right to exercise future rights
which may arise hereunder with respect to those or any other Optioned Shares.
8.6 Further Assurances. Each of the parties hereto agrees to take, at
------------------
its own expense, such further action as may be reasonably requested by any
other party hereto necessary or desirable to accomplish or effect the purposes
of this Agreement and the transactions contemplated hereby.
8.7 Multiple Counterparts. This Agreement may be executed in a number
---------------------
of identical counterparts and it shall not be necessary for each party to
execute each of such counterparts, but when all of the parties have executed
and delivered one or more of such counterparts, the several parts, when taken
together, shall be deemed to constitute one and the same instrument,
enforceable against each party in accordance with its terms. In making proof of
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart executed by the Person against whom enforcement of this
Agreement is sought.
8.8 Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the right of a Shareholder to sell Stock now or hereafter held
by that Person. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
8.9 Invalid Provisions. If any provision of this Agreement is held to
------------------
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully
SHAREHOLDER AGREEMENT -- Page 9 of 11
<PAGE>
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid or unenforceable provision, there shall
be added automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as way be possible
and be legal, valid and enforceable.
8.10 Termination. This Agreement shall terminate (a) upon the
-----------
execution of a termination agreement signed by all Persons who are parties to
this Agreement at the time of execution of that agreement, (b) automatically
upon the bankruptcy or dissolution of the Company or (c) automatically upon the
occurrence of any event that reduces the number of Persons owning Stock in the
Company to one.
8.11 Amendments. This Agreement may be amended at any time and from
----------
time to time, in whole or in part, by an instrument in writing setting forth
the particulars of such duly executed by the Person against whom enforcement of
that is sought.
8.12 Successors and Assigns. Except as otherwise expressly stated to
----------------------
the contrary herein, this Agreement shall be binding upon and inure to the
benefit of each party hereto and shall be binding upon their respective heirs,
successors, executors, representatives, and purported assigns; provided that,
no assignment of the Shareholder's rights under this Agreement shall be
permitted other than in conjunction with a Permitted Transfer.
8.13 References. Whenever herein the singular number is used, the same
----------
shall include the plural where appropriate, and vice versa; and words of any
----------
gender shall include each other gender where appropriate.
8.14 Captions. The captions, headings and arrangements used in this
--------
Agreement are for convenience only and do not in any way affect, limit, amplify
or modify the terms and provisions hereof.
8.15 Governing Law. The laws of the state of Texas and of the United
-------------
States of America shall govern the validity, construction, enforcement and
interpretation of this agreement, without reference to conflicts of law.
8.16 After-Acquired Shares. Whenever the Shareholder shall hereafter
---------------------
acquire any shares of Stock of the Company, the shares so acquired shall be
held subject to all the terms and conditions of this Agreement.
8.17 Former Shareholders. Any Shareholder who sells its Stock will
-------------------
cease to be a party to this Agreement and will have no further rights
hereunder.
8.18 Additional Shareholders. The Company agrees not to issue or sell
-----------------------
shares of its Stock to any Person who is not already a party hereto unless such
Person executes and delivers a Transferee Agreement (as if that Person were a
Transferee).
8.19 Conflicts with Bylaws. In the event of any irreconcilable
---------------------
conflict between any of the terms and provisions of this Agreement and those of
the Bylaws of the Company, as the same may exist from time to time, the terms
and provisions of this Agreement shall govern and control.
SHAREHOLDER AGREEMENT -- Page 10 of 11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below, to be effective as of the date first written above.
NATIONS LINK, INC.
Address:
P.O. Box 120861 By: /s/ Larry Simmons
-------------------------- ----------------------------
Arlington, TX 76012 Name: Larry Simmons
-------------------------
Title: President
-------------------------
date: 5/25, 1995
CR, INC.
Address:
P.O. Box 120861 By: /s/ Larry Simmons
-------------------------- ----------------------------
Arlington, TX 76012 Name: Larry Simmons
-------------------------- --------------------------
Title: President
-------------------------
date: 5/25, 1995
CAPE FEAR PAGING COMPANY OF NORTH
CAROLINA
Address:
P.O. Box 35297 By: /s/ Wyhre Dawson
-------------------------- ----------------------------
Fayetteville, NC 28303 Name: Wyhre Dawson
-------------------------- --------------------------
Title: President
-------------------------
date: 5/25, 1995
SATELLINK PAGING, INC.
Address:
1375 Northmeadow Parkway By: /s/ Jerry W. Mayfield
-------------------------- ----------------------------
Roswell, GA 30076 Name: Jerry W. Mayfield
-------------------------- --------------------------
Title: President
-------------------------
date: 5/25, 1995
SHAREHOLDER AGREEMENT -- Page 11 of 11
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
MERGER AGREEMENT
by and among
PREMIER PAGING, INC.,
PREMIER PAGING OF NEW ORLEANS, INC.,
THE SHAREHOLDERS OF PREMIER PAGING, INC. AND
PREMIER PAGING OF NEW ORLEANS, INC.
and
SATELLINK PAGING LLC
Dated as of January 27, 1998
<PAGE>
EXECUTION COPY
TABLE OF CONTENTS
Page
----
ARTICLE 1 CERTAIN DEFINITIONS .............................................. 1
ARTICLE 2 MERGERS .......................................................... 7
2.01 Premier Merger .............................................. 7
2.02 Premier New Orleans Merger .................................. 7
2.03 Time and Place of Closing ................................... 7
2.04 Effective Time .............................................. 8
2.05 Articles of Organization .................................... 8
2.06 Operating Agreement ......................................... 8
2.07 Manager ..................................................... 8
2.08 Name of Surviving Entity .................................... 8
ARTICLE 3 MANNER OF CONVERTING SHARES ...................................... 8
3.01 Conversion of Shares in Mergers ............................. 8
3.02 Exchange Procedures and Payments at Closing ................. 9
3.03 Determination of Amount of Payments ......................... 10
3.04 Rights of Shareholders ...................................... 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
PREMIER, PREMIER NEW ORLEANS AND
SHAREHOLDERS .......................................................... 11
4.01 Organization and Good Standing, Power and Authority ......... 11
4.02 Capitalization and Ownership ................................ 12
4.03 Qualification ............................................... 13
4.04 No Violation of applicable Laws or Agreements ............... 13
4.05 Financial Statements ........................................ 13
4.06 Absence of Undisclosed Liabilities .......................... 14
4.07 Absence of Certain Changes .................................. 14
4.08 Tax Matters ................................................. 14
4.09 Pending Litigation or Proceedings ........................... 16
4.10 Compliance With Applicable Laws ............................. 16
4.11 Assets ...................................................... 16
4.12 Contracts ................................................... 17
4.13 Intellectual Property ....................................... 18
4.14 Consents and Approvals ...................................... 19
4.15 Employee Benefit Plans ...................................... 19
-i-
<PAGE>
EXECUTION COPY
4.16 Compensation Arrangements; Bank Accounts; Officers and
Directors ................................................... 21
4.17 Transactions With Related Parties ........................... 21
4.18 Labor Relations ............................................. 22
4.19 Brokerage ................................................... 22
4.20 Year 2000 ................................................... 22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER .......................... 22
5.01 Organization and Good Standing; Power and Authority ......... 22
5.02 No Violation of Applicable Laws or Agreements ............... 23
5.03 Pending Litigation or Proceedings ........................... 23
5.04 Brokerage ................................................... 23
5.05 Consents and Approvals ...................................... 23
5.06 Buyer's Financial Statements ................................ 23
ARTICLE 6 CERTAIN ADDITIONAL COVENANTS AND
AGREEMENTS ............................................................ 24
6.01 Operation of Business Pending Closing ....................... 24
6.02 Access to Information ....................................... 25
6.03 Schedules ................................................... 25
6.04 Best Efforts ................................................ 25
6.05 Exclusive Dealings .......................................... 25
6.06 Expenses .................................................... 26
6.07 Assignment of FCC License ................................... 26
6.08 Irrevocable Appointment of Shareholder Representative ....... 26
6.09 Teletouch Litigation ........................................ 28
ARTICLE 7 CONDITIONS TO CLOSING ............................................ 28
7.01 Conditions To Obligations Of Buyer .......................... 28
7.02 Conditions to Obligations of Premier and Premier New
Orleans ..................................................... 30
ARTICLE 8 TERMINATION ...................................................... 31
8.01 When Agreement May be Terminated ............................ 31
8.02 Effect of Termination ....................................... 32
8.03 Payment of Expenses on Termination .......................... 32
ARTICLE 9 INDEMNIFICATION .................................................. 33
9.01 Definitions ................................................. 33
9.02 Agreement of Seller Indemnitors to Indemnify ................ 34
9.03 Agreement of Buyer Indemnitor to Indemnify .................. 34
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9.04 Procedures for Indemnification .............................. 35
9.05 Third Party Claims .......................................... 36
9.06 Other Rights and Remedies Not Affected ...................... 37
9.06 Time Limitations ............................................ 37
9.08 Limitations as to Amount .................................... 38
9.09 Subrogation ................................................. 38
9.10 Buyer's Right of Set-Off .................................... 38
ARTICLE 10 MISCELLANEOUS ................................................... 39
10.01 Nature And Survival Of Representations ...................... 39
10.02 Amendment ................................................... 39
10.03 Waiver ...................................................... 39
10.04 Governing Law ............................................... 39
10.05 Notices ..................................................... 39
10.06 Invalid Provision ........................................... 41
10.07 Assignment .................................................. 41
10.08 Binding Effect .............................................. 41
10.09 Further Assurances .......................................... 41
10.10 Headings .................................................... 41
10.11 Person and Gender ........................................... 41
10.12 Entire Agreement ............................................ 41
10.13 Arbitration ................................................. 42
10.14 Breakup Fee ................................................. 42
10.15 Execution in Counterparts ................................... 43
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EXHIBITS:
A Form of Promissory Note
B Premier and Premier New Orleans Legal Opinion
C Non-Compete Agreement
D Buyer Legal Opinion
SCHEDULES:
I Premier Shareholders
II Premier New Orleans Shareholders
3.01(a) Premier Common Stock Ownership
3.01(c) Premier New Orleans Common Stock Ownership
3.02 Bank Debt
4.01 Articles and Bylaws
4.04(b) No Violation of Agreements
4.04(e) Licenses
4.05 Financial Statements
4.08 Tax Matters
4.10 Compliance With Applicable Laws
4.11 Title to Assets
4.12 Material Contracts
4.13 Intellectual Property
4.14 Consents and Approvals
4.15 Employee Benefit Plans
4.16 Compensation Arrangements; Bank Accounts; Officers and Directors
4.17 Related Party Transactions
5.06 Buyer Financial Statements
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is made as of January 27, 1998 by
and among SATELLINK PAGING LLC, a Georgia limited liability company ("Buyer"),
PREMIER PAGING, INC., a Louisiana corporation ("Premier"), PREMIER PAGING OF NEW
ORLEANS, INC., a Louisiana corporation ("Premier New Orleans"), the shareholders
of Premier listed on Schedule I hereto and the Shareholders of Premier New
Orleans listed on Schedule II hereto (each a person listed on either Schedule I
or Schedule II shall be referred to as a "Shareholder" and collectively, such
persons shall be referred to as the "Shareholders").
Background
The Manager of Buyer and the Boards of Directors of Premier and Premier
New Orleans, respectively, are of the opinion that the transactions described
herein are in the best interests of the parties hereto and their respective
members and shareholders. This Agreement provides for the acquisition of Premier
and Premier New Orleans by Buyer pursuant to the merger of each of Premier and
Premier New Orleans with and into Buyer. At the effective time of such merger,
each outstanding share of capital stock of Premier and Premier New Orleans,
respectively, shall, subject to the terms and conditions of this Agreement, be
converted into the right to receive a cash payment from Buyer and each of
Premier and Premier New Orleans shall be merged with and into Buyer.
Shareholders are the record and beneficial owners of all of the issued and
outstanding shares of Premier and Premier New Orleans capital stock (the
"Premier Shares" and the "Premier New Orleans Shares," respectively and,
together, the "Shares"). Shareholders desire to sell and Buyer desires to
purchase all of the Shares, upon the terms and conditions set forth in this
Agreement.
Agreement
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein and in the Schedules and Exhibits hereto, the following
terms have the following respective meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition Proposal" is defined in Section 6.05.
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"Affiliate" is defined in Section 4.15(g).
"Agreement" means this Merger Agreement and all Schedules and Exhibits
hereto, as the same may be supplemented, modified or amended from time to time.
"Applicable Law" means, to the Knowledge of Premier or Premier New
Orleans, all applicable and currently in force provisions of constitutions,
statutes, laws, rules, regulations and orders of all Governmental Authorities.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, movable or immovable, corporeal or incorporeal,
tangible or intangible, accrued or contingent, or otherwise relating to or
utilized in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and whether or
not owned in the name of any such Person and wherever located, including
goodwill.
"Bank Debt" is defined in Section 3.02.
"Benefit Plans" is defined in Section 4.15(a).
"Breakup Fee" is defined in Section 10.14.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer Financial Statements" is defined in Section 5.06.
"Buyer Indemnitee" is defined in Section 9.01
"Buyer Indemnitor" is defined in Section 9.01.
"Closing" means the consummation of the transactions described in this
Agreement, and "Closing Date" means the date upon which such consummation
occurs.
"Closing Balance Sheet" is defined in Section 3.03(a).
"Closing Financial Data" is defined in Section 3.03(a).
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Confidential Information" means any confidential or proprietary
information about Premier or Premier New Orleans, provided that it does not
include information which Buyer can demonstrate (i) is or becomes generally
available to or known by the public other than as a result of improper
disclosure by Buyer or (ii) is obtained by Buyer
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from a source other than Premier or Premier New Orleans, provided that such
source was not bound by a duty of confidentiality to Premier or Premier New
Orleans with respect to such information or (iii) Buyer independently develops,
without recourse to the Confidential Information.
"Determination" is defined in Section 3.03(b).
"Effective Time" means the date and time on which the Merger becomes
effective with the Secretary of State of Georgia.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time.
"Estimated Balance Sheet" is the unaudited combined balance sheet of
Premier and Premier New Orleans, dated as of the most recent available date
prior to the Closing Date, but not earlier than December 31, 1997.
"Estimated Payment" an amount equal to the Net Equity Value of Premier and
Premier New Orleans as shown on the Estimated Balance Sheet.
"FCC" means the Federal Communications Commission.
"FCC License" means all of the right, title and interest of Premier,
Premier New Orleans and/or any Shareholder in and to licenses, permits,
certificates and governmental authorizations of Premier, Premier New Orleans
and/or any Shareholder related to the operation of a radio station, including,
without limitation, FCC licenses for call signs WPJW65l, WPJW652, WPJW654,
WPKC692, WPDY8l2, WNXU595, WPBU589, WNWE699 and WPKC242.
"Financial Statements" is defined in Section 4.05.
"Former Affiliate" is defined in Section 4.15(g).
"GAAP" consists of the official publications of the American Institute of
Certified Public Accountants. These official publications consist of Accounting
Principles, Board Opinions, Financial Accounting Standards Board Statements, and
Accounting Research Bulletins. In the event there is no official pronouncement,
the consensus of the accounting profession, as manifested in textbooks, for
example, determines GAAP.
"Governmental Authority" means any federal, state, county, local, foreign
or other governmental or public agency, instrumentality, commission, authority,
board or body.
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"Gross Enterprise Value" of Premier and Premier New Orleans, collectively,
shall be $4,300,000, plus: (i) the aggregate purchase price of all new pagers
held in inventory at Closing by Premier or Premier New Orleans in excess of 50
units; and (ii) the net value of all accounts receivable (net of any reserves
for doubtful or uncollectable accounts, computed on the same basis as used in
computing the reserves on the Financial Statements) for service already provided
by Premier or Premier New Orleans and reflected on the Estimated Balance Sheet
and the Closing Balance Sheet, as applicable.
"Hart-Scott Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all regulations promulgated thereunder.
"Indemnification Claim" is defined in Section 9.01.
"Indemnitees" is defined in Section 9.01.
"Indemnitors" is defined in Section 9.01.
"Intellectual Property" means all patents, designs, art work, designs-in
progress, formulations, know-how, prototypes, inventions, trademarks, trade
names, trade styles, service marks, and copyrights owned or held by Premier or
Premier New Orleans and related to Premier's or Premier New Orleans' business;
all registrations thereof and applications therefor, both registered and
unregistered, foreign and domestic; all trade secrets or processes owned by or
belonging to Premier or Premier New Orleans and related to Premier's or Premier
New Orleans' business; all computer software (including documentation and
related object and, if applicable, source codes) owned by or belonging to
Premier or Premier New Orleans and related to Premier's or Premier New Orleans'
business; and all confidential or proprietary information that are either (i)
owned by Premier or Premier New Orleans and related to Premier's or Premier New
Orleans' business, whether or not reflected on the books and records of Premier
or Premier New Orleans, or (ii) as to which Premier or Premier New Orleans has
rights as licensee, constituting all of the intellectual property of Premier or
Premier New Orleans used exclusively in Premier's or Premier New Orleans'
business.
"Knowledge" with respect to Premier or Premier New Orleans, means those
facts known by any Shareholder and, with respect to Buyer, means those facts
known by Jerry W. Mayfield or Daniel D. Lensgraf.
"Letter of Intent" means that certain Letter of Intent dated by Buyer on
October 29, 1997 and approved and accepted by Premier and Premier New Orleans on
October 29, 1997.
"Losses" is defined in Section 9.01.
"Management Shareholders" means Philip L. Fritz, Libbie M. Fritz, Robert
A. Hebert, Connie Beaudreax and Gary L. Magee.
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"Material Adverse Effect" means a material adverse effect to the property,
business, operations, or financial condition of Premier, Premier New Orleans or
Buyer, as the case may be.
"Material Contracts" is defined in Section 4.12.
"Mergers" means the Premier Merger and the Premier New Orleans Merger.
"Net Equity Value" of Premier and Premier New Orleans, collectively, is
the amount equal to the Gross Enterprise Value less all (i) liabilities of
Premier and Premier New Orleans, collectively, which are required by GAAP to be
reflected on Premier's or Premier New Orleans' balance sheets, including any
amounts owed by Premier or Premier New Orleans for the repayment of Bank Debt in
accordance with Section 3.02; and (ii) the aggregate amount of the Premier
Preferred Stock Payments and the Premier New Orleans Preferred Stock Payments,
provided however, that any amounts owed by any Shareholder to Premier or Premier
New Orleans shall be repaid prior to the computation of Net Equity Value.
"Note" means the promissory note substantially in the form of Exhibit A
issued by Buyer in respect of the deferred portion of the Purchase Price.
"Notification Period" is defined in Section 3.03(b).
"Payments" means, collectively, the Premier Common Stock Payment, the
Premier Preferred Stock Payment, the Premier New Orleans Common Stock Payment
and the Premier New Orleans Preferred Stock Payment.
"Permitted Encumbrances" means (i) liens for taxes not yet due and
payable, (ii) personal property leases, and (iii) with respect to Real Property,
privileges, easements, rights of way, licenses, covenants, zoning and other
restrictions of record, which individually or in the aggregate do not affect the
current uses of the Real Property.
"Person" means an individual, corporation, partnership, association, trust
or unincorporated organization, or a government or any agency or political
subdivision thereof.
"Premier" is defined in the first paragraph of this Agreement.
"Premier Articles of Merger" means the Articles of Merger reflecting the
Premier Merger as filed with the Secretary of State of Georgia.
"Premier Common Stock" means the common stock, no par value per share, of
Premier.
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"Premier Common Stock Payment" is defined in Section 3.01.
"Premier Merger" means the merger of Premier with and into Buyer in
accordance with this Agreement and the Georgia Limited Liability Company Act.
"Premier New Orleans" is defined in the first paragraph of this Agreement.
"Premier New Orleans Articles of Merger" means the Articles of Merger
reflecting the Premier New Orleans Merger as filed with the Secretary of State
of Georgia.
"Premier New Orleans Common Stock" means the common stock, no par value
per share, of Premier New Orleans.
"Premier New Orleans Common Stock Payment" is defined in Section 3.01.
"Premier New Orleans Merger" means the merger of Premier New Orleans with
and into Buyer in accordance with this Agreement and the Georgia Limited
Liability Company Act.
"Premier New Orleans Preferred Stock" means the preferred stock, $1,000
par value per share of Premier New Orleans.
"Premier New Orleans Preferred Stock Payment" is defined in Section 3.01.
"Premier Preferred Stock" means the preferred stock, $1,000 par value per
share of Premier.
"Premier New Orleans Shares" is defined in the second paragraph of this
Agreement.
"Premier Preferred Stock Payment" is defined in Section 3.01.
"Premier Shares" is defined in the second paragraph of this Agreement.
"Purchase Adjustment Amount" means the amount, if any, by which the
Payments differ from the Estimated Payment.
"Related Party" means any of the officers or directors of any of Premier
or Premier New Orleans; any affiliate or relative of any such person; or any
business or entity in which Premier or Premier New Orleans or any affiliate or
relative of any such person has any direct or material indirect interest.
"Representative" is defined in Section 6.08.
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"Seller Indemnitee" is defined in Section 9.01.
"Seller Indemnitor" is defined in Section 9.01.
"Seller Management Indemnitor" is defined in Section 9.01.
"Seller Non-Management Indemnitor" is defined in Section 9.01.
"Shareholder" is defined in the first paragraph of this Agreement.
"Shares" is defined in the second paragraph of this Agreement.
"Surviving Entity" means the entity surviving the Merger.
"Tax Returns" means all returns or reports, including accompanying
schedules, with respect to Taxes.
"Taxes" means all federal, state, local and foreign income, premium,
payroll, withholding, excise, sales, use, real and personal property, use and
occupation, mercantile, capital stock, franchise and other taxes, including
interest and penalties thereon and all estimated taxes.
"Third Party Claim" is defined in Section 9.01.
ARTICLE 2
MERGERS
2.01 Premier Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Premier shall be merged with and into Buyer in
accordance with the applicable provisions of the Georgia Limited Liability
Company Act and the Louisiana Business Corporation Law. Buyer shall be the
Surviving Entity resulting from the Premier Merger and shall continue to be
governed by the laws of the State of Georgia. The Premier Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved by
the Manager and Board of Directors of Buyer and Premier, respectively.
2.02 Premier New Orleans Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, Premier New Orleans shall be merged with
and into Buyer in accordance with the applicable provisions of the Georgia
Limited Liability Company Act and the Louisiana Business Corporation Law. Buyer
shall be the Surviving Entity resulting from the Premier New Orleans Merger and
shall continue to be governed by the laws of the State of Georgia. The Premier
New Orleans Merger shall be consummated pursuant to the terms of this Agreement,
which has been approved by the Manager and Board of Directors of Buyer and
Premier New Orleans, respectively.
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2.03 Time and Place of Closing. The Closing will take place at 9:00 AM
(Atlanta, Georgia time) on the last business day of the month in which the FCC
approves the transfer of the FCC Licenses to Buyer pursuant to Section 6.08,
provided however, that if such approval is received on or after the twenty-fifth
(25th) calendar day of such month, then the Closing will take place at 9:00 AM
(Atlanta, Georgia time) on the fifth business day of the following month. The
place of the Closing will be at the offices of Alston & Bird LLP, One Atlantic
Center, 1201 West Peachtree Street, Atlanta, Georgia 30309-3424, or such other
place as may be mutually agreed upon by the parties.
2.04 Effective Time. The Mergers and other transactions contemplated by
this Agreement shall become effective on the later of the date and at the later
of the time the Premier Articles of Merger reflecting the Premier Merger and the
Premier New Orleans Articles of Merger reflecting the Premier New Orleans Merger
become effective with the Secretary of State of Georgia. Subject to the terms
and conditions hereof, unless otherwise mutually agreed upon by the parties in
writing, the parties shall use their reasonable efforts to cause the Effective
Time to occur at the close of business on the Closing Date.
2.05 Articles of Organization. The articles of organization of Buyer in
effect immediately prior to the Effective Time shall be the articles of
organization of the Surviving Entity at the Effective Time.
2.06 Operating Agreement. The operating agreement of Buyer in effect
immediately prior to the Effective Time shall be the operating agreement of the
Surviving Entity at the Effective Time.
2.07 Manager. From and after the Effective Time, the Manager of Buyer in
office immediately prior to the Effective Time shall remain the Manager of the
Surviving Entity and shall continue to hold such office from the Effective Time
until its successor is appointed in the manner provided by the operating
agreement of the Surviving Entity.
2.08 Name of Surviving Entity. The name of the Surviving Entity will be
Satellink Paging LLC.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.01 Conversion of Shares in Mergers. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Mergers and without any
action on the part of the Shareholders the shares of capital stock of Premier
and Premier New Orleans, respectively, issued and outstanding at the Effective
Time shall be converted as follows:
(a) Each share of Premier Common Stock issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall
be
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converted into and exchanged for: (i) an immediate payment equal to a cash
payment of an amount equal to ((sixty percent (60%) of the Net Equity Value less
$516,000) multiplied by a fraction, the numerator of which shall be equal to the
number of shares of Premier Common Stock held by such Shareholder and set forth
on Schedule 3.01(a) and the denominator of which shall be the total number of
shares of Premier Common Stock outstanding as of the Closing Date); and (ii) a
deferred payment equal to a cash payment of ($516,000 multiplied by a fraction,
the numerator of which shall be equal to the number of shares of Premier Common
Stock held by such Shareholder and the denominator of which shall be the total
number of shares of Premier Common Stock outstanding as of the Closing Date),
plus interest, as evidenced by the Note (the "Premier Common Stock Payment");
(b) Each share of Premier Preferred Stock issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall
be converted into and exchanged for an immediate payment equal to a cash payment
of one thousand dollars ($1,000) (the "Premier Preferred Stock Payment");
(c) Each share of Premier New Orleans Common Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for: (i) an immediate
payment equal to a cash payment of an amount equal to ((forty percent (40%) of
the Net Equity Value less $344,000) multiplied by a fraction, the numerator of
which shall be equal to the number of shares of Premier New Orleans Common Stock
held by such Shareholder and set forth on Schedule 3.01(c) and the denominator
of which shall be the total number of shares of Premier New Orleans Common Stock
outstanding as of the Closing Date); and (ii) a deferred payment equal to a cash
payment of an amount equal to ($344,000 multiplied by a fraction, the numerator
of which shall be equal to the number of shares of Premier New Orleans Common
Stock held by such Shareholder and the denominator of which shall be the total
number of shares of Premier New Orleans Common Stock outstanding as of the
Closing Date) plus interest, as evidenced by the Note (the "Premier New
Orleans Common Stock Payment"); and
(d) Each share of Premier New Orleans Preferred Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged an immediate payment equal
to a cash payment of one thousand dollars ($1,000) (the "Premier New Orleans
Preferred Stock Payment").
3.02 Exchange Procedures and Payments at Closing. At the Closing, each
Shareholder shall surrender the certificate or certificates representing the
shares of Premier Common Stock, Premier Preferred Stock, Premier New Orleans
Common Stock and Premier New Orleans Preferred Stock issued and outstanding at
the Effective Time to Buyer, all such certificates to be duly endorsed in blank
or accompanied by a duly executed assignment separate from such certificate.
Shareholders shall, upon surrender of such certificate or certificates, receive
in exchange therefor on the Closing Date; (i) a cashier's check or a wire
transfer in an amount equal to the cash portion of each of the
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Payments, less such Shareholder's pro rata portion of the fee payable to Daniels
& Associates, which fee shall be paid by wire transfer to Daniels & Associates;
and (ii) the Note in an amount equal to the deferred portion of each of the
Payments to which such Shareholder is entitled. Prior to delivering the
aforementioned payment to Shareholders, Buyer shall deliver to each of Premier's
and Premier New Orleans' lenders a wire transfer in an amount equal to the
amount necessary to repay all debts for money borrowed of Premier or Premier New
Orleans ("Bank Debt") set forth on Schedule 3.02, including all interest and
prepayment penalties due and payable.
3.03 Determination of Amount of Payments.
(a) Within thirty (30) days after the Closing Date, Shareholders
will cause to be prepared and delivered to Buyer an unaudited balance sheet of
each of Premier and Premier New Orleans as of the close of business on the
Closing Date (the "Closing Balance Sheets"), which Closing Balance Sheets shall
be accompanied by a Schedule setting forth the difference, if any, between the
Net Equity Value of Premier and Premier New Orleans based on the Closing Balance
Sheet and the Net Equity Value of Premier and Premier New Orleans based on the
Estimated Balance Sheet (collectively, the "Closing Financial Data"), prepared
in accordance with GAAP.
(b) Within thirty (30) days after receipt of the Closing Financial
Data (the "Notification Period"), Buyer will notify Shareholders in writing of
any objections Buyer may have to the Closing Financial Data. In the absence of
such written objections timely made, Buyer shall be deemed to have approved the
Closing Financial Data for purposes of the adjustment, if any, to be made
pursuant to this Section 3.03 on the expiration of the Notification Period. If
Buyer timely notifies Shareholders in writing of objections to the Closing
Financial Data, and if any such objections cannot be resolved by Shareholders
and Buyer within thirty (30) days after receipt by Shareholders of such
objections, such dispute shall immediately be referred to a mutually
satisfactory independent certified public accounting firm of national reputation
which has not been employed by either Buyer, Premier or Premier New Orleans, or
any affiliate of either Buyer, Premier or Premier New Orleans, during the one
(1) year preceding the date of such referral and which has agreed to meet the
time deadlines imposed herein. The determination of such firm with respect to
such dispute (the "Determination"), which shall occur on or prior to ninety (90)
days after the Closing Financial Data has been received by Buyer, shall be
conclusive and binding on the parties hereto. Buyer and Shareholders shall each
pay one-half of the fees of such firm incurred in resolving such dispute.
Premier and Premier New Orleans shall, upon request of Buyer make available to
Arthur Andersen & Co., accountants for Buyer, all work papers prepared in
connection with the preparation of the Closing Balance Sheet.
(c) If the aggregate amount of the Payments based upon the Net
Equity Value of Premier and Premier New Orleans based on the Closing Balance
Sheet (as the same may be adjusted as a result of any agreement between
Shareholders and Buyer with respect to any objection raised by Buyer or as a
result of the Determination) is
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greater than the Estimated Payment based upon the Net Equity Value of Premier
and Premier New Orleans based on the Estimated Balance Sheet, Buyer shall pay to
each Shareholders an amount equal to each Shareholder's pro rata portion of such
difference. Such payment shall be made by wire transfer within two (2) business
days following the earliest to occur of (i) final approval of the Closing
Financial Data by Buyer, (ii) expiration of the Notification Period with no
written objections being received by Shareholders, or (iii) receipt by
Shareholders and Buyer of the Determination. If, however, the aggregate amount
of the Payments based on the Net Equity Value of Premier and Premier New Orleans
based on the Closing Balance Sheet (as the same may be adjusted as a result of
any agreement between Shareholders and Buyer with respect to any objection
raised by Buyer or as a result of the Determination) is less than the Estimated
Payment based on the Net Equity Value of Premier and Premier New Orleans based
on the Estimated Balance Sheet, Shareholders shall pay to the Buyer an amount
equal to such difference. Such payment shall be made (A) first by offsetting
against the Note each Shareholder's pro rata portion of such difference, and (B)
the balance, if any, by wire transfer to the account of Buyer within two (2)
business days following the earliest to occur of (i) final approval of the
Closing Financial Data by Buyer, (ii) expiration of the Notification Period with
no written objections being received by Shareholders, or (iii) receipt by
Shareholders and Buyer of the Determination.
3.04 Rights of Former Shareholders. At the Effective Time, the stock
transfer books of each of Premier and Premier New Orleans shall be closed and no
transfer of Capital Stock of Premier or Premier New Orleans shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 3.02 of this Agreement, each certificate theretofore
representing shares of Premier Common Stock, Premier Preferred Stock, Premier
New Orleans Common Stock and Premier New Orleans Preferred Stock shall from and
after the Effective Time represent for all purposes only the right to receive
the Payments.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PREMIER, PREMIER NEW ORLEANS AND SHAREHOLDERS
Premier, Premier New Orleans and Shareholders, jointly and severally,
hereby represent and warrant to Buyer as of the date hereof as follows:
4.01 Organization and Good Standing; Power and Authority. Each of Premier
and Premier New Orleans is a corporation duly organized, validly existing and in
good standing under the laws of the state of Louisiana. Each of Premier and
Premier New Orleans has the requisite corporate power and authority to own or
lease its properties and assets. Each of Premier, Premier New Orleans and each
Shareholder which is a corporation, limited liability company, trust, escrow
agent or benefit plan has the requisite power, corporate or otherwise, and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions
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contemplated hereby. The execution, delivery and performance by each of Premier,
Premier New Orleans and each Shareholder which is a corporation, limited
liability company, trust, escrow agent or benefit plan of its obligations under
this Agreement, and the consummation of the transactions contemplated hereby,
have been duly and validly authorized by all necessary action, corporate or
otherwise, on the part of each of Premier, Premier New Orleans and such
Shareholder. This Agreement has been duly and validly executed and delivered by
each of Premier, Premier New Orleans and each Shareholder and constitutes each
of Premier's, Premier New Orleans' and Shareholder's valid and binding
obligation, and is enforceable against each of Premier, Premier New Orleans and
each Shareholder in accordance with its terms. The copies of the articles of
incorporation and bylaws of each of Premier and Premier New Orleans, as amended
to date, which are attached as Schedule 4.01, and copies of the corporate
minutes of each of Premier and Premier New Orleans, which have been made
available to Buyer for review, are correct and complete and are in full force
and effect. The stock record books of each of Premier and Premier New Orleans,
which have been made available to Buyer for review, contain complete and
accurate records of the stock ownership of each of Premier and Premier New
Orleans.
4.02 Capitalization and Ownership.
(a) Premier's authorized capital stock consists of ten thousand
(10,000) shares of Common Stock, no par value, of which nine thousand nine
hundred (9,900) shares are currently issued and outstanding and none of which
are held in its treasury and three hundred (300) shares of Preferred Stock,
$1,000 par value, of which one hundred (100) shares are currently issued and
outstanding and none of which are held in its treasury. All of such outstanding
shares of Premier have been duly authorized, validly issued and are fully paid
and nonassessable. None of the outstanding shares of capital stock of Premier
has been issued in violation of any preemptive rights of the current or past
shareholders of Premier. There are no outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of Premier and no securities convertible into or exchangeable for
any of such capital stock. The Shareholders listed on Schedule 4.02(a) own all
of the issued and outstanding shares of Premier Common Stock and Premier
Preferred Stock, free and clear of all liens, privileges, pledges, mortgages,
claims, charges, security interests and other encumbrances or adverse claims of
any kind or nature. Premier does not, directly or indirectly, own any stock of,
or any other interest in, any Person.
(b) Premier New Orleans' authorized capital stock consists of ten
thousand (10,000) shares of Common Stock, no par value, of which nine thousand
five hundred (9,500) shares are currently issued and outstanding and none of
which are held in its treasury and three hundred (300) shares of Preferred
Stock, $1,000 par value, of which twenty-five (25) shares are currently issued
and outstanding and none of which are held in its treasury. All of such
outstanding shares of Premier New Orleans have been duly authorized, validly
issued and are fully paid and nonassessable. None of the outstanding shares of
capital stock of Premier New Orleans has been issued in violation of any
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preemptive rights of the current or past shareholders of Premier New Orleans.
There are no outstanding options, warrants, rights, agreements, calls,
commitments or demands of any character relating to the capital stock of Premier
New Orleans and no securities convertible into or exchangeable for any of such
capital stock. The Shareholders listed on Schedule 4.02(b) own all of the issued
and outstanding shares of Premier New Orleans Common Stock and Premier New
Orleans Preferred Stock, free and clear of all liens, privileges, pledges,
mortgages, claims, charges, security interests and other encumbrances or adverse
claims of any kind or nature. Premier does not, directly or indirectly, own any
stock of, or any other interest in, any Person.
4.03 Qualification. Each of Premier and Premier New Orleans is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction in which such qualification or licensing is
necessary under all Applicable Laws.
4.04 No Violation of Applicable Laws or Agreements. The execution and
delivery of this Agreement by each of Premier and Premier New Orleans does not,
and the consummation of the Merger and the other transactions contemplated by
this Agreement and the compliance with the terms, conditions and provisions of
this Agreement by each of Premier and Premier New Orleans, will not (a) violate
or conflict with any provision of Premier's or Premier New Orleans' articles of
incorporation or bylaws; (b) except as set forth on Schedule 4.04(b), violate,
conflict with or result in the breach or termination of, or otherwise give any
contracting party (which has not consented to such execution, delivery and
consummation) the right to change the terms of, or to terminate or accelerate
the maturity of, or constitute a default under the terms of, any indenture,
mortgage, loan or credit agreement or any other material agreement (including,
but not limited to airtime purchase agreements, tower leases and rental
agreements) or instrument to which Premier or Premier New Orleans is a party or
by which Premier, Premier New Orleans or any of their respective assets may be
bound or affected; (c) violate any Applicable Law; (d) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
Premier's or Premier New Orleans' assets or give to others any interests or
rights therein; other than any such conflicts, breaches, terminations,
accelerations, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect; or (e) except for those licenses
described on Schedule 4.04(e) as to which governmental approval is required in
connection with the Merger, result in the revocation or suspension of any
license or permit held by Premier or Premier New Orleans.
4.05 Financial Statements. Attached hereto as Schedule 4.05 are (a) the
unaudited consolidated balance sheets of each of Premier and Premier New Orleans
as of August 31 and December 31, 1997 and the unaudited unconsolidated balance
sheets of each of Premier and Premier New Orleans as of December 31, 1996, 1995
and 1994 and the related consolidated statements of income, stockholders' equity
and statements of cash flows of each of Premier and Premier New Orleans for the
eight months ended August 31, 1997 and the year ended December 31, 1997 and the
related unconsolidated
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statements of income, stockholders' equity and statements of cash flows of each
of the years ended December 31, 1996, 1995 and 1994 (the "Financial
Statements"). The Financial Statements (a) have been prepared in accordance with
GAAP consistently applied (except as may be indicated therein or in the notes
thereto), (b) present fairly the financial position of each of Premier and
Premier New Orleans as of the dates indicated and present fairly the results of
each of Premier and Premier New Orleans operations for the periods then ended,
(c) are in accordance with the books and records of each of Premier and Premier
New Orleans, which have been properly maintained and are complete and correct in
all material respects, and (d) the aggregate reserve reflected therein was
determined in accordance with generally accepted actuarial standards
consistently applied (except as otherwise noted therein), is fairly stated in
accordance with sound actuarial principles and is in conformance with GAAP.
4.06 Absence of Undisclosed Liabilities. Neither Premier nor Premier New
Orleans has any liabilities, whether absolute, contingent or conditional, that
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier or Premier New Orleans, except liabilities which are
accrued or reserved against in the consolidated balance sheets of Premier or
Premier New Orleans as of August 31, 1997, included in the Financial Statements
or reflected in the notes thereto. Neither Premier nor Premier New Orleans has
incurred or paid any liability, whether absolute, contingent or conditional,
since September 1, 1997, except for such liabilities incurred or paid (i) in
the ordinary course of business consistent with past business practice and which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Premier or Premier New Orleans or (ii) in connection with the
transactions contemplated by this Agreement. Neither Premier nor Premier New
Orleans is directly or indirectly liable, by guarantee, indemnity or otherwise,
upon or with respect to, or obligated, by discount or repurchase agreement or in
any other way, to provide funds in respect to, or obligated to guarantee or
assume any liability, whether absolute or contingent, known or unknown, of any
other Person.
4.07 Absence of Certain Changes. Since September 1, 1997 (a) there have
been no events, changes or occurrence having, or which would reasonably be
expected to result in, a Material Adverse Effect upon Premier or Premier New
Orleans, and (b) neither Premier nor Premier New Orleans has taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken or omitted after the date of this Agreement, would
represent or result in a breach or violation of any of the covenants and
agreements of Premier or Premier New Orleans provided in Article 6. Since
September 1, 1997, the business of each of Premier and Premier New Orleans has
been conducted only in the ordinary and usual course consistent with past
practice, except with respect to the transactions contemplated in this
Agreement.
4.08 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of Premier
and Premier New Orleans have been timely filed or requests for extensions have
been timely
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filed, granted, and have not expired for periods ended on or before December 31,
1996, and on or before the date of the most recent applicable year end
immediately preceding the Effective Time, and all Tax Returns filed are complete
and accurate. All Taxes and other related liabilities due and owing with respect
to periods preceding the Effective Time have been paid, accrued on the Financial
Statements or, in the case of financial statements Premier or Premier New
Orleans prepared in the ordinary course of business covering the period from
January 1, 1997 through the Effective Time, will be accrued on such financial
statements, whether or not such Taxes or other liabilities are shown on filed
Tax Returns. As of the date of this Agreement, there is no audit examination,
deficiency, or refund litigation pending or, threatened with respect to any
Taxes, except as reserved against in the Financial Statements. All Taxes and
other liabilities due with respect to completed and settled examinations or
concluded litigation regarding Tax Returns have been paid. Neither Premier nor
Premier New Orleans has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a tax assessment or deficiency.
There are no liens, privileges, pledges, mortgages or security interests on any
of the assets of Premier or Premier New Orleans resulting from any failure (or
alleged failure) to pay any Tax. Attached to Schedule 4.08 are correct and
complete copies of each of Premier's and Premier New Orleans' federal and state
income tax returns for the years ended December 31, 1993, 1994, 1995 and 1996.
(b) Neither Premier nor Premier New Orleans has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for each
of Premier and Premier New Orleans for the period or periods through and
including the Effective Date have been provided for on the Financial Statements
in accordance with GAAP.
(d) Deferred Taxes of each of Premier and Premier New Orleans have
been provided for on the Financial Statements in accordance with GAAP.
(e) Each of Premier and Premier New Orleans is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local tax
laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
(f) Neither Premier nor Premier New Orleans has (i) filed any
consent or agreement under Section 341(f) of the Code, (ii) applied for any tax
ruling, (iii) entered into a closing agreement with any taxing authority, (iv)
filed an election under Section 338(g) or 338(h)(10) of the Code (nor has a
deemed election under Section 338(e) of the Code occurred), (v) made any
payments, or been a party to an agreement (including this
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agreement) that under any circumstance would obligate Premier, Premier New
Orleans or the Surviving Corporation, to make payments that will not be
deductible because of Section 280G or 162(m) of the Code, or (vi) been a party
to any tax allocation or tax sharing agreement. Neither Premier nor Premier New
Orleans is a "United States Real Property Holding Company" within the meaning of
Section 897 of the Code. Each of Premier and Premier New Orleans has disclosed
in accordance with applicable law on its federal income tax returns all
positions therein that could give rise to an understatement of federal income
tax.
(g) Neither Premier nor Premier New Orleans has (i) been a member of
an affiliated group filing a consolidated federal income tax return or (ii) been
liable for taxes of any person or entity under Treas. Reg. ss. 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor,
by contract, or otherwise.
4.09 Pending Litigation or Proceedings. There are no claims, suits,
actions, proceedings, arbitrations or investigations pending or, to the
knowledge of Premier and Premier New Orleans, threatened, against or otherwise
relating to or involving Premier, Premier New Orleans or any of their respective
properties or assets, the outcome of which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect or to affect
the ability of Premier or Premier New Orleans to consummate the transactions
contemplated by this Agreement.
4.10 Compliance With Applicable Laws. To the knowledge of Premier and
Premier New Orleans, neither Premier, Premier New Orleans nor any Shareholder is
in violation of any Applicable Law. Each of Premier and Premier New Orleans
holds all licenses, permits, registrations and other authorizations required to
conduct Premier's and Premier New Orleans' business, and all such licenses,
permits, registrations and other authorizations are listed on Schedule 4.10 and
are valid and in full force and effect and there has occurred no default under
any such license, permit, registration or other authorization is in material
compliance with all such licenses, permits, registrations and authorizations.
Neither Premier, Premier New Orleans nor any Shareholder is subject to any
judgment, order, writ, injunction or decree issued by any court or any
governmental agency.
4.11 Assets.
(a) Except as set forth on Schedule 4.11, each of Premier and
Premier New Orleans has good, valid and marketable title, free and clear of all
liens, pledges, mortgages, claims, charges, security interests and other
encumbrances of any kind or nature to all of its Assets. All tangible and/or
corporeal properties used in the business of either Premier or Premier New
Orleans are in working condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with each of Premier's and
Premier New Orleans' past practices.
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(b) All items of inventory of each of Premier and Premier New
Orleans reflected on the most recent balance sheet included in the Financial
Statements delivered prior to the date of this Agreement and prior to the
Effective Time consisted and will consist, as applicable, of items of a quality
and quantity usable and saleable in the ordinary course of business and conform
to generally accepted standards in the industry in which each of Premier and
Premier New Orleans is a part.
(c) The accounts receivable of each of Premier and Premier New
Orleans as set forth on the most recent balance sheet included in the Financial
Statements delivered prior to the date of this agreement or arising since the
date thereof are valid and genuine; have arisen solely out of bona fide sales
and deliveries of goods, performance of services and other business transactions
in the ordinary course of business consistent with past practice; are not
subject to valid defenses, set-offs or counterclaims to the Knowledge of Premier
or Premier New Orleans; and are collectible within 90 days after billing at the
full recorded amount thereof less, in the case of accounts receivable appearing
on the most recent balance sheet included in the Financial Statements delivered
prior to the date of this Agreement, the recorded allowance for collection
losses on such balance sheet. The allowance for collection losses on such
balance sheet has been determined in accordance with GAAP.
(d) All Assets which are material to each of Premier's and Premier
New Orleans' business on a consolidated basis, held under leases or subleases by
each of Premier and Premier New Orleans are held under valid Contracts that, to
the knowledge of Premier and Premier New Orleans, are enforceable in accordance
with their respective terms, and each such Contract is in full force and effect.
(e) Neither Premier nor Premier New Orleans has received notice from
any insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims pending under such policies of insurance and no notices of
claims in excess of such amounts have been given by Premier or Premier New
Orleans under such policies.
(f) The Assets of each of Premier and Premier New Orleans include
all Assets required to operate the business of each of Premier and Premier New
Orleans as presently conducted.
4.12 Contracts. The Assets of each of Premier and Premier New Orleans
include all of the contracts, airtime purchase agreements, leases, warranties,
commitments, agreements, arrangements and purchase and sales orders, whether
oral or written, pursuant to which each of Premier and Premier New Orleans
enjoys any right or benefit in connection with each of Premier's and Premier New
Orleans' business, whether or not reflected upon the books and records of each
of Premier and Premier New Orleans, together with the right of each of Premier
and Premier New Orleans to receive income in respect of such contracts, leases,
warranties, commitments, agreements, arrangements,
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and purchase and sales orders on and after the Closing Date. Schedule 4.12
contains a correct and complete list of all contracts, leases, warranties, legal
commitments, agreements, arrangements, whether oral or written, pursuant to
which each of Premier and Premier New Orleans enjoys any rights or benefits or
undertakes any obligations or liabilities that (i) have a duration of twelve
(12) months or more and which are not terminable by Premier or Premier New
Orleans without penalty upon thirty (30) days or less prior written notice, (ii)
require or could reasonably be expected to require any party thereto to pay
$5,000 or more, or (iii) are between Premier or Premier New Orleans and any
shareholder or employee thereof or Related Party (collectively, the "Material
Contracts"). All Material Contracts are in full force and effect, and neither
Premier, Premier New Orleans nor, to the knowledge of Premier and Premier New
Orleans, any other party thereto is in default under nor has any event occurred
which with the passage of time or giving notice or both would result in any
party to a Material Contract being in default under any of the terms thereof.
4.13 Intellectual Property. Schedule 4.13 contains a true and correct list
of all Intellectual Property owned or used by each of Premier and Premier New
Orleans or any affiliate of Premier or Premier New Orleans relating to or used
or useful in connection with each of Premier's and Premier New Orleans'
business, containing a brief description of each item of Intellectual Property
and the nature of Premier's and Premier New Orleans' interest therein. The
Assets include and, upon the consummation of the transactions contemplated by
this Agreement, Buyer will own or have the right to use all patents, designs,
art work, designs-in-progress, formulations, know-how, inventions, trademarks,
trade names, trade styles, service marks, copyrights, manufacturing processes,
and confidential or proprietary information necessary for the conduct of each of
Premier's and Premier New Orleans' business as presently conducted. No claim is
pending or, to the Knowledge of Premier or Premier New Orleans threatened, and
neither Premier nor Premier New Orleans has received notice that the conduct of
Premier's or Premier New Orleans' business (including without limitation, each
of Premier's and Premier New Orleans' use of any Intellectual Property)
infringes upon or conflicts with any rights claimed therein by any third party,
nor is Premier or Premier New Orleans aware of any unasserted claim the
assertion of which is probable. To the knowledge of Premier and Premier New
Orleans, no use by Premier or Premier New Orleans of any Intellectual Property
licensed to it violates the terms of any agreement pursuant to which it is
licensed. No claim is pending, or to the knowledge of Premier or Premier New
Orleans threatened, which alleges that any Intellectual Property owned or
licensed by Premier or Premier New Orleans for use in Premier's or Premier New
Orleans' business or which Premier or Premier New Orleans otherwise has the
right to use is invalid or unenforceable by Premier or Premier New Orleans, nor
is Premier or Premier New Orleans aware of any such claim that is unasserted,
but the assertion of which is probable. With respect to each of Premier's and
Premier New Orleans' business, neither Premier nor Premier New Orleans
manufactures products which are the subject of patents, patent applications,
copyrights, copyright applications, trademarks, trademark applications, trade
styles, service marks, or trade secrets owned by or licensed from third parties.
No royalties or fees are payable by Premier or Premier New Orleans to anyone for
use of the
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Intellectual Property. True, correct, and complete copies of all agreements
pursuant to which Premier or Premier New Orleans has any license or right to use
any Intellectual Property are attached to Schedule 4.13. All such agreements are
in full force and effect and there are no existing defaults or events of
default, real or claimed, or events which with or without notice or lapse of
time or both would constitute defaults under such agreements that would give the
non-defaulting party a right to terminate such agreement or a right to receive
any payment pursuant to such agreement. With respect to each of Premier's and
Premier New Orleans' business, neither Premier nor Premier New Orleans has
received any notice that any operation or machinery employed by Premier or
Premier New Orleans, violates or infringes upon any claims of any United States
or foreign patent or patent application owned or held by any third party, nor is
Premier or Premier New Orleans aware of any unasserted claim the assertion of
which is probable. All Intellectual Property and registrations, applications,
and agreements related thereto are fully assignable to Buyer without the consent
of any third party.
4.14 Consents and Approvals. Except as set forth on Schedule 4.14, the
execution, delivery and performance of this Agreement by each of Premier and
Premier New Orleans and the consummation of the transactions contemplated hereby
do not require any consent, approval or authorization of, or registration or
filing with, any Person or Governmental Authority.
4.15 Employee Benefit Plans.
(a) The only employee pension benefit plans (as defined in Section
3(2) of ERISA), welfare benefit plans (as defined in Section 3(1) of ERISA),
bonus, stock purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plan or arrangement, and other material employee
fringe benefit plans presently maintained by, or contributed to by Premier or
Premier New Orleans for the benefit of any current or former employee of Premier
or Premier New Orleans, other than a multiemployer plan as defined in Section
3(37) of the ERISA, are those listed on Schedule 4.15 (the "Benefit Plans").
(b) Premier, Premier New Orleans and each of the Benefit Plans are
in compliance with the applicable provisions of ERISA, and those provisions of
the Code applicable to the Benefit Plans.
(c) All contributions to, and payments from, the Benefit Plans which
may have been required to be made in accordance with the Benefit Plans and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made.
(d) To the Knowledge of either Premier or Premier New Orleans, there
are (i) no pending investigations by any Governmental Authority involving the
Benefit Plans, (ii) no termination proceedings involving the Benefit Plans,
(iii) no threatened or pending claims (except for claims for benefits payable in
the normal operation of the Benefit Plans), suits or proceedings against any
Benefit Plan or asserting any rights or
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claims to benefits under any Benefit Plan which could give rise to any material
liability, and (iv) no facts which could give rise to any material liability in
the event of such investigation, claim, suit or proceeding.
(e) Neither the Benefit Plans, Premier, Premier New Orleans, nor any
employee of Premier or Premier New Orleans nor any trusts created thereunder or
any trustee, administrator or other fiduciary thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) which could subject Premier or Premier New Orleans to the
tax or penalty on prohibited transactions imposed by such Section 4975 or the
sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any such
trust has been terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereunder) with respect to
either thereof.
(f) No Benefit Plan subject to Title IV of ERISA has incurred any
material liability to the Pension Benefit Guaranty Corporation other than for
the payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed by
Section 412 of the Code. Each of Premier and Premier New Orleans has furnished
to Buyer the most recent actuarial report with respect to each Benefit Plan that
is a defined benefit pension plan as defined by Section 3(35) of ERISA. The
information supplied to the actuary by each of Premier and Premier New Orleans
for use in preparing those reports was complete and accurate and neither Premier
nor Premier New Orleans has reason to believe that the conclusions expressed in
those reports are incorrect.
(g) At no time for which any relevant statute of limitations remains
open have (a) either Premier or Premier New Orleans, (b) any employer that is,
together with Premier or Premier New Orleans, treated as a "single employer"
under Section 414(b), 414(c) or 414(m) of the Code (an "Affiliate"), or (c) any
employer that was at any time after September 2, 1984, an Affiliate of Premier
or Premier New Orleans (a "Former Affiliate"), incurred any liability which
could subject Buyer, Premier or Premier New Orleans to liability under Section
4062,4063 or 4064 of ERISA.
(h) At no time for which any relevant statute of limitations remains
open has Premier, Premier New Orleans or any Affiliate or Former Affiliate been
required to contribute to, or incurred any withdrawal liability within the
meaning of Section 4201 of ERISA, to any multiemployer pension plan, within the
meaning of Section 3(37) of ERISA, which liability has not been fully paid as
of the date hereof.
(i) Each of Premier and Premier New Orleans has complied with the
notice and continuation coverage requirements of Section 4980B of the Code and
the regulations thereunder with respect to each Benefit Plan that is, or was
during any taxable year of Premier or Premier New Orleans for which the statute
of limitations on the assessment of federal income taxes remains open, by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(l) of the Code.
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(j) Neither Premier nor Premier New Orleans has incurred or is
reasonably likely to incur any liability that is or could reasonably be expected
to become a liability of Premier or Premier New Orleans with respect to any plan
or arrangement that would be included within the definition of "Benefit Plan"
hereunder but for the fact that such plan or arrangement was terminated before
the date of this Agreement.
(k) No payment which is or may be made by Premier or Premier New
Orleans, or from any Benefit Plan, to any employee, former employee, director or
agent of Premier or Premier New Orleans under the terms of any Benefit Plan,
either alone or in conjunction with any other payment, will or could be
characterized as an excess parachute payment under Section 280G of the Code.
(l) Neither Premier nor Premier New Orleans has incurred any
liability to provide death or medical benefits with respect to any current or
former employee of Premier or Premier New Orleans beyond retirement or other
termination of employment other than as required by Section 4890B of the Code,
benefit provisions under any employee pension benefit plan, deferred
compensation accrued on Premier's or Premier New Orleans' books, disability
benefits which have been fully provided for by insurance or otherwise, or a
severance pay plan.
4.16 Compensation Arrangements; Bank Accounts; Officers and Directors.
Schedule 4.16 sets forth the following information including, where applicable,
a copy of any relevant document reflecting such information:
(a) the name and current annual salary, including any bonus, if
applicable, of each of the present officers and employees of each of Premier and
Premier New Orleans whose current annual salary, including any promised or
customary bonus, equals or exceeds $50,000, together with a statement of the
full amount of all cash remuneration paid by Premier or Premier New Orleans to
each such person and to any director of Premier or Premier New Orleans, during
the twelve-month period preceding the date hereof;
(b) the name of each bank, brokerage house or other financial
institution in which Premier or Premier New Orleans has an account or safe
deposit box, the identifying numbers thereof, and the names of all persons
authorized to draw thereon or to have access thereto; and
(c) the name and title of each director and officer of each of
Premier and Premier New Orleans and of each trustee, fiduciary or plan
administrator of each Benefit Plan.
4.17 Transactions With Related Parties. Except as set forth on Schedule
4.17, no Related Party:
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(a) has borrowed money or loaned money to Premier or Premier New
Orleans which will not be repaid on or before Closing;
(b) has any contractual or other claim against Premier or Premier
New Orleans; or
(c) had, since January 1, 1993, any interest in any property or
assets used by Premier or Premier New Orleans in its business.
4.18 Labor Relations. (a) No employee Premier nor Premier New Orleans is
represented by any union or other labor organization; (b) there is no material
unfair labor practice complaint against Premier or Premier New Orleans pending
or overtly threatened before the National Labor Relations Board; and (c) there
is no labor strike, dispute, slow down or stoppage actually pending or
threatened against or involving Premier or Premier New Orleans.
4.19 Brokerage. Except for a fee to be paid by Shareholders to Daniels &
Associates, which fee will be the sole obligation of Shareholders and will not
be paid by Premier or Premier New Orleans, either directly or indirectly, at or
prior to the Closing Date, neither Premier, Premier New Orleans nor any
Shareholder has made any agreement or taken any other action which might cause
anyone to become entitled to a broker's fee or commission as a result of the
transactions contemplated hereby.
4.20 Year 2000. Each of Premier's and Premier New Orleans' hardware and
software systems include design, performance and functionality so that neither
Premier nor Premier New Orleans reasonably expects to experience invalid or
incorrect results or abnormal hardware or software operation related to calendar
year 2000. Each of Premier's and Premier New Orleans' hardware and software
systems include calendar year 2000 date conversion and compatibility
capabilities, including, but not limited to, date data century recognition, same
century and multiple century formula and date value calculations, and user
interface date data values that reflect the century.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Premier, Premier New Orleans and
Shareholders as of the date hereof and in all cases to the Knowledge of Buyer as
follows:
5.01 Organization and Good Standing; Power and Authority. Buyer is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Georgia. Buyer has the requisite power and
authority to own or lease its assets as now owned or leased, and to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Buyer of its obligations under this Agreement,
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and the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary action on the part of Buyer. This Agreement
has been duly and validly executed and delivered by Buyer and constitutes
Buyer's valid and binding obligation, enforceable against Buyer in accordance
with its terms.
5.02 No Violation of Applicable Laws or Agreements. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions and
provisions of this Agreement by Buyer will not, (a) violate or conflict with any
provision of Buyer's articles of organization or operating agreement, as the
case may be; (b) violate, conflict with or result in the breach or termination
of, require the consent of, or otherwise give any contracting party (which has
not consented to such execution, delivery and consummation) the right to change
the terms of, or to terminate or accelerate the maturity of, or constitute a
default under the terms of, any indenture, mortgage, loan or credit agreement or
any other material agreement or instrument to which Buyer is a party or by which
any of its assets may be bound or affected; (c) violate any Applicable Law,
other than any such conflicts, breaches, terminations, accelerations, defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect.
5.03 Pending Litigation or Proceedings. There are no claims, suits,
actions, proceedings, arbitrations or investigations pending or, to the
knowledge of Buyer, threatened, against or otherwise relating to or involving
Buyer or any of its properties, the outcome of which would reasonably be
expected to affect the ability of Buyer to consummate the transactions
contemplated by this Agreement.
5.04 Brokerage. Buyer has not made any agreement or taken any other action
which might cause anyone to become entitled to a broker's fee or commission as a
result of the transactions contemplated hereby.
5.05 Consents and Approvals. Except as set forth on Schedules 4.04(b),
4.04(e) and 4.14, the execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby do not
require any consent, approval or authorization of, or registration or filing
with, any Person or Governmental Authority.
5.06 Buyer's Financial Statements. Attached hereto as Schedule 5.06 are
(a) the audited consolidated balance sheets of Buyer as of July 31, 1997, 1996
and 1995 and the related consolidated statements of income, stockholders' equity
and statements of cash flows of Buyer for the fiscal years ended July 31, 1997,
1996 and 1995 (the "Buyer Financial Statements"). The Buyer Financial Statements
(a) have been prepared in accordance with GAAP consistently applied (except as
may be indicated therein or in the notes thereto), (b) present fairly the
financial position of Buyer as of the dates indicated and present fairly the
results of Buyer's operations for the periods then ended, (c) are in accordance
with the books and records of Buyer, which have been properly maintained and are
complete and correct in all material respects, and (d) the aggregate reserve
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reflected therein was determined in accordance with generally accepted actuarial
standards consistently applied (except as otherwise noted therein), is fairly
stated in accordance with sound actuarial principles and is in conformance with
GAAP.
ARTICLE 6
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
6.01 Operation of Business Pending Closing.
(a) Prior to the Closing Date, except as set forth in subsection (b)
below and except as necessary to effect the transactions contemplated by this
Agreement, or except with the prior consent of Buyer, each of Premier and
Premier New Orleans shall conduct its business in the usual and ordinary course
as currently being conducted, and without limiting the generality of the
foregoing clause, neither Premier nor Premier New Orleans shall do any of the
following:
(i) amend its articles of incorporation or bylaws, or merge,
consolidate, liquidate or dissolve;
(ii) issue any capital stock, any securities convertible or
exchangeable into capital stock, or any options, warrants or rights with respect
to capital stock, or split, subdivide or reclassify its capital stock;
(iii) declare or pay any dividend or make any other
distribution on its capital stock;
(iv) increase the compensation or benefits of officers or
employees of Premier or Premier New Orleans or pay any bonuses except for normal
and customary increases made or bonuses paid or accrued in accordance with past
practices;
(v) create or incur any lien, encumbrance, mortgage, pledge,
charge or security interest whatsoever on any of its properties; or, except for
the issuance of insurance contracts or policies and the settlement of insurance
claims in the ordinary course of business, incur or assume any guaranty or other
liability to discharge an obligation of another, or incur or assume any
obligations for money borrowed, or cancel or discount any material debt owed to
it;
(vi) enter into or terminate any Material Contract;
(vii) make any expenditure for fixed assets in excess of
$5,000 for any single item or $10,000 in the aggregate;
(viii) do or fail to do anything that will cause a breach of,
or default under, any Material Contract; or
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(ix) make any change (whether or not material) in its
accounting procedures, methods, policies or practices or the manner in which
Premier or Premier New Orleans maintains its records.
(b) Notwithstanding subsection (a) above, prior to the Effective
Time, each of Premier and Premier New Orleans shall pay all accrued but unpaid
bonuses owed by Premier and Premier New Orleans to their respective employees.
6.02 Access to Information. Subject to the terms of the Letter of Intent
and the confidentiality agreement contemplated thereby, Premier, Premier New
Orleans and Shareholders shall give to Buyer amid their authorized
representatives, during normal business hours, reasonable access to all of each
of Premier's and Premier New Orleans' contracts, books and records, and each of
Premier and Premier New Orleans shall furnish to Buyer and its authorized
representatives such additional financial, legal and other information with
respect to each of Premier and Premier New Orleans that Buyer may reasonably
request. Except as and to the extent required by law, Buyer shall not disclose
or use any Confidential Information with respect to Premier or Premier New
Orleans furnished, or to be furnished, by its representatives to Buyer or its
representatives in connection herewith at any time or in any manner other than
in connection with its evaluation and/or consummation of the transactions
contemplated by this Agreement.
6.03 Schedules. At any time and from time to time between the date hereof
and the date that is two business days prior to the Closing Date, each of
Premier and Premier New Orleans shall have the right and the continuing
obligation to supplement any of the Schedules contained in Article 4 hereof,
respectively, with respect to any matter arising or coming to the Knowledge of
Premier or Premier New Orleans, respectively, after the date hereof that, if
existing, occurring or known at such date, would have been required to be set
forth or described in such Schedules.
6.04 Best Efforts. Each of the parties hereto agrees to use its best
efforts to take, or to cause to be taken, all reasonable actions and to do, or
to cause to be done, all reasonable things necessary, proper or advisable under
Applicable Laws to perform their respective agreements, undertakings and
obligations hereunder and to consummate the transactions contemplated by this
Agreement. None of the parties hereto will intentionally take or intentionally
permit to be taken any action that would be in breach of the terms or provisions
of this Agreement or that would cause any of the representations contained
herein to be or become untrue.
6.05 Exclusive Dealings. Unless and until this Agreement is terminated
prior to Closing pursuant to Article 8, neither Premier, Premier New Orleans nor
any of their respective affiliates, officers, directors, agents, advisers or
shareholders shall (i) solicit submissions of proposals of offers from any
Person other than Buyer relating to any acquisition or purchase of all or any
material part of the capital stock, assets or properties of Premier or Premier
New Orleans, the sale or issuance of any capital stock of Premier,
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Premier New Orleans or of any corporation formed by Premier, Premier New Orleans
or any affiliate to which any of the capital stock, assets or properties of
Premier or Premier New Orleans may be contributed, or any merger or
consolidation of Premier, Premier New Orleans or of any corporation formed by
Premier, Premier New Orleans or any affiliate to which any assets or properties
of Premier or Premier New Orleans may be contributed (each an "Acquisition
Proposal"); (ii) participate in any discussions or negotiations regarding, or
furnish any information to any Person other than Buyer, or otherwise cooperate
in any way or assist, facilitate or encourage any Acquisition Proposal by any
Person other than Buyer; or (iii) enter into any agreement or understanding,
whether oral or written, that would prevent the consummation of the transaction
proposed hereby.
6.06 Expenses. If Closing does not occur as set forth in this Agreement,
the expenses of the parties hereto shall be paid as provided in Section 8.03.
6.07 Assignment of FCC Licenses. Promptly upon receipt of notice from
Buyer of the arrangement of the Financing, each of Premier and Premier New
Orleans agrees to file or cause to be filed all applications and any amendments
thereto or additional applications, that may be necessary to obtain the FCC's
consent to the assignment of the FCC Licenses to Buyer. Buyer agrees to
cooperate with each of Premier and Premier New Orleans in discharging this
responsibility. Buyer, on the one hand, and Premier and Premier New Orleans, on
the other hand, agree to share equally all costs associated with obtaining the
FCC's consent to the assignment of the FCC Licenses.
6.08 Irrevocable Appointment of Shareholder Representative. By the
execution and delivery of this Agreement, including counterparts hereof, each
Shareholder hereby irrevocably constitutes and appoints Philip L. Fritz as the
true and lawful agent and attorney-in-fact (the "Representative") of such
Shareholder with full powers of substitution to act in the name, place and stead
of such Shareholder with respect to the matters contained in this Agreement, as
the same may be from time to time amended, and to do or refrain from doing all
such further acts and things, and to execute all such documents, as the
Representative shall deem necessary or appropriate in connection with any of the
transactions contemplated under this Agreement, including the power:
(a) to execute and deliver all ancillary agreements, certificates,
and documents which the Representative deems necessary or appropriate in
connection with the consummation of the transactions contemplated by the terms
and provisions of this Agreement;
(b) to act for Shareholders with respect to all matters referred to
in this Agreement, including the right to settle, compromise, litigate or
arbitrate any claim on behalf of Shareholders arising under this Agreement or
out of the transactions provided for herein;
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(c) to terminate, amend, or waive any provision of this Agreement;
provided that any such action, shall be taken in the same manner with respect to
all Shareholders, unless otherwise agreed by each Shareholder who is subject to
any disparate treatment of a potentially adverse nature;
(d) to employ and obtain the advice of legal counsel, accountants
and other professional advisors as the Representative, in his sole discretion,
deems necessary or advisable in the performance of its duties as Representative
and to rely on their advice and counsel;
(e) to incur expenses, including fees of attorneys and accountants,
in connection with the consummation of the transactions contemplated by this
Agreement, and any other fees and expenses allocable or in any way relating to
such transactions;
(f) to do or refrain from doing any further act or deed on behalf of
Shareholders which the Representative deems necessary or appropriate in his sole
discretion relating to the subject matter of this Agreement as fully and
completely as any of the Sellers could do if personally present and acting;
(g) to deliver to such Shareholder, within two (2) business days
after receipt thereof, such Shareholder's pro rata share of any principal and
interest payment made by Buyer under the Note.
The appointment of the Representative shall be deemed coupled with an
interest and shall be irrevocable, and Buyer and any other person may
conclusively and absolutely rely, without inquiry, upon any action of the
Representative as the act of Shareholders in all matters referred to in this
Agreement. Each of Shareholders hereby ratifies and confirms all that the
Representative shall do or cause to be done by virtue of his appointment as
Representative of such Shareholder. The Representative shall act for
Shareholders on all of the matters set forth in this Agreement in the manner the
Representative believes to be in the best interest of Shareholders and
consistent with his obligations under this Agreement, but the Representative
shall not be responsible to any Shareholder for any loss or damage any
Shareholder may suffer by reason of the performance by the Representative of his
duties under this Agreement, other than loss or damage arising from willful
violation of law or gross negligence in the performance of his duties under this
Agreement.
Each of the Shareholders hereby expressly acknowledges and agrees that the
Representative is authorized to act on behalf of such Shareholder
notwithstanding any dispute or disagreement among the Shareholders, and that
Buyer shall be entitled to rely on any and all action taken by the
Representative under this Agreement without liability to, or obligation to
inquire of, any of the Shareholders. Buyer is hereby expressly authorized to
rely on the genuineness of the signature of the Representative. Upon receipt of
any writing which reasonably appears to have been signed by the Representative,
Buyer may act upon the same without any further duty of inquiry as to
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the genuineness of the writing. If the Representative resigns or ceases to
function in his capacity as such for any reason whatsoever, then a majority in
number of the Shareholders shall appoint a successor; provided, however, that if
for any reason no successor has been appointed within thirty (30) days, then any
Shareholder shall have the right to petition a court of competent jurisdiction
for appointment of a successor. Each Shareholder hereby jointly and severally
agree to indemnify and hold the Representative harmless, pro rata in accordance
with the number of Shares sold by such Shareholder hereunder, from and against
any and all liability, loss, cost, damage or expense (including without
limitation attorneys' fees) reasonably incurred or suffered as a result of the
performance of its duties under this Agreement, except for willful violation of
law or gross negligence.
6.09 Teletouch Litigation. Buyer understands and acknowledges that certain
Shareholders are parties to legal proceedings involving Teletouch Paging. Buyer
understands and agrees that, except to the extent Premier or Premier New Orleans
is or becomes a party to such litigation, Buyer shall have no liability for the
payment of any judgment or award resulting from such litigation nor shall Buyer
have any claim to any judgment or award to Shareholders resulting from such
litigation.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Buyer. The obligations of Buyer to
proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by Buyer at Buyer's option):
(a) Bringdown of Representations and Warranties. The representations
and warranties of each of Premier, Premier New Orleans and Shareholders
contained in this Agreement shall be true and correct on and as of the time of
Closing, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time and Buyer
shall have received certificates to such effect signed by each of Shareholders
and an authorized officer of each of Premier and Premier New Orleans.
(b) Performance and Compliance. Each of Premier and Premier New
Orleans shall have performed all of the covenants and complied with all of the
provisions required by this Agreement to be performed or complied with by it on
or before the Closing, and Buyer shall have received a certificate to such
effect signed by an authorized officer of each of Premier and Premier New
Orleans.
(c) Opinion of Counsel. Buyer shall have received from Joyce &
Jacobs, Attorneys At Law, L.L.P., counsel for Premier and Premier New Orleans,
an opinion dated the Closing Date substantially in the form of Exhibit B.
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(d) Satisfactory Instruments. All instruments and documents required
on Premier's, Premier New Orleans' and Shareholders' part to effectuate and
consummate the transactions contemplated hereby shall be delivered to Buyer and
shall be in form and substance reasonably satisfactory to Buyer and its counsel.
(e) Litigation. No order of any court or administrative agency shall
be in effect which enjoins or prohibits the transactions contemplated hereby or
which would limit or materially adversely affect Buyer's ownership or control of
Premier or Premier New Orleans or the business of Premier or Premier New
Orleans, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Authority (i) challenging
any of the transactions contemplated by this Agreement or seeking monetary
relief by reason of the consummation of such transactions or (ii) which might
have a Material Adverse Effect on the future conduct of the business of Premier
or Premier New Orleans.
(f) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect with respect to Premier, Premier New Orleans or Buyer,
or any condition or event which is reasonably likely to result in a Material
Adverse Effect, subsequent to August 31, 1997; provided however, that for
purposes of this Section 7.01(f), such Material Adverse Effect shall not include
any event, occurrence or condition adversely affecting the paging industry in
general.
(g) Incumbency Certificate. Each of Premier and Premier New Orleans
shall have delivered to Buyer an incumbency certificate dated the Closing Date
certifying the incumbency of all officers of each of Premier and Premier New
Orleans who have executed this Agreement or any of the other agreements,
documents or instruments required to be delivered hereunder. These certificates
shall contain specimens of the signatures of each of such officers and shall be
executed by an officer of Premier or Premier New Orleans other than an officer
whose incumbency or authority is certified.
(h) Certificate of Existence. Each of Premier and Premier New
Orleans shall have delivered to Buyer, with respect to each of Premier and
Premier New Orleans, a certificate of the Secretary of State of Louisiana, dated
not more than 10 days before the Closing Date, stating that each of Premier and
Premier New Orleans is a corporation in existence under the laws of such state
and has paid all applicable Taxes due to such state.
(i) Certified Copies of Resolutions. Each of Premier and Premier New
Orleans shall have delivered to Buyer copies, certified by the duly qualified
and acting Secretary or Assistant Secretary of each of Premier and Premier New
Orleans, of resolutions adopted by the Board of Directors of each of Premier and
Premier New Orleans, and of resolutions adopted by the shareholders of each of
Premier and Premier
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New Orleans, approving this Agreement and the consummation of the transactions
contemplated hereby.
(j) Delivery of Original Records. Each of Premier and Premier New
Orleans shall have delivered to Buyer the original corporate minute books for
each of Premier and Premier New Orleans, along with the certificates
representing the issued and outstanding shares of capital stock of each of
Premier and Premier New Orleans.
(k) Consents. Each of Premier and Premier New Orleans shall have
obtained the consents of all third parties to the contracts and leases set forth
on Schedules 4.04(b) and 4.14 and shall deliver written evidence of such
consents at the Closing.
(l) Non-Compete. Mr. Philip Fritz shall have entered into, executed
and delivered the Non-Compete Agreement substantially in the form of Exhibit C
hereto.
(m) Repayment of Debt. All debts and other amounts owed by any
Shareholder to either Premier or Premier New Orleans shall be repaid in full.
Each of Premier and Premier New Orleans shall deliver satisfactory evidence of
such repayment to Buyer at Closing. Upon the repayment of all Bank Debt by Buyer
in accordance with Section 3.02, Premier and Premier New Orleans shall use their
best efforts to deliver or cause to be delivered to Buyer satisfactory evidence
of the termination of such Bank Debt and the release of all security interests
or other encumbrances of Premier's or Premier New Orleans' Assets, including but
not limited to, UCC termination statements.
7.02 Conditions to Obligations of Premier and Premier New Orleans. The
obligations of Premier, Premier New Orleans and Shareholders to proceed with the
Closing under this Agreement are subject to the fulfillment prior to or at
Closing of the following conditions (any one or more of which may be waived in
whole or in part by Premier, Premier New Orleans or Shareholders at Premier's,
Premier New Orleans' or Shareholders' option):
(a) Bringdown of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be true and correct on
and as of the time of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time, and Premier and Premier New Orleans shall have received a certificate
to such effect signed by authorized officers of Buyer.
(b) Performance and Compliance. Buyer shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing, and Premier and
Premier New Orleans shall have received a certificate to such effect signed by
authorized officers of Buyer.
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(c) Opinion of Counsel. Premier and Premier New Orleans shall have
received from Alston & Bird LLP, counsel for Buyer, an opinion dated the Closing
Date substantially in the form of Exhibit D.
(d) Satisfactory Instruments. All instruments and documents required
on Buyer's part to effectuate and consummate the transactions contemplated
hereby shall be delivered to Premier and Premier New Orleans and shall be in
form and substance reasonably satisfactory to Premier, Premier New Orleans and
their counsel.
(e) Litigation. No order of any court or administrative agency shall
be in effect which enjoins or prohibits the transactions contemplated hereby,
and there shall not have been threatened, nor shall there be pending, any action
or proceeding by or before any Governmental Authority challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions.
(f) Incumbency Certificate. Buyer shall have delivered to Premier
and Premier New Orleans an incumbency certificate dated the Closing Date
certifying the incumbency of all officers of the Manager of Buyer who have
executed this Agreement or any of the other agreements, documents or instruments
required to be delivered hereunder. These certificates shall contain specimens
of the signatures of each of such officers and shall be executed by officers of
the Manager of Buyer other than an officer whose incumbency or authority is
certified.
(g) Certificate of Existence. Buyer shall have delivered to Premier
and Premier New Orleans a certificate of the Secretary of State of Georgia,
dated not more than 10 days before the Closing Date, stating that Buyer is a
limited liability company in existence under the laws of the State of Georgia.
(h) Certified Copies of Resolutions. Buyer shall have delivered to
Premier and Premier New Orleans copies, certified by the duly qualified and
acting Secretary or Assistant Secretary of Buyer, of resolutions adopted by the
Manager of Buyer approving this Agreement and the consummation of the
transactions contemplated hereby.
(i) Non-Compete. Buyer shall have entered into, executed and
delivered the Non-Compete Agreement substantially in the form of Exhibit C
hereto.
(j) Promissory Note. Buyer shall have entered into, executed and
delivered to the Representatives the Note substantially in the form of Exhibit A
hereto.
(k) Payment of Debt. At Closing, Buyer shall replay all Bank Debt in
accordance with Section 3.02.
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ARTICLE 8
TERMINATION
8.01 When Agreement May be Terminated. This Agreement may be terminated at
any time prior to Closing:
(a) By Buyer (i) at any time if any representation and warranty of
Premier, Premier New Orleans or any Shareholder contained in Article 4 was
incorrect in any material respect when made or becomes incorrect in any material
respect at any time after the date hereof and prior to the Effective Time, (ii)
at any time if Premier or Premier New Orleans fails to comply in any material
respect with any provision of Article 6 binding upon it, or (iii) upon written
notice to Premier and Premier New Orleans given on or at any time after April
30, 1998 if all the conditions precedent set forth in Section 7.01 to be
performed by Premier or Premier New Orleans have not been performed by that
date; or
(b) By Premier and Premier New Orleans upon written notice to Buyer
given on or at any time after April 30, 1998 if all the conditions precedent set
forth in Section 7.02 to be performed by Buyer have not been performed by that
date.
8.02 Effect of Termination. In the event of termination of this Agreement
by either Buyer on the one hand, or Premier or Premier New Orleans, on the
other, as provided above, this Agreement shall forthwith terminate and there
shall be no liability on the part of any party or any party's officers or
directors, except for liabilities arising from a breach of this Agreement prior
to such termination, liabilities set forth in Section 8.03 below and liabilities
and obligations under the confidentiality agreements referred to in the Letter
of Intent. The provisions of Section 8.03, together with each of the
confidentiality agreements referred to in the Letter of Intent, shall survive
for a period of one year following the termination of this Agreement and shall
not be extinguished thereby, provided however, that neither Premier, Premier New
Orleans nor any Shareholder shall disclose any information contained in the
Buyer Financial Statements at any time.
8.03 Payment of Expenses on Termination. If this Agreement is terminated
by Buyer pursuant to Section 8.01(a) Premier and Premier New Orleans shall pay
and reimburse Buyer for all expenses Buyer incurred prior to such termination in
connection with the preparation of this Agreement and the transactions
contemplated hereby, provided however, that such expenses shall not exceed
$20,000. If this Agreement is terminated by Buyer pursuant to Section 8.01(b)
each party shall bear its own expenses incurred in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby. If this Agreement is terminated by Premier and Premier New
Orleans pursuant to Section 8.01(c) Buyer shall pay and reimburse Premier and
Premier New Orleans for all expenses Premier and Premier New Orleans incurred
prior to such termination in connection with the preparation of this Agreement
and the transactions contemplated hereby, provided however, that if this
Agreement is terminated
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as a result of Buyer's failure to secure the Financing, Buyer shall have no
obligation to pay or reimburse Premier or Premier New Orleans for any such
expenses, provided further, that such expenses shall not exceed $20,000.
ARTICLE 9
INDEMNIFICATION
9.01 Definitions
For the purposes of this Article:
(a) "Buyer Indemnitees" shall mean Buyer and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates
(b) "Buyer Indemnitor" shall mean Buyer
(c) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(d) "Indemnitees" shall mean a Seller Indemnitee or a Buyer
Indemnitee, as the context may require.
(e) "Indemnitors" shall mean a Seller Management Indemnitor, a
Seller Non-Management Indemnitor or a Buyer Indemnitor, as the context may
require.
(f) "Losses" shall mean any and all demands, claims, actions or
causes of action, assessments, losses, diminution in value, damages (including
special and consequential damages), liabilities, costs, and expenses, including
without limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(g) "Seller Indemnitees" shall mean Shareholders.
(h) "Seller Indemnitors" shall mean Seller Management Indemnitors
together with Seller Non-Management Indemnitors.
(i) "Seller Management Indemnitors" shall mean Premier, Premier New
Orleans and Management Shareholders, jointly and severally.
(j) "Seller Non-Management Indemnitors" shall mean all Shareholders
who are not Management Shareholders, severally.
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(k) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
9.02 Agreement of Seller Indemnitors to Indemnify
(a) Subject to the terms and conditions of this Article, Seller
Management Indemnitors agree, jointly and severally, to indemnify, defend, and
hold harmless Buyer Indemnitees, and each of them, from, against, for, and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, a Buyer Indemnitee and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Seller Management Indemnitors contained in or made
pursuant to this Agreement or in any certificate, Schedule, or Exhibit furnished
by Seller Management Indemnitors in connection herewith, provided however, that
for purposes of this Article 9 any qualification of such representations and
warranties by reference to the materiality of matters stated therein or as to
matters having or not having a Material Adverse Effect, and any limitation of
such representations and warranties as being "to the knowledge of," "known to"
or words of similar effect, shall be disregarded in determining the inaccuracy,
untruth, incompleteness or breach thereof; and
(ii) a breach of or failure to perform any material covenant
or agreement of Seller Management Indemnitors made in this Agreement.
(b) Subject to the terms and conditions of this Article, Seller Non-
Management Indemnitors agree, severally, to indemnify, defend, and hold harmless
Buyer Indemnitees, and each of them, from, against, for, and in respect of any
and all Losses asserted against, or paid, suffered or incurred by, a Buyer
Indemnitee and resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Seller Non-Management Indemnitors contained in or
made pursuant to this Agreement or in any certificate, Schedule, or Exhibit
furnished by Seller Non-Management Indemnitors in connection herewith, provided
however, that for purposes of this Article 9 any qualification of such
representations and warranties by reference to the materiality of matters stated
therein or as to matters having or not having a Material Adverse Effect, and any
limitation of such representations and warranties as being "to the knowledge
of," "known to" or words of similar effect, shall be disregarded in determining
the inaccuracy, untruth, incompleteness or breach thereof; and
(ii) a breach of or failure to perform any material covenant
or agreement of Seller Non-Management Indemnitors made in this Agreement.
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9.03 Agreement of Buyer Indemnitor to Indemnify
Subject to the terms and conditions of this Article, Buyer Indemnitor
agrees to indemnify, defend, and hold harmless Seller Indemnitees, and each of
them, from, against, for, and in respect of any and all Losses asserted against,
or paid, suffered or incurred by, a Seller Indemnitee and resulting from, based
upon, or arising out of:
(a) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Buyer Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Schedule, or Exhibit furnished by Buyer
Indemnitor in connection herewith, provided however, that for purposes of this
Article 9 any qualification of such representations and warranties by reference
to the materiality of matters stated therein or as to matters having or not
having a Material Adverse Effect, and any limitation of such representations and
warranties as being "to the knowledge of," "known to" or words of similar
effect, shall be disregarded in determining the inaccuracy, untruth,
incompleteness or breach thereof; and
(b) a breach of or failure to perform any material covenant or
agreement of Buyer Indemnitors made in this Agreement.
9.04 Procedures for Indemnification.
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 9.05 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection. Failure
to timely so object shall constitute a final and binding acceptance of the
Indemnification Claim by Indemnitor, and the Indemnification Claim shall be paid
in accordance with subsection (d) hereof. If an objection is timely interposed
by Indemnitor and the dispute is not resolved by Indemnitee and Indemnitor
within fifteen (15) days from the date Indemnitee receives such objection, such
dispute shall be resolved by arbitration as provided in Section 10.13 of this
Agreement.
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(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or by any other final adjudication, Indemnitor shall pay the amount of
such Indemnification Claim in accordance with the instructions of the Indemnitee
within ten (10) days of the date such amount is determined.
9.05 Third Party Claims. The obligations and liabilities of the parties
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 9.04 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party
Claim or the litigation or resolution thereof involves an issue or matter which
could have a material adverse effect on the business, operations, assets,
properties or prospects of Indemnitee (including, without limitation, the
administration of the tax returns and responsibilities under the tax laws of
Indemnitee), Indemnitee shall have the right to control the defense, compromise
and settlement of such Third Party Claim undertaken by Indemnitor, and the costs
and expenses of Indemnitee in connection therewith shall be included as part of
the indemnification obligations of Indemnitor hereunder. If Indemnitee shall
elect to exercise such right, Indemnitors shall have the right to participate
in, but not control, the defense, compromise and settlement of such Third Party
Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitor under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or
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delayed. Consent shall be presumed in the case of settlements of $50,000.00 or
less where Indemnitor has not responded within five (5) business days of notice
of a proposed settlement. If Indemnitor assumes the defense of such a Third
Party Claim, (a) no compromise or settlement thereof may be effected by
Indemnitor without Indemnitee's consent unless (i) there is no finding or
admission of any violation of law or any violation of the rights of any person
and no effect on any other claim that may be made against Indemnitee (ii) the
sole relief provided is monetary damages that are paid in full by Indemnitor and
(iii) the compromise or settlement includes, as an unconditional term thereof,
the giving by the claimant or the plaintiff to Indemnitee of a release, in form
and substance satisfactory to Indemnitee, from all liability in respect of such
Third Party Claim, and (b) Indemnitee shall have no liability with respect to
any compromise or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
9.06 Other Rights and Remedies Not Affected. The rights of Indemnitee
under this Article 9 are independent of and in addition to such rights and
remedies as Indemnitee may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or the failure to fulfill any agreement or
covenant hereunder on the part of Indemnitor, including without limitation the
right to seek specific performance, recession or restitution, none of which
rights or remedies shall be affected or diminished hereby.
9.07 Time Limitations.
(a) Seller Indemnitors shall have no liability under clause (a)(i)
or (b)(i) of Section 9.02 with respect to: (a) the breach of any representation
or warranty, other than those set forth in Sections 4.02, 4.04(a), 4.08, 4.10,
4.11(a) and 4.15 hereof, unless on or before two (2) years after the Closing
Date Seller Indemnitors are given notice asserting an Indemnification Claim with
respect thereto; (b) the breach of the representations and warranties of Seller
Indemnitors contained in Section 4.08 hereof, unless notice asserting an
Indemnification Claim based thereon is given to Seller Indemnitors prior to the
expiration of the period of time when deficiencies may be assessed against
Premier or Premier New Orleans with respect to any tax period ended on or prior
to the Effective Time; and (c) the breach of the representations and warranties
of Seller Indemnitors contained in Section 4.15, unless on or before five (5)
years after the Closing Date Seller Indemnitors are given notice asserting an
Indemnification Claim with respect thereto. An Indemnification Claim based upon
a breach of the representations
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and warranties set forth in Sections 4.02, 4.04(a), 4.10 and 4.11(a) or based
upon the failure of any Seller Indemnitor to perform the covenants and
agreements to be performed by them hereunder may be made at any time.
(b) Buyer Indemnitor shall have no liability under clause (a) of
Section 9.03 with respect to the breach of any representation or warranty, other
than those set forth in Section 5.02(a) hereof, unless on or before the later of
(i) two (2) years after the Closing Date or (ii) the date of the payment in full
of the Note in accordance with its terms, Buyer Indemnitor is given notice
asserting an Indemnification Claim with respect thereto. An Indemnification
Claim based upon a breach of the representations and warranties set forth in
Section 5.02(a) or based upon the failure of Buyer Indemnitor to perform the
covenants and agreements to be performed by it hereunder may be made at any
time.
9.08 Limitations as to Amount. Seller Indemnitors shall have no liability
with respect to the matters described in clauses (a) or (b) of Section 9.02
until the total of all Losses with respect thereto exceeds $75,000, in which
event Seller Indemnitors shall be obligated to indemnify the Buyer Indemnitees
as provided in this Article for all such Losses, provided however, that in no
event shall Seller Indemnitors be obligated to indemnify the Buyer Indemnitees
for Losses in excess of fifty percent (50%) of the Net Equity Value as of the
Closing Date, provided further, that after the fifth anniversary hereof, Seller
Indemnitors shall only be liable for Losses to the extent that the aggregate of
all Losses exceeds $75,000. The limitations set forth in this Section shall not
apply to any intentional misrepresentation or breach of warranty of any Seller
Indemnitor or any intentional failure to perform or comply with any covenant or
agreement of any Seller Indemnitor, and the Seller Indemnitors shall be liable
for all Losses with respect thereto. Buyer Indemnitor shall have no obligation
to indemnify the Seller Indemnitees for Losses in excess of $860,000.
9.09 Subrogation. Upon payment in full of any Indemnification Claim,
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitor shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
9.10 Buyer's Right of Set-Off. Notwithstanding anything to the contrary
herein contained, Buyer shall have the right to set-off against and deduct from
the Note (a) any amount which any Seller Indemnitor becomes obligated (whether
by agreement between one or more of the Seller Indemnitors and Buyer or by
arbitration award) to pay to Buyer hereunder, and (b) any other amounts which
may be payable by the Seller Indemnitors to Buyer under this Agreement or by
virtue of the transactions provided for herein. Buyer's right of set-off shall
be superior to any right of Seller Indemnitors to request or direct payment of
any part or all of the Note to or for the account of Seller Indemnitors. Prior
to exercising the aforementioned right of set-off, Buyer shall give Seller
Indemnitors five (5) days written notice of its intent to exercise such right.
If within five (5) days of receiving such notice, Seller Indemnitors object in
writing to Buyer's exercise of its right
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of set-off, then Buyer shall set aside and hold the disputed amount free of any
obligation to pay over the disputed amount to or at the direction of Seller
Indemnitors, and Buyer's asserted right of set-off will be submitted to
arbitration pursuant to Section 10.13 hereof. Notwithstanding anything to the
contrary in this Agreement, all amounts set aside and held pending the
resolution of arbitration shall remain set aside and held until the final
resolution of such arbitration pursuant to Section 10.13 hereof. If at the time
for payment of the Note, an Indemnification Claim has been asserted by Buyer but
the Seller Indemnitors obligation with respect thereto has not been finally
determined or agreed upon, Buyer may withhold payment of such portion of the
Note as shall be sufficient to pay and reimburse Buyer for all losses upon which
the Indemnification Claim is based and shall not be required to pay such
withheld amount over to Seller Indemnitors until five (5) days following the
final determination or agreement that the Seller Indemnitors are not obligated
to the Buyer Indemnitees with respect to such Indemnification Claim or if
obligated the Seller Indemnitors have paid and satisfied such Indemnification
Claim in full.
ARTICLE 10
MISCELLANEOUS
10.01 Nature and Survival of Representations. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
the Closing until that date which is two (2) years after the Closing Date,
except that: (i) the representations and warranties contained in Section 4.08
shall survive the Closing until the expiration of the period of time when
deficiencies may be assessed against Premier or Premier New Orleans with respect
to any tax period ended on or prior to the Effective Time; (ii) the
representations and warranties contained in Section 4.15 shall survive the
Closing until the fifth anniversary of the Closing Date; and (iii) the
representations and warranties contained in Sections 4.02, 4.04, 4.10 and
4.11(a) shall survive indefinitely. Buyer acknowledges that it has been afforded
the opportunity to perform such investigation of each of Premier and Premier New
Orleans as it deems necessary or appropriate; however, no investigation by Buyer
will diminish or obviate any of the representations, warranties, covenants or
agreements or Buyer's right to rely upon such representations, warranties,
covenants and agreements.
10.02 Amendment. This Agreement may not be amended or modified without the
prior written consent of all parties.
10.03 Waiver. Failure to insist upon strict compliance with any of the
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
10.04 Governing Law. Notwithstanding the place where this Agreement may be
executed by any of the parties, the parties expressly agree that this Agreement
shall in all
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respects be governed by, and construed in accordance with, the laws of the State
of Georgia without regard for its conflict of laws doctrine.
10.05 Notices. Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
If to Buyer:
Satellink Paging LLC
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attention: Mr. Jerry W. Mayfield
Telephone: (770) 664-2640
Telecopy: (770) 664-2651
with a copy (which shall not constitute notice) to:
Alston & Bird LLP
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
Attention: Sidney J. Nurkin, Esq.
Telephone: (404) 881-7000
Telecopy: (404) 881-7777
If to Premier or Premier New Orleans:
Premier Paging, Inc.
Premier Paging of New Orleans, Inc.
7627 Jefferson Highway
Baton Rouge, Louisiana 70809
Attn: Mr. Philip Fritz
Telephone: (504) 924-4500
Telecopy: (504) 937-3305
with a copy (which shall not constitute notice) to:
Joyce & Jacobs, Attorneys At Law, LLP
1019 19th Street, NW
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Penthouse Two
Washington, D.C.
Attn: Frederick M. Joyce, Esq.
Telephone: (202) 457-0100
Telecopy: (202) 457-0186
If to Shareholders:
Mr. Philip Fritz
18012 Club View Drive
Baton Rouge, Louisiana 70810
Telephone: (504) 752-8770
Telecopy: (504) 752-3284 (call first)
with a copy (which shall not constitute notice) to:
Joyce & Jacobs, Attorneys At Law, LLP
1019 19th Street, NW
Penthouse Two
Washington, D.C.
Attn: Frederick M. Joyce, Esq.
Telephone: (202) 457-0100
Telecopy: (202) 457-0186
10.06 Invalid Provision. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
10.07 Assignment. This Agreement may not be assigned or delegated by any
party without the prior written consent of all other parties, which consent
shall not be unreasonably withheld or delayed. In the event of assignment of
this Agreement the original parties shall remain bound to the obligations,
terms, conditions and provisions of this Agreement.
10.08 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
10.09 Further Assurances. Each party agrees to execute and deliver all
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
10.10 Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.
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10.11 Person and Gender. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.
10.12 Entire Agreement. This Agreement, together with its Schedules and
Exhibits, and the Letter of Intent and confidentiality agreement referenced
therein, constitute the entire agreement of the parties with respect to matters
set forth in this Agreement and the Letter of Intent, and supersede any prior
understanding or agreement, oral or written, with respect to such matters. To
the extent that the provisions of this Agreement and the Letter of Intent may be
inconsistent, the provisions of this Agreement shall control.
10.13 Arbitration.
(a) The parties agree that any dispute between or among them arising
out of or based upon this Agreement, or the consummation of the transactions
provided for herein shall be submitted to and resolved by arbitration in Baton
Rouge, Louisiana in accordance with the rules and procedures of the American
Arbitration Association, and the decision of a single arbitrator in such dispute
shall be final and binding on the parties to such arbitration proceeding. Except
as the arbitrator may otherwise award or assess the expenses of any such
proceeding, each party shall bear its own costs and expenses, including the
expense of its counsel, in any such arbitration proceeding. The arbitrator shall
be appointed by agreement of the parties. If there is no agreement upon a single
arbitrator within fifteen (15) days after the submission of the dispute for
arbitration, the arbitrator shall be selected by the following procedure: Buyer
shall appoint one (1) arbitrator and Shareholders shall appoint one (1)
arbitrator and the two appointed arbitrators shall select a mutually agreeable
third arbitrator, which arbitrator shall arbitrate the dispute in accordance
with this Section 10.13. If either of the two arbitrators is not so appointed or
if the two arbitrators refuse or fail to appoint the third arbitrator within 30
days after the expiration of the aforementioned 15 day period, either party may
request the American Arbitration Association to make the appointment in default
in accordance with its rules then obtaining and the parties shall abide by any
appointment so made.
(b) Prior to filing for Arbitration hereunder, either party seeking
arbitration shall provide the other party with written notice of its intention
to file for arbitration. That notice shall state with particularity the basis
for such intent and the remedy sought. The recipient party shall have five (5)
calendar days to provide a written reply. In the event that such reply does not
resolve the matter, the parties agree to meet in person at least one time for
the purpose of resolving the matter. That meeting shall occur within ten (10)
days of the date the written notice of intent to arbitrate was received. The
location for such meeting shall be selected by the party receiving the notice of
intent to arbitrate, provided, however, that the selected location shall be
within the states of Louisiana or Georgia. If the matter is not resolved by the
parties within twenty (20) days of the receipt of the notice of intent to
arbitrate, then arbitration may be immediately commenced.
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10.14 Breakup Fee. If Premier, Premier New Orleans or any of their
respective affiliates, officers, directors, agents, advisors or shareholders
breach the covenants set forth in Section 6.05 and, at any time on or prior to
March 31, 1999, accept an Acquisition Proposal, then Premier and Premier New
Orleans shall become jointly and severally liable to Buyer for $250,000 (the
"Breakup Fee"). The Breakup Fee shall be payable by cashier's check or wire
transfer within five (5) days of receipt by Premier or Premier New Orleans of
written notice from Buyer. The Breakup Fee shall be Buyer's exclusive remedy for
any breach of the covenants set forth in Section 6.05.
10.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SATELLINK PAGING LLC
By: SATELLINK COMMUNICATIONS, INC.,
its Manager
By: /s/ Jerry W. Mayfield
-------------------------------
Name: Jerry W. Mayfield
-------------------------------
Title: President
-------------------------------
PREMIER PAGING, INC.
By: /s/ Philip L. Fritz
-------------------------------
Name: Philip L. Fritz
-------------------------------
Title: President
-------------------------------
PREMIER PAGING OF NEW ORLEANS, INC.
By: /s/ Philip L. Fritz
-------------------------------
Name: Philip L. Fritz
-------------------------------
Title: President
-------------------------------
COMMON SHAREHOLDERS OF PREMIER
/s/ Philip L. Fritz
--------------------------------------
Philip L. Fritz
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/s/ Libbie M. Fritz
------------------------------------
Libbie M. Fritz
/s/ Sidney A. Marchand, III,
------------------------------------
Sidney A. Marchand, III, as Trustee for
the
TALBOT, SOTILE, CARMOUCHE,
MARCHAND AND MARCELLO, (APLC)
EMPLOYEES PROFIT SHARING PLAN,
DATED MARCH 8, 1982, FOR PARTICIPANT
VINCENT J. SOTILE
/s/ Hilton H. Spence
------------------------------------
Hilton H. Spence
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz as Escrow Agent for the
benefit of
Robert Allen Hebert
LA GA INVESTMENT COMPANY, LLC
By: /s/
-------------------------------,
its Manager
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz as Escrow Agent for the
benefit of Connie Breaux (Boudreaux)
/s/ Gary L. Magee
------------------------------------
Gary L. Magee
/s/ Thomas Guillot, Jr.
------------------------------------
Thomas Guillot, Jr.
/s/ John H. Fritz, Jr.
------------------------------------
John H. Fritz, Jr.
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/s/ Philip L. Fritz
-----------------------------------
Philip L. Fritz as Trustee for the
MICHAEL B. FRITZ TRUST
/s/ Philip L. Fritz
-----------------------------------
Philip L. Fritz as Trustee for the
JOHN A. FRITZ TRUST
/s/ Philip L. Fritz
-----------------------------------
Philip L. Fritz as Trustee for the
EVAN M. FRITZ TRUST
PREFERRED SHAREHOLDERS OF PREMIER
/s/ Virginia D. Fritz
-----------------------------------
Virginia D. Fritz
COMMON SHAREHOLDERS OF PREMIER
NEW ORLEANS
/s/ Philip L. Fritz
-----------------------------------
Philip L. Fritz
/s/ Libbie M. Fritz
-----------------------------------
Libbie M. Fritz
/s/ Sidney A. Marchand, III,
-----------------------------------
Sidney A. Marchand, III, as Trustee for
the
TALBOT, SOTILE, CARMOUCHE,
MARCHAND AND MARCELLO, (APLC)
EMPLOYEES PROFIT SHARING PLAN,
DATED MARCH 8,1982, FOR PARTICIPANT
VINCENT J. SOTILE
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/s/ Hilton L. Spence
------------------------------------
Hilton L. Spence
/s/ Roy Moursund
------------------------------------
Roy Moursund
/s/ Roger Cappe
------------------------------------
Roger Cappe
/S/ Sidney L. Harp, II
------------------------------------
Sidney L. Harp, II
JMS OPERATING COMPANY
By: /s/ Jonathan M. Stickland
----------------------------
Name: Jonathan M. Stickland
----------------------------
Title: President
----------------------------
/s/ John R. Hughes, Jr,
------------------------------------
John R. Hughes, Jr.
/s/ Sidney A. Marchand, III
------------------------------------
Sidney A. Marchand, III, as Trustee
for the
TALBOT, SOTILE, CARMOUCHE,
MARCHAND AND MARCELLO, (APLC)
EMPLOYEES PROFIT SHARING PLAN,
DATED MARCH 8,1982, FOR PARTICIPANT
VICTOR L. MARCELLO
LA GA INVESTMENT COMPANY, LLC
By: /s/
-----------------------------,
its Manager
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/s/ Gary L. Magee
------------------------------------
Gary L. Magee
/s/ Michael Alden
------------------------------------
Michael Alden
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz, as Escrow Agent
for the benefit of Robert Allen Hebert
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz, as Trustee for the
EVAN M. FRITZ TRUST
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz, as Trustee for the
JOHN A. FRITZ TRUST
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz, as Trustee for the
MICHAEL P. FRITZ TRUST
/s/ Philip L. Fritz
------------------------------------
Philip L. Fritz, as Escrow Agent
for the benefit of Connie Boudreaux
PREFERRED SHAREHOLDERS OF PREMIER
NEW ORLEANS
/s/ Hilton H. Spence
------------------------------------
Hilton H. Spence
/s/ Michael Alden
------------------------------------
Michael Alden
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PREFERRED SHAREHOLDERS OF PREMIER
NEW ORLEANS
/s/ Sidney A. Marchand, III
- ------------------------------------
Sidney A. Marchand, III Trustee for the
TALBOT, SOTILE, CARMOUCHE,
MARCHAND AND MARCELLO, (APLC)
EMPLOYEES PROFIT SHARING PLAN,
DATED MARCH 8, 1982, FOR PARTICIPANT
VINCENT J. SOTILE
COMMON SHAREHOLDERS OF PREMIER
NEW ORLEANS
/s/ Sidney A. Marchand, III
- ------------------------------------
Sidney A. Marchand, III Trustee for the
TALBOT, SOTILE, CARMOUCHE,
MARCHAND AND MARCELLO, (APLC)
EMPLOYEES PROFIT SHARING PLAN,
DATED MARCH 8, 1982, FOR PARTICIPANT
DONALD T. CARMOUCHE
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EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
between
SATELLINK PAGING INC.
"Purchaser"
and
C.R., INC.
"Seller"
and
JAMES SOWELL
LARRY SIMMONS
and
JAY LEE JAMESON, AS TRUSTEE OF
THE SAFETON TRUST,
Dated October 1, 1992
"Shareholders"
DATED AS OF MAY 31, 1996
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
PAGE
----
TABLE OF CONTENTS
ARTICLE 1 PURCHASE, SALE OF ASSETS............................................ 1
1.1 Purchase and Sale of Acquired Assets................................ 1
1.2 Excluded assets of Seller........................................... 4
1.3 collection of accounts receivable................................... 5
1.4 Non-compete agreements of Shareholders.............................. 8
1.5 Call One Agreement.................................................. 8
1.6 Interest in Pagers.................................................. 8
1.7 License of Software................................................. 9
ARTICLE 2 ASSUMPTION OF LIABILITIES........................................... 9
2.1 Assumption of Liabilities of Seller................................. 9
2.2 Excluded Liabilities of Seller...................................... 9
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE........................... 10
3.1 Purchase Price...................................................... 10
3.2 Payment of Purchase Price........................................... 10
3.3 Transfer Expenses................................................... 10
3.4 Allocation of Purchase Price........................................ 10
ARTICLE 4 PROCEDURE FOR CLOSINGS.............................................. 10
4.1 Time and Place of Closing........................................... 10
4.2 Condition to Closing................................................ 11
4.3 Transactions at the Closing......................................... 11
4.4 Certain Consents.................................................... 13
4.5 Further Assurances.................................................. 14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS........... 14
5.1 Organization and Qualification...................................... 14
5.2 Authority........................................................... 14
5.3 Financial Statements................................................ 15
5.4 Inventories......................................................... 15
5.5 Personal Property................................................... 15
5.6 Real Property....................................................... 16
5.7 Contracts........................................................... 17
5.8 Intellectual Property............................................... 18
</TABLE>
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<TABLE>
<CAPTION>
<C> <S> <C>
PAGE
----
5.9 Insurance........................................................... 19
5.10 Environmental Matters............................................... 19
5.11 Litigation.......................................................... 20
5.12 Absence of Changes.................................................. 20
5.13 Brokers and Finders................................................. 22
5.14 Labor Matters....................................................... 22
5.15 Governmental Approval and Consents.................................. 23
5.16 Taxes............................................................... 23
5.17 Employee Benefit Plans.............................................. 24
5.18 Compliance with Laws................................................ 26
5.19 Governmental Approval and Consents.................................. 26
5.20 Adequacy of Acquired Assets......................................... 26
5.21 Title to Assets..................................................... 26
5.22 Correctness of Representations...................................... 26
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................... 27
6.1 Organization and Qualification...................................... 27
6.2 Authority........................................................... 27
6.3 Litigation.......................................................... 27
6.4 Correctness of Representations...................................... 27
6.5 Brokers and Finders................................................. 27
6.6 Governmental Approval and Consents.................................. 28
ARTICLE 7 COVENANTS........................................................... 28
7.1 Mutual Covenants.................................................... 28
7.2 Conduct of Business Prior to Closing................................ 28
7.3 Access and Information.............................................. 29
7.4 Notification of Changes............................................. 29
7.5 Certain Acts Prohibited............................................. 29
7.6 Consents............................................................ 29
7.7 Supplemental Disclosure............................................. 30
7.8 Conditions Precedent................................................ 30
7.9 Discharge of Liens and Encumbrances................................. 30
7.10 Prorations.......................................................... 30
7.11 Covenant to Pay Debts............................................... 31
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.................... 32
8.1 Certificate Regarding Schedules and Representations and Warranties.. 32
</TABLE>
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8.2 Compliance by Seller and the Shareholders............................ 32
8.3 No Injunction, Etc................................................... 32
8.4 Operation in the Ordinary Course..................................... 33
8.5 Consents, Authorizations, Approval of Legal Matters.................. 33
8.6 Incumbency........................................................... 33
8.7 Certified Resolutions................................................ 33
8.8 Release of Liens..................................................... 33
8.9 Accuracy of Schedules................................................ 33
8.10 No Adverse Change.................................................... 34
8.11 Instruments of Transfer.............................................. 34
8.12 Opinion of Seller's Counsel.......................................... 34
8.13 Proceedings.......................................................... 34
8.14 Condition of Acquired Assets......................................... 34
8.15 Non-Complete Agreements.............................................. 34
8.16 Voice-Mail Services Agreement........................................ 35
ARTICLE A CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........................ 35
9.1 Certificate Regarding Representations and Warranties................. 35
9.2 Compliance by Purchaser.............................................. 35
9.3 Certified Resolutions................................................ 35
9.4 No Injunction; Etc................................................... 35
9.5 Incumbency........................................................... 35
9.6 Certificates......................................................... 36
9.7 Opinion of Purchaser's Counsel....................................... 36
9.8 Proceedings.......................................................... 36
ARTICLE 10 POST CLOSING MATTERS................................................. 36
10.1 Employment of Employees.............................................. 36
10.2 Seller's Benefit Plans............................................... 36
10.3 Maintenance of Books and Records..................................... 36
10.4 Payments Received.................................................... 37
10.5 Covenant Not to Compete.............................................. 37
ARTICLE 11 INDEMNIFICATION...................................................... 38
11.1 Definitions.......................................................... 38
11.2 Agreement of Indemnitors to Indemnify................................ 39
11.3 Agreement of Purchaser to Indemnify.................................. 39
11.4 Procedures for Indemnification....................................... 40
11.5 Third Party Claims................................................... 40
11.6 Other Rights and Remedies Not Affected............................... 41
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11.7 Survival............................................................. 41
11.8 Time Limitations..................................................... 41
11.9 Subrogation.......................................................... 42
11.10 Purchaser's Right of Set-Off......................................... 42
ARTICLE 12 GENERAL PROVISIONS................................................... 43
12.1 Fees and Expenses.................................................... 43
12.2 Notices.............................................................. 43
12.3 Assignment; Binding Effect........................................... 44
12.4 No Benefit to Others................................................. 44
12.5 Headings, Gender, Person and Affiliate............................... 44
12.6 Counterparts......................................................... 45
12.7 Integration of Agreement............................................. 45
12.8 Time of Essence...................................................... 45
12.9 Governing Law........................................................ 45
12.10 Partial Invalidity................................................... 45
12.11 Investigation........................................................ 45
12.12 Public Announcements................................................. 45
12.13 Arbitration.......................................................... 46
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</TABLE>
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibit A Form of Non-Compete Agreement
Exhibit B Form of Voice Mail Services Agreement
Exhibit C Form of Bill of Sale
Exhibit D Form of Seller and Shareholders Opinion
Exhibit E Form of Purchaser Opinion
Exhibit F Map Defining Territory
Exhibit G Form of Consulting Agreement
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<PAGE>
SCHEDULES
---------
Schedule 1.1(C) Contracts
Schedule 1.2.1 Excluded assets
Schedule 1.2.2 Excluded assets
Schedule 3.4 Allocation of Purchase Price
Schedule 5.3 Financial Statements
Schedule 5.4 Consignment Inventory
Schedule 5.5.1 Pagers
Schedule 5.5.2 Furniture and Fixtures
Schedule 5.5.3 Leases for Furniture, Fixtures and Equipment
Schedule 5.6.1 Office Leases
Schedule 5.7.1 Contracts
Schedule 5.7.2 List of Customers and Form of Customer Agreements
Schedule 5.7.3 Commitment for Capital Expenditures
Schedule 5.7.4 List of Terminations or Cancellations of Contracts
Schedule 5.8 Intellectual Property
Schedule 5.9 Insurance Matters
Schedule 5.11 Litigation Matters
Schedule 5.12 Absence of Changes
Schedule 5.15 Permits
Schedule 5.16.1 Taxes and Assessments Contests
Schedule 5.16.2 Federal and State Tax Disputes
Schedule 5.17.1 Employee Benefit Plans
Schedule 5.17.2 Employee Benefit Plans Compliance with Laws
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<PAGE>
CROSS REFERENCES TO DEFINED TERMS
---------------------------------
TERM SECTION IN WHICH DEFINED
Accounts Receivable Section 1.2(f)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Agreement Preamble
Assumed Liabilities Section 2.1
Beneficiary Section 7.10(d)
Books and Records Section 1.1(f)
Business Preamble
Call One Section 1.2(h)
Call One Receivables Section 1.2(h)
CERCLA Section 5.10(c)
Code Section 5.17(g)
Collection Period Section 1.3(a)
Competing Business Section 8.5
Compiled Financials Section 3.3
Contract(s) Section 1.1(c)
CUE Section 1.1(l)
CUE Regional Affiliate Agreement Section 1.1(l)
Employee Benefit Plan Section 5.18(g)
Equipment Section 1.1(b)
Equipment Charges Section 7.10(b)(iii)
ERISA Section 5.17(g)
ERISA Affiliate Section 5.17(g)
ERISA Plan Section 5.17(g)
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
FCC Section 1.2
Financial Statements Section 5.3
Closing Section 4.1
Closing Date Section 4.1
Current Obligations Section 7.12
Effective Time Section 4.1
Furniture and Fixtures Section 1.1(h)
Future Services Receivables Section 1.1(m)
GAAP Section 3.3
Goods Contracts Section 5.7(a)(iii)
Governmental Authority Section 5.17(g)
Hazardous Materials Section 5.10(d)
Indebtedness Section 7.11
Indemnification Claim Section 9.1(a)
Indemnitee Section 11.1(h)
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<PAGE>
Indemnitor Section 11.1(i)
Intellectual Property Section 1.1(e)
Inventory Section 1.1(d)
Labor Claims Section 5.14
Lease Agreement Section 1.4
Lease Payments Section 7.10(b)(vi)
Losses Section 9.1(d)
Nationslink Receivables Section 1.1(k)
Non-Compete Agreement Section 1.4
Obsolete Inventory Section 1.2(g)
Office Leases Section 1.1(a)
Ongoing Obligations Section 7.11
Payor Section 7.10(d)
Payee Section 7.10(d)
Permits Section 1.1(g)
Personal Property Taxes Section 7.10(b)(v)
Proration Items Section 7.10(a)
Purchaser Preamble
Purchase Price Section 3.1
Purchaser Indemnitee Section 11.1(c)
Purchaser Indemnitor Section 11.1(e)
Purchaser Indemnitor Section 11.1(e)
Purchaser Opinion Section 4.3(b)(vii)
RCRA Section 5.10(c)
Real Property Leases Section 5.6(b)
Real Property Taxes Section 7.10(b)(iv)
Receivables Proceeds Section 1.3(a)
Recipient Section 7.10(d)
Rental Charges Section 7.10(b)(ii)
Seller Preamble
Seller Indemnitees Section 11.1(b)
Seller Indemnitors Section 11.1(d)
Seller Opinion Section 4.3(a) (viii)
Services Contract Section 5.7(a) (iii)
Shareholder(s) Preamble
Territory Section 8.5
Third Party Claim Section 9.1(e)
Transfer Expenses Section 3.3
Utility Charges Section 7.10(b)(i)
Voice Mail Services Agreement Section 1.5
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT IS SUBJECT TO ARBITRATION
AS SET FORTH IN SECTION 12.13 HEREOF
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this day of May, 1996, between SATELLINK PAGING INC., a Georgia
---
corporation ("Purchaser"), C.R., INC., a Texas corporation ("Seller"), and JAMES
SOWELL, LARRY SIMMONS and JAY LEE JAMESON, AS TRUSTEE OF THE SAFETON TRUST,
dated October 1, 1992 (individually a "Shareholder" and collectively the
"Shareholders").
A. Seller is engaged in the business of distributing paging messages by
radio in the area set forth on EXHIBIT F, selling or leasing paging devices and
selling or leasing air time for the transmission of paging messages (the
"Business").
B. The Shareholders own all of the issued and outstanding capital stock of
Seller.
C. Purchaser desires to purchase from Seller certain of Seller's assets on
and subject to the terms and conditions contained in this Agreement.
D. Seller desires to sell to Purchaser certain of the Seller's assets on
and subject to the terms and conditions contained in this Agreement.
E. The Shareholders will directly benefit from Purchaser's purchase of
such Assets.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Acquired Assets. At the Closing (as hereinafter
-------------------------------------
defined), on and subject to the terms and conditions of this Agreement, Seller
shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser
shall purchase, acquire, and accept from Seller, all of the right, title, and
interest of Seller in and to (i) the Business (other than the Excluded Assets
(as hereinafter defined)), (ii) the name "C.R., Inc." and any other name or
names under which Seller has conducted the Business and all goodwill associated
therewith, and (iii) all of Seller's right, title and interest in and to the
following assets, properties, and rights of Seller, free and clear of all liens,
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claims, charges, security interests, and encumbrances of any kind or nature on
Seller's interest in such assets, properties and rights, other than Permitted
Encumbrances (as hereinafter defined), as the same shall exist at the Closing
Date (as hereinafter defined):
(a) Except as set forth in Section 1.3, all of Seller's rights in, to,
and under (i) Seller's office leases, together with all of Seller's right,
title, and interest in and to the fixtures and improvements, including
construction-in-progress, and appurtenances thereto, located on the real
property subject to such leases, and any and all assignable warranties of third
parties with respect thereto (the "Office Leases");
(b) All radio paging systems (including network connections to
affiliated systems), machinery, equipment, tools, computers, terminals, computer
equipment, office equipment, business machines, telephones and telephone
systems, parts, accessories, and the like, wherever located, reflected on the
books and records of Seller (even if carried at no value), and any and all
assignable warranties of third parties with respect thereto (the "Equipment");
(c) All of the contracts, airtime purchase agreements, leases,
warranties, commitments, agreements, arrangements and purchase and sales orders,
whether oral or written, pursuant to which Seller enjoys any right or benefit in
connection with the Business, whether or not reflected upon the books and
records of the Seller, together with the right of Seller to receive income in
respect of such contracts, leases, warranties, commitments, agreements,
arrangements, and purchase and sales orders on and after the Closing Date but
excluding any agreements with the Jim Sowell Company or Dennis Miga, the
employment agreement with Larry Simmons and the agreements listed and described
on SCHEDULE 1.1(C) hereto and excluding any leases for automobiles in which the
Seller is the named lessee (individually, a "Contract" and collectively, the
"Contracts");
(d) All stock of pagers and spare or replacement parts therefore,
wherever located, reflected on the books and records of Seller (the "Inventory")
excluding the Obsolete Inventory (as hereinafter defined), together with all
rights of Seller against suppliers of the Inventory including, without
limitation, Seller's rights under express or implied warranties with respect to
such Inventory and Inventory previously sold by Seller and Seller's rights to
receive refunds or rebates in connection with its purchase of Inventory;
(e) All patents, designs, art work, designs-in progress, formulations,
know-how, prototypes, inventions, trademarks, trade names, trade styles, service
marks, and copyrights owned or held by Seller and related to the Business; all
registrations thereof and applications therefor, both registered and
unregistered, foreign and domestic; all trade secrets or processes owned by or
belonging to Seller and related to the Business; all computer software
(including documentation and related object and, if applicable, source codes)
owned by or belonging to Seller and related to the Business; and all
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<PAGE>
confidential or proprietary information that are either (i) owned by Seller and
related to the Business, whether or not reflected on the books and records of
Seller, or (ii) as to which Seller has rights as licensee, constituting all of
the intellectual property of Seller used exclusively in the Business (the
"Intellectual Property");
(f) All existing data, data bases, books, records, correspondence,
business plans and projections, records of sales, customer and vendor lists,
files, and papers in the possession of Seller and related to the Business;
including without limitation, all manuals and printed instructions of Seller
relating to the Acquired Assets (as hereinafter defined) and to the operation of
the Business (the "Books and Records");
(g) All licenses, permits, certificates, and governmental
authorizations held by Seller and related to the Business (the "Permits");
(h) All furniture, fixtures, and leasehold improvements, wherever
located, reflected on the books and records of the Seller (even if carried at no
value), and any and all assignable warranties covering such furniture, fixtures,
and leasehold improvements ("Furniture and Fixtures");
(i) All prepaid expenses (other than prepaid insurance premiums) of
Seller reflected on the books and records of Seller; all claims, demands, and
causes of action or recoveries from any third party arising from or out of any
Acquired Asset being purchased hereunder, including without limitation, rights
to returned or repossessed goods and rights as an unpaid vendor; and all other
assets used in connection with the Business (other than Excluded Assets of
Seller) wherever located, tangible or intangible, provided, however, that the
Acquired Assets shall not include, and Purchaser shall not acquire, any right,
title, or interest of Seller in or to the Excluded Assets of Seller (as defined
in Section 1.2 hereof);
(j) All accounts receivable, notes receivable and other monies due to
Seller from NationsLink, Ltd. ("NationsLink") for sales and deliveries of goods,
performance of services and other business transacted or for monies loaned (the
"NationsLink Receivables");
(k) All of Seller's rights and benefits pursuant to that certain
Regional Affiliate Agreement, dated August 20, 1990 between Seller and CUE
Paging Corporation ("CUE") including all amendments and modifications thereto
(the "CUE Regional Affiliate Agreement");
(l) All accounts receivable, notes and other receivables of Seller
arising out of the sale and delivery of goods, performance of services and other
business transacted where such sale, delivery or performance is to occur on or
after the Closing Date (the "Future Services Receivables");
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(m) All cash and cash equivalents, whether received before, on, or
after the Closing Date, in payment of the NationsLink Receivables or the Future
Services Receivables.
All of the items described in this Section 1.1 to be purchased by Purchaser
and which are not Excluded Assets as defined in Section 1.2 are hereinafter
collectively referred to as the "Acquired Assets."
As used herein, "Permitted Encumbrances" means (i) any lien, claim, charge
or encumbrance arising out of or securing any Assumed Liability and (ii) minor
imperfections in title that do not either individually or in the aggregate
materially and adversely interfere with the possession, use, or ownership of any
Acquired Asset.
1.2 Excluded Assets of Seller. Seller shall not sell and Purchaser shall
--------------------------
not purchase or acquire and the Acquired Assets shall not include:
(a) Any cash and cash equivalents whether received before, on or after
the Closing Date, other than cash or cash equivalents received, whether before,
on or after the Closing Date, in payment of the NationsLink Receivables or the
Future Services Receivables;
(b) The assets of any employee benefit plan maintained by or covering
any employees of Seller or to which Seller has made any contribution;
(c) Seller's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Seller's organization or stock capitalization;
(d) Any rights which accrue or will accrue to Seller under this
Agreement;
(e) Any rights to any of Seller's claims for any federal, state,
local, or foreign tax refund relating to any period ending prior to the Closing
Date;
(f) All accounts, notes or other receivables of Seller arising out of
the sale and delivery of goods, performance of services or other business
transacted where such sale, delivery or performance occurred prior to the
Closing Date, other than the NationsLink Receivables (the "Accounts
Receivable");
(g) All Inventory of Seller which is not in good working order and
saleable at prevailing market prices (the "Obsolete Inventory");
(h) All interests of Seller in Call One, Inc. ("Call One"), including
all notes receivable owed to Seller by Call One (the "Call One Receivables");
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<PAGE>
(i) All interests of Seller in the pager being developed by
NationsLink;
(j) All interests of Seller in pagers leased by Seller to Mobilemedia,
as specifically listed and described on SCHEDULE 1.2.1;
(k) All interest in and rights of Seller in: any agreements with the
Jim Sowell Company or Dennis Miga, the employment agreement with Larry Simmons,
the agreements listed on Schedule 1.1(c), and all leases of automobiles in which
the Seller is the named lessee;
(l) All interest of Seller in, to or under any policies of insurance
insuring the business, properties and assets of Seller prior to the Closing
Date, and all interest of Seller in and to any unearned or returned premium in
respect of such policies; and
(m) The assets, properties, and rights specifically listed and
described on SCHEDULE 1.2.2.
All of the assets described in this Section 1.2 are hereinafter
collectively referred to as the "Excluded Assets."
1.3 Collection of Accounts Receivable. Purchaser and Seller acknowledge
----------------------------------
and agree that the Acquired Assets do not include the Accounts Receivable. In
order to facilitate the transaction provided for herein, Purchaser has agreed to
undertake the collection of the Accounts Receivable for the benefit and account
of Seller on the following terms and conditions:
(a) During the period beginning on the Closing Date and ending one
hundred eighty (180) days after the Closing Date (the "Collection Period"),
Purchaser shall, as agent for Seller, collect the Accounts Receivable (other
than the Account Receivable from Mobilemedia and any other Accounts Receivable
that are more than ninety (90) days past due on the Closing Date) and except as
provided in Section 11.10, set aside and hold in trust for the benefit of Seller
all customer payments received by Purchaser in respect of the Accounts
Receivable (the "Receivables Proceeds"). Purchaser shall not have any
obligation to collect any Accounts Receivables after the expiration of the
Collection Period and shall at such time return to Seller all records relating
to any Accounts Receivable that remain uncollected. Seller alone shall pursue
collection thereof following the expiration of the Collection Period. Except as
otherwise set forth herein, each party shall be responsible for any and all of
its collection expenses, including attorneys' fees and the fees and commissions
of collection agencies.
(b) Purchaser shall use reasonable efforts during the Collection
Period to collect the Accounts Receivable in a manner consistent with the
policies and practices used by Purchaser in the collection of its own accounts
receivable and in compliance with all applicable laws, rules and regulations;
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<PAGE>
provided, however, Purchaser shall have no obligation to institute any legal
proceedings or engage any attorney, collection agency or other person or entity
to collect any Account Receivable.
(c) If a customer does not specifically identify an invoice, or goods
or services that Purchaser can clearly trace to an invoice, when making a
payment, taking a credit or disputing an Account Receivable, then Purchaser
shall deem all collections from, credits to and disputes by such Customer to be
applicable to invoices in order of maturity (e.g., the first collection shall be
deemed to be payments of the oldest invoices).
(d) If a customer disputes an obligation to pay any Account Receivable
and Purchaser determines, in good faith, that Purchaser, as agent for Seller
should (i) accept the return of any goods represented by such Account
Receivable, (ii) extend the time of payment of, or compromise or settle for
cash, credit or otherwise upon any terms, such Account Receivable, and (iii) in
connection with any of the acts set forth in clauses (i) or (ii) above, release
the customer from any obligation with respect to such Account Receivable, or if
a customer directs that payment be applied to outstanding invoices for Accounts
Receivable other than in order of maturity or to invoices of Purchaser in
preference to outstanding invoices for Accounts Receivable, then Purchaser shall
give Seller written notice of such determination. If Purchaser receives from
Seller a written objection to the proposed action within ten (10) days of the
date of such notice, then Purchaser shall not take such action and, in the case
of a payment directed by the customer, shall not apply the payment as so
directed but shall apply such payment first to outstanding invoices for the
Accounts Receivable in regular order of maturity prior to applying such payment
to any other invoices. If Purchaser does not receive from Seller a written
objection to the proposed action within such ten (10) day period, then Purchaser
may (but shall not be obligated to) take such action or apply such payment as
directed. If the proposed action contemplates that Purchaser accept the return
of any goods represented by any Account Receivable, then, at the option of
Purchaser, Purchaser may either (i) retain such goods, in which case title to
such goods shall be deemed to have passed to Purchaser and Purchaser shall pay
to Seller an amount equal to the value of the Account Receivable represented by
such goods, or (ii) return such goods to Seller at Seller's risk and expense.
(e) If a customer disputes its obligation to pay any Account
Receivable and Purchaser determines, in good faith, that Purchaser should
institute legal proceedings against such customer to collect such Account
Receivable, then Purchaser shall give Seller written notice of such
determination. If Purchaser receives the written authorization of Seller to
institute such proceedings within ten (10) days after the date of such notice,
then Purchaser may (but shall not be obligated to) institute such proceedings.
If Purchaser does not receive such authorization within such ten (10) day
period, then Purchaser shall not institute such proceedings.
(f) Seller hereby constitutes and appoints Purchaser as the attorney-
in-fact of Seller to exercise at any time any and all of the following powers:
to receive, open and dispose of all mail addressed to Seller and reasonably
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<PAGE>
believed by Purchaser to relate to the Accounts Receivables, and notify the
postal authorities to change the address for delivery of all mail addressed to
Seller and reasonably believed by Purchaser to relate to the Accounts
Receivables to such address as Purchaser may designate (provided that items not
relating to the Accounts Receivables shall be returned to Seller); to endorse
the name of Seller on any checks, money orders, or other evidences of
indebtedness that Purchaser receives in payment of the Accounts Receivables; to
sign the name of Seller on any invoices, documents, drafts against and notices
to account debtors or obligators of Seller, assignments and requests for
verification of accounts in each case relating to the Accounts Receivables; to
execute proofs of claim and loss relating to the Accounts Receivables under
insurance policies or otherwise, to execute releases relating to the Accounts
Receivables; and to do all other acts and things that Purchaser believes in good
faith to be necessary or advisable to collect the Accounts Receivables in
accordance with this agreement. The appointment of Purchaser as the attorney-
in-fact of Seller is coupled with an interest and shall be irrevocable during
the collection period. All acts of Purchaser as the attorney-in-fact of Seller
are hereby ratified and approved, and Purchaser shall not have any liability for
any acts of commission or omission, for any error of judgment or from any
mistake of fact or law; provided, however, the foregoing shall not eliminate or
limit the liability of Purchaser for acts or omissions that constitute gross
negligence, willful and intentional misconduct or a violation of law.
(g) Ninety (90) days after the commencement of the Collection Period
and within ten (10) days after the end of the Collection Period, Purchaser shall
pay to Seller an amount equal to the Receivables Proceeds collected by Purchaser
together with interest paid on such amount of the Receivables Proceeds by virtue
of the deposit of such amount in an interest bearing account as hereinafter
provided, less any amounts set-off against the Receivables Proceeds as permitted
in Section 11.10 below, and less amounts paid by Purchaser for the account of
Seller as provided in Section 1.3(i) below. Purchaser shall not be obligated to
deliver to Seller any original checks, drafts or other evidences of indebtedness
received by Purchaser. Purchaser shall deposit all Receivables Proceeds in a
segregated interest bearing account (the "Escrow Account") until paid to or for
the account of Seller or until set-off against as herein provided. All funds in
the Escrow Account shall be held for the benefit of Seller, subject to the set-
off rights of Purchaser set forth in Section 11.10. If any of the Accounts
Receivables includes a specific charge for any tax payable to any governmental
tax authority, Purchaser may pay the amount of such charge to the proper taxing
authority for the account of Seller.
(h) Purchaser shall not have any liability for delay of any kind
occurring in the settlement, collection or payment of any Account Receivables or
any instrument received in payment thereof or any damage resulting therefrom,
and Seller shall have no right, whether by defense, set-off or otherwise,
against Purchaser for the failure to collect any Account Receivable. Except as
specifically set forth elsewhere in this Agreement, Purchaser does not assume
any of Seller's obligations under any contract or agreement relating to any
account receivable and shall not be responsible or liable in any way for the
performance by Seller of any of the terms and conditions thereof.
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<PAGE>
(i) At the request of Seller, but subject to the prior right of
Purchaser to set-off against the Receivables Proceeds as provided in Section
11.10, Purchaser shall pay out of the Receivables Proceeds and for the account
of Seller all trade accounts payable first billed to Seller after the Closing
Date and all Proration Items (as hereinafter defined) that are the
responsibility of Seller. Seller shall notify Purchaser in writing of any
payments to be made by Purchaser pursuant to this Section 1.3(i). Purchaser
shall make such payment, to the extent funds are available from the Receivables
Proceeds, as soon as commercially practical following its receipt of such
written notice. In making such payment, Purchaser shall act solely as Seller's
agent and Purchaser does not and is not deemed to become liable for the
obligation to be paid.
(j) On the tenth (10th) day of each month during the Collection Period
and on the tenth (10th) day after the end of the Collection Period, Purchaser
shall provide to Seller a report setting forth the Accounts Receivable collected
in the preceding month, the Accounts Receivable remaining outstanding, all
amounts of the Receivables Proceeds against which Purchaser asserted or claimed
a right of set-off during such preceding month as herein permitted, and all
amounts paid during such month for the account of Seller as provided in Section
1.3(i) above. Notwithstanding anything to the contrary expressed or implied
herein, Seller alone shall collect the Account Receivable existing as of the
Closing Date from Mobilemedia and any Account Receivable that is more than
ninety (90) days past due as of the Closing Date.
1.4 Non-Compete Agreements of Shareholders. At the Closing each
---------------------------------------
Shareholder shall enter into, execute and deliver a Non-Compete Agreement in the
form attached as EXHIBIT A hereto (the "Non-Compete Agreements").
1.5 Call One Agreement. At the Closing, Seller shall cause Call One, Inc.
-------------------
to enter into, execute and deliver the Voice Mail Services Agreement attached
hereto as EXHIBIT B (the "Voice Mail Services Agreement").
1.6 Interest in Pagers. Purchaser and Sellers are each shareholders in
-------------------
NationsLink, which owns the rights to the design of a paging receiver. In order
that Seller may return its interest in such pager while transferring to
Purchaser, as part of the Acquired Assets, Seller's other interests in
NationsLink, Purchaser and Seller agree to use their best efforts to cause to be
formed not later than sixty (60) days following the Closing Date a new entity
and to cause NationsLink to transfer to such new entity all of NationsLink's
right, title and interest in and to such pager and all designs relating thereto.
Such new entity shall be formed in a manner substantially identical to
NationsLink, shall have articles of incorporation, bylaws, agreements among its
shareholders and other documents related to its organization and governance
substantially identical to the comparable documents of NationsLink and all
equity interests in such new entity shall be owned and held by the same owners
and in the same percentages as the equity interests in NationsLink are owned and
held.
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1.7 License of Software. From and after the Closing Date Seller shall
--------------------
have a paid up, royalty free, non-exclusive license to use solely for its own
account the billing and inventory software known as "CRISYS" which is among the
Intellectual Property included in the Acquired Assets. Purchaser shall have no
obligation to update, enhance, modify or otherwise improve such software in the
hands of Seller. Seller may make copies of such software only for the purpose
of preserving the software and making back-up copies thereof or in connection
with enhancements or modifications thereto undertaken by Seller. Seller shall
be under no obligation to make available to Purchaser any enhancements or
modifications to such software undertaken by Seller. Seller may use the
software only for its own account, may not use the software for the purpose of
processing the billing or inventory data of others, and may not transfer or
assign, in whole or in part, the software or any of Seller's rights as licensee
thereof under this Agreement to any person or entity other than a person or
entity that acquires substantially all of the business and assets of Seller or
all of Seller's outstanding capital stock.
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities of Seller. Subject to Section 2.2 hereof,
------------------------------------
as of the Closing Date, Purchaser shall assume responsibility for the
performance and satisfaction of the executory obligations and liabilities of
Seller arising from and after the Effective Time pursuant to (a) the Office
Leases, (b) the Permits, (c) the CUE Regional Affiliate Agreement, (d) the
Service Contracts and (e) the Contracts, but excluding any obligations or
liabilities arising from or relating to any breach or violation of the Office
Leases, the Permits, the CUE Regional Affiliate Agreement, or the Contracts by
Seller or default thereunder by Seller which occur prior to the Closing Date.
The executory obligations and liabilities of Seller specifically assume pursuant
to this Section 2.1 are hereinafter referred to as the "Assumed Liabilities."
The parties acknowledge that they have agreed that Seller may keep and retain
monies paid prior to the Closing Date as deposits under Service Contracts, which
deposits are in the amount of or measured by reference to the last month's
rental under such Service Contracts. Purchaser agrees that, in fulfilling the
executory obligations under such Service Contracts, Purchaser will afford to
each customer thereunder who has paid such a deposit a credit in the amount of
the deposit so paid and will not require payment by such customer of service or
other fees to replace such deposit.
2.2 Excluded Liabilities of Seller. Purchaser shall not assume or become
-------------------------------
liable for any obligations, commitments, or liabilities of Seller, whether known
or unknown, absolute, contingent, or otherwise, and whether or not related to
the Acquired Assets, except for the liabilities specifically described in
Section 2.1 above (the obligations and liabilities of Seller not assumed by
Purchaser are hereinafter referred to as the "Excluded Liabilities"). Without
limiting the generality of the foregoing, Excluded Liabilities shall include any
liabilities related to or arising out of Excluded Assets.
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ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. The aggregate consideration to be paid to Seller for
---------------
the sale, transfer, and conveyance of the Acquired Assets, and the covenant not
to compete set forth in Section 10.5 hereof (the "Purchase Price") shall be FIVE
MILLION SEVEN HUNDRED THOUSAND DOLLARS ($5,700,000).
3.2 Payment of Purchase Price. Subject to the fulfillment of the
--------------------------
conditions set forth herein, on the Closing Date Purchaser shall pay the
Purchase Price to Seller as follows:
(a) For the account of Seller, Purchaser shall pay in full all Current
Obligations (as hereinafter defined) of Seller to third parties as set forth in
Section 7.12 hereof by check or wire transfer to such third party account(s)
designated in writing by Seller; and
(b) Purchaser shall pay the balance of the Purchase Price by wire
transfer in immediately available funds to an account designated in writing by
Seller.
3.3 Transfer Expenses. Seller shall pay any sales and use, transfer or
------------------
recording, documentary, or other taxes or charges levied on the transfer and
assignment of the Acquired Assets (the "Transfer Expenses"). All Inventory
included in the Acquired Assets shall be claimed as exempt from sales or use tax
by Purchaser and Purchaser shall furnish Seller at the Closing with sales tax
exemption certificates.
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
-----------------------------
among the covenant not to compete set forth in Section 10.5 and the Acquired
Assets as set forth on SCHEDULE 3.4 in accordance with the provisions contained
in Treasury Regulation Section 1.1060-1T(d), provided, however, that for a
period of sixty (60) days after the Closing Date Purchaser shall have the right
to modify the allocation set forth on SCHEDULE 3.4 to reflect the results of an
audit to be conducted by Purchaser and/or Purchaser's independent auditor. Any
such modification shall be submitted in writing to Seller within sixty (60) days
of the Closing Date. The parties agree to be bound by such allocation and to
report the transaction contemplated herein for federal income tax purposes in
accordance with such allocation. In furtherance of the foregoing, the parties
hereto agree to execute and deliver Internal Revenue Service Form 8594
reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSING
4.1 Time and Place of Closing. The closing for the purchase and sale
--------------------------
contemplated by this Agreement (the "Closing") shall be held at the offices of
Troutman Sanders, NationsBank Plaza, 600 Peachtree Street, Atlanta, Georgia
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30308 on June 3, 1996 commencing at 9:00 a.m., Atlanta time, or at such other
time and place as the parties hereto may agree in writing (the date on which the
Closing actually occurs is hereinafter referred to as the "Closing Date").
Subject to the consummation of the Closing on the Closing Date, the sale,
assignment, transfer, and conveyance to Purchaser of the Acquired Assets will be
effective as of 12:01 a.m. Eastern Daylight Time on May 31, 1996 (the "Effective
Time").
4.2 Condition to Closing. Purchaser's obligations hereunder shall be
--------------------
conditioned on Purchaser's receipt prior to the Closing of Uniform Commercial
Code searches of filings made pursuant to Article 9 thereof in all jurisdictions
where any of the Acquired Assets are located, in form, scope, and substance
reasonably satisfactory to Purchaser and its counsel, which searches shall
reflect the release or termination of liens, claims, security interests, or
encumbrances against any of the Acquired Assets disclosed thereby, and to the
extent any such release or termination is not reflected of record, Purchaser
shall have received evidence satisfactory to it, that all such liens and
encumbrances against the Acquired Assets have been released or terminated prior
to or at the Closing or that the underlying obligations have been paid in full
pursuant to Section 8.6.
4.3 Transactions at the Closing. At the Closing, each of the following
----------------------------
items shall be delivered:
(a) Seller shall deliver (or cause to be delivered) to Purchaser the
following:
(i) a bill of sale in the form attached hereto as EXHIBIT C
executed by Seller;
(ii) the Non-Compete Agreements in the form attached as EXHIBIT
A hereto executed by each of the Shareholders;
(iii) the Voice Mail Services Agreement in the form attached as
EXHIBIT B hereto executed by Call One, Inc.;
(iv) a certificate of incumbency of the Seller executed by a
Secretary or Assistant Secretary thereof listing the officers authorized to
execute this Agreement and certifying the authority of each such officer to
execute the agreements, documents, and instruments on behalf of Seller in
connection with the consummation of the transactions contemplated herein;
(v) a certificate of the Secretary of Seller containing a true
and correct copy of the resolutions duly adopted by the board of directors
and shareholders of Seller approving and authorizing each Acquisition
Document (as hereinafter defined) and the transactions contemplated hereby
and thereby certifying that such resolutions have not been rescinded,
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revoked, modified, or otherwise affected and remain in full force and
effect;
(vi) the opinion of counsel to Seller and the Shareholders in
substantially the form of EXHIBIT D hereto (the "Seller Opinion");
(vii) all consents and waivers that are required for the
assignment of the Contracts, Permits, Intellectual Property, Office Leases,
and other agreements and assets or otherwise required for the execution,
delivery, and performance of this Agreement by Seller;
(viii) certificates of existence or certificates of good
standing of Seller, as of a date within twenty (20) days prior to the
Closing Date, from the States of Texas and Louisiana;
(ix) such other evidence of the performance by Seller of all
covenants and the satisfaction by Seller of all conditions required by this
Agreement to be performed or satisfied by Seller at or prior to the Closing
Date as Purchaser or its counsel may reasonably require.
The documents and certificates to be delivered hereunder by or on behalf of
Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Subject to the receipt and sufficiency of the items set forth in
Section 4.2(a) above, Purchaser shall deliver to or for the account of Seller
the following:
(i) the Purchase Price as set forth in Section 3.2;
(ii) a certificate executed by the Secretary of Purchaser
containing a true and correct copy of resolutions duly adopted by
Purchaser's Board of Directors approving and authorizing this Agreement and
each of the other Acquisition Documents (as hereinafter defined) to which
Purchaser is a party and each of the transactions contemplated hereby and
thereby certifying that such resolutions have not been rescinded, revoked,
modified, or otherwise affected and remain in full force and effect;
(iii) a certificate of incumbency of Purchaser executed by the
President and attested by the Secretary or Assistant Secretary of Purchaser
listing the officers of Purchaser authorized to execute this Agreement and
the other Acquisition Documents to which Purchaser is a party and the
instruments of assumption on behalf of Purchaser and certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of Purchaser in connection with the consummation of
the transactions contemplated herein;
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(iv) the opinion of counsel to Purchaser in substantially the
form of EXHIBIT E hereto (the "Purchaser Opinion");
(v) certificates of existence or certificates of good standing
of Purchaser, as of a date within twenty (20) days prior to the Closing
Date, from the State of Georgia; and
(vi) the Non-Compete Agreements executed by Purchaser;
(vii) the Voice Mail Services Agreement executed by Purchaser;
and
(viii) such other evidence of the performance by Purchaser of
all covenants and satisfaction by Purchaser of all of the conditions
required by this Agreement to be performed or satisfied by Purchaser at or
before the Closing Date, as Seller or its counsel may reasonably require.
The documents and certificates to be delivered to Seller hereunder by or on
behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to Seller and its counsel.
4.4 Certain Consents.
----------------
Except for the consent of CUE to the assignment to Purchaser of the
CUE Regional Affiliate Agreement, the receipt of which is a condition precedent
to the obligations of Purchaser hereunder, to the extent that the rights of
Seller under any agreement, Contract, commitment, Permit, or other Acquired
Asset to be assigned to Purchaser by Seller hereunder may not be assigned
without the consent of another person which has not been obtained prior to the
Closing Date, and which is materially important to the ownership, use or
disposition by Purchaser of an Acquired Asset, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its expense, shall
use its best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would materially impair Purchaser's rights
under the Acquired Asset in question so that Purchaser would not in effect
acquire the benefit of all such rights, Seller, to the maximum extent permitted
by law and the specific Acquired Asset and at Seller's expense, shall, at its
expense, act after the Closing as Purchaser's agent in order to obtain for
Purchaser the benefits thereunder, and Seller shall cooperate, to the maximum
extent permitted by law and the specific Acquired Assets, with Purchaser in any
other reasonable arrangement designed to provide such benefits to Purchaser,
including any sublease, subcontract or similar arrangement. Notwithstanding
anything to the contrary stated herein, in using its best efforts to obtain any
such consent or in acting as Purchaser's agent after the Closing, Seller shall
not be required to pay other than nominal amounts to third parties.
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4.5 Further Assurances. Seller and the Shareholders from time to time
-------------------
after the Closing Date, at Purchaser's request, shall execute, acknowledge, and
deliver to Purchaser such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications, and further assurances as Purchaser may reasonably require in
order to vest more effectively in Purchaser, or to put Purchaser more fully in
possession of, any of the Acquired Assets or to better enable Purchaser to
complete, perform, or discharge any of the Assumed Liabilities. Each of the
parties hereto will cooperate with the other and execute and deliver to the
other parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other party
hereto as necessary to carry out, evidence, and confirm the intended purposes of
this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser that:
5.1 Organization and Qualification. Seller is a corporation duly
-------------------------------
organized, validly existing, and in good standing under the laws of the State of
Texas.
5.2 Authority. Seller and each Shareholder has full power and authority
----------
to enter into this Agreement and the agreements contemplated hereby, or
respectively executed by it in connection herewith (collectively, this Agreement
and such other agreements shall be referred to hereinafter as the "Acquisition
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by Seller and each Shareholder of each
of the Acquisition Documents to which it is a party has been duly and validly
authorized and approved by all necessary action on the part of Seller and each
Shareholder. Each of the Acquisition Documents to which Seller is a party is
the legal, valid, and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as enforceability may be limited by
applicable equitable principles (whether applied in a proceeding at law or in
equity) or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, to the exercise of judicial
discretion in accordance with general equitable principles, and to equitable
defenses that may be applied to the remedy of specific performance. Neither the
execution and delivery by Seller and each Shareholder of any of the Acquisition
Documents to which it is a party nor the consummation by Seller and each
Shareholder of the transactions contemplated thereby will (i) violate the
Articles of Incorporation or Bylaws of Seller or the trust instrument of the
Safeton Trust, (ii) violate any provisions of law or any order of any court or
any governmental entity to which Seller and each Shareholder is subject, or by
which the Acquired Assets may be bound if such violation would have a material
adverse effect on the operations of Seller, (iii) conflict with, result in a
breach of, or constitute a default under any indenture, mortgage, lease,
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contract, warranty, agreement, arrangement, purchase or sale order or other
instrument to which Seller is a party or by which it or any of the Acquired
Assets may be bound other than as disclosed to Purchaser, or (iv) result in the
creation of any lien, charge, or encumbrance upon any of the Acquired Assets or
increase or adversely affect the obligations of Seller under any of the Assumed
Liabilities.
5.3 Financial Statements. Attached as SCHEDULE 5.3 are true, correct, and
---------------------
complete copies of the unaudited balance sheet and the related statements of
income and cash flows for Seller as at and for the fiscal years ended December
31, 1992, 1993, 1994 and 1995 (collectively, the "Financial Statements").
Except as specifically disclosed on SCHEDULE 5.3, the Financial Statements have
been prepared from the books and records of Seller, and present fairly in all
material respects the financial position and results of operation of Seller on a
combined basis as at and for the periods indicated. Except as set forth on
SCHEDULE 5.3, Seller has not received any advice or notification from its
independent certified public accountants that Seller has used any improper
accounting practice that would have the effect of not reflecting or incorrectly
reflecting in the Financial Statements or the books and records, any properties,
assets, liabilities, revenues, or expenses. Except as specifically disclosed on
SCHEDULE 5.3, the Financial Statements do not contain any items of special or
nonrecurring income, or other income not earned in the ordinary course of
business, individually in excess of $1,000 and in the aggregate in excess of
$10,000. Other than as identified on Schedule 5.3, the books, records, and
accounts of Seller accurately and fairly reflect, in reasonable detail in all
material respects, the transactions and the assets and liabilities of Seller.
Seller has not engaged in any transaction, maintained any bank account, or
used any of the funds of Seller, except for transactions, bank accounts, and
funds which have been and are reflected in the normally maintained books and
records of Seller.
5.4 Inventories. All Inventory reflected on the Financial Statements, or
------------
acquired since the date thereof at the time such Inventory was delivered to
Seller's customers: (a) was acquired and has been maintained in the ordinary
course of the Business; (b) is of good and merchantable quality, consists of a
quality, quantity and condition usable, leasable or salable in the ordinary
course of the Business; (c) is valued at the lesser of cost or net realizable
value; and (d) is not subject to any write-down or write-off. Seller is not
under any liability or obligation with respect to the return of Inventory in the
possession of wholesalers, retailers or other customers. Except as shown on
SCHEDULE 5.4, none of the Inventory is held by Seller on consignment from
others.
5.5 Personal Property.
-----------------
(a) SCHEDULE 5.5.1 contains a true and correct list of all pagers
owned by Seller, and SCHEDULE 5.5.2 contains a true and correct list of all
Furniture and Fixtures and all other items of personal property (excluding items
of Furniture and Fixtures and other personal property having a value of less
than $1,000 individually, or $10,000 in the aggregate), which are owned by
Seller.
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(b) SCHEDULE 5.5.3 contains a list of all leases for Equipment,
Furniture and Fixtures, or other items of personal property (except
miscellaneous leases having an aggregate value, if capitalized, of less than
$10,000) leased by Seller and included in the Acquired Assets, excluding leases
for pagers where the Seller is the lessor. True and correct copies of each
lease listed on SCHEDULE 5.5.3 and any amendments, extensions, and renewals
thereof are attached thereto. Each of the leases described on SCHEDULE 5.5.3 is
in full force and effect and there are no existing defaults or events of
default, real or claimed, or events which with notice or lapse of time or both
would constitute defaults. No rights of Seller under such leases have been
assigned or otherwise transferred as security for any obligation of Seller.
Except as described on SCHEDULE 5.5.3, all such leases are fully assignable
without the consent of any third party.
(c) All of the Equipment, Furniture and Fixtures and other personal
property owned or leased by Seller is in good operating condition, except that
Seller makes no representation as to the condition of pagers in the hands of
lessees.
5.6 Real Property.
--------------
(a) Seller does not own any real property.
(b) A true and correct copy of the Office Leases and any amendments,
extensions, and renewals thereof have been delivered to the Purchaser and are
attached as SCHEDULE 5.6.1. The Office Leases are in full force and effect and
there is no existing default or event of default of a material nature, real or
claimed, or event which with notice or lapse of time or both would constitute a
default thereunder by Seller or any other party to the Office Leases. The
assignment of the Office Leases to Purchaser shall not cause a breach, default,
or event of default thereunder.
(c) Seller has received no written notice from governmental
authorities alleging that the improvements on any property that is subject to
the Office Leases are in violation of any applicable use and occupancy laws, use
restrictions, building ordinances, zoning ordinances and health and safety
ordinances.
(d) Seller has not received any written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
any property that is subject to the Office Leases.
(e) To Seller's knowledge there is no unrecorded private restrictive
covenant on all or any portion of the property that is subject to the Office
Leases which prohibits the current use of the such property.
(f) All Permits required for Seller's occupancy and operation of any
property that is subject to the Office Leases have been obtained if the failure
to obtain such Permit would have a material adverse effect, and are in full
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force and effect, and Seller has received no notices of violations in connection
with such items.
(g) Seller does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the property that is subject to the Office Leases and to
Seller's knowledge, no such defects exist.
5.7 Contracts.
---------
(a) SCHEDULE 5.7.1 contains a true and correct list of all Contracts
other than Service Contracts otherwise listed on SCHEDULE 5.5.1 and Contracts
otherwise listed on SCHEDULES 5.5.3 AND 5.8, together with a true and correct
copy (and, if oral, a description) of each such Contract that (i) has a duration
of twelve (12) months or more, (ii) requires or could require any party thereto
to pay $1,000 or more, or (iii) is between Seller and any officer, stockholder,
director, employee, or affiliate of Seller, and all modifications, amendments,
renewals, or extensions thereof (excluding any management agreement with The Jim
Sowell Company or Dennis Miga or employment agreement with Larry Simmons which
contracts are not transferred to or assumed by Purchaser hereunder). A true and
correct list of all Service Contracts is set forth in SCHEDULE 5.5.1. True and
complete copies of all such Service Contracts have heretofore been made
available to Purchaser. Each of the Contracts listed or described in SCHEDULES
5.7.1 or 5.5.1 was entered into prior to the Closing Date in the ordinary course
of business on terms substantially consistent with such Seller's practice prior
thereto. Except as listed on SCHEDULES 5.5.1, 5.5.3, 5.6.1, 5.7.1, AND 5.8,
Seller is not a party to any written or legally binding Contract of the
following type:
(i) agreement, contract, or commitment with any present or former
employee or consultant or for the employment of any person;
(ii) agreement, contract, or commitment for the future purchase of, or
payment for, supplies or products, or for the performance of services by a third
party which supplies, products or services are used in the conduct of its
business involving in any one case $1,000 or more;
(iii) agreement, contract or commitment to provide paging services or
to sell, lease or otherwise provide paging devices, or to sell, lease or
otherwise provide air time (each a "Services Contract");
(iv) distribution, dealer, representative, or sales agency agreement,
contract, or commitment relating to the Business;
(v) lease under which Seller is lessor relating to the Acquired
Assets or any property at which the Acquired Assets are located;
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(vi) note, debenture, bond, equipment trust agreement, letter of
credit agreement, loan agreement, or other contract or commitment for the
borrowing or lending of money relating to the Business or agreement or
arrangement for a line of credit or guarantee, pledge, or undertaking of the
indebtedness of any other person relating to its business;
(vii) agreement, contract, or commitment for any charitable or
political contribution;
(viii) agreement, contract, or commitment limiting or restraining
Seller from engaging or competing in any manner or in any business, nor, to the
knowledge of Seller is any employee of Seller subject to any such agreement,
contract, or commitment; or
(ix) material agreement, contract, or commitment relating to its
business not made in the ordinary course of business.
(b) SCHEDULE 5.7.3 contains a true and correct list of all commitments
for capital expenditures related to the Business that have been approved or made
prior to the date of this Agreement in excess of $1,000 by Seller and that
remain outstanding as of the date hereof.
(c) Except as set forth on SCHEDULES 5.7.1 and 5.7.2 and except for
default by certain customers under Service Contracts, each of the Contracts is
in full force and effect and there exists no breach or violation of or default
under any of such Contracts by Seller or, to the knowledge of Seller any other
party to such Contracts, or any event which, with notice or the lapse of time,
or both, will create a breach or violation thereof or default thereunder by
Seller or, to the knowledge of Seller, any other party to such Contracts.
Except as set forth on SCHEDULES 5.7.1 and 5.7.2, each Contract listed therein
is fully assignable without the consent of any third party.
(d) Except as indicated on SCHEDULE 5.7.4, there exists no actual or,
to the knowledge of Seller, any threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract or
group of Contracts (including in each case Service Contracts), which would have
a material adverse effect on the business or condition, financial or otherwise,
of the Business.
(e) Seller has not granted any power of attorney affecting or with
respect to the Business or the Acquired Assets that remains outstanding.
5.8 Intellectual Property. SCHEDULE 5.8 contains a true and correct list
----------------------
of all Intellectual Property used by Seller or any affiliate of Seller in the
conduct of the Business, containing a brief description of each item of
Intellectual Property and the nature of Seller's interest therein. The Acquired
Assets include and, upon the purchase of those assets, Purchaser will own or
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have the uncontested right to use all patents, designs, art work, designs-in-
progress, formulations, know-how, inventions, trademarks, trade names, trade
styles, service marks, copyrights, manufacturing processes, and confidential or
proprietary information necessary for the conduct of the Business as presently
conducted. No claim is pending or, to the knowledge of Seller threatened, and
Seller has not received notice that the conduct of the Business (including
without limitation, Seller's use of any Intellectual Property) infringes upon or
conflicts with any rights claimed therein by any third party, nor is Seller
aware of any unasserted claim the assertion of which is probable. No use by
Seller of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. No claim is pending, or to the
knowledge of Seller threatened, which alleges that any Intellectual Property
owned or licensed by Seller for use in the Business or which Seller otherwise
has the right to use is invalid or unenforceable by Seller, nor is Seller aware
of any such claim that is unasserted, but the assertion of which is probable.
With respect to the Business, Seller does not manufacture products which are the
subject of patents, patent applications, copyrights, copyright applications,
trademarks, trademark applications, trade styles, service marks, or trade
secrets owned by or licensed from third parties. Except as shown on SCHEDULE
5.8, no royalties or fees are payable by Seller to anyone for use of the
Intellectual Property. True, correct, and complete copies of all agreements
pursuant to which Seller has any license or right to use any Intellectual
Property are attached to SCHEDULE 5.8. All such agreements are in full force
and effect and there are no existing defaults or events of default, real or
claimed, or events which with or without notice or lapse of time or both would
constitute defaults under such agreements that would give the non-defaulting
party a right to terminate such agreement or a right to receive any payment
pursuant to such agreement. With respect to the Business, Seller has not
received any notice that any operation or machinery employed by Seller, violates
or infringes upon any claims of any United States or foreign patent or patent
application owned or held by any third party, nor is Seller aware of any
unasserted claim the assertion of which is probable. All Intellectual Property
and registrations, applications, and agreements related thereto are fully
assignable to Purchaser without the consent of any third party except as shown
on SCHEDULE 5.8.
5.9 Insurance. The tangible Acquired Assets are insured under various
----------
policies of general liability and other forms of insurance, which policies are
in adequate amounts. Seller has not been refused any insurance with respect to
the Business by any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the past three (3) years. Except as
set forth in SCHEDULE 5.9, there are no outstanding requirements or
recommendations by any current insurer or underwriter with respect to the
Business or the Acquired Assets which require or recommend changes in the
conduct of Business, or require any repairs or other work to be done with
respect to any of the Acquired Assets.
5.10 Environmental Matters.
----------------------
(a) There are no above-ground and underground storage tanks located on
any of the property leased by Seller.
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(b) Except as may arise by automatic operation of law, no lien has
arisen on any of the property leased by Seller or any facilities or properties
used by the Seller for or in connection with its business under or as a result
of any federal, state, or local law, rule, or regulation relating to
environmental protection.
(c) The Seller has not been, and currently is not, a "generator" of
"hazardous waste", as those terms are defined by the Resource Conservation and
Recovery Act as amended, 42 U.S.C. (S)6901 et seq. and the regulations
------
promulgated thereunder ("RCRA"), for the purposes of obtaining an EPA
identification number under 40 C.F.R. (S)262.12(a) or complying with the
manifest system under Subpart 8 of 40 C.F.R. Part 262, and the Seller has not
(A) been notified that it is potentially liable under or (B) received any
requests for information or other correspondence concerning any site or facility
under, nor has Seller any reason to believe that the Company is considered
potentially liable under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. (S)9601 et seq. and the
------
regulations promulgated thereunder ("CERCLA") or any similar state or local law.
(d) To the best of Seller's knowledge, there has been no disposal,
release, burial, or placement of Hazardous Materials on, in, at, or about any of
the property leased by Seller or any facilities or properties used by the Seller
for or in connection with its business that could subject Purchaser to damages,
costs, penalties or expenses, or recovery or remediation requirements under any
federal, state or local law, rule or regulation. As used in this Agreement, the
term "Hazardous Materials" shall mean any hazardous or toxic substance or waste,
asbestos, PCBs, agricultural chemicals, oil, petroleum, and petroleum products
and constituents thereof, or any other substances, wastes, or chemicals defined
as "hazardous" or "toxic" under RCRA, CERCLA, the Hazardous Materials
Transportation Act, 49 U.S.C. (S) 1802, or any applicable state or local law.
5.11 Litigation. Except as listed and described on SCHEDULE 5.11, there
-----------
are no material arbitrations, grievances, actions, suits, or other proceedings
pending or to the knowledge of Seller threatened in writing against, or
adversely affecting the Business or any of the Acquired Assets purported to be
owned or used by Seller, at law or in equity or admiralty, nor to the Seller's
knowledge is there any investigation pending or threatened, before or by any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, related to the
Business. To Seller's knowledge, Seller is not in default under or in violation
of any order, writ, injunction, or decree of any federal, state, municipal
court, or other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Business or the Acquired
Assets purported to be owned or used by Seller.
5.12 Absence of Changes. Except as set forth on SCHEDULE 5.12, since
-------------------
March 30, 1996 there has not been any transaction or occurrence in which Seller
has:
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(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of the
Business nor has there been any event which has had or may reasonably be
expected to have a material adverse effect on any of the foregoing, other than
the write-off of receivables from Mobilemedia;
(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of the Business, consistent
with past practice, or increased (or experienced any change in the assumptions
underlying or the methods of calculating) any material bad debt, contingency, or
other reserve, other than in the ordinary course of the Business consistent with
past practice and other than in connection with the write-off of receivables
from Mobilemedia; and
(c) paid, discharged, or satisfied any claim, lien, encumbrance,
obligation, or liability (whether absolute, accrued, contingent, and whether due
or to become due), other than the payment, discharge, or satisfaction in the
ordinary course of the Business consistent with past practice of claims, liens,
encumbrances, obligations, or liabilities of the type reflected or reserved
against in the Financial Statements or which were incurred since March 30, 1996
in the ordinary course of the Business;
(d) permitted, allowed, or suffered any of its properties or assets
(real, personal or mixed, tangible, or intangible) to be subjected to any
mortgage, pledge, lien, encumbrance, restriction, or charge of any kind except
Permitted Encumbrances incurred in the ordinary course of business;
(e) written down or written up the value of any Inventory (including
write-downs by reason of shrinkage or markdowns), except for write-downs, write-
ups, and write-offs in the ordinary course of the Business consistent with past
practice, none of which is material in amount;
(f) canceled any debts or waived any claims or rights in excess of
$1,000.00 individually or $15,000.00 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of any
patent, trademark, assumed name, service mark, trade name, copyright, license,
or application therefor or disposed of or disclosed to any person not authorized
to have such information any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain;
(h) except for the capital expenditure commitments described on
SCHEDULE 5.7.3, made any significant capital expenditure or commitment for
additions to property, plant, equipment, intangible, or capital assets or for
any other purpose, other than for emergency repairs or replacement;
(i) incurred any long term indebtedness;
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(j) paid, loaned, distributed, sold, transferred or leased to any
stockholder, officer, employee, or director of Seller, or any person
controlling, controlled by, or under common control with Seller any properties
or assets that, but for such payment, loan, distribution, sale, transfer or
lease, would have been an Acquired Asset;
(k) entered into any collective bargaining or labor agreement (oral
and legally binding or written), or experienced any organized slowdown, work
interruption, strike, or work stoppage;
(l) sold, transferred, or otherwise disposed of any of the Acquired
Assets except in the ordinary course of business;
(m) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Seller (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business;
(n) made any material change in any method of accounting or accounting
principle, practice, or policy;
(o) suffered any casualty loss or damage in excess of $1,000 in the
aggregate (whether or not insured against);
(p) made or agreed to make any charitable contributions or incurred or
agreed to incur any non-business expenses in excess of $1,000 in the aggregate;
(q) taken any other action neither in the ordinary course of the
Business and consistent with past practice nor provided for in this Agreement;
or
(r) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this Section 5.12 and not
otherwise permitted by this Agreement.
5.13 Brokers and Finders. Neither Seller nor any Shareholder nor any
--------------------
affiliate of either of them, has incurred any obligation or liability to any
party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated by this Agreement.
5.14 Labor Matters. Seller has not, within the last three (3) years,
-------------
experienced or been threatened with any organized slowdown, work interruption,
strike, or work stoppage by its employees. Seller is not a party to any
collective bargaining agreements. Neither Seller nor any of its officers,
directors, or employees has been charged or threatened with the charge of any
unfair labor practice within the last two (2) years. Seller is in material
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compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. With
respect to Seller, there are no pending or, to Seller's knowledge, threatened
claims, investigations, charges, citations, hearings, consent decrees, or
litigation concerning wages, compensation, bonuses, commissions, awards, or
payroll deductions; equal employment or human rights violations regarding race,
color, religion, sex, national origin, age, handicap, veteran's status, marital
status, disability, or any other recognized class, status, or attribute under
any federal, state, local or foreign equal employment law prohibiting
discrimination; representation petitions of unfair labor practices; grievances
or arbitrations pursuant to current or expired collective bargaining agreements;
occupational safety and health; workers' compensation; wrongful termination,
negligent hiring, invasion of privacy or defamation; immigration or any other
claim based on the employment relationship or termination of the employment
relationship (collectively, "Labor Claims"). Seller is not liable for any
unpaid wages, bonuses, or commissions (other than those not yet due) or any tax,
penalty, assessment, or forfeiture for failure to comply with any of the
foregoing.
5.15 Governmental Approval and Consents. Except as described on SCHEDULE
-----------------------------------
5.15, Seller has obtained all Permits required for the lawful operation of the
Business as presently conducted if the failure to hold such permit would have a
material adverse effect. SCHEDULE 5.15 contains a true and correct copy of each
such Permit.
5.16 Taxes.
-----
(a) Seller has timely filed all federal and foreign income tax
returns, and all state, county, and local income, franchise, property, sales,
use, unemployment, and other tax returns in each state and jurisdiction where
such returns are required to be filed on or prior to the Closing Date, taking
into account any extensions of the filing deadlines which have been validly
granted to Seller, and such returns are and will be true and correct in all
material respects. Seller has paid all federal, state, county, and local
income, franchise, property, sales, use, and all other taxes and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due with respect to any period ended on or prior to the Closing Date
whether shown as due on such returns or not, or is contesting in good faith such
taxes and assessments, in which event Seller has disclosed the details of such
contests on SCHEDULE 5.16.1.
(b) SCHEDULE 5.16.2 provides a brief description of all pending
federal and state tax disputes in which Seller is alleged to be liable or in
which Seller is claiming a refund, including the nature and amount of the
controversy, the respective positions of the parties as to any amounts claimed
to be due thereunder, and the current status thereof.
(c) All taxes required to be withheld on or prior to the Closing Date
from employees of Seller for income taxes and social security taxes have been
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properly withheld and, if required on or prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(d) No claim or investigation is pending or, to Seller's knowledge,
threatened by any state, local, or other jurisdiction alleging that Seller has a
duty to file tax returns and pay taxes or is otherwise subject to the taxing
authority of any jurisdiction not included in SCHEDULES 5.16.1 or 5.16.2 with
respect to any taxes covered by Section 10.2(a) nor has Seller received any
notice or questionnaire from any such jurisdiction which suggests or asserts
that Seller may have a duty to file such returns and pay such taxes, or
otherwise is subject to the taxing authority of such jurisdiction.
5.17 Employee Benefit Plans.
----------------------
(a) SCHEDULE 5.17.1 hereto lists every Employee Benefit Plan (as
hereinafter defined) of the Seller. True and complete copies of the Employee
Benefit Plans listed on SCHEDULE 5.17.1 hereto have heretofore been furnished to
Purchaser.
(b) Except as disclosed in SCHEDULE 5.17.2 hereto, all of the Employee
Benefit Plans and any related trusts (to the extent applicable) comply with and
have been administered in compliance with (i) the provisions of ERISA (as
hereinafter defined), (ii) all provisions of the Code (as hereinafter defined)
relating to qualification and tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended tax consequences, (iii) the
written terms of the Employee Benefit Plan, and (iv) all other applicable laws,
rules, regulations or ordinances, and the Seller has not received any notice
from any Governmental Authority (as hereinafter defined) questioning or
challenging such compliance.
(c) Seller has neither maintained in the past nor currently maintains
an Employee Benefit Plan providing welfare benefits (as defined in ERISA Section
3(1)) to employees after retirement or other separation of service except to the
extent required under Part 6 of Title I of ERISA or Code Section 4980B or their
successors.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions provided for herein will (i) entitle any
current or former employee or director of the Seller to severance pay,
unemployment compensation or any payment contingent upon a change in control or
ownership of the Seller, (ii) increase or enhance any benefits payable under any
Employee Benefit Plan, or (iii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or former
employee.
(e) Neither the Seller nor its ERISA Affiliates have at any time
sponsored, contributed to, or been obligated under Title I or Title IV of ERISA
to contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
On or after September 26, 1980, neither the Seller nor its ERISA Affiliates have
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had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(f) All liabilities arising out of or related to Employee Benefit
Plans of the Seller are reflected on the Financial Statements in accordance with
GAAP.
(g) When used in this Section 5.17, the words and phrases set forth
below shall have the following meanings:
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Employee Benefit Plan" means collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by the Seller for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee of the Seller, or any
dependent or beneficiary thereof, maintained by the Seller or under which the
Seller has any obligation or liability, whether or not they are or are intended
to be (i) covered or qualified under the Code, ERISA or any other applicable
law, (ii) written or oral, (iii) funding or unfunded, (iv) actual or contingent,
or (v) generally available to any or all employees (or former employees) of the
Seller (or their beneficiaries or dependents), including, without limitation,
all incentive, bonus, deferred compensation, flexible spending accounts,
cafeteria plans, vacation, holiday, medical, disability, share purchase or other
similar plans, policies, programs, practices or arrangements.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Code Section 414.
"ERISA Plan" means any Employee Benefit Plan which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA.
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"Governmental Authority" means any federal, state, county, local,
foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
5.18 Compliance with Laws. Seller has complied in all material respects
---------------------
with all laws, statutes, ordinances, or regulations applicable to the Business
or the Acquired Assets. Neither Seller nor any of the Acquired Assets is
subject to any judgment, order, writ, injunction, or decree issued by any court
or any governmental or administrative body or agency. Seller has not at any
time during the last five (5) years (i) made any unlawful contribution to any
political candidate, or failed to disclose fully any contribution in violation
of law, or (ii) made any payment to any federal, state or local governmental,
regulatory or administrative officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
5.19 Governmental Approval and Consents. Except for consents contemplated
-----------------------------------
by this Agreement, no consent, approval, or authorization of or declaration,
filing, or registration with any governmental or regulatory authority is
required in connection with the execution, delivery, and performance of this
Agreement by Seller and each Shareholder or the consummation by Seller and each
Shareholder of the transactions contemplated hereby.
5.20 Adequacy of Acquired Assets. The Acquired Assets include all rights,
----------------------------
properties, interests in properties, and assets which Seller held and should
permit Purchaser to carry on the Business as presently conducted by Seller.
5.21 Title to Assets. Seller has good title to Seller's interest in the
----------------
Acquired Assets being conveyed by it to Purchaser hereunder, free and clear of
all liens, claims, charges, encumbrances and security interests on Seller's
interest other than the Permitted Encumbrances of any kind or nature. All
security interests and encumbrances of record against the Acquired Assets shall
be released, terminated or discharged at the Closing by delivery to the
Purchaser upon payment of the Purchase Price at the Closing of executed
discharges, UCC termination or partial release statements signed by the secured
party.
5.22 Correctness of Representations. The representations and warranties
-------------------------------
of Seller and each Shareholder in this Agreement and in any Exhibit,
certificate, or Schedule attached hereto or furnished pursuant hereto are on the
date hereof and will be on the Closing Date true, correct and complete. True
copies of all leases, agreements, plans, Contracts, and other instruments listed
on the Schedules delivered or furnished to Purchaser pursuant to this Agreement
have been delivered to Purchaser.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a corporation duly
-------------------------------
organized, validly existing, and in good standing under the laws of the State of
Georgia and has all corporate power and authority to conduct its business, to
own, lease, or operate its properties in the places where such business is
conducted and such properties are owned, leased, or operated.
6.2 Authority. Purchaser has full power and authority to enter into this
----------
Agreement and each of the other Acquisition Documents to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each of the other
Acquisition Documents to which Purchaser is a party have been duly and validly
authorized and approved by all necessary action on the part of Purchaser. This
Agreement and each of the other Acquisition Documents to which Purchaser is a
party are the legal, valid, and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms, except as enforceability may
be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by the exercise of judicial discretion in accordance with
equitable principles. Neither the execution and delivery by Purchaser of this
Agreement or any of the other Acquisition Documents to which Purchaser is a
party nor the consummation by Purchaser of the transactions contemplated hereby
or thereby will (i) violate Purchaser's Articles of Incorporation or Bylaws,
(ii) violate any provisions of law or any order of any court or any governmental
unit to which Purchaser is subject, or by which its assets are bound, or (iii)
conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, agreement, or other instrument to which Purchaser is
a party or by which its assets or properties are bound.
6.3 Litigation. There is no suit, action, proceeding, claim or
-----------
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which would affect the consummation of the transactions contemplated
hereby.
6.4 Correctness of Representations. No representation or warranty of
-------------------------------
Purchaser in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto contains any untrue statement of material
fact or omits to state any fact necessary in order to make the statements
contained therein not misleading in any material respect, and all such
statements, representations, Exhibits, and certificates are true and complete.
6.5 Brokers and Finders. Except for a fee payable to The Breckenridge
--------------------
Group, Inc., Resurgens Plaza, Suite 2100, 945 E. Paces Ferry Road, Atlanta,
Georgia 30326, with respect to the transactions provided for herein, which fee
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shall be paid by Purchaser, neither Purchaser nor any affiliate of Purchaser has
incurred any obligation or liability to any party for any brokerage fees,
agent's commissions, or finder's fees in connection with the transactions
contemplated by the Acquisition Documents.
6.6 Governmental Approval and Consents. No consent, approval, or
-----------------------------------
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance by Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE 7
COVENANTS
7.1 Mutual Covenants.
-----------------
Purchaser, on the one hand, and Seller and each Shareholder, on the
other hand, shall each take all actions contemplated by this Agreement, and do
all things reasonably necessary to effect the consummation of the transactions
contemplated by this Agreement. Except as otherwise provided in this Agreement,
Purchaser and Seller and each Shareholder shall each refrain from knowingly
taking or failing to take any action which would render any of the
representations or warranties contained in Articles 5 or 6 of this Agreement in
any material respect inaccurate as of the Closing Date. Each party shall
promptly notify the other party of any action, suit, or proceeding that shall be
instituted or threatened against such party to restrain, prohibit, or otherwise
challenge the legality of any transaction contemplated by this Agreement.
7.2 Conduct of Business Prior to Closing. Seller covenants and agrees
-------------------------------------
that, from the date hereof to the Closing Date, and except to the extent that
Purchaser shall otherwise consent in writing, Seller shall, with respect to the
Business:
(a) operate the Business substantially as previously operated and only
in the regular and ordinary course;
(b) other than in the ordinary course of business, not purchase or
acquire any assets or properties, whether real or personal, tangible or
intangible, that if acquired would be an Acquired Asset hereunder, and except in
the ordinary course of business not sell or otherwise dispose of any real or
personal property or asset that would have been an Acquired Asset hereunder;
(c) maintain the Acquired Assets in their present order and condition,
reasonable wear and use excepted, and deliver the Acquired Assets to Purchaser
on the Closing Date in such condition, and maintain through the Closing Date all
policies of insurance covering such Acquired Assets in amounts and on terms
substantially equivalent to those in effect on the date hereof;
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(d) take all steps reasonably necessary to maintain the Intellectual
Property and other intangible assets of the Business;
(e) pay all accounts payable of the Business in accordance with past
practice and collect all accounts receivable in accordance with past practice;
(f) comply with all laws applicable to the conduct of the Business;
and
(g) maintain the books and records of the Business in the usual,
regular, and ordinary manner, on a basis consistent with past practices and
prepare and file all foreign, federal, state, and local tax returns and
amendments thereto required to be filed by Seller after taking into account any
extensions of time granted by such taxing authorities.
7.3 Access and Information. From the date hereof to the Closing Date and
-----------------------
during normal business hours, Seller shall afford to Purchaser, its lenders,
counsel, accountants, and other representatives, reasonable access to the
offices, properties, books, contracts, commitments, records, vendors, and
customers of Seller, and shall furnish such persons with all information
(including financial and operating data) concerning the Business and the
Acquired Assets as they reasonably may request. Seller shall use its best
efforts to assist Purchaser, its lenders, counsel, accountants, and other
representatives in their examination. Purchaser shall, and shall use its best
efforts to cause its lenders, counsel, accountants, and representatives to, hold
in strict confidence all information so obtained from Seller.
7.4 Notification of Changes. Between the date hereof and the Closing
------------------------
Date, Seller shall promptly notify Purchaser in writing of any adverse change in
the financial condition of the Business, any damage to or loss of any of the
Acquired Assets or the institution of the threat of institution of legal,
administrative, or other proceedings against Seller or the occurrence or
existence of any unasserted proceedings known to Seller.
7.5 Certain Acts Prohibited. Except as may be necessary to discharge or
------------------------
deal with the Excluded Liabilities, from the date hereof to the Closing Date,
Seller shall not, without the prior written consent of Purchaser, take any of
the actions described in Section 5.12 hereof.
7.6 Consents. Seller shall use its best efforts to obtain, at its sole
---------
cost and expense, prior to the Closing all consents and estoppels which, in the
reasonable judgment of Purchaser, are necessary or appropriate for the transfer
or assignment of the Acquired Assets to Purchaser and the consummation of the
transactions contemplated hereby. All such consents and estoppels shall be in
writing and in form and substance reasonably satisfactory to Purchaser, and
executed counterparts thereof will be delivered to Purchaser promptly after
receipt thereof but in no event later than the Closing.
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7.7 Supplemental Disclosure. Seller shall have the continuing obligation
------------------------
up to and including the Closing Date to supplement promptly or amend the
Schedules with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or listed in the Schedules.
7.8 Conditions Precedent. Seller shall use its best efforts to satisfy
---------------------
the conditions enumerated in Article 8 hereof.
7.9 Discharge of Liens and Encumbrances. All liens, claims, charges,
------------------------------------
security interests, pledges, assignments, or encumbrances relating to the
Acquired Assets shall be satisfied, terminated, and discharged by Seller on or
prior to the Closing Date and evidence reasonably satisfactory to Purchaser and
its counsel of such satisfaction, termination, and discharge shall be delivered
to Purchaser at or prior to the Closing.
7.10 Prorations.
-----------
(a) To the extent not included in the Assumed Liabilities, Utility
Charges, Rental Charges, Equipment Charges, Real Property Taxes, Personal
Property Taxes, and Customer Deposits (all as individually defined below and
collectively called the "Proration Items"), shall be prorated directly between
Seller and Purchaser as provided in this Section 7.10.
(b) For purposes of this Section 7.10, the capitalized terms set forth
below shall have the following meanings:
(i) "Utility Charges" means water, sewer, electricity, gas and other
utility charges, if any, payable pursuant to the Office Leases;
(ii) "Rental Charges" means security deposits, common area
maintenance charges, merchant association dues, insurance reimbursement and
rental charges payable or receivable and other payments or receipts (other than
Real Property Taxes) pursuant to the Office Leases;
(iii) "Equipment Charges" means rental charges payable or receivable
and other payments or receipts applicable to the equipment of the Business;
(iv) "Real Property Taxes" means ad valorem taxes, general
assessments, and special assessments payable pursuant to or with respect to the
Office Leases;
(v) "Personal Property Taxes" means ad valorem taxes imposed upon
the Acquired Assets; and
(vi) "Lease Payments" means payments of rent or additional rent under
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the Office Leases and any other lease of real or personal property to be
assigned to Purchaser hereunder.
(c) As soon as practicable after the Closing Date, all Utility
Charges, Rental Charges, Lease Payments, Equipment Charges, Real Property Taxes,
and Personal Property Taxes (including amounts owed pursuant to transferable
state licenses applicable to the Acquired Assets and transferred to Purchaser
hereunder) shall be apportioned to the Closing Date, and representatives of
Seller and Purchaser will examine all relevant books and records as of the
Closing Date in order to make the determination of the apportionments, which
determinations shall be calculated in accordance with past practices. Payments
in respect thereof shall be made to the appropriate party by check within thirty
(30) days after such determination, except that payments for Real Property Taxes
and Personal Property Taxes shall initially be determined based on the previous
year's taxes and shall later be adjusted to reflect the current year's taxes
when the tax bills are finally rendered. The parties shall fully cooperate to
avoid, to the extent legally possible, the payment of duplicate Personal
Property Taxes, and each party shall furnish, at the request of the other, proof
of payment of any Personal Property Taxes or other documentation which is a
prerequisite to avoiding payment of a duplicate tax.
(d) In the event that either party (the "Payor") pays a Proration Item
(other than if and to the extent included in the Assumed Liabilities) for which
the other party (the "Payee") is obligated in whole or in part under this
Section 7.11, the Payor shall present to the Payee evidence of payment and a
statement setting forth the Payee's proportionate share of such Proration Item,
and the Payee shall promptly pay such share to the Payor. In the event either
party (the "Recipient") receives payments of a Proration Item to which the other
party (the "Beneficiary") is entitled in whole or in part under this Agreement,
the Recipient shall promptly pay such share to the Beneficiary.
(e) In the event there exists as of the Closing Date any pending
appeals of ad valorem tax assessments with regard to any Acquired Assets, the
continued prosecution and/or settlement of such appeals shall be subject to the
direction and control of Purchaser with respect to assessments for the year
within which the Closing occurs.
7.11 Covenant to Pay Debts. Seller shall furnish to Purchaser at the
----------------------
Closing a true, correct and complete listing of all indebtedness of Seller that
is not an Assumed Liability and that is owed to third parties as of the Closing
Date or that will become due and payable within thirty (30) days after the
Closing Date (including, without limitation, trade and non-trade payables,
accrued taxes, amounts due to employees, bank indebtedness and all other
indebtedness, whether secured or unsecured), which listing shall set forth as to
each creditor listed thereon the full amount owed by Seller to such creditor on
or as of the Closing Date or that will become due and payable within such thirty
(30) day period (the "Current Obligations"). Such listing shall further set
forth all indebtedness of Seller to third parties that will become due and
payable more than thirty (30) days after the Closing Date and that is not an
Assumed Liability (the "Ongoing Obligations" and, together with the Current
Obligations, the "Indebtedness"). To the extent any of the Acquired Assets are
security for any Indebtedness, Seller shall, at its sole cost and expense,
obtain the release of all liens, claims, charges, encumbrances or security
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interests in such Acquired Assets and deliver to Purchaser at the Closing
evidence (which shall be in form reasonably satisfactory to Purchaser and its
counsel) of such release. Seller covenants and agrees that, to the extent any
Current Obligation is not paid in full at the Closing as provided in Section
3.2(a), Seller will promptly after the Closing pay such Current Obligation in
full. Seller covenants and agrees to pay promptly all Ongoing Obligations as
they come due, with such payment to be made from the proceeds of the Purchase
Price.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions all or any of which may be waived in
writing, in whole or in part, by Purchaser:
8.1 Certificate Regarding Schedules and Representations and Warranties.
-------------------------------------------------------------------
All information required to be furnished or delivered by Seller and the
Shareholders pursuant to this Agreement shall have been furnished or delivered
as of the date hereof and as of the Closing Date, as required hereunder; the
representations and warranties made by Seller and the Shareholders in Article 5
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on and as of the Closing Date (except that such representations and
warranties may be untrue or incorrect as a result of actions or transactions
expressly permitted by this Agreement or actions or transactions of Seller made
with the prior written consent of Purchaser); and Purchaser shall have received
a certificate dated as of the Closing Date executed by an authorized officer of
Seller and the Shareholders to such effect.
8.2 Compliance by Seller and the Shareholders. Seller and the
------------------------------------------
Shareholders shall have each duly performed in all material respects all of the
covenants, agreements, and conditions contained in this Agreement respectively
to be performed by it on or prior to the Closing Date, and Purchaser shall have
received a certificate, dated as of the Closing Date, executed by an authorized
officer of Seller and each Shareholder to such effect.
8.3 No Injunction; Etc. No action, proceeding, investigation, regulation,
-------------------
or legislation shall be pending or threatened which seeks to enjoin, restrain,
or prohibit Purchaser, or to obtain substantial damages from Purchaser, in
respect of the consummation of the transactions contemplated hereby, or which
seeks to enjoin the operation of all or a material portion of the Acquired
Assets, which, in the reasonable judgment of Purchaser, would make it
inadvisable to consummate the transactions contemplated by this Agreement.
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8.4 Operation in the Ordinary Course. Since the date of this Agreement,
---------------------------------
Seller shall have operated the Business in the ordinary course (except as
otherwise permitted by this Agreement or as agreed to by Purchaser as evidenced
by Purchaser's prior written consent).
8.5 Consents; Authorizations; Approval of Legal Matters. Purchaser shall
----------------------------------------------------
have received a true and correct copy of each consent and waiver that is
required for the assignment of the Contracts, Permits, Intellectual Property,
and other agreements and assets or otherwise required for the execution,
delivery, and performance of this Agreement by Seller, including, specifically
but without limitation the consent of CUE to the assignment and transfer to
Purchaser of the CUE Regional Affiliate Agreement. All authorizations, orders,
or approvals of any governmental commission, board, or other regulatory body,
shall have been obtained. Purchaser shall be satisfied with the terms,
conditions, and restrictions of and obligations under each such authorization,
order, or approval.
8.6 Incumbency. Purchaser shall have received a certificate of incumbency
----------
of Seller executed by a Secretary or Assistant Secretary thereof listing the
officers authorized to execute this Agreement and certifying the authority of
each such officer to execute the agreements, documents, and instruments on
behalf of Seller in connection with the consummation of the transactions
contemplated herein.
8.7 Certified Resolutions. Purchaser shall have received a certificate of
---------------------
the Secretary or Assistant Secretary of Seller containing a true and correct
copy of the resolutions duly adopted by the board of directors of Seller
approving and authorizing each Acquisition Document and the transactions
contemplated hereby and thereby and certifying that such resolutions have not
been rescinded, revoked, modified, or otherwise affected and remain in full
force and effect.
8.8 Release of Liens. Purchaser shall have received Uniform Commercial
-----------------
Code searches (which searches shall be made or caused to be made by and at the
expense of Purchaser) of filings made pursuant to Article 9 thereof in all
jurisdictions where any of the Acquired Assets are located, in form, scope, and
substance reasonably satisfactory to Purchaser and its counsel, which searches
shall reflect the release or termination of liens, claims, security interests,
or encumbrances against any of the Acquired Assets disclosed thereby that are
not Permitted Encumbrances, and to the extent any such release or termination is
not reflected of record, Purchaser shall have received evidence satisfactory to
it, that all such liens and encumbrances against the Acquired Assets other than
Permitted Encumbrances have been released or terminated prior to or at the
Closing.
8.9 Accuracy of Schedules. Examination by Purchaser shall not have
----------------------
disclosed any material inaccuracy in the representations and warranties of
Seller set forth in this Agreement or in the Schedules delivered to Purchaser
pursuant hereto.
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8.10 No Adverse Change. There shall not have been any material adverse
------------------
change in the Acquired Assets or the Business since the date of this Agreement,
and Purchaser shall have received a certificate dated as of the Closing Date,
executed by an authorized officer of Seller to such effect.
8.11 Instruments of Transfer. Seller shall have delivered to Purchaser
------------------------
such warranty deeds, bills of sale, motor vehicle titles, endorsements,
assignments, licenses, and other good and sufficient instruments of conveyance
and transfer and any other instruments reasonably deemed appropriate by counsel
to Purchaser, all in form and substance reasonably satisfactory to counsel to
Purchaser, to vest in Purchaser all of Seller's rights, title, and interest with
respect to the Acquired Assets, free and clear of all liens, charges,
encumbrances, pledges, or claims of any nature except for Permitted
Encumbrances.
8.12 Opinion of Counsel for Seller. Purchaser shall have received the
------------------------------
written legal opinion of Steven E. Smathers, Esq., counsel to Seller,
substantially in the form of EXHIBIT D hereto.
8.13 Proceedings. The form and substance of all opinions, certificates,
-----------
assignments, orders, and other documents and instruments, hereunder shall be
satisfactory in all reasonable respects to Purchaser and its counsel.
8.14 Condition of Acquired Assets. On the Closing Date, all of the
-----------------------------
Acquired Assets, other than pagers held by lessees, shall be in substantially
the same condition as at the close of business on the date hereof, except for
ordinary use and wear thereof and changes occurring in the ordinary course of
business or expressly permitted by this Agreement between the date hereof and
the Closing Date, and Purchaser shall have received a certificate dated as of
the Closing Date, executed by an authorized officer of Seller to such effect;
provided, however, if on or prior to the Closing Date any of the Acquired Assets
shall have suffered loss or damage on account of fire, flood, accident, act of
war, civil commotion, or any other cause or event beyond the reasonable power
and control of Seller (whether or not similar to the foregoing) to an extent
which, in the reasonable opinion of Purchaser, materially affects the value of
the Acquired Assets, taken as a whole, Purchaser shall have the right either (a)
to terminate this Agreement and all of Purchaser's obligations hereunder without
incurring any liability to Seller as a result of such termination, or (b) to
consummate the transactions provided for herein and be paid the full amount of
all insurance proceeds, if any, paid or payable to Seller, in respect of such
loss plus an amount equal to any deductible or co-insurance reserve applicable
to such loss. If under the circumstances described in the foregoing sentence,
Purchaser shall elect to consummate the transactions provided for herein, Seller
shall, on demand, pay to Purchaser the full amount of any insurance proceeds
received by Seller in respect of any such loss, together with any deductible or
co-insurance reserve applicable to such loss.
8.15 Non-Compete Agreements. Each shareholder shall have executed and
-------------------------
delivered to Purchaser a Non-Compete Agreement.
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8.16 Voice Mail Services Agreement. Call One shall have executed and
--------------------------------
delivered to Purchaser the Voice Mail Services Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date hereunder, of each of the following conditions, all or any of which may be
waived, in whole or in part, by Seller.
9.1 Certificate Regarding Representations and Warranties. All information
-----------------------------------------------------
required to be furnished or delivered by Purchaser pursuant to this Agreement
shall have been furnished or delivered as of the date hereof and the Closing
Date as required hereunder; the representations and warranties made by Purchaser
in Article 6 hereof shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date; and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser to such effect.
9.2 Compliance by Purchaser. Purchaser shall have duly performed in all
------------------------
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Purchaser on or before the Closing Date, and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser, to such effect.
9.3 Certified Resolutions. Seller shall have received from Purchaser a
----------------------
certificate executed by the Secretary of Purchaser containing a true and correct
copy of resolutions duly adopted by Purchaser's Board of Directors approving and
authorizing this Agreement and each of the other Acquisition Documents to which
Purchaser is a party and each of the transactions contemplated thereby. The
Secretary or Assistant Secretary of Purchaser shall also certify that such
resolutions have not been rescinded, revoked, modified, or otherwise affected
and remain in full force and effect.
9.4 No Injunction; Etc. No action, proceeding, investigation, regulation,
-------------------
or legislation shall be pending or overtly threatened which seeks to enjoin,
restrain, or prohibit Seller, or to obtain substantial damages from Seller, in
respect of the consummation of the transactions contemplated hereby, which, in
the reasonable judgment of Seller, would make it inadvisable to consummate such
transactions.
9.5 Incumbency. Seller shall have received a certificate of incumbency of
-----------
Purchaser executed by the President and attested by the Secretary or Assistant
Secretary of Purchaser listing the officers of Purchaser authorized to execute
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this Agreement and the other Acquisition Documents to which Purchaser is a party
and the instruments of assumption on behalf of Purchaser and certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of Purchaser in connection with the consummation of the
transactions contemplated herein.
9.6 Certificates. Seller shall have received from Purchaser all such
-------------
certificates, dated as of the Closing Date, as Seller shall reasonably request
to evidence the fulfillment by Purchaser, or such other satisfaction as the
Closing Date, of the terms and conditions of this Agreement.
9.7 Opinion of Purchaser's Counsel. Seller shall have received the
-------------------------------
written legal opinion of Alston & Bird, counsel for Purchaser, substantially in
the form of EXHIBIT E hereto, which opinion may be based upon and incorporate
the 1992 edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia, which
Interpretive Standards shall be attached to the Opinion.
9.8 Proceedings. The form and substance of all opinions, certificates,
------------
assignments, orders and other documents and instruments hereunder shall be
satisfactory in all reasonable respects to Seller and its counsel.
ARTICLE 10
POST CLOSING MATTERS
10.1 Employment of Employees. Purchaser shall have no obligation to
------------------------
employ or to offer employment to any of the employees of Seller. Seller shall
be responsible for the payment of all wages, commissions, severance pay, accrued
but unpaid wages, vacation pay, sick pay, and holiday pay to the employees of
Seller, up to and including the date Seller terminates the employment of such
employees. Seller shall be responsible for the payment of any amounts due to
its employees pursuant to any benefit plans of Seller as a result of the
employment of its employees.
10.2 Seller's Benefit Plans. Purchaser shall assume no responsibility
-----------------------
with regard to any benefit plans of Seller.
10.3 Maintenance of Books and Records.
---------------------------------
(a) Seller and Purchaser shall preserve until the fifth anniversary of
the Closing Date all Books and Records possessed or to be possessed by such
party relating to any of the assets, liabilities or business of Seller prior to
the Closing Date. Seller shall give Purchaser written notice of any Books and
Records discovered by Seller that were not transferred to Purchaser. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
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of such party and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Business prior to the Closing
Date, and the other parties and their representatives shall have the right to
make copies of such books and records; provided, however, the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided, as
to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 30th day after such notice is given unless another
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(b) Purchaser shall fully cooperate with Seller in the preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Purchaser also shall make available to Seller such information as may be
reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible. Purchaser shall
provide within a reasonable time after the receipt of a written request all
information contained in its files necessary for the preparation by Seller of a
Form W-2 for the calendar year in which the Closing occurs for each Hired
Employee.
10.4 Payments Received. Seller and Purchaser agree that after the
------------------
Effective Time they will hold and will promptly transfer and deliver to the
proper recipient thereof, from time to time as and when received by them, any
cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash), or other property that they may receive on or
after the Effective Time which properly belongs to the other party, including
without limitation, any insurance proceeds, and will account to the other for
all such receipts. From and after the Effective Time, Purchaser shall have the
right and authority to endorse without recourse the name of Seller on any check
or any other evidences of indebtedness received by Purchaser on account of the
Business and the Acquired Assets transferred to Purchaser hereunder.
10.5 Covenant Not to Compete. Seller covenants and agrees that for a
------------------------
period of five (5) years commencing on the Closing Date, Seller will not, within
the Territory (as hereinafter defined), either (a) directly or indirectly, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, any business, whether in corporate, proprietorship or
partnership form or otherwise, which is engaged at any place in the Territory in
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a business substantially the same as the Business (a "Competing Business"), or
(b) solicit or attempt to solicit to or for the benefit of any Competing
Business the business or patronage of a customer of Purchaser that has been at
any time during the five (5) year period prior to the Closing Date a customer of
Seller. As used herein, the term "Territory" means the territory marked on the
map attached as EXHIBIT F hereto, such territory being the area in which Seller
conducted the Business prior to the Closing Date. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of the
foregoing will be inadequate and that the Purchaser, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage. In the event that the
provisions of this Section 10.5 should ever be deemed to exceed the limitation
provided by applicable law, then the parties hereto agree that such provisions
shall be reformed to set forth the maximum limitations permitted.
ARTICLE 11
INDEMNIFICATION
11.1 Definitions
-----------
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(b) "Purchaser Indemnitees" shall mean the Purchaser and its agents,
representatives, employees, officers, directors, shareholders and controlling
persons.
(c) "Seller Indemnitees" shall mean the Seller and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(d) "Seller Indemnitors" shall mean Seller and each Shareholder,
jointly and severally.
(e) "Purchaser Indemnitor" shall mean Purchaser.
(f) "Losses" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(g) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
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than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
(h) "Indemnitee" means a Seller Indemnitee or a Purchaser Indemnitee
as the context may require.
(i) "Indemnitor" means a Seller Indemnitor or the Purchaser
Indemnitor as the context may require.
11.2 Agreement of Seller and Shareholders to Indemnify
-------------------------------------------------
Subject to the terms and conditions of this Article, the Seller
Indemnitors, jointly and severally, agree to indemnify, defend, and hold
harmless the Purchaser Indemnitees, and each of them, from, against, for, and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, such Purchaser Indemnitees resulting from, based upon, or arising out of:
(a) a breach of any material representation or warranty of an Seller
Indemnitor contained in or made pursuant to this Agreement or in any
certificate, Schedule, or Exhibit furnished by Indemnitor in connection
herewith;
(b) a breach of or failure to perform any covenant or agreement of an
Seller Indemnitor made in this Agreement;
(c) the failure to comply with the Bulk Sales Act or any comparable
law to the extent such act or law is or may be deemed to be applicable to the
transactions provided for herein; and
(d) any Excluded Liability.
11.3 Agreement of Purchaser to Indemnify. Subject to the terms and
-----------------------------------
conditions of this Article, Purchaser Indemnitor agrees to indemnify, defend and
hold harmless the Seller Indemnitees, and each of them, from, against, for and
in respect of any and all Losses asserted against, or paid, suffered or incurred
by a Seller Indemnitee and resulting from:
(a) a breach of any material representation or warranty of Purchaser
made or given in this Agreement;
(b) a breach or failure to perform any material covenant or agreement
of Purchaser made in this Agreement; or
(c) any Assumed Liability.
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11.4 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in Section 11.5 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in Section
12.13 of this Agreement.
(d) No Indemnification Claim shall be made against Seller Indemnitors
until the total amount of all outstanding Indemnification Claims against the
Seller Indemnitors, as any of them, under Section 11.2 hereof equals Fifty
Thousand Dollars ($50,000.00), at which time and thereafter all outstanding
Indemnification Claims may be made, including those Indemnification Claims
subject to the aforementioned limitation. Notwithstanding anything to the
contrary herein contained, the maximum aggregate liability of any Seller
Indemnitor hereunder shall be an amount equal to such Seller Indemnitor's pro
rata portion of the sum of the Purchase Price and Receivables Proceeds (such pro
rata portion is to be based on the assumption that at the Closing Date, Seller
distributes the proceeds of the Purchase Price to the Shareholders based on
their pro rata share ownership).
11.5 Third Party Claims. The obligations and liabilities of the parties
------------------
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
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Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within twenty (20) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 9.3 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
11.6 Other Rights and Remedies Not Affected. The rights of an Indemnitee
--------------------------------------
under this Article 11 are independent of and in addition to such rights and
remedies as Indemnitee may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or the failure to fulfill any agreement or
covenant hereunder on the part of Indemnitor, including without limitation the
right to seek specific performance, recession or restitution, none of which
rights or remedies shall be affected or diminished hereby.
11.7 Survival. All representations, warranties and agreements contained
--------
in this Agreement or in any certificate delivered pursuant to this Agreement
shall survive the Closings notwithstanding any investigation conducted with
respect thereto or any knowledge acquired as to the accuracy or inaccuracy of
any such representation or warranty.
11.8 Time Limitations. The Seller Indemnitors shall have no liability
----------------
under clause (a) of Section 11.2 with respect to: (a) the breach of any
representation or warranty, other than those set forth in Sections 5.10, 5.16,
5.17, and 5.21 hereof, unless on or before one (1) year after the Closing Date
Seller is given notice asserting an Indemnification Claim with respect thereto,
and (b) the breach of the representations and warranties contained in Sections
5.10, 5.16 and 5.17 hereof, unless notice asserting an Indemnification Claim
based thereon is given to Seller prior to the expiration of the applicable
statute of limitations for the assertion of liability against the Purchaser
based upon the matters that are the subject of the representations and
warranties contained in such Sections. An Indemnification Claim based upon a
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breach of the representations and warranties set forth in Section 5.21 or based
upon the failure of Seller and the Shareholders to perform the covenants and
agreements to be performed by them hereunder or based upon clause (c) of Section
11.2 hereof may not be made unless Seller is given notice asserting an
Indemnification Claim with respect thereto prior to the expiration of twenty
(20) years after the Closing Date. Purchaser shall have no liability under
Section 11.3 unless on or before two (2) years after the Closing Date Purchaser
is given notice asserting an Indemnification Claim.
11.9 Subrogation. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitor shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
11.10 Purchaser's Right of Set-Off. Notwithstanding anything to the
-----------------------------
contrary herein contained, Purchaser shall have the right to set-off against and
deduct from the Receivables Proceeds and any other amounts in the hands of
Purchaser that may belong to or be payable to Seller (a) any amount which any
Seller Indemnitor becomes obligated (whether by agreement between one or more of
the Seller Indemnitors and the Purchaser or by arbitration award) to pay to
Purchaser hereunder, (b) the amount of any Proration Item owed by Seller to
Purchaser as herein provided, and (c) any other amounts which may be payable by
Seller to Purchaser under this Agreement or by virtue of the transactions
provided for herein. Purchaser's right of set-off shall be superior to any
right of Seller to request or direct payment of any part or all of the
Receivables Proceeds to or for the account of Seller. Prior to exercising the
aforementioned right of set-off, Purchaser shall give Seller five (5) days
written notice of its intent to exercise such right. If within five (5) days of
receiving such notice, Seller objects in writing to Purchaser's exercise of its
right of set-off, then Purchaser shall set aside and hold the disputed amount
free of any obligation to pay over the disputed amount to or at the direction of
Seller, and Purchaser's asserted right of set-off will be submitted to
arbitration pursuant to Section 12.13 hereof. Notwithstanding anything to the
contrary in this Agreement, all amounts set aside and held pending the
resolution of arbitration shall remain set aside and held until the final
resolution of such arbitration pursuant to Section 12.13 hereof. If at the time
for payment of the Receivables Proceeds as provided in Section 1.3(g), or at the
time of any request by Seller for payment of Seller's indebtedness under Section
1.3(i), an Indemnification Claim has been asserted by Purchaser but the
Indemnitors obligation with respect thereto has not been finally determined or
agreed upon, Purchaser may withhold payment of such portion of the Receivables
Proceeds as shall be sufficient to pay and reimburse Purchaser for all losses
upon which the Indemnification Claim is based and shall not be required to pay
such withheld amount over to Seller until five (5) days following the final
determination or agreement that the Indemnitors are not obligated to the
Indemnitees with respect to such Indemnification Claim or if obligated the
Indemnitors have paid and satisfied such Indemnification Claim in full.
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<PAGE>
ARTICLE 12
GENERAL PROVISIONS
12.1 Fees and Expenses. Except as otherwise specifically provided in
------------------
this Agreement, Seller and each Shareholder, on the one hand, and Purchaser, on
the other hand, shall pay their respective fees and expenses in connection with
the transactions contemplated by this Agreement.
12.2 Notices. All notices, request, demands, and other communications
--------
hereunder shall be in writing and shall be delivered (a) in person or by
courier, (b) mailed by first class registered or certified mail, or (c)
delivered by facsimile transmission, as follows:
(a) If to Seller:
C.R., Inc.
c/o The Jim Sowell Company
3131 McKinney Avenue
Suite 200
Dallas, Texas 75204
Telephone: (214) 871-3320
Telecopier: (214) 871-1620
with a copy (which shall not constitute notice) to:
Steven E. Smathers, Esq.
3131 McKinney Avenue
Suite 200
Dallas, Texas 75204-2471
Telephone: (214) 871-7227
Telecopier: (214) 871-1620
(b) If to Purchaser:
Satellink Paging Inc.
1100 Northmeadow Parkway
Suite 100
Roswell, Georgia 30076
Attn: Mr. Dan Lensgraf
Telephone: (770) 664-2699
Telecopier: (770) 664-2651
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<PAGE>
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: S.J. Nurkin, Esq.
Telephone: (404) 881-7270
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 12.2. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
12.3 Assignment; Binding Effect. Except as provided in this Section
---------------------------
12.3, this Agreement shall not be assignable by any of the parties hereto
without the written consent of the other; provided, however, that Purchaser may
assign all of its rights hereunder to any subsidiary of Purchaser, but such
assignment shall not relieve Purchaser of its obligations hereunder in the event
such assignee shall fail timely to perform any of such obligations From and
after any such assignment, the word "Purchaser" shall include assignee.
12.4 No Benefit to Others. The representations, warranties, covenants,
--------------------
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article 9 hereof, Indemnitee and its heirs,
executors, administrators, legal representatives, successors and assigns, and
they shall not be construed as conferring any rights on any other persons.
12.5 Headings, Gender, "Person" and "Affiliate". All section headings
------------------------------------------
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity,
and any reference to an "affiliate," whether or not such term is capitalized,
with respect to a person shall mean a person or entity that is controlled by,
under common control with or controls such person.
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<PAGE>
12.6 Counterparts. This Agreement may be executed in two (2) or more
-------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
12.7 Integration of Agreement. This Agreement supersedes all prior
-------------------------
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
12.8 Time of Essence. Time is of the essence in this Agreement.
----------------
12.9 Governing Law. This Agreement shall be governed by and construed
--------------
under the substantive laws of the State of Texas.
12.10 Partial Invalidity. Whenever possible, each provision hereof shall
-------------------
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
12.11 Investigation. No inspection, preparation, or compilation of
-------------
information or Schedules, or audit of the inventories, properties, financial
condition, or other matters relating to Seller conducted by or on behalf of
Purchaser pursuant to this Agreement shall in any way limit, affect, or impair
the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller and each Shareholder set forth herein. Any
disclosure made on one Schedule shall not be deemed made on any other Schedule,
unless appropriate cross-referencing is made. The covenants and representations
and warranties of Seller and Purchaser shall survive the Closing and the
execution and delivery of all instruments of conveyance for the periods set
forth in Section 11.7.
12.12 Public Announcements. Seller and each Shareholder and Purchaser
---------------------
will consult with each other before issuing any press releases or otherwise
making any public statements or filings with governmental entities with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any press releases or make any public statements or filings with governmental
entities prior to such consultation and shall modify any portion thereof if the
other party reasonably objects thereto, unless the same may be required by
applicable law.
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<PAGE>
12.13 Arbitration. The parties agree that any dispute between or among
-----------
them arising out of or based upon this agreement, the remaining acquisition
documents or the consummation of the transactions provided for herein shall be
submitted to and resolved by arbitration in Dallas, Texas in accordance with the
rules and procedures of the American Arbitration Association, and the decision
of the arbiter(s) in such dispute shall be final and binding on the parties to
such arbitration proceeding. Except as the arbiter(s) may otherwise award or
assess the expenses of any such proceeding, each party shall bear its own costs
and expenses, including the expense of its counsel, in any such arbitration
proceeding.
SIGNATURES ON FOLLOWING PAGE
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<PAGE>
IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement
to be executed on its behalf by its duly authorized officer or trustee, all as
of the day and year first above written.
PURCHASER:
SATELLINK PAGING INC.
By: /s/ Jerry W. Mayfield
--------------------------------
Title: President
-----------------------------
SELLER:
C.R., INC.
By: /s/ Larry Simmons
-------------------------------
Title: President
----------------------------
SHAREHOLDERS:
/s/ James Sowell
----------------------------------
James Sowell
/s/ Larry Simmons
----------------------------------
Larry Simmons
JAY LEE JAMESON, AS TRUSTEE OF
THE SAFETON TRUST,
dated October 1, 1992
By: /s/ Jay Lee Jameson
-------------------------------
Jay Lee Jameson, Trustee
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<PAGE>
EXHIBIT 10.7
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 15th day of February, 1997, by and among SATELLINK PAGING, LLC, a
Georgia limited liability company ("Purchaser") and CALL ONE, INC., a Texas
corporation ("Seller") and JAMES SOWELL, LARRY SIMMONS and JAY LEE JAMESON, AS
TRUSTEE OF THE SAFETON TRUST, dated October 1, 1992 (individually a
"Shareholder" and collectively the "Shareholders").
A. Seller is engaged in the business of providing voice messaging and call
messaging services for paging devices (the "Business").
B. Shareholders own all of the issued and outstanding capital stock of
Seller.
C. Purchaser desires to purchase from Seller all of Seller's assets
related to the Business on and subject to the terms and conditions contained in
this Agreement.
D. Seller desires to sell to Purchaser all of Seller's assets related to
the Business on and subject to the terms and conditions contained in this
Agreement.
E. Shareholders will directly benefit from Purchaser's purchase of such
assets.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Acquired Assets. At the Closing (as hereinafter
-------------------------------------
defined), on and subject to the terms and conditions of this Agreement, Seller
shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser
shall purchase, acquire, and accept from Seller, all of the right, title, and
interest of Seller in and to (i) the Business, (ii) the name "Call One" and any
other name or names under which Seller has conducted the Business and all
goodwill associated therewith, and (iii) the following assets, properties, and
rights of Seller, free and clear of all liens, claims, charges, security
interests, and encumbrances of any kind or nature, as the same shall exist at
the Closing Date (as hereinafter defined):
(a) Except as set forth in SECTION 1.2(A), all hardware, software and
interconnection facilities utilized in the provision and maintenance of voice
<PAGE>
messaging services located at ONEOK, Tulsa, Oklahoma, including any and all
network switching equipment, peripheral computer and telecommunications hardware
and software, parts and accessories, furniture and the like wherever located,
whether or not reflected on the books and records of Seller (even if carried at
no value) and related to the Business, and any and all assignable warranties of
third parties with respect thereto (the "Equipment");
(b) All of the contracts, airtime purchase agreements, leases,
warranties, commitments, agreements, arrangements and purchase and sales orders,
whether oral or written, pursuant to which Seller enjoys any right or benefit in
connection with the Business, whether or not reflected upon the books and
records of the Seller, together with the right of Seller to receive income in
respect of such contracts, leases, warranties, commitments, agreements,
arrangements, and purchase and sales orders on and after the Closing Date
(individually, a "Contract" and collectively, the "Contracts");
(c) All patents, designs, art work, designs-in progress, formulations,
know-how, prototypes, inventions, trademarks, trade names, trade styles, service
marks, and copyrights owned or held by Seller and related to the Business; all
registrations thereof and applications therefor, both registered and
unregistered, foreign and domestic; all trade secrets or processes owned by or
belonging to Seller and related to the Business; all computer software
(including documentation and related object and, if applicable, source codes)
owned by or belonging to Seller and related to the Business; and all
confidential or proprietary information that are either (i) owned by Seller and
related to the Business, whether or not reflected on the books and records of
Seller, or (ii) as to which Seller has rights as licensee, constituting all of
the intellectual property of Seller used exclusively in the Business (the
"Intellectual Property"), excluding however, all Intellectual Property related
to the assets described in SECTION 1.2(A);
(d) All existing records of sales, customer and vendor lists, manuals
and printed instructions of Seller relating to the Acquired Assets (as
hereinafter defined) and to the operation of the Business (the "Books and
Records");
(e) All licenses, permits, certificates, and governmental
authorizations of Seller and related to the Business, including pending
applications therefor (the "Permits");
(f) All furniture, fixtures, and leasehold improvements, wherever
located, reflected on the books and records of the Seller (even if carried at no
value) and related to the Business, and any and all assignable warranties
covering such furniture, fixtures, and leasehold improvements ("Furniture and
Fixtures"); and
(g) All contracts and agreements relating to interconnection
facilities with the Local Exchange Carrier (Southwestern Bell) and the
Interexchange Carrier (MCI Telecommunications) for the provision of local and
long distance telephone service including monthly recurring fees, usage charges
and 800 Access Numbers in active service necessary or desirable for the conduct
of the Business (the "Telephone Contracts"); and
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<PAGE>
(h) All of Seller's rights in, to, and under Seller's office lease,
together with all of Seller's right, title, and interest in the buildings,
fixtures and improvements, including construction-in-progress, and appurtenances
thereto, located on the real property subject to such lease, and any and all
assignable warranties of third parties with respect thereto (the "Office
Lease").
All of the items described in this SECTION 1.1 to be purchased by Purchaser
and which are not Excluded Assets as defined in SECTION 1.2 are hereinafter
collectively referred to as the "Acquired Assets."
1.2 Excluded Assets of Seller. Seller shall not sell and Purchaser shall
--------------------------
not purchase or acquire and the Acquired Assets shall not include:
(a) Any and all hardware and software associated with the "new voice
mail platform" currently being developed by Voice Express including Show N' Tel
software by Brooktrout, an Intel 166mhz Pentium based computer, Rhetorex Voice
Boards with 48 port capacity, peripheral telecommunications hardware and
software and any computer related parts and accessories necessary for the full
and independent operation of the aforementioned platform.
(b) Seller's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Seller's organization or stock capitalization; and
(c) Any rights which accrue or will accrue to Seller under this
Agreement; and
(d) All accounts receivable and note receivables to the extent such
accounts relate to periods prior to the Closing.
All of the assets described in this SECTION 1.2 are hereinafter
collectively referred to as the "Excluded Assets."
1.3 Non-Solicitation. At the Closing Seller and each Shareholder shall
-----------------
enter into, execute and deliver the Non-Solicitation Agreement substantially in
the form attached as EXHIBIT A hereto (the "Non-Solicitation Agreement").
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities of Seller. Subject to SECTION 2.2 hereof,
------------------------------------
as of the Closing Date, Purchaser shall assume responsibility for the
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<PAGE>
performance and satisfaction of the executory obligations and liabilities of
Seller arising from and after the Effective Time pursuant to the Contracts
assigned pursuant to SECTION 1.1(B), the Telephone Contracts assigned pursuant
to SECTION 1.1(G) and the Office Lease assigned pursuant to SECTION 1.1(H), but
excluding any obligations or liabilities arising from or relating to any breach
or violation of such Contracts, Telephone Contracts or Office Lease by Seller or
default under such Contracts, Telephone Contracts or Office Lease by Seller.
The executory obligations and liabilities of Seller specifically assume pursuant
to this SECTION 2.1 are hereinafter referred to as the "Assumed Liabilities."
2.2 Excluded Liabilities of Seller. Purchaser shall not assume or become
-------------------------------
liable for any obligations, commitments, or liabilities of Seller, whether known
or unknown, absolute, contingent, or otherwise, and whether or not related to
the Acquired Assets except for the liabilities specifically described in SECTION
2.1 above (the obligations and liabilities of Seller not assumed by Purchaser
are hereinafter referred to as the "Excluded Liabilities"). Without limiting
the generality of the foregoing, Excluded Liabilities shall include any
liabilities related to or arising out of the Excluded Assets.
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. The aggregate consideration to be paid to Seller for
---------------
the sale, transfer, and conveyance of the Acquired Assets and the Non-Compete
Agreement (the "Purchase Price") shall be TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000).
3.2 Payment of Purchase Price. Subject to the fulfillment of the
--------------------------
conditions set forth herein, on the Closing Date Purchaser shall pay to Seller
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) by check or by wire transfer in
immediately available funds to an account designated in writing by Seller.
3.3 Transfer Expenses. Seller shall pay any sales and use, transfer or
------------------
recording, documentary, or other taxes or charges levied on the transfer of the
Acquired Assets (the "Transfer Expenses"). All Inventory shall be claimed as
exempt from sales or use tax by Purchaser and Purchaser shall furnish Seller at
the Closing with sales tax exemption certificates.
3.4 Allocation of Purchase Price. The parties agree the Purchase Price
-----------------------------
shall be allocated as provided on SCHEDULE 3.4.
ARTICLE 4
PROCEDURE FOR CLOSINGS
4.1 Time and Place of Closing. The closing for the purchase and sale
--------------------------
contemplated by this Agreement (the "Closing") shall be held at the offices of
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<PAGE>
Alston & Bird, One Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia
30309, on February 14, 1997, commencing at 10:00 a.m., Atlanta time, or at such
other time and place as the parties hereto may agree in writing (the date on
which the Closing actually occurs is hereinafter referred to as the "Closing
Date"). Subject to the consummation of the Closing on the Closing Date, the
sale, assignment, transfer, and conveyance to Purchaser of the Acquired Assets
will be effective as of 12:01 a.m. Eastern Daylight Time on February 15, 1997
(the "Effective Time").
4.2 Condition to Closing. The parties' obligations hereunder shall be
--------------------
conditioned on:
(a) Purchaser's receipt prior to the Closing of Uniform Commercial
Code searches of filings made pursuant to Article 9 thereof in all jurisdictions
where any of the Acquired Assets are located, in form, scope, and substance
reasonably satisfactory to Purchaser and its counsel, which searches shall
reflect the release or termination of liens, claims, security interests, or
encumbrances against any of the Acquired Assets disclosed thereby, and to the
extent any such release or termination is not reflected of record, Purchaser
shall have received evidence satisfactory to it, that all such liens and
encumbrances against the Acquired Assets have been released or terminated prior
to or at the Closing or that the underlying obligations have been paid in full
pursuant to SECTION 7.5.
(b) The approval of the Board of Directors of Purchaser of the
transactions contemplated by this Agreement.
(c) The approval of the Board of Directors of Seller of the
transactions contemplated by this Agreement.
(d) The receipt by Purchaser and Seller of all consents and approvals
of governmental agencies or regulators necessary to the consummation of the
transactions contemplated by this Agreement.
4.3 Transactions at the Closing. At the Closing, each of the following
----------------------------
items shall be delivered:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale, assignments, endorsements, and other good and
sufficient instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall be necessary and
effective to transfer and assign to, vest in, and purchase all of Seller's
right, title, and interests in and to the Acquired Assets;
(ii) the Non-Solicitation Agreement;
-5-
<PAGE>
(iii) a certificate of incumbency of the Seller executed by a
Secretary or Assistant Secretary thereof listing the officers authorized to
execute this Agreement and certifying the authority of each such officer to
execute the agreements, documents, and instruments on behalf of Seller in
connection with the consummation of the transactions contemplated herein;
(iv) a certificate of the Secretary of Seller containing a true and
correct copy of the resolutions duly adopted by the board of directors and
shareholders of Seller approving and authorizing each Acquisition Document (as
hereinafter defined) and the transactions contemplated hereby and thereby
certifying that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect;
(v) the opinion of counsel to Seller in substantially the form of
EXHIBIT B hereto (the "Seller Opinion");
(vi) a true and correct copy of each consent and waiver that is
required for the assignment of the Contracts, Telephone Contracts, Permits,
Intellectual Property and other agreements and assets or otherwise required for
the execution, delivery, and performance of this Agreement by Seller, along with
a certificate dated as of the Closing Date, executed by an authorized officer of
Seller to the foregoing effect;
(vii) certificates of existence or certificates of good standing of
Seller, as of a date within ten (10) days prior to the Closing Date, from the
State of Texas; and
(viii) such other certificates, instruments or evidence of the
performance by Seller of all covenants and the satisfaction by Seller of all
conditions required by this Agreement to be performed or satisfied by Seller at
or prior to the Closing Date as Purchaser or its counsel may reasonably require.
The documents and certificates to be delivered hereunder by or on behalf of
Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Subject to the receipt and sufficiency of the items set forth in
SECTION 4.2(A) above, Purchaser shall deliver to or for the account of Seller
the following:
(i) a check or wire transfer in the amount equal to the Purchase Price
as set forth in SECTION 3.2(A) in immediately available funds to an account
designated in writing by Seller;
(ii) an instrument or instruments of assumption of the Assumed
Liabilities, duly executed by Purchaser, and reasonably satisfactory in form and
substance to Seller and its counsel;
-6-
<PAGE>
(iii) a certificate executed by the Manager of Purchaser containing a
true and correct copy of resolutions duly adopted by the Manager approving and
authorizing this Agreement and each of the other Acquisition Documents (as
hereinafter defined) to which Purchaser is a party and each of the transactions
contemplated hereby and thereby certifying that such resolutions have not been
rescinded, revoked, modified, or otherwise affected and remain in full force and
effect;
(iv) a certificate of incumbency of Purchaser executed by the
President and attested by the Secretary or Assistant Secretary of the Manager of
Purchaser listing the officers of the Manager authorized to execute this
Agreement and the other Acquisition Documents to which Purchaser is a party and
the instruments of assumption on behalf of Purchaser and certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of the Manager in connection with the consummation of the
transactions contemplated herein;
(v) certificates of existence or certificates of good standing of
Purchaser, as of a date within ten (10) days prior to the Closing Date, from the
State of Georgia; and
(vi) the Non-Solicitation Agreement; and
(vii) such other certificates, instruments or evidence of the
performance by Purchaser of all covenants and satisfaction by Purchaser of all
of the conditions required by this Agreement to be performed or satisfied by
Purchaser at or before the Closing Date, as Seller or its counsel may reasonably
require.
The documents and certificates to be delivered to Seller hereunder by or on
behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to Seller and its counsel.
4.4 Certain Consents. To the extent that the rights of Seller under any
-----------------
agreement, Contract, Telephone Contract, commitment, lease, Permit, Office
Lease, or other Acquired Asset to be assigned to Purchaser by Seller hereunder
may not be assigned without the consent of another person which has not been
obtained prior to the Closing Date, and which is materially important to the
ownership, use or disposition by Purchaser of an Acquired Asset, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Seller, at its expense,
shall use its best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights under the
Acquired Asset in question so that Purchaser would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law and
the specific Acquired Asset and at Seller's expense, shall act after the Closing
as Purchaser's agent in order to obtain for Purchaser the benefits thereunder,
and Seller shall cooperate, to the maximum extent permitted by law and the
-7-
<PAGE>
specific Acquired Assets, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser, including any sublease,
subcontract or similar arrangement.
4.5 Further Assurances. Seller and Shareholders from time to time after
-------------------
the Closing Date, at Purchaser's request, shall execute, acknowledge, and
deliver to Purchaser such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications, and further assurances as Purchaser may require in order to vest
more effectively in Purchaser, or to put Purchaser more fully in possession of,
any of the Acquired Assets or to better enable Purchaser to complete, perform,
or discharge any of the Assumed Liabilities. Each of the parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser that:
5.1 Organization and Qualification. Seller is a corporation duly
-------------------------------
organized, validly existing, and in good standing under the laws of the State of
Texas.
5.2 Authority. Seller has full power and authority to enter into this
----------
Agreement and the agreements contemplated hereby, or respectively executed by it
in connection herewith (collectively, this Agreement and such other agreements
shall be referred to hereinafter as the "Acquisition Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of each of the Acquisition Documents to which
it is a party has been duly and validly authorized and approved by all necessary
action on the part of Seller. Each of the Acquisition Documents to which Seller
is a party is the legal, valid, and binding obligation of Seller, enforceable
against Seller, in accordance with its terms, except as enforceability may be
limited by applicable equitable principles (whether applied in a proceeding at
law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, to the exercise of judicial
discretion in accordance with general equitable principles, and to equitable
defenses that may be applied to the remedy of specific performance. Neither the
execution and delivery by Seller, respectively, of any of the Acquisition
Documents to which it is a party nor the consummation by Seller of the
transactions contemplated thereby will (i) violate the Articles of Incorporation
or Bylaws of Seller or the trust instrument of the Safeton Trust, (ii) violate
any provisions of law or any order of any court or any governmental entity to
which Seller is subject, or by which the Acquired Assets, may be bound (iii)
conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, contract, warranty, agreement, arrangement, purchase
-8-
<PAGE>
or sale order or other instrument to which Seller is a party or by which it or
any of the Acquired Assets may be bound if such conflict would have a material
adverse effect, or (iv) result in the creation of any lien, charge, or
encumbrance upon any of the Acquired Assets or increase or adversely affect the
obligations of Seller or Purchaser under any of the Assumed Liabilities.
5.3 Personal Property. SCHEDULE 5.3.1 contains a true and correct list of
-----------------
all Equipment owned and leased by Seller and included in the Acquired Assets,
and SCHEDULE 5.3.2 contains a true and correct list of all Furniture and
Fixtures and all other items of personal property (excluding items of Furniture
and Fixtures and other personal property having a value of less than $1,000
individually, or $10,000 in the aggregate), which are owned or leased by Seller
and included in the Acquired Assets. Each of the leases described on SCHEDULE
5.3.1 is in full force and effect and there are no existing defaults or events
of default, real or claimed, or events which with notice or lapse of time or
both would constitute defaults. No rights of Seller under such leases have been
assigned or otherwise transferred as security for any obligation of Seller.
Except as described on SCHEDULE 5.3.1, all such leases are fully assignable
without the consent of any third party.
5.4 Real Property.
--------------
(a) Seller does not own any real property.
(b) A true and correct copy of the Office Lease and any amendments,
extensions, and renewals thereof have been delivered to the Purchaser. The
Office Lease is in full force and effect and there is no existing default or
event of default, real or claimed, or event which with notice or lapse of time
or both would constitute a default thereunder by Seller or any other party to
such Office Leases. The License Agreement shall not cause a breach, default, or
event of default under the Office Lease.
(c) All Permits required for Seller's occupancy and operation of any
property that is subject to the Office Lease have been obtained and are in full
force and effect, and Seller has received no notices of violations in connection
with such items.
5.5 Contracts.
---------
(a) SCHEDULE 5.5.1 contains a true and correct list of all Contracts
other than Contracts with customers, together with a true and correct copy (and,
if oral, a description) of each such Contract that (i) has a duration of twelve
(12) months or more, (ii) requires or could require any party thereto to pay
$1,000 or more, or (iii) is between either Seller and any officer, stockholder,
director, employee, or affiliate thereof or any other party hereto or any
officer, stockholder, director, employee or affiliate of any such other party,
and all modifications, amendments, renewals, or extensions thereof. SCHEDULE
5.5.2 contains a true and correct list of all customers who subscribe for voice
messaging and call messaging services of Seller related to the Business as of
the date hereof together with a true and correct copy of each form of agreement
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currently in effect with any such customer. Each of the Contracts listed or
described in SCHEDULES 5.5.1 or 5.5.2 was entered into prior to the Closing Date
in the ordinary course of business on terms substantially consistent with such
Seller's practice prior thereto.
(b) Each of the Contracts is in full force and effect and there exists
no breach or violation of or default under any of such Contracts by Seller or,
to the best of Seller's knowledge, any other party to such Contracts or any
event which, with notice or the lapse of time, or both, will create a breach or
violation thereof or default thereunder by Seller or any other party to such
Contracts. Except as set forth on SCHEDULES 5.5.1 AND 5.5.2, each Contract
listed therein is fully assignable without the consent of any third party.
(c) There exists no actual or threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have an adverse effect on the business or condition, financial or
otherwise, of the Business, including, without limitation, (i) the business
relationship of Seller with any customer, distributor, or related group of
customers or distributors, (ii) the requirements of any customer or related
group of customers of the Business.
(d) Seller has not granted any power of attorney affecting or with
respect to the Business or the Acquired Assets that remains outstanding.
5.6 Insurance. The tangible Acquired Assets are insured under various
----------
policies of general liability and other forms of insurance, which policies are
in adequate amounts. Seller has not been refused any insurance with respect to
the Business by any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the past year. There are no
outstanding requirements or recommendations by any current insurer or
underwriter with respect to the Business or the Acquired Assets which require or
recommend changes in the conduct of Business, or require any repairs or other
work to be done with respect to any of the Acquired Assets.
5.7 Litigation. There are no material arbitrations, grievances, actions,
-----------
suits, or other proceedings pending or to the knowledge of Seller threatened
against, or adversely affecting the Business or any of the Acquired Assets
purported to be owned or used by Seller, at law or in equity or admiralty, nor
to the Seller's knowledge is there any investigation pending or threatened,
before or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
related to the Business. Seller is not in default under or in violation of any
order, writ, injunction, or decree of any federal, state, municipal court, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Business or the Acquired
Assets purported to be owned or used by Seller.
5.8 Absence of Changes. Since January 1, 1997 there has not been any
-------------------
transaction or occurrence in which Seller has suffered any material adverse
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change in the business, operations, condition (financial or otherwise),
liabilities, assets, or earnings of the Business nor has there been any event
which has had or may reasonably be expected to have a material adverse effect on
any of the foregoing.
5.9 Brokers and Finders. Neither Seller nor Shareholder nor any affiliate
--------------------
of either of them, has incurred any obligation or liability to any party for any
brokerage fees, agent's commissions, or finder's fees in connection with the
transactions contemplated by this Agreement.
5.10 Governmental Approval and Consents. Seller has obtained all Permits
-----------------------------------
required for the lawful operation of the Business as presently conducted, if the
failure to obtain such Permit would have a material adverse effect.
5.11 Taxes.
-----
(a) Seller has timely filed all federal and foreign income tax
returns, and all state, county, and local income, franchise, property, sales,
use, unemployment, and other tax returns in each state and jurisdiction where
such returns are required to be filed on or prior to the Closing Date, taking
into account any extensions of the filing deadlines which have been validly
granted to Seller, and such returns are and will be true and correct in all
material respects. Seller has paid all federal, state, county, and local
income, franchise, property, sales, use, and all other taxes and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due with respect to any period ended on or prior to the Closing Date
whether shown as due on such returns or not, or is contesting in good faith such
taxes and assessments.
(b) All taxes required to be withheld on or prior to the Closing Date
from employees of Seller for income taxes and social security taxes have been
properly withheld and, if required on or prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(c) No claim or investigation is pending or threatened in writing by
any state, local, or other jurisdiction alleging that Seller has a duty to file
tax returns and pay taxes or is otherwise subject to the taxing authority of any
jurisdiction with respect to any taxes covered by SECTION 5.11(A) nor has Seller
received any notice or questionnaire from any such jurisdiction which suggests
or asserts that Seller may have a duty to file such returns and pay such taxes,
or otherwise is subject to the taxing authority of such jurisdiction.
5.12 Compliance with Laws. Seller is now with respect to the Acquired
---------------------
Assets to be transferred at the Closing in material compliance with all laws,
statutes, ordinances, or regulations applicable to the Business and the Acquired
Assets if the failure to so comply would have a material adverse effect.
Neither Seller nor any of the Acquired Assets is subject to any judgment, order,
writ, injunction, or decree issued by any court or any governmental or
administrative body or agency. Seller possesses all Permits required for the
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operation of the Business as presently conducted. Seller has not at any time
during the last year (i) made any unlawful contribution to any political
candidate, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal, state or local governmental, regulatory or
administrative officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof.
5.13 Governmental Approval and Consents. Except for consents contemplated
-----------------------------------
by this Agreement, no consent, approval, or authorization of or declaration,
filing, or registration with any governmental or regulatory authority is
required in connection with the execution, delivery, and performance of this
Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby.
5.14 Adequacy of Acquired Assets. The Acquired Assets include all rights,
----------------------------
properties, interests in properties, and assets necessary to permit Purchaser to
carry on the Business as presently conducted by Seller.
5.15 Title to Assets. Seller has good and marketable title to the
----------------
Acquired Assets, free and clear of all liens, claims, charges, encumbrances and
security interests of any kind or nature. All security interests and
encumbrances of record against the Acquired Assets shall be released, terminated
or discharged at the Closing by delivery to the Purchaser at the Closing of
executed discharges, UCC termination or partial release statements signed by the
secured party.
5.16 Correctness of Representations. No representation or warranty
-------------------------------
excluding, however, the representations and warranties contained in SECTIONS 5.5
and 5.8 of Seller in this Agreement or in any Exhibit, certificate, or Schedule
attached hereto or furnished pursuant hereto, contains any untrue statement of
material fact or omits to state any fact necessary in order to make the
statements contained therein not misleading in any material respect, and all
such statements, representations, warranties, Exhibits, certificates, and
Schedules are true and complete in all material respects. True copies of all
mortgages, indentures, notes, leases, agreements, plans, Contracts, and other
instruments listed on the Schedules delivered or furnished to Purchaser pursuant
to this Agreement have been delivered to Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a limited liability
-------------------------------
company duly organized, validly existing, and in good standing under the laws of
the State of Georgia and has all necessary power and authority to conduct its
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business, to own, lease, or operate its properties in the places where such
business is conducted and such properties are owned, leased, or operated.
6.2 Authority. Purchaser has full power and authority to enter into this
----------
Agreement and each of the other Acquisition Documents to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by Purchaser of this Agreement and each of the other
Acquisition Documents to which Purchaser is a party have been duly and validly
authorized and approved by all necessary action on the part of Purchaser. This
Agreement and each of the other Acquisition Documents to which Purchaser is a
party are the legal, valid, and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms, except as enforceability may
be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by the exercise of judicial discretion in accordance with
equitable principles. Neither the execution and delivery by Purchaser of this
Agreement or any of the other Acquisition Documents to which Purchaser is a
party nor the consummation by Purchaser of the transactions contemplated hereby
or thereby will (i) violate Purchaser's Operating Agreement, (ii) violate any
provisions of law or any order of any court or any governmental unit to which
Purchaser is subject, or by which its assets are bound, or (iii) conflict with,
result in a breach of, or constitute a default under any indenture, mortgage,
lease, agreement, or other instrument to which Purchaser is a party or by which
its assets or properties are bound.
6.3 Litigation. There is no suit, action, proceeding, claim or
-----------
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which would affect the consummation of the transactions contemplated
hereby.
6.4 Correctness of Representations. No representation or warranty of
-------------------------------
Purchaser in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto contains any untrue statement of material
fact or omits to state any fact necessary in order to make the statements
contained therein not misleading in any material respect, and all such
statements, representations, Exhibits, and certificates are true and complete.
6.5 Governmental Approval and Consents. No consent, approval, or
-----------------------------------
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance by Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
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ARTICLE 7
POST CLOSING MATTERS
7.1 Employment of Employees. Purchaser shall have no obligation to
------------------------
employ or to offer employment to any of the employees of Seller. Seller shall
be responsible for the payment of all wages, commissions, severance pay, accrued
but unpaid wages, vacation pay, sick pay, and holiday pay to the employees of
Seller, up to and including the date Seller terminates the employment of such
employees. Seller shall be responsible for the payment of any amounts due to
its employees pursuant to any benefit plans of Seller as a result of the
employment of its employees.
7.2 Seller's Benefit Plans. Purchaser shall assume no responsibility
-----------------------
with regard to any benefit plans of Seller.
7.3 Maintenance of Books and Records.
---------------------------------
(a) Seller and Purchaser shall preserve until the fifth anniversary of
the Closing Date all Books and Records possessed or to be possessed by such
party relating to any of the assets, liabilities or business of Seller prior to
the Closing Date. Seller shall give Purchaser written notice of any Books and
Records discovered by Seller that were not transferred to Purchaser. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
of such party and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Business prior to the Closing
Date, and the other parties and their representatives shall have the right to
make copies of such books and records; provided, however, the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided, as
to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 30th day after such notice is given unless another
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(b) Purchaser shall fully cooperate with Seller in the preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Purchaser also shall make available to Seller such information as may be
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reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible. Purchaser shall
provide within a reasonable time after the receipt of a written request all
information contained in its files necessary for the preparation by Seller of a
Form W-2 for the calendar year in which the Closing occurs for each Hired
Employee.
7.4 Payments Received. Seller and Purchaser agree that after the
------------------
Effective Time they will hold and will promptly transfer and deliver to the
proper recipient thereof, from time to time as and when received by them, any
cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash), or other property that they may receive on or
after the Effective Time which properly belongs to the other party, including
without limitation, any insurance proceeds, and will account to the other for
all such receipts.
7.5 Covenant to Pay Debts. Promptly following the Closing Seller will
----------------------
pay in full all indebtedness of Seller to third parties (including, without
limitation, trade payables, accrued taxes, amounts due to employees, bank
indebtedness and all other indebtedness, whether secured or unsecured) owed by
Seller on or as of the Closing Date, and to the extent any of the Acquired
Assets are security for any such indebtedness, obtain the release of all liens,
claims, charges, encumbrances or security interests in such Acquired Assets and
deliver evidence (which shall be in form reasonably satisfactory to Purchaser
and its counsel) of such release or that the underlying obligations have been
paid in full pursuant to SECTION 7.5 to Purchaser at the Closing.
ARTICLE 8
INDEMNIFICATION
8.1 Definitions
-----------
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(b) "Purchaser Indemnitees" shall mean the Purchaser and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(c) "Seller Indemnitees" shall mean the Seller and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(d) "Seller Indemnitors" shall mean Seller and Shareholders.
(e) "Purchaser Indemnitor" shall mean Purchaser.
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<PAGE>
(f) "Losses" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(g) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
(h) "Indemnitee" means a Seller Indemnitee or a Purchase Indemnitee as
the context may require.
(i) "Indemnitor" means a Seller Indemnitor or a Purchaser Indemnitor
as the context may require.
8.2 Agreement of Seller and Shareholders to Indemnify
-------------------------------------------------
Subject to the terms and conditions of this Article, Seller
Indemnitors agree to indemnify, defend, and hold harmless Purchaser Indemnitees,
and each of them, from, against, for, and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, such Purchaser Indemnitees
and resulting from, based upon, or arising out of:
(a) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of the Seller Indemnitors contained in or made
pursuant to this Agreement or in any certificate, Schedule, or Exhibit furnished
by Seller Indemnitors in connection herewith;
(b) a breach of or failure to perform any material covenant or
agreement of Seller Indemnitors made in this Agreement;
(c) the failure to comply with the Bulk Sales Act or any comparable
law to the extent such act or law is or may be deemed to be applicable to the
transactions provided for herein; and
(d) any Excluded Liability.
8.3 Agreement of Purchaser to Indemnify. Subject to the terms and
------------------------------------
conditions of this Article, Purchaser Indemnitor agrees to indemnify, defend and
hold harmless the Seller Indemnitees, and each of them, from, against, for and
in respect of any and all Losses asserted against, or paid, suffered or incurred
by a Seller Indemnitee arising from the Telephone Contracts after the Effective
Time, but excluding any obligations or liabilities arising from or relating to
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any breach or violation of the Telephone Contracts by Seller prior to the
Effective Time or default under such Telephone Contracts by Seller prior to the
Effective Time.
8.4 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 8.5 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in SECTION
9.13 of this Agreement.
(d) No Indemnification Claim shall be made against Seller Indemnitors
until the total amount of all outstanding Indemnification Claims against the
Seller Indemnitors, or any of them, under SECTION 8.2 hereof equals Ten Thousand
Dollars ($10,000.00), at which time and thereafter all outstanding
Indemnification Claims may be made, including those Indemnification Claims
subject to the aforementioned limitation. Notwithstanding anything to the
contrary herein contained, the maximum aggregate liability of any Seller
Indemnitor hereunder shall be an amount equal to such Seller Indemnitor's pro
rata portion of the Purchase Price (such pro rata portion is to be based on the
assumption that at the Closing Date, Seller distributes the proceeds of the
Purchase Price to the Shareholders based on their pro rata share ownership).
8.5 Third Party Claims. The obligations and liabilities of the parties
------------------
hereunder with respect to a Third Party Claim shall be subject to the following
terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
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<PAGE>
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within twenty (20) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in SECTION 8.4 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
8.6 Other Rights and Remedies Not Affected. The rights of Indemnitee
--------------------------------------
under this Article 8 are independent of and in addition to such rights and
remedies as Indemnitee may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or the failure to fulfill any agreement or
covenant hereunder on the part of Indemnitor, including without limitation the
right to seek specific performance, recession or restitution, none of which
rights or remedies shall be affected or diminished hereby, provided however,
that any remedy available to Purchaser Indemnitiees shall be subject to the
limitations set forth in SECTION 8.4(D).
8.7 Survival. All representations, warranties and agreements contained in
--------
this Agreement or in any certificate delivered pursuant to this Agreement shall
survive the Closings notwithstanding any investigation conducted with respect
thereto or any knowledge acquired as to the accuracy or inaccuracy of any such
representation or warranty.
8.8 Time Limitations. Seller Indemnitors shall have no liability under
----------------
clause (a) of SECTION 8.2 with respect to: (a) the breach of any representation
or warranty, other than those set forth in SECTIONS 5.1, 5.2, 5.11 and 5.15
hereof, unless on or before one (1) years after the Closing Date Seller
Indemnitors are given notice asserting an Indemnification Claim with respect
thereto, and (b) the breach of the representations and warranties of Seller
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<PAGE>
contained in SECTIONS 5.11 hereof, unless notice asserting an Indemnification
Claim based thereon is given to Seller Indemnitors prior to the expiration of
the applicable statute of limitations for the assertion of liability against the
Purchaser based upon the matters that are the subject of the representations and
warranties contained in such Sections. An Indemnification Claim based upon a
breach of the representations and warranties set forth in SECTIONS 5.1, 5.2 and
5.15 or based upon the failure of Seller to perform the covenants and agreements
to be performed by them hereunder may not be made unless on or before twenty
(20) years after the Closing Date Seller Indemnitors are given notice asserting
an Indemnification Claim with respect thereto.
8.9 Subrogation. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitor shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
ARTICLE 9
GENERAL PROVISIONS
9.1 Fees and Expenses. Except as otherwise specifically provided in this
------------------
Agreement, Seller, on the one hand, and Purchaser, on the other hand, shall pay
their respective fees and expenses in connection with the transactions
contemplated by this Agreement.
9.2 Notices. All notices, request, demands, and other communications
--------
hereunder shall be in writing and shall be delivered (a) in person or by
courier, (b) mailed by first class registered or certified mail, or (c)
delivered by facsimile transmission, as follows:
(a) If to Seller:
Call One, Inc.
2100 North Highway 360
Suite 205
Grand Prairie, Texas 75050
Telephone: (____)_________
Telecopier: (____)_________
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with a copy (which shall not constitute notice) to:
Steven E. Smathers, Esq.
3131 McKinney Avenue
Dallas, Texas 75204
Telephone: (214) 871-3320
Telecopier: (214) 871-1620
(b) If to Purchaser:
Satellink Paging LLC
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attn: Mr. Jerry W. Mayfield
Telephone: (770) 772-9909
Telecopier: (770) 664-2650
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: S.J. Nurkin, Esq.
Telephone: (404) 881-7000
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this SECTION 9.2. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
9.3 Assignment; Binding Effect. Except as provided in this SECTION 9.3,
---------------------------
prior to the Closing, this Agreement shall not be assignable by any of the
parties hereto without the written consent of the other; provided, however, that
Purchaser may assign all of its rights hereunder to any subsidiary of Purchaser,
but such assignment shall not relieve Purchaser of its obligations hereunder in
the event such assignee shall fail timely to perform any of such obligations
From and after any such assignment, the word "Purchaser" shall include assignee.
9.4 No Benefit to Others. The representations, warranties, covenants, and
--------------------
agreements contained in this Agreement are for the sole benefit of the parties
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hereto and, in the case of Article 8 hereof, Indemnitee and its heirs,
executors, administrators, legal representatives, successors and assigns, and
they shall not be construed as conferring any rights on any other persons.
9.5 Headings, Gender, "Person" and "Affiliate". All section headings
------------------------------------------
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity,
and any reference to an "affiliate," whether or not such term is capitalized,
with respect to a person shall mean a person or entity that is controlled by,
under common control with or controls such person.
9.6 Counterparts. This Agreement may be executed in two (2) or more
-------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
9.7 Integration of Agreement. This Agreement supersedes all prior
-------------------------
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
9.8 Time of Essence. Time is of the essence in this Agreement.
----------------
9.9 Governing Law. This Agreement shall be construed under the laws of
--------------
the State of Texas.
9.10 Partial Invalidity. Whenever possible, each provision hereof shall
-------------------
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
9.11 Investigation. No inspection, preparation, or compilation of
-------------
information or Schedules, or audit of the inventories, properties, financial
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<PAGE>
condition, or other matters relating to Seller conducted by or on behalf of
Purchaser pursuant to this Agreement shall in any way limit, affect, or impair
the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller set forth herein. Any disclosure made on
one Schedule shall not be deemed made on any other Schedule, unless appropriate
cross-referencing is made. The covenants and representations and warranties of
Seller and Purchaser shall survive the Closing and the execution and delivery of
all instruments of conveyance for the periods set forth in SECTION 8.8.
9.12 Public Announcements. Seller and Purchaser will consult with each
---------------------
other before issuing any press releases or otherwise making any public
statements or filings with governmental entities with respect to this Agreement
or the transactions contemplated hereby and shall not issue any press releases
or make any public statements or filings with governmental entities prior to
such consultation and shall modify any portion thereof if the other party
reasonably objects thereto, unless the same may be required by applicable law.
9.13 Arbitration. The parties agree that any dispute between or among
-----------
them arising out of or based upon this Agreement, the remaining Acquisition
Documents or the consummation of the transactions provided for herein shall be
submitted to and resolved by arbitration in Dallas, Texas in accordance with the
rules and procedures of the American Arbitration Association, and the decision
of the arbiter(s) in such dispute shall be final and binding on the parties to
such arbitration proceeding. Except as the arbiter(s) may otherwise award or
assess the expenses of any such proceeding, each party shall bear its own costs
and expenses, including the expense of its counsel, in any such arbitration
proceeding.
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<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PURCHASER:
(SEAL) SATELLINK PAGING LLC
By: /s/ Jerry W. Mayfield
-------------------------------
Title: President
----------------------------
SELLER:
(SEAL)
CALL ONE, INC.
By: /s/ Larry Simmons
-------------------------------
Title: President
----------------------------
SHAREHOLDERS:
/s/ James Sowell
---------------------------------
James Sowell
/s/ Larry Simmons
----------------------------------
Larry Simmons
JAY LEE JAMESON, AS TRUSTEE OF THE SAFETON TRUST,
dated October 1, 1992
By: /s/ Jay Lee Jameson
--------------------------------
Jay Lee Jameson, Trustee
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<PAGE>
EXHIBIT 10.8
[The Company has entered into agreements substantially similar in all material
respects to this agreement. A schedule of such similar agreements is attached to
this exhibit.]
THE SECURITIES REPRESENTED BY THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES ACTS
OF ANY STATE. THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON THE
EXEMPTIONS FROM REGISTRATION CONTAINED IN SECTION 4(2) OF THE SECURITIES ACT AND
REGULATION D PROMULGATED THEREUNDER AND SECTION 10-5-9(13) OF THE GEORGIA
SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
EFFECTIVE REGISTRATIONS UNDER SUCH ACTS OR IN A TRANSACTION WHICH IS EXEMPT
UNDER SUCH ACTS.
TRANSFER OF THE SECURITIES REPRESENTED BY THIS OPTION IS RESTRICTED PURSUANT TO
SECTIONS 4 AND 13 HEREOF AND, UPON EXERCISE OF THIS OPTION, BY THAT CERTAIN
SHAREHOLDERS' AGREEMENT, DATED AUGUST 1, 1988 BETWEEN THE COMPANY AND THE
STOCKHOLDERS LISTED ON EXHIBIT A THERETO.
Void after 5:00 P.M., Atlanta, Georgia, Time, on
May 31, 2002
OPTION
TO PURCHASE COMMON STOCK OF
SATELLINK COMMUNICATIONS INC.
W I T N E S S E T H:
WHEREAS, THE BRECKENRIDGE GROUP, INC., a Georgia corporation, has assisted
SATELLINK COMMUNICATIONS INC., a Georgia corporation (the "Company"), in
connection with its identification and acquisition of Atlanta Voice Page, Inc.
and C.R., Inc. (collectively, the "Acquisitions"); and
WHEREAS, as compensation for such assistance, the Company, pursuant to and
in accordance with the approval of its Board of Directors, desires to grant to
Mr. Donald W. Rochow ("Rochow"), a principal of The Breckenridge Group, Inc. an
option to purchase 400 shares of the Class A Common Stock, $.01 par value per
share ("Common Stock"), of the Company;
WHEREAS, simultaneously with the granting of this option, the Company has
granted to Messrs. Larry C. Williams, E. Bruce Woodward, Wilkie S. Colyer, Alan
A.
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<PAGE>
McClure, D. Bailey Izard and William G. Benston, Jr. (together with the Holder,
the "Breckenridge Holders") options to purchase an aggregate of 1,600 shares of
the Common Stock of the Company.
NOW, THEREFORE, in consideration of the assistance provided to the Company
in connection with the Acquisitions, the Company hereby grants to Rochow or his
registered assigns (and together with the owner of Option Shares acquired upon
exercise of this Option, the "Holder") the right and option (the "Option") to
purchase from the Company, in whole at any time or in part from time to time
from and including the date hereof to and until 5:00 P.M., Atlanta, Georgia,
Time, on May 31, 2002 (the "Option Period"), all or any part of a total of Four
Hundred (400) shares of Class A Common Stock of the Company (the "Option
Shares") at a price of Three Hundred Eleven and No/100 Dollars ($311.00) per
share (the "Exercise Price"). The number of Option Shares and the Exercise
Price may be adjusted from time to time as hereunder set forth.
1. EXERCISE OF OPTION. Subject to the registration provisions of Section
-------------------
9 hereof, this Option may be exercised in whole at any time or in part from time
to time, on or after May 31, 1997, but not later than 5:00 P.M., Atlanta,
Georgia, Time, on May 31, 2002, of if May 31, 2002 is a day on which banking
institutions are authorized by law to close, then on the next succeeding day
which shall not be such a day, by presentation and surrender hereof to the
Company at the address shown in Section 11 hereof or at the office of its stock
transfer agent, if any, with the Exercise Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of shares specified
in such form, together with all federal and state taxes applicable upon such
exercise. If this Option should be exercised in part only, the Company, upon
surrender of this Option for cancellation, shall execute and deliver a new
Option evidencing the right of the Holder to purchase the balance of the shares
purchasable hereunder. On the date of receipt by the Company of this Option and
the Purchase Form at the office or agency of the Company, in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Class A Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Class A Common Stock shall not then be actually
delivered to the Holder.
2. RESERVATION OF SHARES. The Company hereby agrees that at all times
----------------------
there shall be reserved for issuance and/or delivery upon exercise of this
Option such number of shares of its Class A Common Stock as shall be required
for issuance or delivery upon exercise of this Option.
3. FRACTIONAL SHARES. No fractional shares or scrip representing
------------------
fractional shares shall be issued upon the exercise of this Option. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction,
multiplied by the current market value of such fractional share, determined as
follows:
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<PAGE>
(a) If the Class A Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange, or if the
Class A Common Stock is traded in the NASDAQ National Market System, the
current value shall be the last reported sale price of the Class A Common
Stock on such exchange or National Market System on the last business day
prior to the date of exercise of this Option or if no such sale is made on
such day, the last reported sale price on the next preceding day on which a
sale price was reported on such exchange or National Market System; or
(b) If the Class A Common Stock is not so listed, admitted to unlisted
trading privileges or traded, the current value shall be the mean of the
last reported bid and asked prices reported on NASDAQ (or, if not so quoted
on NASDAQ, by the National Quotation Bureau, Inc.) on the last business day
prior to the date of the exercise of this Option or if no bid or asked
prices are reported on such day, the mean of the last reported bid and
asked prices on the next preceding day on which bid and asked prices were
reported on NASDAQ or by the National Quotation Bureau, Inc.; or
(c) If the Class A Common Stock is not so listed, admitted to unlisted
trading privileges or traded and bid and asked prices are not so reported,
the current value shall be an amount, not less than book value, determined
in such reasonable manner as may be prescribed by the board of Directors of
the Company, such determination to be final and binding on the Holder.
4. EXCHANGE, ASSIGNMENT OR LOSS OF OPTION. This Option may not be sold,
---------------------------------------
transferred, assigned or hypothecated by the Holder, in whole or in part, to any
person. This Option is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company or at the office
of its stock transfer agent, if any, for other Options of different
denominations entitling the Holder thereof to purchase in the aggregate the same
number of shares of Class A Common Stock purchasable hereunder. The term
"Option" as used herein includes any Options issued in substitution for or
replacement of this Option or into which this Option may be divided or
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Option and, in the case of loss,
theft or destruction, of indemnification reasonably satisfactory to the Board of
Directors of the Company, and upon surrender and cancellation of this Option if
mutilated, the Company will execute and deliver a new Option of like tenor and
date. Any such new Option executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this Option so
lost, stolen, destroyed or mutilated shall be at any time enforceable by anyone.
5. RIGHTS OF THE HOLDER. Except as otherwise provided herein, the Holder
---------------------
shall not, by virtue hereof, be entitled to any rights of a shareholder in the
Company, either at law or equity, and the rights of the Holder are limited to
those expressed in the Option.
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<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
----------------------------------------------
and warrants to the Holder as follows:
(a) ORGANIZATION AND STANDING. The Company is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has full corporate power and authority to carry on its business as
and where it is now being conducted.
(b) AUTHORITY. The Company has full legal power and authority to execute
----------
and deliver this Option, to perform all of the Company's obligations hereunder
and to consummate the transactions contemplated hereby, and no consent or
approval of any person or governmental authority is required therefor that has
not been obtained as of the date hereof. This Option and the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company, and this Option constitutes the legal, valid and binding
obligation of the Company and is enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors which affect the validity and enforcement
of creditors' rights and subject to equitable principles limiting the
enforceability of rights to obtain specific performance and similar equitable
relief.
(c) NO VIOLATION. Neither the execution and delivery of this Option nor
-------------
the consummation by the Company of the transactions contemplated hereby will (i)
result in the breach of any of the terms or conditions of, or constitute a
default (or an event which with the giving of notice or the passage of time or
both would constitute a default) under or cause the termination of any
agreement, mortgage, license, permit or other instrument or obligation to which
the Company is a party or by which the Company, the Option Shares or the
Company's properties or assets are bound or subject and which would have a
material adverse effect on the Company, its operations or the transactions
contemplated hereby, (ii) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority applicable to
the Company or the Option Shares, (iii) result in or require the creation of any
lien, security interest, charge or other encumbrance upon or with respect to
such Option Shares or (iv) result in a violation of the Company's certificate of
incorporation or bylaws.
(d) REPRESENTATIONS AND WARRANTIES TRUE AS OF DATE AND EXERCISE OF OPTION.
----------------------------------------------------------------------
The representations and warranties made pursuant to this Section 6 are true and
correct as of the date hereof. In addition, the representations and warranties
made pursuant to Section 6(c) contained herein will be true and correct on and
as of the date of exercise of this Option, with the same force and effect as
though such representations and warranties had been made on or as of each such
date of exercise of this Option. All representations and warranties shall
survive the granting and each exercise of this Option.
7. INVESTMENT REPRESENTATION. The Holder represents and warrants to the
--------------------------
Company that it is acquiring this Option and any Option Shares for investment
for its
-4-
<PAGE>
own account and not with a view to participating directly or indirectly in any
public resale or distribution thereof and will not sell this Option, the Option
Shares or any portion(s) thereof in violation of the Securities Act of 1933, as
amended (the "Securities Act") or applicable state securities laws. Unless the
Option Shares which may be acquired upon the exercise of this Option have been
registered under the Securities Act and applicable state securities laws,
certificates representing Option Shares acquired upon exercise of this Option,
or any portion thereof, shall bear a legend reading substantially as follows:
The securities representing by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state. These securities have been issued or sold in
reliance on the exemptions from registration contained in Section 4(2) of
the Securities Act and Section 10-5-9(13) of the Georgia Securities Act of
1973 and may not be sold or transferred except pursuant to effective
registrations under such Acts or in a transaction which is exempt under
such Acts.
8. ANTI-DILUTION PROVISIONS.
-------------------------
(a) CHANGES IN CAPITALIZATION. If the Company shall (i) pay a dividend in
--------------------------
shares of its Class A Common Stock, (ii) subdivide the outstanding shares of
Class A Common Stock into a larger number of shares, or (iii) combine its
outstanding shares of Class A Common Stock into a smaller number of shares, the
number of shares thereafter subject to the Option shall be increased or
decreased, as the case may be, by multiplying the previously existing number of
shares subject to this Option by a fraction, the denominator of which shall be
the number of shares of Class A Common Stock outstanding immediately prior to
the happening of any of the events described above and the numerator of which
shall be the number of shares of Class A Common Stock outstanding immediately
thereafter. Similarly, the Exercise Price per share shall be adjusted in such
event by multiplying the previously existing Exercise Price per share by the
inverse of the fraction used in adjusting the number of shares subject to this
Option.
(b) CONSOLIDATION OR MERGER. In the case of any consolidation of the
------------------------
Company with, or merger of the Company into, any other corporation (other than a
consolidation or merger in which the Company is the continuing corporation), the
corporation formed by such consolidation or the corporation into which the
Company shall have been merged, as the case may be, shall execute and deliver to
the Holder a certificate stating that the Holder shall have the right thereafter
(until the expiration of this Option) to exercise this Option in exchange for
the kind and amount of shares of Class A Common Stock into which this Option
might have been converted immediately prior to such consolidation or merger,
subject to adjustment as provided hereinabove. The above provisions of this
paragraph shall similarly apply to successive consolidations or mergers.
-5-
<PAGE>
(c) EXCHANGES AND DISTRIBUTIONS WITH RESPECT TO CLASS A COMMON STOCK. If
-----------------------------------------------------------------
the Company shall exchange for its Class A Common Stock or distribute with
respect to its Class A Common Stock other securities or rights issued by it, the
Company shall give notice thereof to the Holder and the Holder shall have the
right thereafter (until the expiration of this Option) to exercise this Option
for the kind and amount of shares of stock and other property or securities
retained or received by a holder of the number of shares of Class A Common Stock
of the Company into which this Option might have been converted immediately
prior to such exchange or distribution, subject to adjustment as provided
hereinabove.
(d) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
----------------------
as required by the provisions of this Section 8, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder, and the Company, forthwith after each such adjustment,
shall deliver a copy of such certificate to the Holder.
(e) NOTICE TO HOLDER. The Company shall give written notice to the Holder
-----------------
of the announcement, declaration or occurrence of any event involving a change
in capitalization, an agreement regarding a consolidation, merger or sale or
transfer of all or substantially all of the assets of the Company, or agreement
in connection with an exchange and/or distribution with respect to the Class A
Common Stock of the Company, as soon as reasonably practicable following
entering into such agreement or agreement in principle or the announcement,
declaration or occurrence of any such event, provided however, that the Company
shall not be required to give notice of an agreement regarding a consolidation,
merger with or into or sale or transfer of all or substantially all of the
Company's assets to a wholly owned subsidiary of the Company. Such notice shall
provide reasonable detail of the event, occurrence or agreement in order to
allow the Holder sufficient time to determine whether or not the Option should
be exercised prior to the consummation of such an event.
9. PIGGYBACK REGISTRATION.
-----------------------
(a) If, any time or from time to time after the date hereof and prior to
May 31, 2002, the Company proposes to register (except pursuant to a
registration statement on Form S-4 or S-8) any of its securities under the
Securities Act of 1933, as amended (the "Act") (whether in connection with the
offering of securities for sale by the Company or its stockholders or both),
other than in the Company's first offering of Common Stock of the Company that
is registered under the Act, which offering is underwritten on a firm commitment
basis and produces gross proceeds to the Company in excess of $30,000,000 (the
"Initial Public Offering"), where only securities of the Company are proposed to
be included therein, and the registration form to be used may be used for the
registration of (i) any Class A Common Stock, or (ii) any capital stock of
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<PAGE>
the Company issued or issuable with respect to the Class A Common Stock
described in clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization ("Registrable Securities" and a "Piggyback
Registration," respectively), the Company shall give prompt written notice to
Holder of its intention to effect such a registration and shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within twenty (20) Business Days
after the receipt of the Company's notice.
(b) The Registration Expenses (as defined below) of Holder shall be paid by
the Company in all Piggyback Registrations.
(c) If a Piggyback Registration is an underwritten primary registration on
behalf of the Company, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include securities in such registration in the following order of priority (i)
first, the securities the Company proposes to sell, (ii) second, the Registrable
Securities requested to be included in such registration by the Breckenridge
Holders and (iii) third, other securities requested to be included in such
registration.
(d) If a Piggyback Registration is an underwritten secondary registration
on behalf of holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include securities in such registration in the
following order of priority (i) first, the securities requested to be included
therein by the other holders requesting such registration, (ii) second, any
securities the Company proposes to sell, (iii) third, the Registrable Securities
requested to be included in such registration, by the Breckenridge Holders, and
(iv) fourth, other securities requested to be included in such registration.
(e) If the Company has previously filed a registration statement with
respect to Registrable Securities pursuant to this Section 9.1, and if such
previous registration has not been withdrawn or abandoned, the Company shall not
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Act (except on Form S-8 or any successor form),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 180 days has elapsed from the effective
date of such previous registration.
(f) If Holder is selling Registrable Securities in an underwritten
offering, Holder shall not be required to make any representations or warranties
to the Company or the underwriters (other than representations and warranties
regarding Holder
-7-
<PAGE>
and Holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 9.6.
9.2 LOCKUP AGREEMENTS. If requested to do so by the underwriters managing
------------------
the registered public offering, the Company (a) shall not effect any public sale
or distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the one hundred eighty (180) day period beginning on the effective
date of any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), and (b) Holder shall agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted).
9.3 DESIGNATION OF UNDERWRITER. In the case of any registration pursuant
---------------------------
to the provisions of Section 9.1 hereof which is proposed to be effected
pursuant to a firm commitment underwriting, the Company shall select the
managing underwriter, and Holder shall sell such shares only pursuant to such
underwriting.
9.4. REGISTRATION PROCEDURES. Whenever Holder has requested that any
-----------------------
Registrable Securities be registered pursuant to this Agreement, the Company
shall use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by Holder
copies of all such documents proposed to be filed, and such counsel shall have
the opportunity to review and comment on such);
(b) notify Holder of the effectiveness of each registration statement filed
hereunder and prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days and to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to Holder such number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents
-8-
<PAGE>
as such seller may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by Holder;
(d) use its best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify Holder, at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller, the
Company shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-I of the Securities and Exchange Commission or, failing that, to
secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, use its best efforts to arrange for at
least two market makers to register as such with respect to such Registrable
Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as Holder or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full
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<PAGE>
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder;
(j) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(k) use its best efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
(l) use its best efforts to obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request (provided
that such Registrable Securities constitute at least ten percent (10%) of the
securities covered by such registration statement); and
(m) if any such registration or comparable statement refers to any holder
by name or otherwise as the holder of any securities of the Company and if in
such holder's sole and exclusive judgment, such holder is or might be deemed to
be an underwriter or a controlling person of the Company, such holder shall have
the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such holder and presented to the Company in
writing, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder shall assist in meeting any future financial requirements of
the Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Act or any similar Federal statute then in
force, the deletion of the reference to such holder; provided that with respect
to this clause (ii) such holder shall furnish to the Company an opinion of
counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to the Company.
9.5 REGISTRATION EXPENSES.
----------------------
(a) All expenses incident to the Company's performance of or compliance
with this Section 9, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, fees and disbursements of custodians,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other persons
-10-
<PAGE>
retained by the Company (all such expenses being herein called "Registration
Expenses"), shall be borne as provided in this Section 9, except that the
Company shall, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the NASD
automated quotation system.
(b) In connection with each Piggyback Registration, the Company shall
reimburse the Breckenridge Holders, collectively, for the reasonable fees and
disbursements of one counsel, not to exceed an aggregate of $25,000.
(c) To the extent Registration Expenses are not required to be paid by the
Company, Holder shall pay those Registration Expenses allocable to the
registration of Holder's securities so included, and any Registration Expenses
not so allocable shall be borne by all sellers of securities included in such
registration in proportion to the aggregate selling price of the securities to
be so registered.
(d) Underwriting discounts and commissions and transfer taxes relating to
the Registrable Securities included in any registration hereunder, and all fees
and expenses of counsel for Holder (other than fees and expenses of one counsel
chosen by Holder as provided in Section 9.5(b) above) shall be borne and paid by
Holder.
9.6 INDEMNIFICATION.
----------------
(a) The Company agrees to indemnify, to the extent permitted by law,
Holder, its officers and directors and each person who controls such Holder
(within the meaning of the Act) against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by Holder
expressly for use therein or by Holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such Holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Act) to the same extent as
provided above with respect to the indemnification of Holder.
(b) In connection with any registration statement in which Holder is
participating, Holder shall furnish to the Company in writing such information
and affidavits relating to Holder as the Company reasonably requests for use in
connection
-11-
<PAGE>
with any such registration statement or prospectus and, to the extent permitted
by law, shall indemnify the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by Holder; provided that the
obligation to indemnify shall be shall be limited to the net amount of proceeds
received by Holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Section 9.6 shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and shall survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
9.7 CONTRIBUTION. If the indemnification provided for in this Section 9
-------------
is unavailable to or insufficient to hold harmless an indemnified party under
Section 9.6 hereof (other than by reason of exceptions or other limitations
provided in such Section) in respect of any losses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and Holder on the other hand from its sale of
Registrable Securities or if such allocation is not permitted by applicable law,
the relative fault of the
-12-
<PAGE>
Company on the one hand and of Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
Holder and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 9.6, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and Holder agree that it would not be just and equitable if
contribution pursuant to this Section 9.7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9.8. OTHER INDEMNIFICATION. Indemnification similar to that specified
----------------------
herein (with appropriate modifications) shall be given by the Company and Holder
with respect to any required registration or other qualification of securities
under any state law or regulation or governmental authority other than the Act.
9.9 PUBLIC REPORTS. If the Company shall have filed a registration
---------------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Act, the Company
thereafter shall use its best efforts to file the reports required to be filed
by it under the Exchange Act on a timely basis. Further, the Company shall use
its best efforts to make such filings and disclosures as are necessary for
Holder to dispose of its Common Stock pursuant to Rule 144 under the Securities
Act.
10. ACCESS TO INFORMATION. During the Option Period, the Company shall
----------------------
provide or make available to the Holder, all reports, financial statements and
information available or furnished to shareholders of the Company. The Company
also shall furnish to the Holder any and all reports, information, documents and
materials filed by the Company with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities Dealers.
The Company agrees that it shall provide to Holders quarterly unaudited
financial statements within 60 days after the end of each fiscal quarter and
annual certified financial statements within 120 days after the end of the
fiscal year. Such financial statements shall be prepared in accordance with
generally accepted accounting principles, consistently applied. During the
option period, the Company shall give notice to the Holder of any and all
meetings of the shareholders of the Company, at the same time such notice is
provided to shareholders and shall permit
-13-
<PAGE>
the Holder and its representatives to attend any such meetings; the Company
shall further advise the Holder of all material actions taken by the Board of
Directors of the Company at all regular or special meetings thereof and also
shall inform the Holder of any and all actions taken either by directors or
shareholders by written consent. The Holder agrees to keep all nonpublic
information provided to it pursuant to this Section 10 confidential to it and
its representatives.
11. NOTICES. All notices or other communications hereunder shall be in
--------
writing and shall be effective (i) when personally delivered by courier or
otherwise to the party to be given such notice or other communication or (ii) on
the third day following the date deposited in the United States mail if such
notice of other communication is sent by certified or registered mail with
return receipt requested and postage thereof fully prepaid. The addresses for
such notices shall be as follows:
If to the Company:
Satellink Communications Inc.
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attn: Jerry W. Mayfield
With a copy to:
Alston & Bird
1201 W. Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Sidney J. Nurkin
If to Holder:
Donald W. Rochow
The Breckenridge Group, Inc.
Resurgens Plaza - Suite 2100
945 East Paces Ferry Road
Atlanta, Georgia 30326
Any party hereto may, by notice to the other parties hereunto, change its
address for receipt of notices hereunder.
12. GOVERNING LAW. This Option shall be governed by, and construed in
--------------
accordance with, the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such state and without
regard to laws relating to conflict of law.
-14-
<PAGE>
13. STOCKHOLDERS AGREEMENT. Upon exercise of this Option, Holder shall
-----------------------
enter into that certain Stockholders Agreement, dated August 1, 1988 by and
between the Company and the stockholders listed on Exhibit A thereto.
14. APPOINTMENT OF REPRESENTATIVE. By the execution and delivery of this
------------------------------
agreement, including counterparts hereof, Holder hereby irrevocably constitutes
and appoints Alan A. McClure as the true and lawful agent and attorney-in-fact
(the "Representative") of Holder with full powers of substitution to act in the
name, place and stead of Holder with respect to the matters contained in this
agreement, as the same may be from time to time amended, and to do or refrain
from doing all such further acts and things, and to execute all such documents,
as the Representative shall deem necessary or appropriate in connection with any
of the transactions contemplated under this Agreement, including the power:
(a) to execute and deliver all ancillary agreements, certificates, and
documents which the Representative deems necessary or appropriate in connection
with the consummation of the transactions contemplated by the terms and
provisions of this Agreement;
(b) to act for Holder with respect to all matters referred to in this
agreement, including the right to settle, compromise, litigate or arbitrate any
claim on behalf of Holder arising under this agreement or out of the
transactions provided for herein;
(c) to terminate, amend, or waive any provision of this agreement; provided
that any such action, shall be taken in the same manner with respect to all
Breckenridge Holders, unless otherwise agreed by each Breckenridge Holder who is
subject to any disparate treatment of a potentially adverse nature;
(d) to employ and obtain the advice of legal counsel, accountants and other
professional advisors as the Representative, in his sole discretion, deems
necessary or advisable in the performance of its duties as Representative and to
rely on their advice and counsel;
(e) to incur expenses, including fees of attorneys and accountants, in
connection with the consummation of the transactions contemplated by this
agreement, and any other fees and expenses allocable or in any way relating to
such transactions;
(f) to do or refrain from doing any further act or deed on behalf of Holder
which the Representative deems necessary or appropriate in his sole discretion
relating to the subject matter of this agreement as fully and completely as
Holder could do if personally present and acting.
-15-
<PAGE>
The appointment of the Representative shall be deemed coupled with an
interest and shall be irrevocable, and the Company and any other person may
conclusively and absolutely rely, without inquiry, upon any action of the
Representative as the act of Holder in all matters referred to in this
Agreement, Holder hereby ratifies and confirms all that the Representative shall
do or cause to be done by virtue of his appointment as Representative of Holder.
The Representative shall act for Holder on all of the matters set forth in this
agreement in the manner the Representative believes to be in the best interest
of Holder and consistent with his obligations under this agreement, but the
Representative shall not be responsible to Holder for any loss or damage Holder
may suffer by reason of the performance by the Representative of his duties
under this agreement, other than loss or damage arising from willful violation
of law or gross negligence in the performance of his duties under this
agreement.
Holder hereby expressly acknowledges and agrees that the Representative is
authorized to act on behalf of Holder notwithstanding any dispute or
disagreement among the Breckenridge Holders, and that the Company shall be
entitled to rely on any and all action taken by the Representative under this
agreement without liability to, or obligation to inquire of, any of the
Breckenridge Holders. The Company is hereby expressly authorized to rely on the
genuineness of the signature of the Representative. Upon receipt of any writing
which reasonably appears to have been signed by the Representative, the Company
may act upon the same without any further duty of inquiry as to the genuineness
of the writing. If the Representative resigns or ceases to function in his
capacity as such for any reason whatsoever, then a majority in number of the
Breckenridge Holders shall appoint a successor; provided, however, that if for
any reason no successor has been appointed within thirty (30) days, then Holder
shall have the right to petition a court of competent jurisdiction for
appointment of a successor. Holder agrees to indemnify and hold the
Representative harmless from and against any and all liability, loss, cost,
damage or expense (including without limitation attorneys' fees) reasonably
incurred or suffered as a result of the performance of its duties under this
Agreement, except for willful violation of law or gross negligence.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
President and attested by its Secretary and its corporate seal to be affixed
hereto on this 31 day of May, 1997.
-16-
<PAGE>
SATELLINK COMMUNICATIONS INC.
By: /s/ Jerry W. Mayfield
--------------------------------
Name: Jerry W. Mayfield
Title: President and Chief
Executive Officer
Attest: /s/ Daniel D. Lensgraf
----------------------------
(SEAL) Name: Daniel D. Lensgraf
Title: Secretary
ACCEPTED on the 31 day of May, 1997
/s/ Donald W. Rochow
- -----------------------------------
Donald W. Rochow
Attest:
----------------------------
-17-
<PAGE>
PURCHASE FORM
Dated: , 19__.
The undersigned hereby irrevocably elects to exercise the attached Option
to the extent of purchasing ________ of the 400 shares (__________ of the
__________ shares as adjusted) of Class A Common Stock and hereby makes payment
of $________ in payment of the actual exercise price thereof.
====================
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
--------------------------------------------------------------------------
(please type or print in block letters)
Taxpayer I.D. Number:
----------------------------------------------------------
------------------------------------------------------------
Signature:
---------------------------------------------------------------------
====================
-18-
<PAGE>
Schedule to Exhibit 10.8
The Company has granted Options to Purchase its Class A Common Stock
substantially identical in all material respects to Exhibit 10.7 except as to
the optionees thereto and the number of shares subject to options thereunder to
the following principals of The Breckenridge Group:
Optionee: Number of Shares*
-------- ----------------
Larry C. Williams 26,000
E. Bruce Woodward 26,000
Wilkie S. Colyer 26,000
Alan A. McClure 13,000
D. Bailey Izard 8,450
William G. Banston, Jr. 4,550
* All share amounts reflect a 64 for-one share dividend declared and paid by the
Company subsequent to the date of the grant of the options.
<PAGE>
EXHIBIT 10.9
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of June 27, 1997
By and Among
SATELLINK COMMUNICATIONS, INC.,
a Georgia corporation formerly known as
Satellink Paging, Inc.,
as Parent
SATELLINK PAGING, LLC,
as Borrower
THE LENDERS NAMED HEREIN,
and
CREDITANSTALT-BANKVEREIN,
as Agent
<PAGE>
TABLE OF CONTENTS
Page No.
--------
1. DEFINITIONS, TERMS AND REFERENCES...........................................2
1.1 CERTAIN DEFINITIONS.....................................................2
1.2 USE OF DEFINED TERMS...................................................15
1.3 ACCOUNTING TERMS; CALCULATIONS.........................................15
1.4 OTHER TERMS............................................................15
1.5 TERMINOLOGY............................................................15
1.6 EXHIBITS...............................................................15
2. THE LOANS..................................................................15
2.1 REVOLVING CREDIT LOANS.................................................15
2.2 TERM LOAN..............................................................16
2.3 BORROWING PROCEDURES...................................................17
2.4 LOAN ACCOUNT; STATEMENTS OF ACCOUNT....................................17
2.5 USE OF PROCEEDS........................................................18
2.6 SEVERAL OBLIGATIONS OF THE LENDERS; REMEDIES INDEPENDENT...............18
2.7 TERMINATION............................................................18
2.8 PAYMENTS...............................................................18
2.9 PRORATA TREATMENT......................................................19
2.10 PREPAYMENT; COMMITMENT REDUCTION......................................19
2.11 SHARING OF PAYMENTS...................................................20
2.12 CERTAIN NOTICES.......................................................21
3. FEES AND INTEREST..........................................................22
3.1 INTEREST...............................................................22
3.2 INTEREST PERIOD........................................................23
3.3 LIMITATIONS ON INTEREST PERIODS AND LOANS..............................24
3.4 CONVERSIONS AND CONTINUATIONS..........................................24
3.5 FEES...................................................................24
3.6 ILLEGALITY; INABILITY TO DETERMINE THE QUOTED RATE.....................24
3.7 INCREASED COSTS AND REDUCED RETURN.....................................25
3.8 INDEMNITY..............................................................26
3.9 NOTICE OF AMOUNTS PAYABLE TO LENDERS...................................26
3.10 INTEREST SAVINGS CLAUSE...............................................26
4. SECURITY INTEREST - COLLATERAL.............................................27
4.1 SECURITY INTEREST......................................................27
4.2 PERFECTION OF SECURITY INTEREST........................................27
4.3 RIGHT TO INSPECT; VERIFICATIONS........................................28
5. REPRESENTATIONS AND WARRANTIES.............................................28
5.1 CORPORATE EXISTENCE AND QUALIFICATION .................................28
5.2 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS...........................29
5.3 CORPORATE AUTHORITY....................................................29
5.4 NO CONSENTS; VALIDITY AND BINDING EFFECT...............................29
5.5 NO MATERIAL LITIGATION.................................................29
ii
<PAGE>
5.6 CORPORATE ORGANIZATION.................................................29
5.7 SOLVENCY...............................................................29
5.8 ADEQUACY OF INTANGIBLE ASSETS..........................................29
5.9 TAXES..................................................................30
5.10 ERISA.................................................................30
5.11 FINANCIAL INFORMATION.................................................30
5.12 TITLE TO ASSETS.......................................................31
5.13 VIOLATIONS OF LAW.....................................................31
5.14 ENVIRONMENTAL LAWS....................................................31
5.15 NO DEFAULT............................................................32
5.16 BONA FIDE ACCOUNTS....................................................32
5.17 AMOUNT OF ACCOUNTS; NO SETOFFS........................................32
5.18 RIGHT TO ASSIGN.......................................................32
5.19 CORPORATE AND TRADE OR FICTITIOUS NAMES...............................32
5.20 EQUIPMENT.............................................................32
5.21 INVENTORY.............................................................33
5.22 INVESTMENTS...........................................................33
5.23 TRADE RELATIONS.......................................................33
5.24 BROKER'S OR FINDER'S FEES.............................................33
5.25 SECURITY INTEREST.....................................................33
5.26 REGULATORY MATTERS....................................................33
5.27 DISCLOSURE............................................................34
5.28 BURDENSOME RESTRICTIONS...............................................34
5.29 LABOR MATTERS.........................................................34
5.30 EXISTING DEBT.........................................................34
5.31 REGULATION OF THE AGENT AND THE LENDERS...............................34
6. AFFIRMATIVE COVENANTS......................................................34
6.1 RECORDS RESPECTING COLLATERAL; LOCKBOX OR BLOCKED ACCOUNT ARRANGEMENT..35
6.2 REPORTING REQUIREMENTS.................................................35
6.3 TAX RETURNS............................................................36
6.4 COMPLIANCE WITH LAWS...................................................36
6.5 ENVIRONMENTAL LAWS.....................................................36
6.6 ERISA..................................................................37
6.7 BOOKS AND RECORDS......................................................37
6.8 NOTIFICATIONS TO THE LENDERS AND THE AGENT.............................37
6.9 INSURANCE..............................................................38
6.10 MAINTENANCE OF PROPERTY...............................................38
6.11 CONDUCT OF BUSINESS...................................................38
6.12 PRESERVATION OF CORPORATE OR LIMITED LIABILITY COMPANY EXISTENCE......38
6.13 EQUIPMENT.............................................................38
6.14 ASSIGNMENT OF LEASEHOLD INTERESTS.....................................39
6.15 COMPLIANCE WITH LICENSE REQUIREMENTS..................................39
6.16 OTHER INDEBTEDNESS....................................................39
6.17 TRANSFER OF AGREEMENTS, CONSENTS AND LICENSES.........................39
7. NEGATIVE COVENANTS.........................................................39
7.1 NO ENCUMBRANCES........................................................39
7.2 INDEBTEDNESS...........................................................40
7.3 ASSET SALES............................................................40
7.4 GUARANTIES.............................................................40
7.5 INVESTMENTS AND ACQUISITIONS...........................................40
7.6 CORPORATE OR LIMITED LIABILITY COMPANY STRUCTURE.......................41
iii
<PAGE>
7.7 FISCAL YEAR............................................................41
7.8 ERISA..................................................................41
7.9 RELOCATIONS; USE OF NAME...............................................41
7.10 ARM'S-LENGTH TRANSACTIONS.............................................41
7.11 AMENDMENT OF DISTRIBUTION AGREEMENT...................................42
7.12 DIVIDENDS.............................................................42
7.13 OPERATING LEASES......................................................42
7.14 FM SUBCARRIER LEASE AGREEMENTS........................................42
8. FINANCIAL COVENANTS........................................................43
8.1 INTEREST COVERAGE RATIO................................................43
8.2 NET WORTH..............................................................43
8.3 SENIOR DEBT/CASH FLOW RATIO............................................44
8.4 TOTAL DEBT/CASH FLOW RATIO.............................................44
9. EVENTS OF DEFAULT..........................................................45
9.1 OBLIGATIONS............................................................45
9.2 MISREPRESENTATIONS.....................................................45
9.3 LOAN DOCUMENT DEFAULTS.................................................45
9.4 DISTRIBUTION AGREEMENT DEFAULT OR TERMINATION..........................45
9.5 OTHER DEBTS............................................................45
9.6 TAX LIEN...............................................................46
9.7 ERISA..................................................................46
9.8 VOLUNTARY BANKRUPTCY...................................................46
9.9 IN VOLUNTARY BANKRUPTCY................................................46
9.10 SUSPENSION OF BUSINESS................................................47
9.11 JUDGMENTS.............................................................47
9.12 MANAGEMENT............................................................47
9.13 RICO..................................................................47
9.14 SECURITY DOCUMENTS; FAILURE OF SECURITY...............................47
9.15 OWNERSHIP OF THE BORROWER'S CAPITAL STOCK.............................47
10. REMEDIES..................................................................47
10.1 DEFAULT RATE.........................................................48
10.2 TERMINATION; ACCELERATION OF THE OBLIGATIONS.........................48
10.3 SET-OFF..............................................................48
10.4 RIGHTS AND REMEDIES OF A SECURED PARTY...............................48
10.5 TAKE POSSESSION OF COLLATERAL........................................48
10.6 SALE OF COLLATERAL...................................................48
10.7 JUDICIAL PROCEEDINGS.................................................49
10.8 NOTICE...............................................................49
10.9 APPOINTMENT OF AGENT AS OBLIGORS' LAWFUL ATTORNEY....................49
11. CONDITIONS PRECEDENT......................................................50
11.1 CONDITIONS PRECEDENT TO INITIAL LOAN.................................50
11.2 ALL LOANS............................................................53
11.3 DELAY IN SATISFACTION OF CONDITIONS PRECEDENT........................53
12. THE AGENT.................................................................54
12.1 APPOINTMENT, POWERS AND IMMUNITIES...................................54
12.2 RELIANCE BY AGENT....................................................54
12.3 DEFAULTS.............................................................54
iv
<PAGE>
12.4 RIGHTS AS A LENDER...................................................55
12.5 INDEMNIFICATION......................................................55
12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS..............................55
12.7 FAILURE TO ACT.......................................................56
12.8 RESIGNATIN OR REMOVAL OF AGENG; CO-AGENT.............................56
12.9 COLLATERAL MATTERS...................................................57
12.10 BORROWER NOT A BENEFICIARY..........................................58
13. MISCELLANEOUS.............................................................58
13.1 WAIVER...............................................................58
13.2 SURVIVAL.............................................................59
13.3 ASSIGNMENTS; SUCCESSORS AND ASSIGNS..................................59
13.4 COUNTERPARTS.........................................................61
13.5 EXPENSE REIMBURSEMENT................................................61
13.6 SEVERABILITY.........................................................62
13.7 NOTICES..............................................................62
13.8 ENTIRE AGREEMENT; AMENDMENT..........................................62
13.9 TIME OF THE ESSENCE..................................................63
13.10 INTERPRETATION......................................................63
13.11 LENDERS, AGENT NOT JOINT VENTURERS..................................63
13.12 CURE OF DEFAULTS BY LENDERS.........................................63
13.13 INDEMNITY...........................................................63
13.14 TERMINATION STATEMENTS..............................................64
13.15 GOVERNING LAW; JURISDICTION.........................................64
13.16 WAIVER OF JURY TRIAL................................................64
v
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1.1 - FM Station Agreements
Schedule 1.2 - Lease Agreements
Schedule 1.3 - Permitted Liens
Schedule 5.2 - Chief Executive Office; Collateral Locations
Schedule 5.5 - Litigation
Schedule 5.8 - Intangible Assets
Schedule 5.9 - Taxes
Schedule 5.10 - ERISA Matters
Schedule 5.12 - Title to Assets
Schedule 5.19 - Corporate and Trade or Fictitious Names
Schedule 5.22 - Investments
Schedule 5.29 - Labor Matters
Schedule 5.30 - Existing Debt
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C - Form of Notice of Borrowing or Conversion/Continuation
Exhibit D - Form of Subcarrier Lease
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Assignment and Acceptance Agreement
vi
<PAGE>
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made and
entered into as of the 27th day of June, 1997, by and among SATELLINK
COMMUNICATIONS, INC., a Georgia corporation f/k/a Satellink Paging, Inc., having
a principal place of business at 1325 Northmeadow Parkway, Suite 120, Roswell,
Georgia 30076 (hereinafter referred to as "Parent"), SATELLINK PAGING, LLC, a
Georgia limited liability company, having a principal place of business at 1325
Northmeadow Parkway, Suite 120, Roswell, Georgia 30076 (herewith referred to as
"Borrower"; the Parent and the Borrower are sometimes collectively hereinafter
referred to as the "Obligors" and individually as an "Obligor") and an Austrian
banking corporation acting through its Connecticut (Federal) branch, with
offices at Two Greenwich Plaza, Greenwich, Connecticut 06830 and the financial
institutions from time to time party hereto (collectively, the "Lenders"), and
CREDITANSTALT-BANKVEREIN ("Creditanstalt"), an Austrian banking corporation
acting through its Connecticut (Federal) branch, with offices at Two Greenwich
Plaza, Greenwich, Connecticut 06830, in its separate capacity as agent for the
Lenders (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Parent and Creditanstalt entered into that certain Loan and
Security Agreement, dated as of December 23, 1992, as amended by that certain
First Amendment to Loan and Security Agreement dated as of December 31, 1993, as
further amended by that certain Second Amendment to Loan and Security Agreement
dated as of March 31, 1994, as further amended by that certain Consent, Waiver
and Third Amendment to Loan and Security Agreement dated as of December 23,
1994, as further amended by that certain Consent, Waiver and Fourth Amendment to
Loan and Security Agreement dated as of June 30, 1995, and as further amended by
that certain Fifth Amendment to Loan and Security Agreement dated as of October
24, 1995 (as so amended, the "Original Loan Agreement"), pursuant to which
Creditanstalt made available to the Parent a term loan and a revolving credit
facility; and
WHEREAS, the Parent and Creditanstalt entered into that certain Amended
and Restated Loan and Security Agreement, dated as of November 17, 1995, as
amended by that certain First Amendment to Amended and Restated Loan and
Security Agreement dated as of May 31, 1996 (as so amended, the "First Restated
Loan Agreement"), pursuant to which Creditanstalt and the Parent agreed, among
other things, to increase the principal amount of the term loan to $5,500,000
and to increase the revolving credit facility commitment to $8,500,000; and
WHEREAS, the Parent transferred substantially all of its assets and
liabilities to the Borrower, its direct, wholly-owned Subsidiary; and
WHEREAS, the Parent, the Borrower and Creditanstalt entered into that
certain Second Amended and Restated Loan and Security Agreement, dated as of
January 31, 1997, as amended
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by that certain First Amendment to Second Amended and Restated Loan and Security
Agreement dated as of May 20, 1997 (as so amended, the "Second Restated Loan
Agreement") (i) to substitute the Borrower for the Parent as "Borrower"
thereunder, (ii) to increase the revolving line of credit provided for therein
to Seventeen Million Dollars ($17,000,000), (iii) to increase the amount of the
outstanding principal amount of term loan to Eight Million Dollars ($8,000,000),
and (iv) to make certain other changes thereto; and
WHEREAS, for the sake of convenience, the Obligors, the Lenders and the
Agent desire to restate in its entirety the Second Restated Loan Agreement; and
WHEREAS, this Agreement represents a continuation of the Original Loan
Agreement and the First Restated Loan Agreement, as previously amended and as
amended hereby, and is not a termination of the Original Loan Agreement nor a
replacement, satisfaction or repayment of the Indebtedness of Parent incurred
under the Original Loan Agreement or the First Restated Loan Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, to induce the
Lenders and the Agent to enter into this Agreement and to extend the financing
provided for herein, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are acknowledged by the Obligors, the
Obligors, the Lenders and the Agent hereby agree as follows:
1. DEFINITIONS, TERMS AND REFERENCES
1.1 Certain Definitions. When used herein, the following terms shall have
the following respective meanings:
"Accounts" shall mean, as to either Obligor, all of such Obligor's
accounts, contract rights, chattel paper and instruments (whether now existing
or hereafter acquired or arising or in which such Obligor now has or hereafter
acquires any rights), including, without limitation, all present and future
rights to payments for goods, merchandise or Inventory sold or leased or for
services rendered, whether or not represented by instruments, chattel paper,
invoices or other billing, and whether or not earned by performance; proceeds of
any letter of credit on which such Obligor is a beneficiary and all forms of
obligations whatsoever owing to such Obligor, together with all instruments and
documents of title representing any of the foregoing, all rights in any goods,
merchandise or Inventory which any of the foregoing may represent, all rights in
any returned or repossessed goods, merchandise or Inventory, and all rights,
security and guaranties with respect to each of the foregoing, including,
without limitation, any rights of stoppage in transit.
"Account Debtor" shall mean any Person who is or may become obligated to
either Obligor on any Account.
"Affiliate" shall mean, as to any Person, any other Person which, directly
or indirectly, owns or controls, on an aggregate basis, including all beneficial
ownership and ownership or
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control as a trustee, guardian or other fiduciary, at least five percent (5%) of
the outstanding shares of Capital Stock having ordinary voting power to elect a
majority of the board of directors or other governing body (irrespective of
whether, at the time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) of such Person or at least five percent (5%) of the partnership
or other ownership interest of such Person; or which controls, is controlled by
or is under common control with such Person; provided however, that in no event
shall either Obligor and any Lender or the Agent be deemed or regarded as
Affiliates of each other. For the purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Third Amended and Restated Loan and Security
Agreement, as the same may be further amended, restated, supplemented or
otherwise modified from time to time.
"Amortization Date" shall mean, collectively, each March 31, June 30,
September 30 and December 31, commencing on June 30, 1998 and continuing to and
including March 31, 2002.
"Applicable Law" shall mean all provisions of statutes, rules, regulations
and orders of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality or any court, in each case,
whether of the United States or foreign, applicable to a Person, and all orders
and decrees of all courts and arbitrators in proceedings or actions in which the
Person in question is a party.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as may be
amended from time to time.
"Base Lending Rate" shall mean an interest rate per annum, fluctuating
daily, equal to the higher of (a) the rate announced by the Creditanstalt from
time to time at its principal office in Greenwich, Connecticut, as its prime
rate for domestic (United States) commercial loans in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus one-half percent (1/2%).
The Base Lending Rate is not necessarily intended to be the lowest rate of
interest charged by the any Lender in connection with extensions of credit. Each
change in the Base Lending Rate shall result in a corresponding change in the
interest rate hereunder and such change shall be effective on the effective date
of such change in the Base Lending Rate.
"Base Rate Loan" shall mean a Loan bearing interest at a rate based on the
Base Lending Rate.
"Bill of Sale" shall mean that certain Bill of Sale and Assignment
Agreement dated as of January 31, 1997 between the Borrower and the Parent,
pursuant to which the Parent transferred to the Borrower substantially all of
the Parent's assets and liabilities.
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"Borrower" shall mean Satellink Paging, LLC, a Georgia limited liability
company.
"Business Day" shall mean a day on which banks are not required or
authorized to close in Greenwich, Connecticut or New York City, New York.
"Capital Expenditures" shall mean, for any period, expenditures (including
the aggregate amount of Capital Lease obligations incurred during such period)
incurred (or assumed) by Borrower to acquire or construct fixed assets, plant
and equipment (including renewals, improvements and replacements, but excluding
repairs) during such period, computed for Borrower in accordance with GAAP.
"Capital Lease Obligations" shall mean, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board) and, for the
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP (including such
Statement No. 13).
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participations or other equivalents (however designated) of
corporate stock of such Person.
"Cash Flow" shall mean, for any period for which the same is computed,
determined on a consolidated basis for any Person, the sum of (a) Net Income for
such period plus (b) Interest Expense for such period plus (c) depreciation and
amortization for financial reporting purposes for such period; plus (d) income
tax expense for such period, computed in each case in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder from time to time.
"Collateral" shall mean the property of Obligors described in Section 4.1,
or any part thereof, as the context shall require, in which Agent has, or is to
have, a security interest pursuant thereto, as security for payment of the
Obligations.
"Collateral Assignment Agreements" shall mean, collectively, (a) the
Second Amended and Restated Collateral Assignment and Agreement, of even date
herewith, by and between Parent and Agent, and (b) the Amended and Restated
Collateral Assignment and Agreement dated as of the date hereof by and between
the Borrower and the Agent, in each case as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Commitment" shall mean the aggregate obligation of the Lenders to make
Revolving Credit Loans to Borrower, subject to the terms and conditions hereof,
up to an aggregate principal amount not to exceed at any one time outstanding
for all the Lenders Seventeen Million Dollars ($17,000,000).
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"Commitment Fee" shall mean that amount due and payable to the Lenders
from Borrower pursuant to and in the amount specified in Section 3.5 hereof.
"Commitment Percentage" shall mean, as to each Lender, that amount,
expressed as a percentage, equal to the ratio of the amount set forth opposite
the name of such Lender on the signature pages hereto under the heading
"Commitment" to the aggregate amount of the Commitment; provided that the
Commitment Percentage of each Lender shall be increased or decreased, as
appropriate, to reflect any assignments made by such Lender pursuant to Section
13.3(c) hereof.
"Compliance Certificate" shall have the meaning given to such term in
Section 6.2(e).
"Continue", "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 3.4 hereof of a Eurodollar Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 3.4 hereof of a Base Rate Loan into a Eurodollar Loan or of
a Eurodollar Loan into a Base Rate Loan.
"CUE" shall mean CUE Paging Corporation, a Delaware corporation.
"Default" shall mean the occurrence of any event or condition which, after
satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
"Default Rate" shall mean (a) with respect to any Eurodollar Loan or
portion thereof, an interest rate per annum equal to two percent (2%) above the
interest rate set forth for such Loan in Section 3.1(a) al hereof or (b) with
respect to any portion of the Obligations other than Eurodollar Loans, two
percent (2%) above the rate set forth in Section 3.l(a)(ii) hereof.
"Direct Link" shall mean Direct Link communications, L.L.C., a limited
liability company organized under the laws of Georgia.
"Distribution Agreement" shall mean, collectively, (a) the Distribution
Agreement, dated as of April 2, 1990, by and between Parent and CUE, as
heretofore amended, and (b) the Regional Affiliate Agreement, dated August 20,
1990, by and between CR, Inc. (Communications Resources), a Texas corporation
("Seller") and CUE, as amended prior to the Effective Date, and assigned, with
the consent of CUE, by Seller to Parent.
"Effective Date" shall mean the date that this Agreement has been signed
by the Obligors, the Lenders and the Agent and the conditions precedent set
forth in Section 11.1 have been satisfied or waived by the Lenders in writing.
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"Environmental Laws" shall mean all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of any Hazardous
Substance into the environment (including without limitation ambient air,
surface water, ground water or land), or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Substances and any and all regulations,
codes, standards, plans, orders, decrees, writs, judgments, injunctions, notices
or demand letters issued, entered, promulgated or approved thereunder.
"Equipment" shall mean, as to either Obligor, all of such Obligor's
equipment, and leasehold improvements, whether now existing or hereafter
acquired or arising or in which such Obligor now has or hereafter acquires any
rights, including, without limitation, all furniture, machinery, and vehicles,
together with any and all accessories, accessions, parts and appurtenances
thereto, substitutions therefor and replacements thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules and regulations from time to time
issued or promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with Borrower, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean that portion of a Loan bearing interest at a
rate based on the Quoted Rate.
"Event of Default" shall mean any of the events or conditions described in
Article 9 hereof.
"Excess Cash Flow" shall mean, for any period, Cash Flow for the Parent
and its consolidated Subsidiaries for such period less the sum of (a) all
principal payments on the Term Notes made by Borrower, plus (b) Parent's
consolidated Interest Expense, plus (c) all taxes paid by Parent and its
Subsidiaries to any Federal, state or local government authority, plus (d)
Capital Expenditures, plus (e) any amount paid by Parent as dividends to holders
of its Preferred Stock, in each case, for the period for which Excess Cash Flow
is being calculated.
"FCC" shall mean the Federal Communications Commission, or any successor
agency or entity performing substantially the same functions.
"Federal Funds Rate" shall mean, for any day, the overnight federal funds
rate in New York City, New York, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) in the Federal Reserve
Statistical Release H.15 (519) or any successor publication, or if such rate is
not so published for any day which is a New York Business Day, the average of
the quotations for such day on overnight federal funds transactions in New York
City received by the Agent from three federal funds brokers of recognized
standing
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selected by the Agent.
"FM Station Agreements" shall mean those agreements set forth on Schedule
1.1 attached hereto, together with each of the other lease arrangements for use
of broadcast channel entered into after the date hereof, whether in the form of
Exhibit D or otherwise.
"GAAP" shall mean generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with the
prior financial practice of Parent and the Borrower, as reflected in the
financial information referred to in Section 5.11 hereof.
"General Intangibles" shall mean, as to either Obligor, all of such
Obligor's general intangibles, whether now existing or acquired or arising or in
which such Obligor now has or hereafter acquires any rights, including, without
limitation, all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, service marks,
trademarks, trade names, trade secrets, good will, copyrights, registrations,
licenses, franchises, customer lists, agency and other contracts, (including,
without limitation, the FM Station Agreements, the Lease Agreements and the
Collateral Assignment Agreement) tax refund claims, computer programs, all
claims under guaranties, security interests or other security held by or granted
to such Obligor to secure payment of any of the Accounts by an Account Debtor,
all rights to indemnification, any membership interests or other ownership
interests in any other Person, and all other intangible property of every kind
and nature (other than Accounts).
"Guarantee" shall mean a guarantee, an endorsement, a contingent agreement
to purchase or to furnish funds for the payment or maintenance of, or otherwise
to be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the Capital
Stock or equity interests of any Person, or an agreement to purchase, sell or
lease (as lessee or lessor) property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have a
correlative meaning.
"Guaranteed Obligations" shall have the meaning given to such term in the
Guaranty.
"Guaranty" shall mean that certain Amended and Restated Guaranty and
Agreement dated as of the date hereof and executed by the Parent in favor of the
Lenders and the Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Hazardous Substances" shall mean any pollutant, contaminant, hazardous,
toxic or dangerous waste, substance or material, or any other substance or
material regulated or controlled pursuant to any Environmental Law, including,
without limiting the generality of the foregoing, asbestos, PCBS, petroleum
products (including crude oil, natural gas, natural gas
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liquids, liquefied natural gas or synthetic gas) or any other substance defined
as a "hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "hazardous material," "hazardous chemical," "hazardous waste,"
"regulated substance," "toxic chemical," `toxic substance" or other similar term
in any Environmental Law.
"Indebtedness" shall mean, as applied to any Person at any time, (a) all
indebtedness, obligations or other liabilities of such Person (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, and any accrued interest, fees and charges relating
thereto; (ii) under profit payment agreements or similar agreements; (iii) with
respect to letters of credit issued for such Person's account; (iv) to pay the
deferred purchase price of property or services, except unsecured accounts
payable and accrued expenses arising in the ordinary course of business which
are less than 60 days past due; or (v) Capital Lease Obligations; (b) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien on any property of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by such Person, all as of such time; (c)
all indebtedness, obligations or other liabilities of such Person in respect of
any foreign exchange contract or Interest Hedge Agreement, net of liabilities
owed to such Person by the counterparties thereon; (d) all Capital Stock of such
Person subject (upon the occurrence of any contingency or otherwise) to
mandatory redemption prior to the first anniversary of the Maturity Date (but
excluding, in the case of the Parent, the Series A Preferred Stock and the
Series C Preferred Stock); and (e) indebtedness of others Guaranteed by such
Person.
"Interest Coverage Ratio" shall mean, for any fiscal quarter of Parent and
its consolidated Subsidiaries for which the same is computed, the ratio of (a)
Cash Flow for such fiscal quarter to (b) Interest Expense for such fiscal
quarter, in each case calculated in accordance with GAAP.
"Interest Expense" shall mean, for any period, total interest expense,
whether paid, accrued or capitalized (including the interest component of
Capital Lease obligations), of the Parent and its consolidated Subsidiaries,
including, but not limited to, all origination and other fees and the net amount
payable under any interest rate swap, cap or collar or similar agreement between
Parent or any of its Subsidiaries and any Person, all as calculated in
accordance with GAAP but excluding any and all original issue discounts.
"Interest Hedge Agreement" shall mean, for any Person, an interest rate
swap, cap or collar agreement or similar arrangement between such Person and one
or more financial institutions providing for the transfer or mitigation of
interest risks either generally or under specific contingencies.
"Interest Period" shall mean, in connection with any Eurodollar Loan, the
period beginning on the date such Eurodollar Loan is made, Continued or
Converted and continuing for one (1), two (2), three (3) or six (6) months as
selected by Borrower in its Notice of Borrowing or Conversion/Continuation.
Notwithstanding the foregoing, however, (a) any applicable Interest Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in another
calendar
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month, in which case such Interest Period shall end on the immediately preceding
Business Day; and (b) any applicable Interest Period which begins on a day for
which there is no numerically corresponding day in the calendar month during
which such Interest Period is to end shall (subject to clause (a) above) end on
the last day of such calendar month.
"Inventory" shall mean, as to either Obligor, all of such Obligor's
inventory, whether now existing or acquired or arising or in which such Obligor
now has or hereafter acquires any rights, including, without limitation, any and
all goods, merchandise and other personal property, wheresoever located and
whether or not in transit, which is or may at any time be held for sale or lease
or to be furnished under any contract of service or held as raw materials, work
in process, finished goods or materials, and supplies of any kind, nature or
description used or consumed in such Obligor's business, including, without
limitation, all such property, the sale or other disposition of which has given
rise to an Account and which may have been returned to or repossessed or stopped
in transit by such Obligor.
"Investment Property" shall mean, as to either Obligor, all "investment
property" of such Obligor, as such term is defined in Section 9-115 of the
Uniform Commercial Code, as promulgated by the Permanent Editorial Board for the
Uniform Commercial Code, whether now owned or existing or hereafter acquired or
arising, and, in any event, shall include all of the following: (a) all
securities of such Obligor, whether certificated or uncertificated; (b) any
share, participation or other interest in another Person or in property or in an
enterprise of such other Person held directly or indirectly by such Obligor
which is, or is of a type, dealt in or traded on financial markets, or which is
recognized in any area in which it is issued or dealt in as a medium for
investment; (c) all commodity futures contracts of such Obligor, options on any
commodity futures contract held by such Obligor, all commodity options or other
contracts of such Obligor that are traded on, or subject to the rules of, a
board of trade that has been designated as a contract market for such contracts
pursuant to the federal commodities laws or which are traded on one or more
foreign commodity boards of trade, exchanges, or markets and are carried on the
books of registered futures commodity merchant or on the books of a Person
providing clearance or settlement services for a board of trade that has been
designated as a contract market for such a contract pursuant to the federal
commodities laws; (d) any of the foregoing held, directly or indirectly, in the
name of any other Person to the extent such other Person has expressly agreed to
treat such Obligor as the Person entitled to exercise the rights comprising the
foregoing; and (e) all right, title and interest of such Obligor in any account
to which any of the foregoing have been credited.
"Lease Agreements" shall mean, collectively, those agreements set forth on
Schedule 1.2 attached hereto.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the UCC or
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comparable law of any jurisdiction).
"LLC Pledge Agreement" shall mean the Amended and Restated Limited
Liability Company Membership Interest Pledge Agreement, in form and substance
satisfactory to the Agent, executed by Parent and pursuant to which Parent
pledges all of the ownership interest of the Borrower to the Agent to secure the
performance and satisfaction of the Guaranteed Obligations, as such agreement
may be amended, restated, supplemented or otherwise modified from time to time.
"Loan" shall mean either a Revolving Credit Loan or a Term Loan, and
"Loans" shall mean, collectively, all Revolving Credit Loans and the Term Loans.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, the documents executed by Borrower, Parent or any other Person
pursuant to Section 11.1 hereof, any financing statements covering portions of
the Collateral or any other collateral securing any of the Obligations and any
and all other instruments, documents, and agreements now or hereafter executed
and/or delivered by Borrower, its Affiliates or any other Person in connection
herewith, or any one, more, or all of the foregoing, as the context shall
require, and "Loan Document" shall mean any one of the Loan Documents.
"Loans/Cash Flow Ratio" shall mean, for any fiscal quarter of the Parent
and its consolidated Subsidiaries, the ratio of (a) the outstanding principal
balance of all Loans as of the end of such quarter to (b) four (4) times the
Cash Flow for such quarter, calculated on a pro forma basis as if any
acquisition made by the Parent or any Subsidiary of the Parent during such
fiscal quarter had been made on the first day of such fiscal quarter.
"Majority Lenders" shall mean, subject to the terms of the last paragraph
of Section 13.8 hereof, Lenders holding at least sixty-seven percent (67%) of
the aggregate outstanding principal amount of the Loans or, if no Loans are
outstanding at such time, Lenders holding at least sixty-seven percent (67%) of
the Commitment.
"Material Adverse Effect" shall mean any event or condition which, alone
or when taken with other events or conditions occurring or existing concurrently
therewith (a) has or is reasonably expected to have a material adverse effect on
the business, operations, condition (financial or otherwise), assets,
liabilities, properties or prospects of either Obligor, or the industry in which
either Obligor operates; (b) has or is reasonably expected to have any material
adverse effect whatsoever on the validity or enforceability of this Agreement or
any Loan Document; (c) materially impairs or is reasonably expected to
materially impair the ability of Borrower to pay and perform the Obligations or
the ability of Parent to pay and perform the Guaranteed Obligations; (d)
materially impairs or is reasonably expected to materially impair the ability of
the Lenders and the Agent to enforce their respective rights and remedies under
this Agreement and the Loan Documents; or (e) has or is reasonably expected to
have any material adverse effect on the Collateral, the Lien of the Agent in the
Collateral or the priority of such Lien.
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"Maturity Date" shall mean March 31, 2002.
"MPPAA" shall mean the Multiemployer Pension Plan Amendments Act of 1980,
amending Title V of ERISA.
"Multiemployer Plan" shall have the same meaning as set forth in Section
4001(a)(3) of ERISA.
"Nations Link" shall mean Nations Link Ltd., a limited partnership
organized under the laws of the State of Texas.
"Net Income" shall mean, for any period and for any Person, the income (or
loss) of such Person for the period in question, after deducting therefrom all
operating expenses, provisions for all taxes and reserves and all other proper
deductions, all determined in accordance with GAAP.
"Net Worth" shall mean, with respect to the Parent and its consolidated
Subsidiaries, at any time, the excess of total assets over Total Liabilities,
excluding, however, from the definition of assets the amount of (a) any write-up
in the book value of any asset resulting from a revaluation thereof subsequent
to the later to occur of (i) the Effective Date and (ii) the date any such
Person acquired such asset; (b) treasury stock; (c) receivables from Affiliates;
and (d) unamortized debt discount, all determined in accordance with GAAP on a
consolidated basis for the Parent and its Subsidiaries.
"Notes" shall mean, collectively, the Revolving Credit Note and the Term
Notes.
"Notice of Borrowing or Conversion/Continuation" shall have the meaning
given to such term in Section 2.12(a) hereof.
"Obligations" shall mean the Loans and any and all other indebtedness,
liabilities and obligations of Borrower to the Lenders and the Agent of every
kind and nature (including, without limitation, interest, charges, expenses,
attorneys' fees and other sums chargeable to Borrower by the Lenders and the
Agent and future advances made to or for the benefit of Borrower), arising under
this Agreement or under any of the other Loan Documents, or acquired by any
Lender or the Agent from any other source, whether arising by reason of an
extension of credit, opening of a letter of credit, loan, lease, credit card
arrangement, guaranty, indemnification or in any other manner, direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter acquired.
"Original Revolving Credit Loans" shall have the meaning given to such
term in Section 2.1(b).
"Original Term Loans" shall have the meaning given such term in Section
2.2 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA,
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or any successor agency or Person performing substantially the same functions.
"Permitted Investments" shall have the meaning given to such term in
Section 7.5.
"Permitted Liens" shall mean: (a) those Liens existing on the date hereof
described on Schedule 1.3 attached hereto; (b) Liens in favor of the Agent; (c)
Liens arising out of legal proceedings, so long as such proceedings are being
contested in good faith by appropriate proceedings diligently conducted and so
long as execution is stayed on all judgments resulting from any such
proceedings; (d) Liens arising with respect to Capital Lease Obligations to the
extent permitted under Section 7.2, provided such Liens attach only to the
property subject to the lease under which such Capital Lease Obligations arise
and the amounts of such Capital Lease Obligations does not exceed 100% of the
fair market value of such property; and (e) Liens for (i) property taxes not
delinquent, (ii) taxes not yet subject to penalties, (iii) pledges or deposits
made under Workmen's Compensation, Unemployment Insurance, Social Security and
similar legislation, or in connection with appeal or surety bonds incident to
litigation, or to secure statutory obligations, and (iv) mechanics' and
materialmen's Liens with respect to liabilities which are not yet due or which
are being contested in good faith.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, limited liability partnership,
institution, entity, party or government (whether national, federal, state,
county, city, municipal, or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan, program, arrangement,
practice or contract, maintained by or on behalf of either Obligor or an ERISA
Affiliate, which provides benefits or compensation to or on behalf of employees
or former employees, whether formal or informal, whether or not written,
including, but not limited to, the following types of plans:
(i) Executive Arrangements - any bonus, incentive compensation, stock
option, deferred compensation, commission, severance, "golden parachute," "rabbi
trust," or other executive compensation plan, program, contract, arrangement or
practice ("Executive Arrangements");
(ii) ERISA Plans - any "employee benefit plan", except any Multiemployer
Plan, as defined in Section 3(3) of ERISA, whether maintained by or for a single
employee or by or for multiple employees, including, but not limited to, any
defined benefit pension plan, profit sharing plan, money purchase plan, savings
or thrift plan, stock bonus plan, employee stock ownership plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits ("ERISA Plans");
(iii) other Employee Fringe Benefits - any stock purchase, vacation,
scholarship, day care, prepaid legal services, severance pay or other fringe
benefit plan, program, arrangement, contract or practice ("Fringe Benefit
Plans") and
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(iv) Multiemployer Plan - any Multiemployer Plan.
"Preferred Stock" shall mean, collectively, the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock.
"Quoted Rate" shall mean, when used with respect to an Interest Period for
a Eurodollar Loan, the quotient of (i) the offered rate quoted by Creditanstalt
in the interbank Eurodollar market in New York City, New York or London, England
on or about 10:00 p.m. (New York or London time, as the case may be) two
Business Days prior to such Interest Period for U.S. dollar deposits of an
aggregate amount comparable to the principal amount of the Eurodollar Loan to
which the Quoted Rate is to be applicable and for a period comparable to such
Interest Period, divided by (ii) one minus the Reserve Percentage. For purposes
of this definition, (a) "Reserve Percentage" shall mean with respect to any
Interest Period, the percentage which is in effect on the first day of such
Interest Period under Regulation D as the maximum reserve requirement for member
banks of the Federal Reserve System in New York City with deposits comparable in
amount to those of Creditanstalt against Eurocurrency Liabilities and (b)
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation
D, as in effect from time to time. The Quoted Rate for the applicable period
shall be adjusted automatically on and as of the effective date of any change in
the applicable Reserve Percentage.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as it may be amended from time to time.
"Reportable Event" shall have the meaning set forth in Section 4043 of
ERISA.
"Revolving Credit Loans" shall have the meaning given to such term in
Section 2.1 hereof.
"Revolving Credit Note" shall have the meaning given to such term in
Section 2.1 hereof.
"Security Documents" shall mean, collectively, (i) the Collateral
Assignments and Agreements, (ii) the LLC Pledge Agreement, and (v) each of the
other security documents executed in connection with this Agreement from time to
time, and "Security Document" shall mean any one of the foregoing.
"Senior Debt" shall mean, at any time, the aggregate principal amount of
all Indebtedness of Parent and its consolidated Subsidiaries (including, but not
limited to, the Loans) which has not been subordinated in right of payment to
the Obligations on terms and conditions satisfactory to the Lenders and the
Agent, excluding, however, any Indebtedness in respect of the Borrower's
Preferred Stock.
"Senior Debt/Cash Flow Ratio" shall mean, for any fiscal quarter or other
three-month period of the Parent and its consolidated Subsidiaries, the ratio of
(a) Senior Debt as of the end
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of such quarter or period to (b) four (4) times the Cash Flow for the such
quarter or period, calculated on a pro forma basis as if any acquisition made by
the Parent or any Subsidiary of the Parent during such fiscal quarter or period
had been made on the first day of such fiscal quarter or period.
"Series A Preferred Stock" shall mean the Series A Cumulative Convertible
Preferred Stock of Parent, $.01 par value per share.
"Series B Preferred Stock" shall mean the Series B Preferred Stock of
Parent, $.01 par value per share.
"Series C Preferred Stock" shall mean the Series C Convertible Preferred
Stock of the Parent, $.01 par value per share.
"Solvent" shall mean, as to any Person, that such Person (a) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and (b) is able to pay its debts as
they mature.
"Subordinated Debt" shall mean Indebtedness of either Obligor which has
been subordinated to the Guaranteed Obligations on terms and conditions
satisfactory to the Lenders and the Agent.
"Subsidiary" shall mean, as to any Person, any other Person, of which more
than fifty percent (50%) of the outstanding shares of Capital Stock or other
ownership interest having ordinary voting power to elect a majority of the board
of directors of such corporation or similar governing body of such other Person
(irrespective of whether or not at the time stock or other ownership interests
of any other class or classes of such other Person shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or by one or more
Subsidiaries of such Person.
"Term Loan" shall have the meaning given to such term in Section 2.2
hereof
"Term Note" shall have the meaning given to such term in Section 2.2
hereof.
"Termination Date" shall mean the earliest of (a) the Maturity Date; (b)
the date the Commitment is reduced to zero pursuant to Section 2.10 hereof; and
(c) the date the Commitment is terminated pursuant to Section 10.2 hereof.
"Total Debt/Cash Flow Ratio" shall mean, for any fiscal quarter or other
three-month period of the Parent and its consolidated Subsidiaries, the ratio of
(a) Indebtedness as of the end of such quarter or period to (b) four (4) times
the Cash Flow for the such quarter or period, calculated on a pro forma basis as
if any acquisition made by the Parent or any Subsidiary of the Parent during
such fiscal quarter or period had been made on the first day of such fiscal
quarter or period.
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"Total Liabilities" shall mean, with respect to the Parent and its
consolidated Subsidiaries, all obligations, Indebtedness or other liabilities of
any kind or nature, fixed or contingent, due or not due, which, in accordance
with GAAP, would be classified as a liability on the consolidated balance sheet
of such Person, together with any obligation, indebtedness or other liability of
any kind or nature, fixed or contingent, due or not due, which, in accordance
with GAAP, would be classified as a liability on the balance sheet of the any
Person other than the Parent and its consolidated Subsidiaries and which has
been guaranteed by such the Parent and its consolidated Subsidiaries.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
New York.
1.2 Use of Defined Terms. All terms defined in this Agreement and the
Exhibits hereto shall have the same defined meanings when used in any other Loan
Document, unless the context shall require otherwise.
1.3 Accounting Terms; Calculations. All accounting terms not specifically
defined herein shall have the meanings generally attributed to such terms under
GAAP. Calculations hereunder shall be made and financial data required hereby
shall be prepared, both as to classification of items and as to amounts, in
accordance with GAAP, consistently applied (except as otherwise specifically
required herein).
1.4 Other Terms. All other terms used in this Agreement which are not
specifically defined herein but which are defined in the UCC shall have the
meanings set forth therein.
1.5 Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement, and all
references in this Agreement to Articles, Sections, Subsections, paragraphs,
clauses, subclauses, Exhibits or Schedules shall refer to the corresponding
Article, Section, Subsection, paragraph, clause, subclause of, Exhibit or
Schedule attached to, this Agreement, unless specific reference is made to the
articles, sections or other subdivisions of, Exhibits or Schedules to, another
document or instrument. All references to any instrument, document or agreement
shall, unless the context otherwise requires, refer to such instrument, document
or agreement as the same may be, from time to time, amended, modified,
supplemented, renewed, extended, replaced or restated.
1.6 Exhibits. All Exhibits and Schedules attached hereto are by reference
made a part hereof.
2. THE LOANS
2.1 Revolving Credit Loans. (a) Subject to the terms and conditions hereof
and provided that there exists no Default or Event of Default, each, of the
Lenders, severally but not jointly, agrees to make revolving loans (the
"Revolving Credit Loans") as requested by
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Borrower in accordance with the provisions of Section 2.3 hereof, to Borrower
from time to time on and after the date hereof and up to, but not including, the
Termination Date in an aggregate amount not to exceed at any one time
outstanding an amount equal to such Lender's Commitment Percentage of the
Commitment, provided, however, that no Lender shall be required to make any
Revolving Credit Loan if, after giving effect to the making of such Loan, the
Senior Debt/Cash Flow Ratio during the period in which such Loan would be made
shall be greater than the applicable maximum ratio permitted under Section 8.3
hereof. The Revolving Credit Loans made by each Lender shall be evidenced by a
promissory note, substantially in the form of Exhibit A attached hereto, payable
to such Lender in the principal face amount of such Lender's Commitment (each
such promissory note, together with any and all amendments, modifications and
supplements thereto, and any renewals, replacements or extensions thereof, in
whole or in part, a "Revolving Credit Note"). Prior to the Termination Date,
Revolving Credit Loans may be borrowed, repaid and reborrowed in accordance with
the terms hereof. All Revolving Credit Loans shall become due and payable in
full on the Termination Date.
(b) Prior to the Effective Date, certain of the Lenders from time to time
made certain revolving credit loans to the Parent (which loans were subsequently
assigned to, and assumed by, the Borrower) and to the Borrower (collectively,
the "Original Revolving Credit Loans"). This Agreement shall not constitute a
novation of the Original Revolving Credit Loans; any such Original Revolving
Credit Loans outstanding shall for all purposes constitute Revolving Credit
Loans under this Agreement.
2.2 Term Loans.
(a) Prior to the Effective Date, certain of the Lenders had made
certain term loans to the Parent (which term loans subsequently were assigned
to, and assumed by, the Borrower) and to the Borrower, in an aggregate principal
amount of Eight Million Dollars ($8,000,000), the outstanding principal balance
of which, as of the date hereof, is $8,000,000 (collectively, the "Original Term
Loans"). This Agreement shall not constitute a novation of the Original Term
Loans; any such Original Term Loans outstanding shall for all purposes
constitute Term Loans under this Agreement, but shall be deemed funded by the
applicable Lender in accordance with Section 2.3(c) hereof on the Effective Date
(each a "Term Loan" and collectively, the "Term Loans"). The Term Loans, shall
be evidenced by one or more promissory notes, substantially in the form of
Exhibit B attached hereto (each such promissory note, together with any and all
amendments, modifications and supplements thereto, and any renewals,
replacements or extensions thereof, in whole or in part, the "Term Note"), and
shall be payable to the Lenders in the respective principal amounts set forth on
Schedule I attached hereto.
(b) The aggregate principal amount of the Term Loans shall be
repayable in sixteen (16) quarterly installments of principal, payable on each
Amortization Date commencing on June 30, 1998, with the first eight such
principal installments each being in the amount of $400,000; the ninth through
twelfth such installments each being in the amount of $500,000; the thirteenth
through fifteenth such installments each being in the amount of $700,000; and
the
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sixteenth and final such installment being be in an amount equal to the
outstanding principal balance of such Term Loan, payable on the Maturity Date.
2.3 Borrowing Procedures.
(a) Borrower shall give the Agent notice of each request for a Loan
hereunder in accordance with Section 2.12 hereof. The Agent shall promptly
notify each Lender of any Notice of Borrowing received hereunder. Not later than
1:00 p.m. (Greenwich, Connecticut time) on the date specified for each borrowing
hereunder, each Lender shall make available to the Agent the amount of the Loan
to be made by such Lender in accordance with such Lender's Commitment
Percentage, in immediately available funds at an account with Creditanstalt
designated by the Agent. The Agent shall, subject to the terms and conditions of
this Agreement, not later than 2:00 p.m. (Greenwich, Connecticut time) on the
Business Day specified for such borrowing, make such amount available to
Borrower in same day funds in Greenwich, Connecticut.
(b) Unless the Agent shall have been notified by any Lender at least
one Business Day prior to the date on which any Eurodollar Loan is to be made to
Borrower and not later than 11:00 am. (Greenwich, Connecticut time) on the date
any Base Rate Loan is to be made, that such Lender does not intend to make
available to the Agent such Lender's Commitment Percentage of such Loan, the
Agent may assume that such Lender has made such amount available to the Agent on
the date of such Loan and the Agent may, in reliance upon such assumption, make
available to Borrower a corresponding amount. If such corresponding amount is
not in fact made available to Agent by such Lender, the Agent shall be entitled
to recover such corresponding amount on demand from such Lender, which demand
shall be made in a reasonably prompt manner. If such Lender does not pay such a
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify Borrower and Borrower shall pay such corresponding amount to the
Agent. The Agent shall also be entitled to recover from such Lender interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to Borrower to the date
such corresponding amount as recovered by the Agent at a rate per annum equal to
the Federal Funds Rate, for the first two Business Days, and then thereafter at
the rate per annum then in effect with respect to Base Rate Loans. Nothing
herein shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment Percentage of the Commitment hereunder or to prejudice any rights
which the Agent or Borrower may have against any Lender as a result of any
Default by such Lender hereunder.
(c) Borrower agrees that, on the Effective Date, it shall borrow
Loans from the Lenders who are not party to the Second Restated Loan Agreement
and repay Loans of the other Lenders such that, after giving effect thereto, the
Loans (including, without limitation, the principal amounts, types and (if
applicable) Interest Periods thereof) shall be held by the Lenders ratably in
accordance with their Commitment Percentage by reference to the principal
amounts of the Loans. Borrower shall not incur any fees or costs pursuant to
Section 2.10 or Section 3.8 in connection with such deemed borrowing.
2.4 Loan Account; Statements of Account. The Agent will maintain one or
more
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loan accounts for Borrower to which the Agent will charge all amounts advanced
to or for the benefit of Borrower hereunder or under any of the other Loan
Documents and to which the Agent will credit all amounts collected under each
such credit facility from or on behalf of the Borrower. The Agent will account
to Borrower periodically with a statement of charges and payments made pursuant
to this Agreement, and each such account statement shall be deemed final,
binding and conclusive unless the Agent is notified by Borrower in writing to
the contrary within thirty (30) days of the date of each account statement. Any
such notice shall only be deemed an objection to those items specifically
objected to therein. The unpaid principal amount of the Loans, the unpaid
interest accrued thereon, the interest rate or rates applicable to such unpaid
principal amount and the accrued and unpaid fees, premiums and other amounts due
hereunder shall at all times be ascertained from the records of the Agent and
such records shall constitute prima facie evidence of the amounts so due and
payable.
2.5 Use of Proceeds. The proceeds of the Revolving Credit Loans shall be
used (a) for acquisitions expressly permitted under Section 7.5 hereof or
acquisitions otherwise expressly consented to in writing by the Agent and the
Majority Lenders, and (b) to provide for the general working capital needs of
Borrower. No portion of the proceeds of any Loan may be used by the Borrower in
any manner which would cause such Loan or the application of the proceeds
thereof to violate any of Regulations G, T, U or X of the Board of Governors of
the Federal Reserve System.
2.6 Several Obligations of the Lenders; Remedies Independent. The failure
of any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make any Loan to be made
by it on such date, but neither any Lender nor the Agent shall be responsible
for the failure of any other Lender to make a Loan to be made by such other
Lender. The amounts payable by the Borrower at any time hereunder and under the
Notes to each Lender shall be a separate and independent debt and each Lender
shall be entitled to protect and enforce its rights arising out of this
Agreement and its Note, and it shall not be necessary for any other Lender or
the Agent to consent to, or be joined as an additional party in, any proceeding
for such purposes.
2.7 Termination. This Agreement shall terminate upon the later to occur of
(a) the Termination Date, or (b) the repayment and satisfaction of all
Obligations.
2.8 Payments. Each payment by Borrower pursuant to this Agreement or any
of the Notes shall be made prior to 1:00 p.m. (Greenwich, Connecticut time) on
the date due and shall be made without set-off or counterclaim to the Agent at
such account or at such other place or places as the Agent may designate from
time to time in writing to Borrower and in such amounts as may be necessary in
order that all such payments (after withholding for or on account of any present
or future taxes, levies, imposts, duties or other similar charges of whatsoever
nature imposed by any government or any political subdivision or taxing
authority thereof, other than any tax on or measured by the net income of the
Agent or any Lender, as applicable, pursuant to the income tax laws of the
jurisdiction where the Agent's, or such Lender's, as applicable, principal or
lending office is located) shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Notes. Except as otherwise set
forth herein or in the Notes,
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the principal amount of each such payment shall be an integral multiple of
$100,000. Each such payment shall be in lawful currency of the United States of
America and in immediately available funds. If the due date of any payment
hereunder or under any of the Notes would otherwise fall on a day which is not a
Business Day, then such payment shall be due on the next succeeding Business Day
and interest shall be payable on the principal amount of such payment for the
period of such extension. The Agent shall remit to each Lender such Lender's
share of any payment received by the Agent from the Borrower on the date
received if any such payment is received prior to 1:00 p.m.; otherwise the Agent
will remit such payment to such Lender on the next succeeding Business Day. If
the Agent has not received any payment due hereunder by the close of business on
the date such payment is due, Borrower authorizes the Lenders, at their option,
to charge such payment as a Revolving Credit Loan. If the Agent does not remit
to any Lender the amount due to such Lender within the time period provided
above, the Agent shall remit such amount to such Lender on demand and such
Lender shall be entitled to recover from the Agent interest on such amount in
respect of each day from the date such amount was due until the date remitted to
such Lender at a rate per annum equal to the Federal Funds Rate, for the first
two (2) Business Days, and then thereafter at the rate per annum then in effect
with respect to Base Rate Loans.
2.9 Prorata Treatment. Except to the extent otherwise provided herein: (a)
each borrowing from the Lenders under Section 2.1 and the deemed borrowings
under Section 2.2 hereof shall be made from the Lenders and each payment of
Commitment Fee under Section 3.5 hereof shall be made to the Agent for the
account of the Lenders, prorata according to the unused amounts of their
respective Commitment Percentage of the Commitment; (b) each termination or
reduction of the amount of the Commitment under Section 2.10 hereof shall be
applied to the Lenders, prorata according to their Commitment Percentage of the
Commitment; (c) the making, Conversion and Continuation of Loans of a particular
type shall be made prorata among the relevant Lenders according to their
Commitment Percentage of the Commitment and the then current Interest Period for
each Eurodollar Loan shall be coterminous; (d) each payment or prepayment of
principal of Loans by Borrower shall be made for the account of relevant Lenders
prorata in accordance with their Commitment Percentages; provided that if
immediately prior to giving effect to any such payment in respect of any Loans
the outstanding principal amount of the Loans shall not be held by the Lenders
prorata in accordance with their Commitment Percentage in effect at the time
such Loans were made (by reason of a failure of a Lender to make a Loan
hereunder in the circumstances described in the last paragraph of Section 13.8
hereof), then such payment shall be applied to the Loans in such manner as shall
result, as nearly as is practicable, in the outstanding principal amount of the
Loans being held by the Lenders prorata in accordance with their respective
Commitment Percentages; and (e) each payment of interest on Loans by Borrower
shall be made for account of the Lenders prorata in accordance with the amounts
of interest on such Loans then due and payable to the respective Lenders.
2.10 Prepayment; Commitment Reduction.
(a) Upon written notice to the Agent in accordance with Section
2.12(a) hereof, Borrower may, at its option, reduce the Commitment, in whole or
in part, on the date specified in such notice, by paying to the Agent for the
benefit of the Lenders the accrued
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amount of the Commitment Fee applicable to the amount of Commitment reduction,
and, if such reduction occurs prior to January 31, 1999, a premium equal to one
percent (1%) of the amount by which the Commitment is reduced. In no event may
Borrower reduce the Commitment below the aggregate principal amount of Revolving
Credit Loans outstanding thereunder.
(b) Upon written notice to the Agent in accordance with Section
2.12(a) hereof, Borrower may, at its option, prepay the Term Loan, in whole or
in part, on the date specified in such notice, by paying to Agent for the
benefit of the Lenders the amount of such prepayment, and, if such prepayment
occurs prior to January 31, 1999, a premium equal to one percent (1%) of the
amount of such repayment.
(c) The Commitment shall be automatically reduced to zero on the
Maturity Date.
(d) The Commitment, once terminated or reduced, may not be
reinstated.
(e) All prepayments of the Term Loan shall be applied to the
principal installments thereof in the inverse order of their maturities.
(f) Borrower may not prepay any Loan which is a Eurodollar Loan
prior to the last day of the Interest Period applicable to such Eurodollar Loan
unless Borrower pays to the Agent, for the benefit of the Lenders, concurrently
with such prepayment, all amounts payable to the Lenders pursuant to Section 3.8
hereof.
(g) Notwithstanding the terms of Section 2.10(a) and Section 2.10(b)
hereof, Borrower may, without premium or penalty, in whole or part, reduce the
Commitment as a result of, or prepay the Term Loan, in whole or in part, from
the proceeds of, a sale of Capital Stock of Borrower other than Capital Stock
constituting Indebtedness.
2.11 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option, to offset balances held by it for
account of Borrower at any of its offices, in dollars or in any other currency,
against any principal of or interest on any of such Lender's Loans or any other
amount payable to such Lender hereunder, that is not paid when due, after giving
effect to any applicable grace periods (regardless of whether such balances are
then due to Borrower), in which case it shall promptly notify Borrower and the
Agent thereof, provided that such Lender's failure to give such notice shall not
affect the validity thereof.
(b) If any Lender shall obtain from Borrower payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement through the exercise of any right of set-off, banker's lien
or counterclaim or similar right or otherwise (other than from the Agent as
provided herein), and, as a result of such payment, such Lender shall have
received more than its Commitment Percentage of the principal of or interest on
the Loans or such other
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amounts then due hereunder by Borrower, it shall promptly notify the Agent of
such payment and promptly purchase from such other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in) the
Loans or such other amounts, respectively, owing to such other Lenders (or in
interest due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
prorata in accordance with the unpaid principal of and/or interest on the Loans
or such other amounts, respectively, owing to each of the Lenders, provided that
if at the time of such payment the outstanding principal amount of the Loans
shall not be held by the Lenders prorata in accordance with their respective
Commitment Percentages in effect at the time such Loans were made (by reason of
a failure of a Lender to make a Loan hereunder in the circumstances described in
the last paragraph of Section 13.8 hereof), then such purchases of
participations and/or direct interests shall be made in such manner as will
result, as nearly as is practicable, in the outstanding principal amount of the
Loans being held by the Lenders prorata according to each Lender's Commitment
Percentage. To such end all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 2.11 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 2.11 to
share in the benefits of any recovery on such secured claim.
2.12 Certain Notices.
(a) All notices given by Borrower to the Agent hereunder of terminations
or reductions of the Commitment, or of borrowings, Conversions, Continuations or
prepayments of Loans hereunder shall either be oral, with prompt written
confirmation, which may be by telecopy, or in writing, with such written
confirmation or writing, in the case of a borrowing or in the case of an
Conversion or Continuation, to be substantially in the form of Exhibit C
attached hereto (a "Notice of Borrowing or Conversion/Continuation"); shall be
irrevocable; shall be effective only if received by Agent prior to 10:00 am.
(New York time) on a Business Day which is: (i) at least fifteen (15) days prior
to such termination or reduction of the Commitment; (ii) not later than the date
such Loan is to be made as, Converted to or Continued as a Base Rate Loan; (iii)
at least three (3) Business Days prior to the date such Loan is to be made as,
Converted to or Continued as a Eurodollar Loan; (iv) at least five (5) days
prior to any such prepayment, in the case of a prepayment of a Eurodollar Loan;
or (v) not later than the date
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of any such prepayment, in the case of a prepayment of a Base Rate Loan. Each
such notice to reduce the Commitment or to prepay the Loans shall specify the
amount of the Commitment to be reduced or of the Loans to be prepaid and the
date of such reduction or prepayment. Each Notice of Borrowing or
Conversion/Continuation shall specify: (1) the amount of such borrowing
Conversion or Continuation; (2) whether such Loan will be made, Converted or
Continued as a Eurodollar Loan or as a Base Rate Loan; (3) the date such Loan is
to be made, Converted or Continued (which shall be a Business Day and, if such
notice is to Convert or Continue a Eurodollar Loan then outstanding, shall not
be prior to the last day of the then current Interest Period for such
outstanding Loan); and (4) if such Loan is a Eurodollar Loan, the duration of
the Interest Period with respect thereto. If Borrower fails to specify the
duration of the Interest Period for any Eurodollar Loan, Borrower shall instead
be deemed to have requested that such Loan be made as, Converted to or Continued
as a Base Rate Loan. Each request for a borrowing, Conversion or Continuation of
a Loan or for any other financial accommodation by Borrower pursuant to this
Agreement or the other Loan Documents shall constitute (x) an automatic warranty
and representation by Borrower to the Agent and the Lenders that there does not
then exist a Default or Event of Default or any event or condition which, with
the making of such Loan, would constitute a Default or Event of Default and (y)
an affirmation that as of the date of such request all of the representations
and warranties of Borrower contained in this Agreement and the other Loan
Documents are true and correct in all material respects, both before and after
giving effect to the making, Conversion or Continuation of such Loan. If, on the
last day of the Interest Period of any Eurodollar Loan hereunder, the Agent has
not received a timely notice hereunder to Convert, Continue or prepay such Loan,
Borrower shall be deemed to have submitted a notice to Convert such Loan to a
Base Rate Loan.
(b) Except for mandatory prepayments made pursuant to Section 7.12 hereof,
each borrowing, Conversion and partial prepayment of principal of Loans shall be
in a minimum principal amount of $100,000, shall be in an integral multiple of
$100,000 in excess thereof, and if a Eurodollar Loan, shall be in a minimum
principal amount of $100,000 (borrowings, Conversions or prepayments of or into
Loans of different types or, in the case of Eurodollar Loans, having different
Interest Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each type of
Loan or Interest Period).
3. FEES AND INTEREST
3.1 Interest.
(a) Subject to modification pursuant to Subsection (b) below and Section
10.1 hereof, the average daily outstanding principal amount of the Loans and all
other sums payable by Borrower hereunder shall bear interest, calculated on the
basis of a 360-day year and actual days elapsed, from the date thereof until
paid in full at the following rates:
(i) the outstanding Principal amount of each Eurodollar Loan shall
bear interest at a fixed rate of interest per annum equal to the Quoted
Rate for the then-current Interest Period for such Loan plus four percent
(4%); and
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(ii) the outstanding principal amount of each Base Rate Loan and all
other sums payable by Borrower hereunder shall bear interest at a
fluctuating rate per annum equal to the Base Lending Rate plus two percent
(2%).
(b) If no Default or Event of Default has occurred and is continuing and
if, on the last date of any month of the Parent, the Senior Debt/Cash Flow Ratio
for such month is less than or equal to 2.5 to 1.0 for the three month period
then ended, then, subject to delivery by a senior financial officer of Parent of
financial statements for that month as required pursuant to Section 6.2(a)
hereof, together with a certificate of the chief executive officer or chief
financial officer of Parent certifying as to the Senior Debt/Cash Flow Ratio,
the rate of interest payable on the Loans shall be adjusted, from the date of
the Agent's receipt of such financial statements and certificate until the date
on which the next following monthly financial statements are required to be
delivered to the Agent and the Lenders, such that the average daily outstanding
principal amount of the Loans and all other sums payable by Borrower hereunder
shall bear interest, calculated daily on the basis of a 360-day year and actual
days elapsed, at the following rates:
(i) the outstanding principal amount of each Eurodollar Loan shall
bear interest at a fixed rate of interest per annum equal to the Quoted
Rate for the then-current Interest Period for such Loan plus three and
one-half percent (3-1/2%); and
(ii) the outstanding principal amount of each Base Rate Loan and all
other sums payable by Borrower hereunder shall bear interest at a
fluctuating rate per annum equal to the Base Lending Rate plus one and
one-half percent (1-1/2%).
If Borrower does not qualify for an adjustment in interest rates as set forth in
clause (b) above for any given month or if no certificate and monthly financial
statements are delivered by the required date, the-interest rates applicable
hereunder shall be those set forth in Section 3.1(a) above.
(c) The outstanding principal balance of any Loans or other Obligations
which are not paid in full when due shall bear interest at the Default Rate.
(d) Accrued interest shall be payable (i) in the case of Base Rate Loans,
monthly on the first day of each month hereafter for the previous month,
commencing July 1, 1997; (ii) in the case of a Eurodollar Loan, on the last day
of each Interest Period; provided, however, that if any Interest Period in
respect of a Eurodollar Loan is longer than three (3) months, such interest
prior to maturity shall be paid on the last Business Day of each three (3) month
interval within such Interest Period as well as on the last day of such Interest
Period; (iii) in the case of any Loan, upon the payment or prepayment thereof;
(iv) in the case of any other sum payable hereunder as set forth elsewhere in
this Agreement or, if not so set forth, on demand; and (v) in the case of
interest payable at the Default Rate, on demand.
3.2 Interest Period. The Interest Period for any Eurodollar Loan shall
commence on the date such Loan is made, Converted or Continued as specified in
the Notice of Borrowing or
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Conversion/Continuation applicable thereto and shall continue for a period of
one (1), two (2), three (3) or six (6) months, as specified in such notice for
such Eurodollar Loan. If Borrower fails to specify the duration of the Interest
Period for any Eurodollar Loan in the Notice of Borrowing or
Conversion/Continuation applicable thereto, such Loan shall instead be made or
Converted, as appropriate, as a Base Rate Loan.
3.3 Limitations on Interest Periods and Loans. Borrower may not select any
Interest Period for any Eurodollar Loan which extends beyond the Maturity Date
or, in the case of the Term Loan, beyond any Amortization Date, unless, in the
case of Interest Periods extending beyond an Amortization Date, after giving
effect to such Interest Period, the aggregate outstanding principal amount of
the Term Loan which consists of Eurodollar Loans having Interest Periods
extending beyond such Amortization Date is not greater than the aggregate
principal amount of the Term Loan scheduled to be outstanding immediately
following such Amortization Date. Notwithstanding any other provision hereof to
the contrary, Borrower shall not have, in the aggregate for all Loans
outstanding, more than four (4) different Interest Periods at any given time
during the term of this Agreement (for which purpose (x) Interest Periods for
Revolving Credit Loans shall be deemed different from Interest Periods for the
Term Loan, even if they are otherwise identical and (y) Base Rate Loans shall be
counted as an Interest Period).
3.4 Conversions and Continuations. So long as there then exists no Default
or Event of Default hereunder, Borrower shall have the right, on any Business
Day, from time to time, upon written notice in accordance with Section 2.12(a)
hereof, to Convert Loans of one type to Loans of the other type and to Continue
Loans of one type as Loans of the same type; provided that a Eurodollar Loan may
not be Converted to a Base Rate Loan prior to the end of the Interest Period
applicable thereto. Borrower agrees that, if it shall fail to repay any Loan or
portion thereof when due (whether by acceleration or otherwise) and the Loan at
such maturity is being maintained as a Eurodollar Loan, the Lenders, without
limiting the rights of the Lenders hereunder or under the Notes evidencing such
Loan, may at any time and from time to time after such due date Convert to
another type of Loan or Continue such Loan as a Loan of the same type.
3.5 Fees. Borrower shall pay to the Agent for the account of each Lender a
commitment fee (the "Commitment Fee"), calculated on the basis of a 360-day year
and actual days elapsed, equal to one-half of one percent (1/2 of 1 %) per annum
of the average daily unused amount such Lender's Commitment Percentage of the
Commitment, payable on the first day of each calendar quarter for the previous
calendar quarter or portion thereof (commencing on July 1, 1997) and on the
Termination Date.
3.6 Illegality; Inability to Determine the Quoted Rate. Notwithstanding
any other provision of this Agreement to the contrary, in the event that (a) it
shall become unlawful for any Lender to obtain funds in the London interbank
market or for such Lender to maintain a Eurodollar Loan; or (b) by reason of
circumstances affecting the London interbank market, the Agent determines (which
determination shall be conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition of "Quoted Rate" herein are not
being provided in the relevant amounts or for the relevant maturities for the
purpose of determining rates of
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interest for a Eurodollar Loan, then such Lender or the Agent, as the case may
be, shall promptly notify Borrower thereof whereupon (i) the right of Borrower
to request any Eurodollar Loan shall thereupon terminate and (ii) Borrower
shall, on the earlier of the date required by law or the last day of the then
applicable Interest Period, either (A) pay each Eurodollar Loan then outstanding
in full, or (B) Convert each Eurodollar Loan then outstanding to a Base Rate
Loan.
3.7 Increased Costs and Reduced Return.
(a) If any event shall occur (whether in the form of a reserve requirement
(not included in the definition of the Quoted Rate), exchange control
regulations, governmental charges, compliance with any guideline or request from
any central bank or other Governmental Authority, changes in the interbank
eurodollar market or the position of any Lender in such market or otherwise) and
the result of any such event is, in such Lender's reasonable judgment, to
increase the costs which such Lender determines are attributable to its making
or maintaining any Eurodollar Loan, or its obligation to make available any
Eurodollar Loan or to reduce the amount of any sum received or receivable by
such Lender under this Agreement or either of such Lender's Notes with respect
to any Eurodollar Loan, then, within ten (10) days after demand by such Lender,
Borrower hereby agrees to pay to such Lender such additional amount or amounts
as will compensate such Lender for such increased cost or reduction.
(b) In addition to any amounts payable Pursuant to Section 3.7(a) above,
if any Lender shall have determined that the applicability of any law, rule,
regulation or guideline adopted pursuant to or arising out of the July 1988
report of the Basle Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement and Capital
Standards," or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the enforcement or interpretation or administration of any of
the foregoing by any court or any central bank or other Governmental Authority,
charged with the enforcement or interpretation or administration thereof, or
compliance by such Lender (or any lending office of such Lender) or such
Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of its making or maintaining any Loan or its
incurring any obligations under this Agreement to a level below that which such
Lender or such Lender's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Lender's policies and the policies of such Lender's holding company with respect
to capital adequacy) by an amount deemed by such Lender to be material, then,
upon demand by such Lender, the Borrower hereby agrees to pay to such Lender
from time to time such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
(c) If any Lender shall seek payment of any amounts from Borrower pursuant
to paragraph's (a) or (b) of this Section 3.7, such Lender shall notify promptly
the Borrower of any event occurring after the Effective Date entitling such
Lender to compensation thereunder, but in
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any event within 180 days after such Lender receives actual knowledge thereof;
provided, that if such Lender fails to give such notice within 180 days after it
receives actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 3.7 in respect of any costs
resulting from such event, be entitled to payment under this Section 3.7 only
for costs incurred from and after the date 180 days prior to the date that such
Lender gives such notice.
3.8 Indemnity. Borrower hereby indemnifies and agrees to hold harmless the
Agent and each Lender from and against any and all losses or expenses which any
of them may sustain or incur as a consequence of failure by Borrower to
consummate any notice of prepayment, borrowing, conversion or continuation made
by Borrower, including, without limitation, any such loss or expense arising
from interest or fees payable by the Agent or any Lender to lenders of funds
obtained by it in order to maintain any Eurodollar Loan. Borrower hereby further
indemnifies and agrees to hold harmless each Lender from and against any and all
losses or expenses which it may sustain or incur as a consequence of prepayment
of any Eurodollar Loan on other than the last day of the Interest Period for
such Loan (including, without limitation, any prepayment pursuant to Sections
2.10 and 3.6 hereof). Borrower's obligations under this Section shall survive
the termination of this Agreement and the repayment of the obligations.
3.9 Notice of Amounts Payable to Lenders. If any Lender shall seek payment
of any amounts from Borrower pursuant to Sections 2.8, 3.7 or 3.8 hereof, it
shall notify Borrower of the amount payable by Borrower to such Lender
thereunder. A certificate of such Lender seeking payment pursuant to Sections
2.8, 3.7 or 3.8 hereof, setting forth in reasonable detail the factual basis for
and the computation of the amounts specified, shall be conclusive and binding on
all parties for all purposes, absent manifest error, as to the amounts owed.
Borrower's obligations under this Section shall survive the termination of this
Agreement and the repayment of the obligations.
3.10 Interest Savings Clause. Nothing contained in this Agreement or in
any of the Notes or in any of the other Loan Documents shall be construed to
permit any Lender to receive at any time interest, fees or other charges in
excess of the amounts which such Lender is legally entitled to charge and
receive under any law to which such interest, fees or charges are subject. In no
contingency or event whatsoever shall the compensation payable to any Lender by
Borrower, howsoever characterized or computed, hereunder or under either of the
Notes or under any other agreement or instrument evidencing or relating to the
obligations, exceed the highest rate permissible under any law to which such
compensation is subject. There is no intention that any Lender shall contract
for, charge or receive compensation in excess of the highest lawful rate, and,
in the event it should be determined that any excess has been charged or
received, then, ipso facto, such rate shall be reduced to the highest lawful
rate so that no amounts shall be charged which are in excess thereof; and such
Lender shall apply such excess against the Loans then outstanding (with such
application being made first against the Loans, and then to any other
obligations hereunder) and, to the extent of any amounts remaining thereafter,
refund such excess to Borrower.
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4. SECURITY INTEREST - COLLATERAL
4.1 Security Interest. As security for the Obligations and the Guaranteed
Obligations, each Obligor hereby grants to the Agent, for the benefit of the
Lenders, a continuing, first priority Lien in the following described property
of such Obligor, whether now owned or existing or hereafter acquired or arising
or in which such Obligor now has or hereafter acquires any rights and
wheresoever located (sometimes herein collectively referred to as "Collateral"):
(a) Accounts;
(b) Inventory;
(c) Equipment;
(d) General Intangibles;
(e) Investment Property;
(f) all licenses, permits and authorizations issued or otherwise afforded
to such Obligor, and all products and proceeds of such licenses, permits and
authorizations;
(g) all of such Obligor's rights under the Distribution Agreement;
(h) all monies, residues and property of any kind of such Obligor, now or
at any time or times hereafter, in the possession or under the control of the
Agent or any Lender or a bailee of the Agent or any Lender;
(i) all accessions to, substitutions for and all replacements, products
and proceeds of the foregoing, including, without limitation, proceeds of
insurance policies insuring the Collateral;
(j) all books and records (including, without limitation, customer lists,
credit files, computer programs, print-outs and other computer materials and
records) of such Obligor pertaining to any of the foregoing;
(k) any and all other property of such Obligor; and
(l) all products and proceeds of any of the foregoing.
4.2 Perfection of Security Interest. Until the termination of this
Agreement and the payment and satisfaction in full of all Obligations, whichever
last occurs, the Agent's security interest in the Collateral and all products
and proceeds thereof, shall continue in full force and effect. The Obligors
shall perform any and all steps requested by the Agent to perfect, maintain and
protect the Agent's security interest in the Collateral, including, without
limitation, executing
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and filing financing or continuation statements, or amendments thereof, in form
and substance satisfactory to the Agent; delivering to the Agent upon the
Agent's request therefor all documents, instruments or chattel paper included in
the Collateral, the possession of which is necessary or appropriate to perfect
the Agent's security interest therein; delivering to the Agent all letters of
credit on which either Obligor is named as a beneficiary; and obtaining and
delivering such consents and waivers from such landlords, developers or other
Persons as the Agent may request. The Agent may file one or more financing
statements disclosing the Agent's security interest under this Agreement without
either Obligor's signature appearing thereon and the Obligors, jointly and
severally, agree to pay the costs of, or incidental to, any recording or filing
of any financing statements concerning the Collateral. The Obligors agree that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement.
4.3 Right to Inspect; Verifications. The Agent (or any person or persons
designated by it), in its sole discretion, shall have the right to call at any
place of business or property location of either Obligor at any reasonable time,
and, without hindrance or delay, to inspect the Collateral and to inspect,
audit, check and make extracts from either Obligor's books, records, journals,
orders, receipts and any correspondence and other data relating to the
Collateral, to either Obligor's business or to any other transactions between
the parties hereto and to discuss any of the foregoing with any of the Obligors'
officers, directors, managers and employees and with the independent accountants
for the Obligors. Additionally, the Agent may, at any time and from time to time
in its sole discretion, require the Obligors to verify the individual Accounts
immediately upon its request therefor; provided however that unless and until
there occurs an Event of Default, the Agent agrees not to contact directly any
Account Debtor for purposes of account verification except with the prior
consent of either Obligor. To facilitate the foregoing, upon request from the
Agent made at any time and from time to time hereafter, each Obligor shall
furnish the Agent with a then current Account Debtor address list.
5. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make Loans hereunder, each Obligor, jointly and severally, hereby makes
the following representations and warranties to the Agent and the Lenders which
shall be true and correct on the date hereof and shall continue to be true and
correct at the time of the making of any Loan and until the Loans have been
repaid in full:
5.1 Corporate Existence and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and is duly qualified as a foreign corporation in good standing in each
other state wherein the conduct of its business or the ownership of its property
requires such qualification. Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Georgia and is duly qualified as a foreign limited liability company in good
standing in each other state wherein the conduct of its business or the
ownership of its property requires such qualification.
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5.2 Chief Executive office; Collateral Locations. Each Obligor's principal
place of business, chief executive office and office where it keeps all of its
books and records is set forth on Schedule 5.2 attached hereto, and neither
Obligor has had any other chief executive office or principal place of business
except as set forth on Schedule 5.2 attached hereto during the five (5) years
immediately preceding the date hereof. Schedule 5.2 attached hereto and
incorporated herein by reference sets forth a true, correct and complete list of
all places of business and all locations at which any Collateral is located.
5.3 Corporate Authority. Each Obligor has the organizational power and
authority to execute, deliver and perform its obligations under this Agreement
and the Loan Documents to which it is a party, and to borrow hereunder, and has
taken all necessary and appropriate organizational action to authorize the
execution, delivery and performance by each Obligor of this Agreement and such
Loan Documents.
5.4 No Consents; Validity and Binding Effect. The execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party and the consummation of the transactions contemplated thereby and hereby
are not in contravention of any provisions of law or any agreement or indenture
by which either Obligor is bound or of the Articles of Incorporation or By-laws
of the Parent or the Articles of Organization or Operating Agreement of the
Borrower and do not require authorization, consent, approval or other action by
any governmental body, agency, authority or other Person which has not been
obtained and a copy thereof furnished to the Agent and the Lenders. This
Agreement and the other Loan Documents to which each Obligor is a party
constitute the valid and legally binding obligations of such Obligor,
enforceable against such Obligor in accordance with their respective terms.
5.5 No Material Litigation. Except as set forth on Schedule 5.5 hereto,
there are no proceedings pending or threatened before any court or
administrative agency which might have a Material Adverse Effect.
5.6 Corporate or Limited Liability Company Organization. The Articles of
Incorporation and By-laws of the Parent and the Articles of Organization and
Operating Agreement of the Borrower are in full force and effect under the laws
of Georgia and all amendments to said documents and agreements have been duly
and properly made under and in accordance with all applicable laws.
5.7 Solvency. Giving effect to the execution and delivery of this
Agreement, the Loan Documents, the consummation of the transactions contemplated
hereby and thereby and the making of the initial Loans hereunder, each Obligor
is Solvent.
5.8 Adequacy of Intangible Assets. Each Obligor possesses all intellectual
property licenses, patents, patent applications, copyrights, trademarks,
trademark applications, and trade names and all governmental registrations and
licenses necessary to continue to conduct its business as heretofore conducted
by it, and all such intellectual property licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade names,
licenses and registrations are listed on Schedule 5.8 attached hereto and, in
the case of the Borrower, shall be
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deemed General Intangibles for the purposes of this Agreement.
5.9 Taxes. Each Obligor has filed all federal, state, local and foreign
tax returns, reports and estimates which are required to be filed by it and all
taxes (including penalties and interest, if any) shown on such returns, reports
and estimates as being due and payable or which are otherwise due and payable
have been fully paid. Such tax returns properly and correctly reflect the income
and taxes of the such Obligor for the periods covered thereby. Each Obligor's
federal tax identification number is set forth on Schedule 5.9 attached hereto.
5.10 ERISA.
(a) Identification of Plans. Except as disclosed on Schedule 5.10 attached
hereto, neither Obligor nor any ERISA Affiliate maintains or contributes to, or
has maintained or contributed to, any Plan or Multiemployer Plan that is subject
to regulation by Title IV of ERISA;
(b) Compliance. Each Plan has at all times been maintained, by its terms
and in operation, in accordance with all applicable laws, except for such
noncompliance (when taken as a whole) that will not have a Materially Adverse
Effect;
(c) Liabilities. Neither Obligor nor any ERISA Affiliate is currently or
to the best knowledge of either Obligor or any ERISA Affiliate will become
subject to any liability (including withdrawal liability), tax or penalty
whatsoever to any person whomsoever with respect to any Plan, including, but not
limited to, any tax, penalty or liability arising under Title I or Title IV of
ERISA or Chapter 43 of the Code, except such liabilities (when taken as a whole)
as will not have a Material Adverse Effect;
(d) Funding. Each Obligor and each ERISA Affiliate have made full and
timely payment of (i) all amounts required to be contributed under the terms of
each Plan and applicable law and (ii) all material amounts required to be paid
as expenses of each Plan. No Plan has any "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA); and
(e) Insolvency: Reorganization No Plan is insolvent (within the meaning of
Section 4245 of ERISA) or in reorganization (within the meaning of Section 4241
of ERISA).
5.11 Financial Information
(a) The audited financial statements of Parent for the fiscal years ending
July 31, 1995 and July 31, 1996, in each case consisting of a balance sheet and
statements of income and cash flow, copies of which have been delivered by
Parent to the Agent and the Lenders, are true and correct in all material
respects and contain no material misstatement or omission, and fairly present
the financial position, assets and liabilities of Parent as of the respective
dates thereof and the results of operations of Parent for-the respective periods
then ended, and as of the date thereof there were no liabilities of either
Obligor, fixed or contingent, which are material that were not reflected in such
financial statements.
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(b) The consolidated and consolidating projected cash flow statement,
balance sheet and operating budget for Parent and its Subsidiaries delivered to
Agent and the Lenders prior to the date of this Agreement, if any, (the
"Projections"), (i) disclose all assumptions made with respect to costs, general
economic conditions, and financial and market conditions in formulating the
Projections; (ii) are based on reasonable estimates and assumptions; and (iii)
reflected, as of the date prepared, and continue to reflect, as of the date of
this Agreement, the reasonable estimate of Parent of the results of operations
and other information projected therein for the periods covered thereby.
(c) Since the date of the audited financial statements for the fiscal year
ending on July 31, 1996, there has been no material adverse change in the
condition, financial or otherwise, assets, business, liabilities, or results of
operations of the Parent, and neither the Parent nor any of its Subsidiaries,
since such date, has (i) incurred any obligation or liability, fixed or
contingent, which would have a Material Adverse Effect; (ii) incurred any
Indebtedness for borrowed money or Capital Lease Obligations other than the
Obligations, in the case of Borrower, and the Guaranteed Obligations, in the
case of the Parent, or incurred any other Indebtedness other than trade payables
and other liabilities arising in the ordinary course of the business of Parent;
or (iii) Guaranteed the obligations of any other Person, provided, however, that
the Parent will Guarantee the payment and performance of the Obligations
pursuant to the Guaranty.
5.12 Title to Assets. Except as set forth on Schedule 5.12 attached
hereto, Borrower has good and marketable title to and ownership of the
Collateral and all of its other assets, free and clear of all Liens and claims,
except for Permitted Liens.
5.13 Violations of Law. Neither Parent nor any of its Subsidiaries is in
violation of any applicable statute, regulation or ordinance of any governmental
entity, or of any agency thereof, which violation might have a Material Adverse
Effect.
5.14 Environmental Laws.
(a) Each of the Parent and its Subsidiaries has obtained all permits,
licenses and other authorizations, if any, which are required under
Environmental Laws, and each such Person is in compliance in all material
respects with all terms and conditions of required permits, licenses and
authorizations, and are also in compliance in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, notifications, schedules and timetables contained in
the Environmental Laws;
(b) Neither the Parent nor any of its Subsidiaries is aware of, nor has
any such Person received notice of, the disposal or release or presence of
Hazardous Substances on any of its properties, or of any past, present or future
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent compliance or continued compliance on
the part of any such Person in any material respect with Environmental Laws, or
may give rise to any material common law or legal liability, or otherwise form
the
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basis of any material claim, action, demand, suit, Lien, proceeding, hearing,
study or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Substance;
(c) All assets of Parent and its Subsidiaries are free from Hazardous
Substances except for Hazardous Substances used, maintained or handled by Parent
and its Subsidiaries in the ordinary course of business and the use and disposal
of any and all such Hazardous Substances is effected by Parent and its
subsidiaries in compliance with all applicable Environmental Laws; and
(d) There is not pending or threatened against Parent or any of its
Subsidiaries, and neither Parent nor any Subsidiary of the Borrower knows of any
facts or circumstances that might give rise to, any civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, environmental Lien, investigation, or proceeding relating
in any way to Environmental Laws.
5.15 No Default. Neither Parent nor any of its Subsidiaries is in default
with respect to (a) any note, indenture, loan agreement, guaranty, mortgage,
lease, deed or other similar agreement relating to Indebtedness to which such
Person is a party or by which such Person is bound or (b) any other instrument,
document or agreement to which such Person is a party or by which such Person or
any of such Person's properties are bound, the default of which would have a
Material Adverse Effect.
5.16 Bona Fide Accounts. Each Account now or hereafter shown on any
schedule or aging of Accounts provided to the Agent hereunder arises or will
arise under a contract between an Obligor and the Account Debtor in each case
providing for the bona fide performance of services by Borrower for or on behalf
of the Account Debtor except to the extent otherwise expressly indicated on such
schedule or aging of accounts.
5.17 Amount of Accounts; No Setoffs. The amount of the face value of any
Accounts shown on any schedule or aging of Accounts provided to the Agent are
actually and absolutely owing to the applicable Obligor, are not contingent for
any reason and, except as otherwise expressly noted on such schedule or aging of
accounts, there are no setoffs, counterclaims, disputes or deductions existing
or asserted with respect thereto.
5.18 Right to Assign. Borrower has full right, power and authority to
assign the accounts receivable included in the Accounts.
5.19 Corporate and Trade or Fictitious Names. Except as disclosed on
Schedule 5.19 attached hereto, during the five (5) years immediately preceding
the date of this Agreement, neither Obligor has been known as or used any
corporate, trade or fictitious name other than its current corporate name as
such name is set forth on the first page of this Agreement.
5.20 Equipment. The Equipment is and shall remain in good condition,
normal wear
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and tear excepted, meets all standards imposed by any governmental agency, or
department or division thereof having regulatory authority over such material
and its use and is currently usable in the normal course the Obligors' business.
5.21 Inventory. The Inventory is and shall remain in good condition, meets
all standards imposed by any governmental agency, or department or division
thereof having regulatory authority over such goods, their use and/or sale, is
either currently usable or currently saleable in the normal course of the
Obligors' business and is not subject to any output contract or similar
agreement between either Obligor, or both of them, and any other Person.
5.22 Investments. Neither Obligor has made any loans or advances or other
financial accommodations or extensions of credit to any other Person. Schedule
5.22 is a complete list of all Subsidiaries, Investment Property and other
Investments in any Person by the Obligors, including but not limited to, all
interests in any partnership or joint venture. Except as otherwise disclosed on
Schedule 5.22, all shares of stock in any corporation or other Person held by
Parent or any of its Subsidiaries are evidenced by stock certificates or other
ownership certificates issued in the name of Parent or such Subsidiary and all
other Investment Property of either Obligor is held directly in the name of such
Obligor and is not held in any brokerage or similar account or in the name of
any financial institution or nominee name.
5.23 Trade Relations. There exists no actual nor, to the best of the
Obligors' knowledge, threatened limitation of the business relationship of
Parent or any of its Subsidiaries with any material customer, supplier, landlord
or with any company whose contracts or projected contracts with such Person
would be material to the operations of such Person; and there exists no
condition or state of facts or circumstances which would have a Material Adverse
Effect or prevent either Obligor from conducting its business after the
consummation of the transactions contemplated by this Agreement as such business
is conducted or proposed to be conducted in the Projections and other
information furnished to Agent and the Lenders by Parent.
5.24 Broker's or Finder's Fees. No broker's or finder's fees or
commissions have been incurred or will be payable by Parent or any of its
Subsidiaries to any Person in connection with the transactions contemplated by
this Agreement.
5.25 Security Interest. This Agreement creates a valid security interest
in the Collateral securing payment of the Obligations and the Guaranteed
Obligations, subject only to Permitted Liens, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
taken, and the Agent has a valid and perfected first priority security interest
in the Collateral.
5.26 Regulatory Matters. Neither the Parent nor any of its Subsidiaries is
subject to regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Federal Power Act,
the Interstate Commerce Act or any other federal or state statute or regulation
which limits its ability to incur indebtedness or its ability to consummate the
transactions contemplated hereby.
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5.27 Disclosure. Neither this Agreement nor any other instrument,
document, agreement, financial statement or certificate furnished to the Agent
and the Lenders, or any of them, by or on behalf of either Obligor in connection
herewith contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or omits to state any
fact which may in the future have a Material Adverse Effect.
5.28 Burdensome Restrictions. Neither any contract, lease, indenture,
agreement or other instrument, or corporate restriction, judgment, decree, or
order to which Parent or any of its Subsidiaries is a party or by which Parent
or any of its Subsidiaries is bound, nor any provision of applicable law or
governmental regulation, has or is reasonably likely to have a Material Adverse
Effect.
5.29 Labor Matters. Schedule 5.29 attached hereto sets forth each written
employment agreement covering management of Parent and/or its subsidiaries and
each collective bargaining agreement and every other written labor agreement
which covers any employees of the Parent or any of its Subsidiaries as of the
date of this Agreement, and sets forth the respective expiration date of such
agreement. Except as set forth on Schedule 5.29 attached hereto, there are no
written employment agreements covering management of Parent or any of its
Subsidiaries, collective bargaining agreements or other written labor agreements
covering any employees of Parent or its Subsidiaries as of the date of this
Agreement, and no material claims due to termination of any such agreement.
Except as otherwise listed on Schedule 5.29 attached hereto, no strikes or other
labor disputes are pending or threatened against Parent or any of its
Subsidiaries. Hours worked by and payment made to employees of Parent have not
been in violation of any provision of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All payments due from Parent and its
Subsidiaries on account of employee health and welfare insurance have been paid
or, if not due, have been accrued as liabilities on the books of such Person.
5.30 Existing Debt. Set forth on Schedule 5.30 attached hereto is a
complete and accurate list of all existing Indebtedness of Parent and its
Subsidiaries.
5.31 Regulation of the Agent and the Lenders. None of the Lenders and the
Agent will by reason of the execution, delivery and performance (other than the
enforcement of remedies) of any of the Loan Documents, be subject to the
regulation or control of either the FCC or any regulatory authority having
jurisdiction over Parent or any of its Subsidiaries.
6. AFFIRMATIVE COVENANTS
Each Obligor, jointly and severally covenants to the Agent and the Lenders
that from and after the date hereof, and until the termination of this Agreement
and the payment and satisfaction in full of the Obligations, it will, and will
cause each of its Subsidiaries to, unless the Majority Lenders otherwise consent
in writing:
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6.1 Records Respecting Collateral; Lockbox or Blocked Account Arrangement.
Keep all records with respect to the Collateral at its office set forth on
Schedule 5.2 attached hereto and not remove such records from such address
without the prior written consent of the Agent and the Lenders and, upon request
of the Agent or the Majority Lenders after the occurrence of an Event of Default
hereunder, enter into such lockbox or blocked account arrangement with respect
to collection of the Accounts and execute and deliver such documents in
connection therewith as the Agent may reasonably require.
6.2 Reporting Requirements. Furnish or cause to be furnished to the Agent
and the Lenders:
(a) As soon as practicable, and in any event within 30 days after the end
of each month, interim unaudited consolidated financial statements of Parent and
its Subsidiaries, including a balance sheet and statements of income and cash
flow, for the month and year-to-date period then ended, prepared in accordance
with GAAP, consistent with the past practice of Parent, and certified as to
truth and accuracy thereof by the chief financial officer of Parent;
(b) As soon as available, and in any event within 120 days after the end
of each fiscal year of Parent, consolidated audited annual financial statements
of Parent and its Subsidiaries, including balance sheets and statements of
income and cash flow for the fiscal year then ended, prepared in accordance with
GAAP, in comparative form and accompanied by the unqualified opinion of a
nationally recognized firm of independent certified public accountants retained
by Parent and acceptable to the Majority Lenders and the Agent.
(c) Together with the annual financial statements referred to in clause
(b) above, a statement from such independent certified public accountants that,
in making their examination of such financial statements, they obtained no
knowledge of any Default or an Event of Default or, in lieu thereof, a statement
specifying the nature and period of existence of any such Default or an Event of
Default disclosed by their examination;
(d) Together with the annual or interim financial statements referred to
in clauses (a) and (b) above, a certificate of the chief executive officer and
chief financial officer of Parent certifying that, to the best of their
knowledge, no Default or an Event of Default has occurred and is continuing or,
if a Default or an Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken with
respect thereto;
(e) As soon as available, and in any event within thirty (30) days after
the end of each fiscal quarter (i) an accounts receivable aging, showing
separately for Parent, Borrower and each Subsidiary the aggregate dollar value
of the Accounts and the accounts of each such Subsidiary and indicating the
aggregate value of such Accounts that are past due and whether such Accounts are
thirty (30), sixty (60) or ninety (90) or more days past due and containing such
other information regarding such Accounts as the Agent, on its behalf and on
behalf of the Lenders, may request (including, without limitation, an accounts
receivable aging showing the age of each individual Account as of the last day
of the preceding quarter (segregating such items in such
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manner and to such degree as the Agent, on behalf of the Lenders, may request,
including the type and dollar value of the Accounts and the location of the
Account Debtor thereon as of the end of the preceding quarter)); and (ii) a
certificate (a "Compliance Certificate") signed by the Chief Financial Officer
of the Parent certifying as to Obligors' compliance with the financial covenants
set forth in Section 8 hereof, substantially in the form of Exhibit E, including
or accompanied by information sufficient to enable the Agent and the Lenders to
verify the calculations set forth therein;
(f) Promptly after the sending or filing thereof, as the case may be,
copies of any definitive proxy statements, financial statements or reports which
either Obligor sends to its shareholders and copies of any regular periodic and
special reports or registration statements which either Obligor files with the
Securities and Exchange Commission (or any governmental agency substituted
therefor), including, but not limited to, all Form 10-K and Form 10-Q reports,
or any report or registration statement which either Obligor files with any
national securities exchange;
(g) Promptly after the filing thereof, copies of any report or documents
which either Obligor sends to any federal, state or local regulatory agency; and
(h) Such other information respecting the condition or operations,
financial or otherwise, of Parent and its Affiliates as the Agent, on behalf of
the Lenders, may from time to time reasonably request.
6.3 Tax Returns. File all federal, state and local tax returns and other
reports that Parent or any Subsidiary of the Parent is required by law to file,
maintain adequate reserves for the payment of all taxes, assessments,
governmental charges and levies imposed upon them, their income, or their
profits, or upon any property belonging to them, and pay and discharge all such
taxes, assessments, governmental charges and levies prior to the date on which
penalties attach thereto, except where the same may be contested in good faith
by appropriate proceedings and for which adequate reserves have been
established.
6.4 Compliance with Laws. (a) Comply with all laws, statutes, rules,
regulations and ordinances of any governmental entity, or of any agency thereof,
applicable either Obligor, and any such laws, statutes, rules, regulations or
ordinances regarding the collection, payment, and deposit of employees' income,
unemployment, and Social Security taxes and with respect to pension liabilities,
and (b) obtain and maintain all licenses, permits and other governmental
authorizations and approvals necessary to own, acquire or dispose of its
property, to conduct its business or to comply with the FCC's or any other
regulatory authority's construction, operating and reporting requirements, the
violation of which or the failure to obtain or maintain which could have a
Material Adverse Effect.
6.5 Environmental Laws. Comply with all Environmental Laws and, in the
event of any "release" or "threatened release" of any Hazardous Substance onto,
at or under the property of such Person which requires or may require
notification, response, assessment, investigation or remedial action pursuant to
any Environmental Law, notify the Agent and the Lenders and all
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appropriate governmental agencies thereof, and proceed with due diligence and,
at such Person's cost and expense, to respond appropriately, in accordance with
all requirements of the Environmental Laws.
6.6 ERISA.
(a) At all times make prompt payment of contributions required to meet the
minimum funding standards set forth in Sections 302 and 305 of ERISA with
respect to each Plan and otherwise comply with ERISA and all rules and
regulations promulgated thereunder in all material respects;
(b) Promptly after the occurrence thereof with respect to any Plan, or any
trust established thereunder, notify the Agent and the Lenders of (i) a
"reportable event" described in Section 4043 of ERISA and the regulations issued
from time to time thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations), or (ii) any
other event which could subject either Obligor or any ERISA Affiliate to any
tax, penalty or liability under Title I or Title IV of ERISA or Chapter 43 of
the Code;
(c) At the same time and in the same manner as such notice must be
provided to the PBGC, or to a Plan participant, beneficiary or alternative
payee, give the Agent and the Lenders any notice required under Section 101(d),
302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) or ERISA or under Section
401(a)(29) or 412 of the Code with respect to any Plan;
(d) Furnish to the Agent and the Lenders, promptly upon the request
therefor, (i) true and complete copies of any and all documents, government
reports and determination or opinion letters for any Plan; and (ii) a current
statement of withdrawal liability, if any, for each Multiemployer Plan; and
(e) Furnish to the Agent and the Lenders, promptly upon the request
therefor, such additional information concerning any Plan as may be reasonably
requested.
6.7 Books and Records. Keep adequate records and books of account with
respect to its business activities in which proper entries are made in
accordance with GAAP reflecting all its financial transactions.
6.8 Notifications to the Lenders and the Agent. Notify the Lenders and the
Agent immediately by telephone (with each such notice to be confirmed in writing
within three (3) Business Days): (a) upon such Person's obtaining knowledge
thereof, of any litigation affecting such Person or any of its Affiliates
claiming damages of $100,000 or more, individually or when aggregated with other
litigation pending against such Person or its Affiliates, whether or not covered
by insurance, and of the threat or institution of any suit or administrative
proceeding against such Person or any of its Affiliates which, if adversely
determined, might have a Material Adverse Effect, and establish such reasonable
reserves with respect thereto as the Agent and the Lenders, or any of them, may
request; (b) upon occurrence thereof, of any Default or Event of Default
hereunder; (c) upon occurrence thereof, of any event or condition which would
have a
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Material Adverse Effect; and (d) upon the occurrence thereof, of such Person's
or any Affiliate's default under (i) any note, indenture, loan agreement,
mortgage, lease, deed or other similar agreement relating to any indebtedness of
such Person or any of its Affiliates or (ii) any other instrument, document or
agreement to which such Person or any of its Affiliates is a party or by which
such Person or any of its Affiliates or any of their respective property is
bound (including without limitation, the Distribution Agreement).
6.9 Insurance. Keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks under "special" or "all risk"
forms of coverage, including fire and other risks insured against by extended
coverage, as is customary with companies in the same or similar businesses,
including public liability insurance against claims or personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law. The Obligors shall cause such policies
referred to in this Section to name the Agent the loss payee and as additional
insured as its interests may appear. The Obligors shall furnish to the Agent by
December 15 of each year a schedule listing the insurance policies in effect for
the next succeeding year, the nature of the coverage, the annual premium cost,
the insurer for each policy and the rating of each insurer as is listed in all
of which shall be reasonably satisfactory to the Agent. In the event of any
termination or notice of non-payment by any insurer with respect to any policy
or any lapse in the coverage thereunder, the Obligors shall give prompt written
notice to Johanna Connor, Senior Vice President, Creditanstalt-Bankverein, Two
Greenwich Plaza, Fourth Floor, Greenwich, Connecticut 06830 of the occurrence of
such termination, nonpayment or lapse.
6.10 Maintenance of Property. Keep all General Intangibles in full force
and effect except for immaterial General Intangibles allowed to lapse by either
Obligor in the ordinary course of business of such Obligor and any other General
Intangible for such Obligor has obtained a substantially similar substitution
and the lapse of which, because of such substitution, does not have a Material
Adverse Effect, and maintain all of its other property necessary or useful in
the proper conduct of its business in good working condition, ordinary wear and
tear excepted.
6.11 Conduct of Business. Continue to engage in an efficient and
economical manner in business of the same general type as conducted by it on the
date hereof.
6.12 Preservation of Corporate or Limited Liability Company Existence.
Preserve, renew and keep in full force and effect its corporate or limited
liability existence in the jurisdiction of its incorporation or organization, as
applicable, and take all action to maintain all rights, franchises and
privileges necessary or desirable for the conduct of its business, and qualify
and remain qualified as a foreign corporation or limited liability company in
each jurisdiction in which such qualification is necessary or desirable in view
of its business and operations or the ownership of its properties.
6.13 Equipment. Keep and maintain the Equipment in good operating
condition,
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reasonable wear and tear excepted, repair and make all necessary replacements,
renewals, additions or improvements thereto so that the value and operating
efficiency thereof shall at all times be maintained and preserved and not permit
any item of Equipment to become a fixture to real estate or accession to other
personal property unless the Agent has a first priority Lien in such real estate
or other personal property. Each Obligor shall, immediately on demand therefor
by the Agent or any Lender, deliver to the Agent or such Lender any and all
evidence of ownership of any of the Equipment (including, without limitation,
certificates of title and applications for title, together with any necessary
applications to have the Agent's Lien noted thereon, in the case of vehicles).
6.14 Assignment of Leasehold Interests. Upon the request of the Agent,
execute and deliver to the Agent such fee mortgages, leasehold mortgages or
other appropriate security instruments, in such form as the Agent requests, in
respect of any real property owned or leased by either Obligor.
6.15 Compliance with License Requirements. Fully comply with all
applicable requirements, laws, rules, regulations and orders, whether of the FCC
or otherwise (as if such requirements, laws, rules, regulations and order
applied directly to such Person rather than the applicable licensees), regarding
or with respect to (a) the licenses held, owned or used by CUE to offer the
Obligors the services provided to the Obligors under the Distribution Agreement;
and (b) the licenses held, owned or used by those FM radio stations through
which Borrower transmits its paging or other services.
6.16 Other Indebtedness. Maintain all of its Indebtedness in whatsoever
manner incurred, including but not limited to, Indebtedness for borrowed money
or for services or goods purchased, in a current status.
6.17 Transfer of Agreements, Consents and Licenses. Parent shall use its
best efforts to obtain the necessary consents and approvals to transfer to the
Borrower all FM Station Agreements and all other licenses, approvals, consents,
agreements, contracts and similar property of Parent necessary or desirable for
the conduct of Borrower's business which were not transferred to Borrower on the
Effective Date and shall, upon the obtaining of each such consent or approval,
promptly assign or otherwise transfer to the Borrower the applicable FM Station
Agreement, license, approval consent, agreement, contract or similar property.
7. NEGATIVE COVENANTS
The Obligors, jointly and severally, covenant with the Agent and the
Lenders that from and after the date hereof and until the termination of this
Agreement and the payment and satisfaction in full of the obligations, neither
Obligor will, nor will permit any of Subsidiaries to, without the prior written
consent of the Majority Lenders:
7.1 No Encumbrances. Create, incur, assume, or suffer to exist any
mortgage, deed of trust, pledge, assignment, Lien, charge, encumbrance on,
security interest or security title of any kind in any of the Collateral or its
other assets other than Permitted Liens.
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7.2 Indebtedness. Incur, assume, or suffer to exist any Indebtedness
except for (a) the obligations; (b) Subordinated Debt; and (c) other
Indebtedness not to exceed $2,000,000 at any time outstanding.
7.3 Asset Sales. Sell, lease, transfer or otherwise dispose of any of the
Collateral or any interest therein or any of its other assets except for (a) the
sale of Inventory in the ordinary course of business, (b) the sale of assets no
longer used or useful in the business of such Person, in each case having an
aggregate value of not more than $200,000 during any fiscal year, (c) the
transfer by the Parent of substantially all of its assets to the Borrower,
subject to the first priority security interest in favor of the Agent, on the
Effective Date, (d) other transfers after the Effective Date of assets of the
Parent from time to time, and (e) distributions from the Borrower to the Parent
expressly permitted under Section 7.12.
7.4 Guaranties. Guarantee, endorse, become surety with respect to or
otherwise become directly or contingently liable for or in connection with the
obligations of any other Person except by endorsement of negotiable instruments
for deposit or collection and similar transactions in the ordinary course of
business, provided that so long as both before and after giving effect thereto,
no Default or Event of Default would exist hereunder, (i) The Obligors may
Guarantee up to $500,000 in the aggregate of Indebtedness of Nations Link to
First Union National Bank of North Carolina, (ii) following its acquisition of
at least a majority of the equity interest of Direct Link in accordance with
Section 7.5(c), the Obligors may Guarantee the Indebtedness of Direct Link so
long as the sum of (x) the amount so Guaranteed and (y) the amount of Direct
Link's Indebtedness to the Obligors does not exceed $750,000, and (iii) the
Parent may Guarantee the Obligations pursuant to the Guaranty and may Guarantee
other Indebtedness of the Borrower expressly permitted hereunder.
7.5 Investments and Acquisitions. Make any or suffer to exist any advances
or loans to any Person; or make any investment or acquisition, or agreement for
investment or acquisition, including, but not limited to, by way of transfer of
property, contributions to capital, purchases of shares, securities or evidences
of indebtedness, acquisitions of businesses or otherwise, in any Person or from
any Person, except for the following (each, a "Permitted Investment"):
(a) those investments existing on the date hereof described on Schedule
5.22 attached hereto;
(b) loans or advances to employees of either Obligor in an aggregate
principal amount not to exceed $20,000 at any one time outstanding;
(c) an investment in at least a majority of the equity interest of Direct
Link in an amount not to exceed $85,000;
(d) following the Obligors' acquisition of at least 85% of the equity
interest in Direct Link, loans to Direct Link such that the sum of (i) the
aggregate principal amount of such loans
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and (ii) the amount of Indebtedness of Direct Link Guaranteed by the Obligors
pursuant to Section 7.4 does not exceed $750,000 at any time;
(e) acquisitions of or from any Person for which the aggregate purchase
price payable (whether payable in cash, shares of Capital Stock, notes,
property, assumption of liabilities or otherwise, with property being valued at
the fair market value thereof and notes and assumed liabilities being valued at
the face amount thereof) for each such Person is less than or equal to the
lesser of (i) $250,000 and (ii) an amount equal to Cash Flow for such Person for
the twelve (12) month period ending on the last day of such Person's most
recently ended fiscal quarter times seven (7); and
(f) acquisitions of assets to be used or consumed in the ordinary course
of business.
7.6 Corporate or Limited Liability Company Structure. Dissolve or
otherwise terminate its corporate or limited liability company status; amend,
restate, supplement or otherwise modify the Borrower's Articles of Organization
or Operating Agreement; enter into any merger, reorganization or consolidation;
issue any shares of any class of its Capital Stock or any securities or other
instruments for or which are convertible into any shares of any class of Capital
Stock other than the issuance by Parent of Series B Preferred Stock or common
stock (or options or warrants to purchase common stock) of a class that has been
duly authorized on or before November 17, 1995; or permit the incorporation or
existence of any Subsidiary other than as disclosed on Schedule 5.22; provided,
however, that, so long as such merger is otherwise not prohibited by the terms
of this Agreement, (i) any Person may merge with the Parent or any Subsidiary of
the Parent so long as the Parent or such Subsidiary is the surviving Person, and
(ii) any Subsidiary of Parent (other than the Borrower) may merge with and into
any other Subsidiary of the Parent.
7.7 Fiscal Year. Change its fiscal year end from July 31.
7.8 ERISA. Take, or fail to take, or permit any ERISA Affiliate to take,
or fail to take, any action with respect to a Plan including, but not limited
to, (i) establishing any Plan, (ii) amending any Plan, (iii) terminating or
withdrawing from any Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, where such action or
failure could have a Material Adverse Effect, result in a Lien on the property
of either Obligor or require either Obligor to provide any security.
7.9 Relocations; Use of Name. Except as disclosed on Schedule 5.2 attached
hereto, relocate its executive offices, open new places of business or relocate
existing places of business, maintain any Collateral or records with respect to
Collateral at any other locations than those locations presently kept or
maintained, as set forth on Schedule 5.2 attached hereto, or use any corporate
name (other than its own) or any fictitious name, except upon thirty (30) days
prior written notice to the Agent and the Lenders and after the delivery to the
Agent of financing statements, if required by the Agent, in form satisfactory to
the Agent.
7.10 Arm's-Length Transactions. Enter into or be a party to any contract,
agreement
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or transaction with any Affiliate except those contracts, agreements or
transactions entered into in an arm's-length transaction, for fair value and
pursuant to the reasonable requirements of such Person's business; provided,
however, that (i) the Obligors may provide accounting services to Nations Link
and (ii) the Obligors may enter into any other transaction with any Affiliate so
long as such transaction is in accordance with Section 7.5.
7.11 Amendment of Distribution Agreement. Amend, modify or supplement, or
agree to any amendment, modification or supplement of, the Distribution
Agreement, other than to evidence the assignment of the Distribution Agreement
from the Parent to the Borrower.
7.12 Dividends. Declare or pay any dividends on, or make any distribution
with respect to, any of its Capital Stock or other ownership interests or
purchase, redeem, retire, defease or otherwise acquire for value any of its
Capital Stock or other ownership interest or take action having an effect
equivalent to the foregoing, except that, provided no Default or Event of
Default has occurred and is continuing or would exist upon the payment of the
dividend amounts described in this Section 7.12, (i) any Subsidiary may pay
dividends to the Borrower, (ii) the Borrower may pay dividends to Parent (a) in
an amount not to exceed $90,000 per year, to be used by Parent for the sole
purpose of paying dividends to holders of its Series A Preferred Stock; (b) in
an additional amount equal the lesser of (x) twenty-five percent (25%) of Excess
Cash Flow for the immediately preceding fiscal year or (y) $350,000 (such amount
hereinafter referred to as the "Dividend Amount"); provided, however, that
simultaneously with the payment of dividends described in clause (b) of this
Section 7.12, the Obligors shall apply an amount equal to the Dividend Amount to
prepay principal amounts outstanding under the Term Loan, and (c) the Borrower
may pay dividends to Parent in an amount not to exceed $350,000 per year, to be
used by Parent solely for the purpose of paying dividends to holders of the
Parent's Series C Preferred Stock; provided, however, that, to the extent
Borrower has failed to make the payments to Parent in the amounts provided in
clauses (ii)(a) and (c) of this section in any fiscal year, Borrower may in
subsequent fiscal years make such payments to Parent to the extent permitted in
this Section 7.12; and (iii) the Parent may pay the dividends contemplated in
clause (ii) of this section.
7.13 Operating Leases. Become or remain obligated to perform as lessee
under Operating Leases which, collectively, have an aggregate monthly rental
charge to Obligor equal to or in excess of $100,000. For the purposes of this
Section 7.13, "Operating Leases" shall mean any lease required or desirable in
the business of the Obligor which is not a Capitalized Lease.
7.14 FM Subcarrier Lease Agreements. Enter into any agreement to lease the
use of Subsidiary Communications Authorizations subcarrier channels ("Subcarrier
Lease") unless such agreement contains terms and provisions substantially
similar to the terms and provisions of the Standard Subcarrier Lease Agreement
attached hereto as, and, in any event, including, without limitation, provisions
(a) permitting the applicable Obligor to mortgage, create a security interest
in, and collaterally assign the Subcarrier Lease to its lenders to secure
indebtedness and other obligations to its lenders, without obtaining the consent
of the lessor thereunder, (b) permitting any lender to which the Subcarrier
Lease has been assigned to cure any default by the applicable
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Obligor thereunder, (c) requiring (after the termination of the Subcarrier Lease
or any extension thereof by the lessor upon default by the applicable Obligor)
lessor thereunder to enter into a new lease with lender for the remainder of the
lease term for the rent and upon the terms and conditions set forth in the
Subcarrier Lease, and (d) permitting any lender to which the Subcarrier Lease
has been assigned to assign the Subcarrier Lease to a user of the subcarrier for
the original intent of the Subcarrier Lease, at lender's option, with no change
in terms.
8. FINANCIAL COVENANTS
The Obligors jointly and severally, covenant with the Agent and the
Lenders that from and after the date hereof and until the termination of this
Agreement and the payment and satisfaction in full of the Obligations, the
Obligors will not, unless the Majority Lenders otherwise consent in writing:
8.1 Interest Coverage Ratio. Permit the Interest Coverage Ratio as of the
last day of each fiscal quarter set forth below of to be less than the
applicable ratio set forth opposite such quarter as set forth below:
Quarter Ending Applicable Ratio
-------------- ----------------
April 30, 1997 through
July 31, 1997 2.35 to 1.00
October 31, 1997 through
January 31, 1998 2.55 to 1.00
April 30, 1998 through
July 31, 1998 2.80 to 1.00
Thereafter 3.25 to 1.00
8.2 Net Worth. Permit Net Worth as of any date from and after the
Effective Date to be less than the amount set forth opposite the applicable
period as follows:
Applicable Period Amount
----------------- ------
February 1, 1997 through
January 31, 1998 $1,700,000
February 1, 1998 through
July 31, 1998 $1,775,000
August 1, 1998 through
January 31, 1999 $1,850,000
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February 1, 1999 through
July 31, 1999 $2,100,000
August 1, 1999 through
January 31, 2000 $2,500,000
February 1, 2000 through
July 31, 2000 $3,000,000
Thereafter $4,100,000
provided, however, that effective upon each issuance of any equity securities by
the Parent, the minimum amounts set forth above for the period in which such
equity issuance occurs and for each period thereafter shall be automatically
increased by an amount equal to seventy five percent (75%) of amount by which
shareholders' equity is increased as a result of such equity issuance.
8.3 Senior Debt/Cash Flow Ratio. Permit the Senior Debt/Cash Flow Ratio
for any fiscal quarter set forth below to be greater than the applicable ratio
set forth opposite such quarter as set forth below:
Quarter Ending Applicable Ratio
-------------- ----------------
Effective Date through
July 31, 1998 4.50 to 1.00
August 1, 1998 through
October 31, 1998 4.25 to 1.00
November 1, 1998 through
January 31, 1999 4.00 to 1.00
February 1, 1999 through
April 30, 1999 3.75 to 1.00
Thereafter 3.50 to 1.00
8.4 Total Debt/Cash Flow Ratio. Permit the Total Debt/Cash Flow Ratio for
any fiscal quarter set forth below to be greater than the applicable ratio set
forth opposite such quarter as set forth below:
Quarter Ending Applicable Ratio
-------------- ----------------
Effective Date through
July 31, 1998 6.00 to 1.00
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August 1, 1998 through
October 31, 1998 5.75 to 1.00
November 1, 1998 through
January 31, 1999 5.50 to 1.00
February 1, 1999 through
April 30, 1999 5.25 to 1.00
Thereafter 5.00 to 1.00
9. EVENTS OF DEFAULT
The occurrence of any of the following events or conditions shall
constitute an Event of Default hereunder:
9.1 Obligations. The Obligors shall fail to make any payments of principal
of or interest on any Loan or any other Obligation when due.
9.2 Misrepresentations. Either Obligor shall make any representation or
warranty in this Agreement or any of the other Loan Documents or in any
certificate or statement furnished at any time hereunder or in connection with
this Agreement or any of the other Loan Documents which proves to have been
untrue or misleading in any material respect when made or furnished and which
continues to be untrue or misleading in any material respect.
9.3 Loan Document Defaults. Either Obligor shall default in the observance
or performance of any term, covenant or agreement contained in (a) Article 6
hereof (other than Section 6.8 and Section 6.9 hereof) and such default shall
not have been remedied or waived within fifteen (15) days after receipt of
notice from Agent and the Lenders of such default; (b) this Agreement (other
than those covenants or agreements referred to in subsection (a) of this Section
9.3); or (c) any other Loan Document and such default shall not have been
remedied or waived within the applicable grace period provided therefor, if any,
in such Loan Document.
9.4 Distribution Agreement Default or Termination. Either Obligor shall
default in the observance or performance of any term, covenant or agreement
contained in the Distribution Agreement and such default shall not be cured by
such Obligor within ten (10) days from the date of such default or, if less, the
amount of time provided in the Distribution Agreement for cure by such Obligor
of such default, or the Distribution Agreement shall terminate for any reason.
9.5 Other Debts. Either Obligor or any Subsidiary of such Obligor shall
fail to make payment when due under any agreement for borrowed money or other
material credit or shall default in connection with any agreement for borrowed
money or other material credit with any
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creditor other than a Lender or the Agent and such failure to make payment or
default shall not be cured within the grace period applicable thereto, if any,
as provided for in such agreement.
9.6 Tax Lien. A notice of Lien (other than a Permitted Lien), levy or
assessment is filed of record with respect to all or any of either Obligor's or
any of their Subsidiaries' assets by the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal or other
governmental agency, including, without limitation, the PBGC, which in the
opinion of the Agent and the Majority Lenders, adversely affects the priority of
the Liens granted to the Agent hereunder or under the other Loan Documents.
9.7 ERISA. The occurrence of any of the following events: (i) the
happening of a Reportable Event with respect to any Plan which Reportable Event
could result in a material liability for either Obligor or an ERISA Affiliate or
which otherwise could have a Material Adverse Effect on the Obligors or such
ERISA Affiliate; (ii) the disqualification or involuntary termination of a Plan
for any reason which could result in a material liability for either Obligor or
an ERISA Affiliate or which otherwise could have a Material Adverse Effect on
either Obligor or such ERISA Affiliate; (iii) the voluntary termination of any
Plan while such Plan has a funding deficiency (as determined under Section 412
of the Code) which could result in a material liability for either Obligor or an
ERISA Affiliate or which otherwise could have a Material Adverse Effect on
either Obligor or such ERISA Affiliate; (iv) the appointment of a trustee by an
appropriate United States district court to administer any such Plan; (v) the
institution of any proceedings by the PBGC to terminate any such Plan or to
appoint a trustee to administer any such Plan; (vi) the failure of the Obligors
to notify the Agent and the Lenders promptly upon receipt by either Obligor or
any of its Affiliates of any notice of the institution of any proceeding or
other actions which may result in the termination of any such Plan.
9.8 Voluntary Bankruptcy. Either Obligor or any Subsidiary of either
Obligor shall: (a) file a voluntary petition or assignment in bankruptcy or a
voluntary petition or assignment or answer seeking liquidation, reorganization,
arrangement, readjustment of its debts, or any other relief under the Bankruptcy
Code, or under any other act or law pertaining to insolvency or debtor relief,
whether State, Federal, or foreign, now or hereafter existing; (b) enter into
any agreement indicating consent to, approval of, or acquiescence in, any such
petition or proceeding; (c) apply for or permit the appointment, by consent or
acquiescence, of a receiver, custodian or trustee of such Person or for all or a
substantial part of its property; (d) make an assignment for the benefit of
creditors; or (e) be unable or shall fail to pay its debts generally as such
debts become due, admit in writing its inability or failure to pay its debts
generally as such debts become due, or otherwise cease to be Solvent.
9.9 Involuntary Bankruptcy. There occurs (a) a filing or issuance against
either Obligor or any Subsidiary of the either Obligor an involuntary petition
in bankruptcy or seeking liquidation, reorganization, arrangement, readjustment
of its debts or any other relief under the Bankruptcy Code, or under any other
act or law pertaining to insolvency or debtor relief, whether State, Federal or
foreign, now or hereafter existing and (i) the petition shall have been
dismissed or stayed within thirty (60) days after commencement of the case, or
(ii) an order for relief against such Person shall be entered in an involuntary
case under the Bankruptcy Code; (b)
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the involuntary appointment of a receiver, liquidator, custodian or trustee of
such Person or for all or a substantial part of its property; or (c) the
issuance of a warrant of attachment, execution or similar process against all or
any substantial part of the property of such Person.
9.10 Suspension of Business. The suspension of the transaction of the
business of either Obligor or any Subsidiary of either Obligor, or the
dissolution of either Obligor or any Subsidiary of either Obligor.
9.11 Judgments. Any judgment, decree or order for the payment of money
which, when aggregated with all other judgments, decrees or orders for the
payment of money pending against either Obligor or any of the Subsidiaries of
either Obligor, exceeds the sum of One Hundred Thousand Dollars ($100,000),
shall be rendered against either Obligor or any Subsidiary of either Obligor and
remain unsatisfied and in effect for a period of sixty (60) consecutive days or
more without being vacated, discharged, satisfied or stayed or bonded pending
appeal.
9.12 Management. The failure of the Obligors to maintain senior management
having sufficient skill and experience in the Obligors' industry to manage the
Obligors competently and efficiently, including, but not limited to, the failure
of Jerry W. Mayfield to devote substantially all of his time and attention to
his duties as President and Chief Executive Officer of the Parent and the
Manager of the Borrower.
9.13 RICO. Either Obligor or any Subsidiary of either Obligor or any
director, shareholder, member, manager or executive officer of such Person shall
be indicted under the Racketeer Influenced and Corrupt Organizations Act of 1970
(18 U.S.C. S 1961 et seq.) or the Agent and the Majority Lenders otherwise
believe in good faith that all or any portion of Borrower's or any of its
Subsidiaries' assets are subject to forfeiture pursuant to 18 U.S.C. ss. 1963.
9.14 Security Documents; Failure of Security. At any time, for any reason
other than with the consent of the Agent and the Majority Lenders, (a) this
Agreement or any of the Security Documents ceases to be in full force and effect
in any material respect or either Obligor seeks to repudiate its obligations
thereunder; (b) the Liens intended to be created in connection with this
Agreement or any Security Document shall be invalidated or otherwise cease to be
in full force and effect, or such Liens are, or either Obligor seeks to render
such Liens, invalid or unperfected; or (c) such Liens shall be subordinated or
shall not be first in priority, subject only to Permitted Liens.
9.15 Ownership of the Borrower's Capital Stock. The Parent shall for any
reason cease to own all of the issued and outstanding membership interest or
other ownership interest in the Borrower.
10. REMEDIES
Upon the occurrence or existence of any Event of Default, and during the
continuation
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thereof, without prejudice to the rights of the Agent and the Lenders to enforce
their respective claims against the Obligors for damages for failure by the
Obligors to fulfill any of the obligations hereunder, the Agent and the Lenders
shall have the following rights and remedies, in addition to any other rights
and remedies available to the Agent and the Lender at law, in equity or
otherwise:
10.1 Default Rate. At the election of the Agent or the Majority Lenders,
evidenced by written notice to the Obligors, the outstanding principal balance
of the Obligations shall bear interest at the Default Rate until paid in full.
10.2 Termination; Acceleration of the Obligations. In the event of an
Event of Default set forth in Sections 9.8 or 9.9 hereof, the Commitment shall
automatically and immediately terminate and in the event of any other Event of
Default, the Majority Lenders, at their option, may terminate the Commitment,
whereupon in either case all of the Obligations (including, but not limited to
the Term Loan and the Revolving Credit Loans) shall become immediately due and
payable, without presentment, demand, protest, notice of non-payment or any
other notice required by law relative thereto, all of which are hereby expressly
waived by each of the Obligors, anything contained herein to the contrary
notwithstanding.
10.3 Set-Off. The right of each Lender to set-off, without notice to
either Obligor, any and all deposits at any time credited by or due from such
Lender to either Obligor, whether in a general or special, time or demand, final
or provisional account or any other account or represented by a certificate of
deposit and whether or not unmatured or contingent against any or all of the
Obligations now existing or hereafter arising, whether or not such Lender shall
have made any demand under this Agreement or any of the Loan Documents.
10.4 Rights and Remedies of a Secured Party. All of the rights and
remedies of a secured party under the UCC or under other applicable law, all of
which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights and
remedies contained in this Agreement, and in any of the other Loan Documents.
10.5 Take Possession of Collateral. The right of the Agent to (a) enter
upon the premises of Parent, or any other place or places where the Collateral
is located and kept, through self-help and without judicial process, without
first obtaining a final judgment or giving either Obligor notice and opportunity
for a hearing on the validity of the Agent's or the Lenders' claims and without
any obligation to pay rent to either Obligor, and remove the Collateral
therefrom to the premises of Agent or any agent of Agent, for such time as Agent
may desire, in order to effectively collect or liquidate the Collateral; and/or
(b) require the Obligors to assemble the Collateral and make it available to
Agent at a place to be designated by the Agent, in its sole discretion.
10.6 Sale of Collateral. The right of the Agent to sell or to otherwise
dispose of all or any of the Collateral, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as the Agent, in its sole discretion, may deem
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advisable. Such sales may be adjourned from time to time with or without notice.
The Agent shall have the right to conduct such sales on either Obligor's
premises or elsewhere and shall have the right to use either Obligor's premises
without charge for such sales for such time or times as the Agent may see fit.
The Agent is hereby granted a license or other right to use, without charge, the
Obligors' labels, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks and advertising matter, or any property
of a similar nature, whether owned by either Obligor or with respect to which
either has rights under license, sublicense or other agreements (including, but
not limited to, any rights under the Distribution Agreement and the FM Station
Leases), as it pertains to the Collateral, in preparing for sale (including,
without limitation, finishing any unfinished Inventory), advertising for sale
and selling any Collateral and either Obligor's rights under all licenses and
all franchise agreements shall inure to the benefit of the Agent and the
Lenders. The Agent shall have the right to sell, lease or otherwise dispose of
the Collateral, or any part thereof, for cash, credit or any combination
thereof, and the Agent may purchase all or any part of the Collateral at public
or, if permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Obligations.
The proceeds realized from the sale of any Collateral shall be applied first to
the costs, expenses and attorneys' fees and expenses incurred by Agent for
collection and for acquisition, completion, protection, removal, storage, sale
and delivery of the Collateral; second to interest due upon any of the
obligations; and third to the principal of the Obligations. If any deficiency
shall arise, the Obligors, jointly and severally, shall remain liable to the
Lenders and the Agent therefor.
10.7 Judicial Proceedings. The right to proceed by an action or actions at
law or in equity to obtain possession of the Collateral, to recover the
Obligations and amounts secured hereunder or to foreclose under this Agreement
and sell the Collateral or any portion thereof, pursuant to a judgment or decree
of a court or courts of competent jurisdiction, all without the necessity of
posting any bond.
10.8 Notice. Any notice required to be given by Agent of a sale, lease, or
other disposition of the Collateral or any other intended action by Agent, given
to either Obligor in the manner set forth in Section 13.7 below, ten (10) days
prior to such proposed action, shall constitute commercially reasonable and fair
notice thereof to the Obligors.
10.9 Appointment of Agent as Obligors' Lawful Attorney. Each of the
Obligors irrevocably designates, makes, constitutes and appoints the Agent (and
all persons designated by the Agent) as such Obligor's true and lawful attorney,
and the Agent or the Agent's agent, may, without notice to Borrower, at the
Obligors' cost and expense, and at such time or times thereafter as the Agent or
said agent, in its sole discretion, may determine, in either Obligor's or the
Agent's name: (a) demand payment of the Accounts; (b) enforce payment of the
Accounts, by legal proceedings or otherwise; (c) exercise all of the Obligors'
rights and remedies with respect to the collection of the Accounts; (d) settle,
adjust, compromise, extend or renew the Accounts; (e) settle, adjust or
compromise any legal proceedings brought to collect the Accounts; (f) if
permitted by applicable law, sell or assign the Accounts upon such terms, for
such amounts and at such time or times as the Agent deems advisable; (g)
discharge and release the Accounts; (h) take control, in any manner, of any item
of payment or proceeds on the Accounts; (i)
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prepare, file and sign either Obligor's name on a Proof of Claim in Bankruptcy
or similar document against any Account Debtor; (j) prepare, file and sign
either Obligor's name on any notice of Lien, assignment or satisfaction of Lien
or similar document in connection with the Accounts; (k) do all acts and things
necessary, in the Agent's sole discretion, to fulfill either Obligor's
obligations under this Agreement; (1) endorse the name of either Obligor upon
any of the items of payment or proceeds on any Account, and deposit the same to
the account of the Agent and the Lenders on account of the Obligations; (m)
endorse the name of either Obligor upon any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar document or agreement relating
to the Accounts or Inventory; (n) use either Obligor's stationery and sign the
name of either Obligor to verifications of the Accounts and notices thereof to
Account Debtors; and (o) use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Accounts and Inventory to which either Obligor has access, and each of the
Obligors hereby agrees to indemnify and hold the Agent harmless from any costs,
damages, expenses or liabilities arising against or incurred by the Agent in
connection therewith except to the extent that any of such costs, damages,
expenses or liabilities arise out of Agent's gross negligence or willful
misconduct.
11. CONDITIONS PRECEDENT
11.1 Conditions Precedent to Initial Loan. Notwithstanding any other
provision of this Agreement, it is understood and agreed that this Agreement
shall not become effective and the Agent and the Lenders shall have no
obligation to make the initial Loan hereunder unless and until the following
conditions have been met, to the sole and complete satisfaction of the Lenders,
the Agent and their respective counsel:
(a) All governmental consents and approvals and third party consents and
approvals necessary in connection with the Loan Documents and the transactions
contemplated thereby shall have been received and shall remain in full force and
effect, and no action shall have been taken by any competent authority and no
law or regulation shall be applicable that, in the good faith judgment of the
Agent and the Lenders, restrains, prevents or imposes materially adverse
conditions upon the Loan Documents and the transactions contemplated thereby.
(b) Neither Obligor shall be subject to any statute, rule, regulation,
order, writ or injunction of any court or governmental authority or agency which
would materially restrict or hinder the conduct of such Obligor's business as
proposed to be conducted or which would have a Material Adverse Effect. In
addition, each of the Lenders shall have reasonably satisfied itself that each
of the Obligors is in compliance with all applicable statutes, rules,
regulations, orders, writs or injunctions of any court or governmental authority
or agency the failure to comply with which, in the opinion of such Lender, could
have a Material Adverse Effect.
(c) Each Lender shall have reasonably satisfied itself that neither of the
Obligors is subject to any liability for environmental or other matters,
including, without limitation, litigation, governmental inquiries, injunctions
or restraining orders pending or threatened which in the opinion of such Lender,
could have a Material Adverse Effect.
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(d) The Agent and the Lenders shall have received the following documents,
each dated the Effective Date (unless otherwise specified), each duly executed
and delivered to the Agent and the Lenders, and each to be satisfactory in form
and substance to the Lenders, the Agent and their counsel:
(i) the Notes;
(ii) a certificate signed by the chief executive officer and chief
financial officer of the Parent and the Manager of the Borrower,
each certifying that (A) the representations and warranties set
forth in Article 5 hereof are true and correct in all material
respects on and as of such date with the same effect as though made
on and as of such date; (B) since July 31, 1996, there has been no
material adverse change in the financial condition of such Obligor
as set forth in the financial statement dated such date, prepared by
management and reviewed by Arthur Andersen; (C) such Obligor is on
such date in compliance with all the terms and conditions set forth
in this Agreement on its part to be observed and performed, and (D)
on the Effective Date, after giving effect to the making of the
initial Loan, no Default or Event of Default has occurred or is
continuing;
(iii) a certificate of the Secretary of Parent certifying (A) that
attached thereto is a true and complete copy of the Articles of
Incorporation of Parent as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy
of the by-laws of Parent as in effect on the date of such
certification; (C) that attached thereto is a true and complete copy
of Resolutions adopted by the Board of Directors of Parent,
authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents; and (D) as to the incumbency
and genuineness of the signatures of the officers of Parent
executing this Agreement or any of the other Loan Documents;
(iv) a copy of the Articles of Incorporation of Parent, and all
restatements thereof or amendments thereto (including, without
limitation, the amendment changing the Parent's name), certified as
of a date close to the Effective Date, by the Secretary of State of
the State of Georgia;
(v) a certificate of the Secretary of Borrower certifying (A) that
attached thereto is a true and complete copy of the Articles of
Organization of Borrower as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy
of the Operating Declaration of Borrower, as in effect on the date
of such certification; (C) that attached thereto is a true and
complete copy of Resolutions adopted by the Board of Directors of
the Manager of Borrower, authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents; and (D)
as to the incumbency and genuineness of the signatures of the
officers of the Manager of Borrower executing this Agreement or any
of the other Loan Documents;
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(vi) a copy of the Articles of Organization of Borrower, and all
restatements thereof (or amendments thereto), certified as of a date
close to the Effective Date by the Secretary of State of the State
of Georgia;
(vii) good standing certificates for each Obligor, certified as of a date
close to the Effective Date and issued by the Secretaries of State
of the States of Alabama, Georgia, Louisiana and Texas;
(viii) copies of all filing receipts or acknowledgments issued by any
governmental authority to perfect the security interests of the
Agent in the Collateral and evidence in a form acceptable to the
Agent that such security interests of the Agent constitute valid and
perfected first priority security interests;
(ix) certified copies of each of the casualty and liability insurance
policies of Obligors, effective as of a date on or before the
Effective Date, together, in the case of such casualty policies,
with loss payable and mortgagee endorsements on the Agent's standard
form naming the Agent as loss payee;
(x) (A) an audited balance sheet of Parent for the fiscal year ended
July 31, 1996, prepared in accordance with GAAP, accompanied by the
unqualified opinion of Arthur Andersen & Co., and (B) interim
unaudited financial statements of Parent dated April 30, 1997,
including a balance sheet and statements of income and cash flow,
for the quarter and year-to-date periods then ended, reviewed by
Arthur Andersen & Co.;
(xi) the Amended and Restated Guaranty;
(xii) the Amended and Restated LLC Pledge Agreement;
(xiii) the Amended and Restated Collateral Assignments;
(xiv) the written opinion of Alston & Bird, counsel to the Obligors, in
form and content acceptable to the Lenders;
(xv) copies of all required regulatory approvals including, without
limitation, any which may be required by regulatory authorities
having jurisdiction over Borrower and any that may be required for
any transactions contemplated by this Agreement or any of the other
Loan Documents;
(xvi) such other documents, instruments and agreements with respect to the
transactions contemplated by this Agreement, in each case in such
form and containing such additional terms and conditions as may be
satisfactory to the Agent and the Lenders, and containing, without
limitation, representations and warranties which are customary and
usual in such documents.
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(e) The Lenders shall have executed and delivered to the Agent the
signature pages to this Agreement.
(f) Concurrently with the making of the initial Loan, Borrower shall pay
all accrued fees and expenses of the Agent and the Lenders payable hereunder or
under any other Loan Document (including, without limitation, that portion of
the commitment fee due and payable as a condition to the Lenders' obligation to
make the initial Loans hereunder as set forth in Section 3.5 hereof and the
accrued fees and disbursements of counsel to the Agent).
11.2 All Loans. The obligation of Lenders to make any Loan hereunder
(including the initial Loan) shall be subject to fulfillment of the following
conditions:
(a) No Injunction. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court
or other governmental agency or authority to enjoin, restrain, or prohibit, or
to obtain substantial damages in respect of, or which is related to or arises
out of this Agreement or such Loan or which in the judgment of the Majority
Lenders, would make it inadvisable to make such Loan;
(b) No Material Adverse Change. There shall not have occurred any material
adverse change in the assets, liabilities, business, operations or condition
(financial or otherwise) of either Obligor, or any event, condition, or state of
facts which would be expected to have a Material Adverse Effect subsequent to
the making of such Loan to Borrower, including, without limitation, any material
adverse change in the financial condition of the Obligors from that reflected in
the restated consolidated audited financial statements of Borrower dated July
31, 1996, previously furnished to the Lenders, as determined by the Majority
Lenders in their sole discretion;
(c) Solvency. The Majority Lenders shall be satisfied that, giving effect
to the making of such Loan, the Obligors will be Solvent;
(d) No Default or Event of Default. There shall exist no Default or Event
of Default or any event or condition which, with the making of such Loan, would
constitute a Default or Event of Default;
(e) Representations and Warranties. All of the representations and
warranties made by the Obligors hereunder shall be true and correct in all
material respects as of the date of such Loan with the same force and effect as
if made on and as of such date.
(g) Payment of Fees then Payable. All of the fees then due and payable
shall have been paid in full on or before such date.
11.3 Delay in Satisfaction of Conditions Precedent. If any Lender makes a
Loan prior to the fulfillment of any condition precedent set forth in this
Section 11, the making of such Loan shall constitute only an extension of time
for the fulfillment of such condition and not a waiver thereof. The failure of
either Obligor, for any reason, to satisfy or cause to be satisfied
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any such condition precedent within thirty (30) days after the date thereof
shall constitute an Event of Default for all purposes under this Agreement and
the Loan Documents, unless such failure is waived in writing by the Majority
Lenders.
12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder with
such powers as are specifically delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 12.5 hereof and
the first sentence of Section 12.6 hereof shall include reference to its
Affiliates and its own and its Affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement, and shall not by reason of this Agreement be a trustee
for any Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any of
the other Loan Documents, or in any certificate or other instrument, document or
agreement referred to or provided for in, or received by any of them under, this
Agreement or any of the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
Note or any of the other Loan Documents or for any failure by Borrower or any
other Person to perform any of its obligations hereunder or thereunder; (c)
subject to Section 12.3 hereof, shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
agreement, document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Agent may deem and treat the payee of any Note
as the holder thereof for all purposes hereof unless and until a written notice
of the assignment or transfer complying with the terms and conditions of Section
13.3 hereof.
12.2 Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, facsimile, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Majority Lenders (unless the instructions of or
consent of all of the Lenders is required hereunder), and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders; provided, however, the Agent shall not be required to take any
action which (a) the Agent reasonably believes will expose it to personal
liability unless the Agent receives an indemnification satisfactory to it from
the Lenders with respect to such action or (b) is contrary to this Agreement,
the Notes, the other Loan Documents or Applicable Law.
12.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of
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the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans or of Commitment Fees) unless the Agent has
received notice from a Lender or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment). The Agent shall
(subject to Section 12.7 of) take such action with respect to such Default or
Event of Default as shall be directed by the Majority Lenders (unless the
directions of or consent of all of the Lenders is required hereunder), provided
that, unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
12.4 Rights as a Lender. With respect to its Commitment and the
Loans made by it, Creditanstalt (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. Creditanstalt
(and any successor acting as Agent) and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with Borrower
(and any of its Affiliates) as if it were not acting as the Agent, and
Creditanstalt and its Affiliates may accept fees and other consideration from
Borrower for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
12.5 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Sections 13.5 or 13.13 hereof, but without
limiting the obligations of Borrower under said Sections 13.5 and 13.13), for
their Commitment Percentage of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other instruments, documents or agreements contemplated by or
referred to herein or the transactions contemplated hereby (including, without
limitation, the costs and expenses which Borrower are obligated to pay under
Section 13.5 hereof but excluding, unless an Event of Default has occurred and
is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or of any such other instruments, documents or agreements, provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be indemnified.
The obligations of the Lenders under this Section 12.5 shall survive the
termination of this Agreement.
12.6 Non-Reliance on Agent and other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its own decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and
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decisions in taking or not taking action under this Agreement. The Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrower of this Agreement or any other instrument, document or agreement
referred to or provided for herein or to inspect the properties or books of the
Borrower. Except for notice, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrower (or any of its Affiliates) which may come into the
possession of the Agent or any of its Affiliates.
12.7 Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall receive further assurances to its
satisfaction from the Lenders of their indemnification obligations under Section
12.5 hereof against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
12.8 Resignation or Removal of Agent; Co-Agent.
(a) Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower, and the Agent may be removed at any time with cause by
the Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment with thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lender's removal of the retiring Agent, the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
bank which has a combined capital and surplus of at least Three Hundred Million
Dollars ($300,000,000). Upon the acceptance of any appointment as Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 12 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
(b) In the event that Applicable Law imposes any restrictions on the
identity of an agent such as the Agent or requires the appointment of any
co-agent in connection therewith, the Agent may, in its discretion, for the
purpose of complying with such restrictions, appoint one or more co-agents
hereunder. Any such Co-Agent(s) shall have the same rights, powers, privileges
and obligations as the Agent and shall be subject to and entitled to the
benefits of all provisions of this Agreement and the Loan Documents relative to
the Agent. In addition to any rights of the Majority Lenders set forth in
subsection (a) above, any such Co-Agent may be removed at any time by the Agent.
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12.9 Collateral Matters.
(a) Authority. Each Lender authorizes and directs the Agent to enter
into the Loan Documents relating to the Collateral for the benefit of the
Lenders. Each Lender agrees that any action taken by the Agent or the Majority
Lenders (or, where required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions of this Agreement
or the other Loan Documents, and the exercise by the Agent or the Majority
Lenders (or, where so required, such greater proportion) of the powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders. Without limiting the generality of the foregoing, the Agent shall have
the sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for the Lenders with respect to all payments and collections
arising in connection with this Agreement and the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower
or any of its Subsidiaries; (iii) act as collateral agent for the Lenders for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein, provided, however, the Agent
hereby appoints, authorizes and directs the Lenders to act as collateral
sub-agents for the Agent and the Lenders for purposes of the perfection of all
security interests and Liens with respect to the Borrower's and its
Subsidiaries' respective deposit accounts maintained with, and cash and other
property held by, such Lender; (iv) manage, supervise and otherwise deal with
the Collateral; (v) take such action as is necessary or desirable to maintain
the perfection and priority of the security interest and Liens created or
purported to be created by the Loan Documents, and (vi) except as may be
otherwise specifically restricted by the terms of this Agreement or any other
Loan Document, exercise all remedies given to the Agent or the Lenders with
respect to the Collateral under the Loan Documents, Applicable Law or otherwise.
(b) Each Lender hereby directs, in accordance with the terms of this
Agreement, the Agent to release or to subordinate any Lien held by the Agent for
the benefit of the Lenders:
(i) against all of the Collateral, upon final and indefeasible
payment in full of the Obligations and termination of this Agreement;
(ii) against any part of the Collateral sold or disposed of by
the Borrower or any of its Subsidiaries, if such sale or disposition is
permitted by Section 7.3 hereof or is otherwise consented to by the
Majority Lenders, as certified to the Agent by the Majority Lenders;
(iii) against any part of the Collateral constituting property
in which the Borrower owned no interest at the time the Lien was granted
or at any time thereafter; or
(iv) if approved, authorized or ratified in writing by the
Agent at the direction of Majority Lenders.
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Each Lender hereby directs the Agent to execute and deliver or file such
termination and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to Section 12.9(b) hereof
promptly upon the effectiveness of any such release.
(c) Without in any manner limiting the Agent's authority to act
without any specific or further authorization or consent by Majority Lenders (as
set for in Section 12.9(b) hereof), each Lender agrees to confirm in writing,
upon request by the Borrower, the authority to release Collateral conferred upon
the Agent under clauses (i) through (iv) of Section 12.9(b) hereof. So long as
no Default or Event of Default is then continuing, upon receipt by the Agent of
any such written confirmation from the Majority Lenders of its authority to
release any particular items or types of Collateral, and in any event upon any
sale and transfer of Collateral which is expressly permitted pursuant to the
terms of this Agreement, and upon at lease five (5) Business Days prior written
request by the Borrower, the Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of Lenders herein or
pursuant hereto upon such Collateral; provided, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other that the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrower in respect of) all
interests retained by the Borrower, including without limitation the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
(d) The Agent shall have no obligation whatsoever to the Lenders or
to any other Person to assure that the Collateral exists or is owned by the
Borrower or is cared for, protected or insured or has been encumbered or that
the Liens granted to the Agent pursuant to this Agreement or any of the Loan
Documents have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent in this Section 12.9 or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
in any act, omission or event related thereto, the Agent may act in any manner
it may deem appropriate, in its sole discretion, given its own interest in the
Collateral as one of the Lenders and that the Agent shall have no duty or
liability whatsoever to any Lender (except to the extent of its own gross
negligence or willful misconduct).
12.10 Borrower Not a Beneficiary. The provisions of this Article 12
are solely for the benefit of the Agent and the Lenders and neither the Borrower
nor any Subsidiary of the Borrower shall have any right to rely on or enforce
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as the agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligations or relationship
of agency, trustee or fiduciary with or for the Borrower or any Subsidiary of
the Borrower.
13. MISCELLANEOUS
13.1 Waiver. Each and every right and remedy granted to the Lenders and
the Agent
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under this Agreement, or any other document delivered hereunder or in connection
herewith or allowed it by law or in equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Lenders and the
Agent, or any of them, to exercise, and no delay in exercising, any right or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by the Lenders and the Agent, or any of them, of any right or remedy
preclude any other or future exercise thereof or the exercise of any other right
or remedy. No waiver by the Lenders and the Agent of any Default or Event of
Default shall constitute a waiver of any subsequent Default or Event of Default.
13.2 Survival. All representations, warranties and covenants made herein
shall survive the execution and delivery of all of the Loan Documents. The terms
and provisions of this Agreement shall continue in full force and effect until
all of the Obligations have been paid in full and the Commitment has been
terminated in writing, whichever last occurs; provided, that Borrower's
obligations under Sections 3.3, 13.5 and 13.13 hereof shall survive the
repayment of the Obligations and the termination of this Agreement.
13.3 Assignments; Successors and Assigns.
(a) This Agreement and the Loan Documents shall be binding upon, and inure
to the benefit of, the successors of the Lenders and the Agent, the permitted
successors of the Obligors, and the respective assigns, transferees and
endorsees of the Lenders and the Agent. No Person shall be deemed to be a
third-party beneficiary of any of the provisions of this Agreement or the Loan
Documents or otherwise have any rights by reason of any provisions of this
Agreement or the Loan Documents.
(b) Each Lender may, in the ordinary course of its commercial banking
business and in accordance with the applicable law, at any time sell to one or
more banks or other entities ("Participants") participating interests in any
Loans owing to such Lender, any of the Notes held by such Lender, such Lender's
Commitment hereunder or any other interests of such Lender hereunder. Each
Obligor agrees that each Participant shall be entitled to the benefits of
Section 13.13 hereof with respect to its participation; provided, that, no
Participant shall be entitled to receive any greater amount pursuant to such
Section than such Lender would have been entitled to receive in respect of the
amount of the participation transferred by such Lender to such Participant had
no such transfer occurred.
(c) Each Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time assign, pursuant to
an Assignment and Acceptance Agreement substantially in the form of Exhibit F
attached hereto and incorporated herein by reference, without either Obligor's
consent to one or more banks having unimpaired capital and surplus of
$250,000,000 or more or may assign with the Borrower's consent (which shall not
be unreasonably withheld) to any other entities (in either case, "Assignees")
all or any part of any Loans owing to such Lender, any of the Notes held by such
Lender, such Lender's Commitment or any other interest of such Lender hereunder;
provided, however, that any such assignment shall be in a minimum principal
amount of $1,000,000 or, if less, the sum of (a) the principal amount
outstanding under such Lender's Term Note Plus (b) such Lender's Commitment. The
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Obligors, the Agent and the Lenders agree that to the extent of any assignment
the Assignee shall be deemed to have the same rights and benefits with respect
to the Obligors under this Agreement and any of the Notes as it would have had
if it were the "Lender" hereunder on the date hereof and the assigning Lender
shall be released from its Commitment and other obligations hereunder, to the
extent of such assignment.
(d) Each Obligor authorizes each Lender to disclose to any Participant or
Assignee ("Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Obligors which has been
delivered to such Lender by either Obligor pursuant to this Agreement or which
has been delivered to such Lender by either Obligor in connection with such
Lender's credit evaluation of the Obligors prior to entering into this
Agreement.
(e) Any Lender shall be entitled to have any Note held by it subdivided in
connection with a permitted assignment of all or any portion of such Note and
the respective Loans evidenced thereby pursuant to Section 13.3(c) above. In the
case of any such subdivision, the new Note (the "New Note") issued in exchange
for a Note previously issued hereunder (the "Old Note") (i) shall be dated the
date of such assignment, (ii) shall be otherwise duly completed, and (iii) shall
bear a legend, to the effect that such New Note is issued in exchange for such
old Note and that the indebtedness represented by such Old Note shall not have
been extinguished by reason of such exchange.
(f) If, pursuant to this Section 13.3, any interest in this Agreement or
any of the Notes is transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any State thereof, the
Lender making such transfer shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to such Lender (for the benefit
of such Lender and the Obligors) that under applicable law and treaties no taxes
will be required to be withheld by such Lender or either Obligor with respect to
any payments to be made to such Transferee hereunder or in respect of the Loans,
(ii) to furnish to such Lender and the Obligors either United States Internal
Revenue Service Form 4224 or United States Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from United
States federal withholding tax on all payments hereunder), and (iii) to agree
(for the benefit of such Lender and the Obligors) to provide such Lender and the
Obligors a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable United
States laws and regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable United States
laws and regulations with regard to such withholding tax exemption; provided,
however, that with respect to any Transferee organized under the laws of any
jurisdiction other than the United States or any State thereof, such Transferee
shall have an office in the United States.
(g) Neither Obligor shall be permitted to assign its interest in this
Agreement or any Loan Document without the prior written consent of the Agent
and the Lenders.
(h) Each the Lenders and the Agent agrees to keep confidential, in
accordance with
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its customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by either Obligor pursuant to this Agreement which is
identified by the Obligors as being confidential at the time the same is
delivered to such Person, provided that nothing herein shall limit the
disclosure of any such information (i) the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Agent or any Lender,
(iii) to bank examiners, auditors or accountants, (iv) in connection with any
litigation to which any Lender or the Agent is a party, or (v) to any assignee
or participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) agrees to keep such
nonpublic information confidential to the same extent as provided in this
paragraph with respect to the Agent or such Lender.
13.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
13.5 Expense Reimbursement. The Obligors, jointly and severally, agree to
reimburse the Agent for all of the Agent's expenses incurred in connection with
the negotiation, preparation, execution, delivery, modification, regular review,
administration and enforcement of this Agreement, the Notes and the other Loan
Documents, including, without limitation, audit costs, appraisal costs, the cost
of searches, filings and filing fees, taxes and the fees and disbursements of
Agent's attorneys, Messrs. Troutman Sanders LLP, and any counsel retained by
them. The Obligors, jointly and severally, further agree to reimburse the Agent
and each Lender for all costs and expenses incurred by the Agent or such Lender
(including, without limitation, attorneys' fees and disbursements) to: (i)
commence, defend or intervene in any court proceeding; (ii) file a petition,
complaint, answer, motion or other pleading, or to take any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) relating to the
Collateral or this Agreement, the Notes or any of the other Loan Documents;
(iii) protect, collect, lease, sell, take possession of, or liquidate any of the
Collateral; (iv) attempt to enforce any security interest in any of the
Collateral or any guarantee of the Obligations or to seek any advice with
respect to such enforcement; and (v) enforce any of such Lender's or the Agent's
rights to collect any of the Obligations. The Obligors, jointly and severally,
also agree to pay, and to save harmless the Agent and the Lenders from any delay
in paying, any intangibles, documentary stamp and other taxes, if any, which may
be payable in connection with the execution and delivery of this Agreement, the
Notes or any of the other Loan Documents, or the recording of any thereof, or in
any modification hereof or thereof. Additionally, the Obligors, or either of
them, shall pay to any Lender or the Agent on demand any and all fees, costs and
expenses which such Lender or the Agent pays to a bank or other similar
institution arising out of or in connection with (a) the forwarding to Borrower
or any other Person, on Borrower's behalf, by the Agent or such Lender of
proceeds of any Loan and (b) the depositing for collection by the Agent or such
Lender of any check or item of payment received by or delivered to the Agent or
such Lender on account of the Obligations. All fees, costs and expenses
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provided for in this Section 13.5 may, at the option of the Lenders and the
Agent, be charged as Revolving Credit Loans to Borrower's revolving loan
accounts with the Lenders provided for in Section 2.1 hereof. The Obligors'
obligations under this Section 13.5 shall survive the termination of this
Agreement and the repayment of the Obligations.
13.6 Severability. If any provision of this Agreement or any of the Loan
Documents or the application thereof to any party thereto or circumstances shall
be invalid, illegal or unenforceable to any extent, the remainder of this
Agreement or such Loan Document and the application of such provisions to any
other party thereto or circumstance shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
13.7 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been given
or made when (a) delivered by hand, (b) sent by telex or facsimile transmitter
(with receipt confirmed), provided that a copy is mailed by certified mail,
return receipt requested, or (c) when received by the addressee, if sent by
Express Mail, Federal Express or other overnight delivery service (receipt
requested), in each case to the appropriate addresses, telex numbers, facsimile
numbers designated for a party at the "Address for Notices" specified below its
name on the signature pages hereto or to such other addresses as may be
designated hereafter in writing by the respective parties hereto.
13.8 Entire Agreement; Amendment. This Agreement and the Loan Documents
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior negotiations, understandings and
agreements between such parties in respect of such subject matter. Neither this
Agreement nor any provision hereof may be changed, waived, discharged, modified
or terminated except pursuant to a written instrument signed by the Obligors,
the Agent and the Majority Lenders; provided, however, that no such amendment,
waiver, discharge, modification or termination shall, except pursuant to an
instrument signed by Obligors, and all of the Lenders, (a) increase the amount
of, extend the term of, or extend the time or waive any requirement for the
termination of, the Commitment; (b) extend the date fixed for the scheduled
payment of principal of, or interest on, any Loan; (c) reduce the amount of any
scheduled payment of principal of, or the rate of interest on, any Loan; (d)
reduce any fee payable hereunder; (e) alter the terms of this Section 13.8; (f)
release any guarantor of the Obligations; (g) reduce the Commitment of any
Lender in any manner which would change such Lender's Commitment Percentage; or
(h) amend the definitions of the term "Majority Lenders" or "Commitment
Percentage" set forth in Section 1.1 hereof; provided, further, that any
amendment, waiver, discharge modification or termination of any provision of
Section 12 hereof, or which increases the obligations of the Agent hereunder and
under the Loan Documents, shall require the written consent of the Agent.
Anything in this Agreement to the contrary notwithstanding, if any
Lender shall fail to fulfill its obligations to make any Loan hereunder then,
for so long as such failure shall continue, such Lender shall (unless the
Majority Lenders, determined as if such Lender were not a "Lender" hereunder,
shall otherwise consent in writing) be deemed for all purposes relating to
amendments, modifications, waivers or consents under this Agreement or the Notes
(including, without
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limitation, under this Section 13.8) to have no Loans or Commitment, shall not
be treated as a "Lender" hereunder when performing the computation of Majority
Lenders, and shall have no rights under the preceding paragraph of this Section
13.8; provided that any action taken by the other Lenders with respect to the
matters referred to in clauses (a) through (h) of the preceding paragraph shall
not be effective as against such Lender.
13.9 Time of the Essence. Time is of the essence in this Agreement and the
other Loan Documents.
13.10 Interpretation. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
13.11 Lenders, Agent Not Joint Venturers. Neither this Agreement, the Loan
Documents, any agreements, instruments, documents executed and delivered
pursuant hereto or thereto or in connection herewith or therewith, nor any of
the transactions contemplated hereby or thereby shall in any respect be
interpreted, deemed or construed as making any Lender or the Agent a partner or
joint venturer with either Obligor or as creating any similar relationship or
entity, and each Obligor agrees that it will not make any assertion, contention,
claim or counterclaim to the contrary in any action, suit or other legal
proceeding involving any Lender, the Agent and the Obligors, or any of them.
13.12 Cure of Defaults by Lenders. If, hereafter, either Obligor defaults
in the performance of any duty or obligation to any third party, any Lender may,
at its option, but without obligation, cure such default and any costs, fees and
expenses incurred by such Lender in connection therewith including, without
limitation, for payment on mortgage or note obligations, for the purchase of
insurance, the payment of taxes and the removal or settlement of Liens and
claims, shall be included in the Obligations and be secured by the Collateral.
13.13 Indemnity. In addition to any other indemnity provided for herein,
the Obligors, jointly and severally, hereby indemnify the Agent and each Lender
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against the Agent
or such Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person
(other than the Obligors, or either of them) with respect to any aspect of, or
any transaction contemplated by, or referred to in, or any matter related to,
this Agreement or the other Loan Documents, whether or not the Agent or such
Lender is a party thereto, except to the extent that any of the foregoing arises
out of gross negligence or willful misconduct of the Agent or such Lender, as
the case may be. Additionally, the Obligors, jointly and severally, hereby
indemnify and hold the Agent and each of the Lenders harmless from all loss,
cost (including, without limitation, fees and disbursements of counsel),
liability and damage whatsoever incurred by the Agent and the Lenders by reason
of any violation of any applicable Environmental Laws for which either Obligor
or any of their
63
<PAGE>
respective Affiliates or predecessors has any liability or which occurs upon any
real estate owned by or under the control of either Obligor or any of their
respective Affiliates or predecessors, or by reason of the imposition of any
governmental Lien for the recovery of environmental cleanup costs expended by
reason of such violation. The Obligors' obligations under this Section shall
survive the termination of this Agreement and the repayment of the Obligations.
13.14 Termination Statements. The Obligors acknowledge and agree that it
is the Obligors' intent that all financing statements filed hereunder shall
remain in full force and effect until the Commitment shall have been terminated
in accordance with the provisions hereof, even if, at any time or times prior to
such termination, no loans or Loans shall be outstanding hereunder. Accordingly,
each Obligor waives any right which it may have under Section 9-404(l) of the
UCC to demand the filing of termination statements with respect to the
collateral, and agrees that the Agent shall not be required to send such
termination statements to the Obligors, or to file them with any filing office,
unless and until the Commitment shall have been terminated in accordance with
the terms of this Agreement and all Obligations paid in full in immediately
available funds. Upon such termination and payment in full, the Agent shall
execute appropriate termination statements and deliver the same to Borrower.
13.15 Governing Law; Jurisdiction. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH
OBLIGOR HEREBY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT; (B) AGREES THAT SECTIONS 5-1401 AND 5-1402
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS
AGREEMENT AND THE LOAN DOCUMENTS; AND (C) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS
AGAINST EITHER OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.
13.16 Waiver of Jury Trial. AFTER REVIEWING THIS PROVISION SPECIFICALLY
WITH ITS RESPECTIVE COUNSEL, EACH OF THE OBLIGORS, THE AGENT AND THE LENDERS
HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR
ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, ANY
64
<PAGE>
OF THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF EITHER OBLIGOR, THE AGENT OR THE LENDERS. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO MAKE THE LOANS TO
BORROWER.
[Remainder of page intentionally left blank]
65
<PAGE>
IN WITNESS WHEREOF, Parent, Borrower, the Agent and the Lenders have
caused their duly authorized officers or other representatives to set their
hands and seals as of the day and year first above written.
"Parent"
SATELLINK COMMUNICATIONS,
INC., a Georgia corporation
By: /s/ Jerry W. Mayfield
--------------------------------
Jerry W. Mayfield
President
Attest: /s/ Daniel D. Lensgraf
----------------------------
Daniel D. Lensgraf
Senior Vice President of
Finance and Administration
and Chief Financial Officer
[CORPORATE SEAL]
Address for Notices:
Satellink Communications, Inc.
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attn: Daniel D. Lensgraf
Facsimile Number: (770) 664-2651
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Sidney J. Nurkin
Facsimile Number: (404) 881-7777
(Signatures Continued On Next Page)
<PAGE>
(Signatures Continued From Previous Page)
"Borrower"
SATELLINK PAGING, LLC,
a Georgia limited liability company
By: Satellink Communications, Inc.,
Its Manager
By: /s/ Jerry W. Mayfield
--------------------------------
Jerry W. Mayfield
President
Attest: /s/ Daniel D. Lensgraf
----------------------------
Daniel D. Lensgraf
Senior Vice President of
Finance and Administration
and Chief Financial Officer
[CORPORATE SEAL]
Address for Notices:
c/o Satellink Communications, Inc.
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attn: Daniel D. Lensgraf
Facsimile Number: (770) 664-2651
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Sidney J. Nurkin
Facsimile Number: (404) 881-7777
(Signatures Continued On Next Page)
<PAGE>
(Signatures Continued From Previous Page)
"AGENT"
CREDITANSTALT-BANKVEREIN
By: /s/ Robert M. Biringer
--------------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Craig Stamn
--------------------------------
Name: Craig Stamn
Title: Sr Associate
Address for Notices:
Creditanstalt-Bankverein
2 Greenwich Plaza
Fourth Floor
Greenwich, Connecticut 06830
Attn: Lisa Bruno
Facsimile Number: (203) 861-6594
with copies to:
Creditanstalt-Bankverein
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Facsimile Number: (770) 390-1851
and
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile Number: (404) 885-3900
(Signatures Continued On Next Page)
<PAGE>
(Signatures Continued From Previous Page)
"LENDER"
CREDITANSTALT-BANKVEREIN
By: /s/ Robert M. Biringer
--------------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Craig Stamn
--------------------------------
Name: Craig Stamn
Title: Sr Associate
Amount of Commitment: $10,200,000
Amount of Term Loan: $4,800,000
Address for Notices:
Creditanstalt-Bankverein
2 Greenwich Plaza
Fourth Floor
Greenwich, Connecticut 06830
Attn: Lisa Bruno
Facsimile Number: (203) 861-6594
with copies to:
Creditanstalt-Bankverein
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Facsimile Number: (770) 390-1851
and
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile Number: (404) 885-3900
(Signatures Continued On Next Page)
<PAGE>
(Signature Continued From Previous Page)
"LENDER"
FINOVA CAPITAL CORPORATION
By: /s/ David A. Meier
--------------------------------
David A. Meier
Vice President
Amount of Commitment: $6,800,000
Amount of Term Loan: $3,200,000
Address for Notices:
FINOVA Capital Corporation
1850 North Central Avenue
Phoenix, Arizona 85004
Attn: Vice President, Law
Facsimile Number (602) 207-5036
with copies to:
FINOVA Capital Corporation
311 S. Wacker Drive
Suite 4400
Chicago, Illinois 60606-6618
Attn: Portfolio Manager
Facsimile Number: (312) 322-3533
<PAGE>
Schedule 1.1
FM Station Agreements
Borrower
1. Standard Subcarrier Lease Agreement dated October 19, 1988, by and between
Satellink Paging Inc. and WGOV, Incorporated, the licensee of radio station
WAAC-FM, licensed in the city of Valdosta, Georgia.
2. Standard Subcarrier Lease Agreement dated March 20, 1990, by and between
Satellink Paging Inc. and Marathon Communications, Inc., the licensee of
radio station WAVH-FM, licensed in the city of Mobile, Alabama.
3. Standard Subcarrier Lease Agreement dated April 18, 1989, by and between
Satellink Paging Inc. and Rowland Radio, Inc. the licensee of radio station
WBGA-FM, licensed in the city of Waycross, Georgia.
4. Standard Subcarrier Lease Agreement dated April 1, 1988, by and between
Satellink Paging Inc. and M & M Partners, the licensee of radio station
WNKS-FM, licensed in the city of Columbus, Georgia.
5. Standard Subcarrier Lease Agreement dated August 16, 1988, by and between
Satellink Paging Inc. and South Georgia Broadcasting, Inc., the licensee of
radio station WBYZ-FM, licensed in the city of Baxley, Georgia.
6. Standard Subcarrier Lease Agreement dated May 4, 1989, by and between
Satellink Paging Inc. and Arrow Communications Inc., the licensee of radio
station WFFX-FM, licensed in the city of Tuscaloosa, Alabama.
7. Standard Subcarrier Lease Agreement dated May 31, 1989, by and between
Satellink Paging Inc. and HVS Partners, the licensee of radio station
WGUS-FM, licensed in the city of Augusta, Georgia.
8. Standard Subcarrier Lease Agreement dated August 16, 1988, by and between
Satellink Paging Inc. and Anniston Radio, Inc., the licensee of radio
station WHMA-FM, licensed in the city of Anniston, Alabama.
9. Standard Subcarrier Lease Agreement dated June 30, 1989, by and between
Satellink Paging Inc. and Wolff Broadcasting Corp., the licensee of radio
station WIJK-FM, licensed in the city of Evergreen, Alabama.
10. Standard Subcarrier Lease Agreement dated April 18, 1989, by and between
Satellink paging and Colonial Broadcasting Inc., the licensee of radio
station WLWI-FM, licensed in the city of Montgomery, Alabama.
<PAGE>
11. Standard Subcarrier Lease Agreement dated March 9, 1990, by and between
Satellink Paging Inc. and Colquitt Broadcasting Company, the licensee of
radio station WMTM-FM, licensed in the city of Moultrie, Georgia.
12. Standard Subcarrier Lease Agreement dated March 20, 1989, by and Between
Satellink Paging Inc. and WDEB TV: Woods Communications Group Inc., the
licensee of radio station WTVY-FM, licensed in the city of Dothan, Alabama.
13. Standard Subcarrier Lease Agreement dated December 12, 1988, by and between
Satellink Paging Inc. and Gulf Atlantic Media of Georgia, Inc., the
licensee of radio station WZAT-FM, licensed in the city of Savannah,
Georgia.
14. Standard Subcarrier Lease Agreement dated August 16, 1989, by and between
Satellink Paging Inc. and Broadcast Investment Associates Inc., the
licensee of radio station WTSH-FM, licensed in the city of Rockmart,
Georgia.
15. Agreement to Lease SCA Subcarrier dated May 1, 1988, by and between All
America Communications Corporation and Provident Broadcasting Company, the
licensee of WVFJ-FM.
16. Agreement to Lease SCA Subcarrier dated September 15, 1987, by and between
All America Communications Corporation and Clarke Broadcasting Corporation,
the licensee of WNGC-FM.
17. Agreement to Lease SCA Subcarrier dated November 5, 1987, by and between
All American Communications Corporation and Piedmont Communications
Corporation, the licensee of WPEZ-FM.
18. Standard Subcarrier Lease Agreement dated April 15, 1993, by and between
Satellink Paging Inc. and E. H. Darby, the licensee of radio station
WVNA-FM, licensed in the city of Tuscumbia, Alabama.
19. Standard Subcarrier Lease Agreement dated July 19, 1993, by and between
Satellink Paging Inc. and WMCD-Statesboro, Georgia, the licensee of radio
station WMCD-FM, licensed in the city of Statesboro, Georgia.
20. Standard Subcarrier Lease Agreement dated August 1, 1993, by and between
Satellink Paging Inc. and Albany Broadcasting Company, Inc., the licensee
of radio station WGPC-FM, licensed in the city of Albany, Georgia.
21. Standard Subcarrier Lease Agreement dated December 1, 1993, by and between
Satellink Paging Inc. and Sonic Broadcasting L. P. - Fund I, the licensee
of radio station WLET-FM, licensed in the city of Toccoa, Georgia.
<PAGE>
22. Standard Subcarrier Lease Agreement dated February 1, 1994, by and between
Satellink Paging Inc. and Mountain Lakes Broadcasting LLC, the licensee of
radio station WDRM-FM, licensed in the city of Hunstville, Alabama.
23. Standard Subcarrier Lease Agreement dated February 4, 1994, by and between
Satellink Paging Inc. and Radio Communications, Inc., the licensee of radio
station WINL-FM, licensed in the city of Linden, Alabama.
24. Standard Subcarrier Lease Agreement dated November 9, 1994, by and between
Satellink Paging Inc. and Birmingham Communications, Inc., the licensee of
radio station WODL-FM, licensed in the city of Birmingham, Alabama.
25. Standard Subcarrier Lease Agreement dated January 31, 1995, by and between
Satellink Paging Inc. and P & T Broadcasting, Inc., the licensee of radio
station WLOV-FM, licensed in the city of Washington, Georgia.
26. Standard Subcarrier Lease Agreement dated March 9, 1995, by and between
Satellink Paging Inc. and Stewart Broadcasting, the licensee of radio
station WYNR-WGIG-FM, licensed in the city of Brunswick, Georgia.
27. Standard Subcarrier Lease Agreement dated April 16, 1995, by and between
Satellink Paging Inc. and Tel-Dodge Broadcasting, the licensee of radio
station WZNY-FM, licensed in the city of Augusta, Georgia.
28. Standard Subcarrier Lease Agreement dated April 16, 1995, by and between
Satellink Paging Inc. and State Broadcasting Corp., the licensee of radio
station WQZY-FM, licensed in the city of Dublin, Georgia.
29. Standard Subcarrier Lease Agreement dated April 16, 1995, by and between
Satellink Paging Inc. and Savanah Valley Broadcasting, the licensee of
radio station WZNY-FM, licensed in the city of Augusta, Georgia.
30. SCA Transmission Agreement dated February 22, 1989, by and between
Satellink Paging Inc. and Jacor Broadcasting of Atlanta, Inc.
<PAGE>
Schedule 1.2
Lease Agreements
Parent
1. Lease Agreement, dated April 2, 1992, by and between Northmeadow Associates
Joint Venture and Satellink Paging Inc.
2. Office Service Center Lease, dated July 20, 1994, by and between Tynes
Development Corporation and Satellink Paging Inc.
3. Lease, dated October 11, 1991, by and between Dan Stallings and Satellink
Paging Inc.
4. Standard Texas Business Complex Lease, dated March 30, 1994, by and between
R&B EXECUTIVE INVESTMENTS - GREAT SOUTHWEST ASSOCIATES, a California
Limited Partnership and CR, Inc. a Texas Corporation.
5. Shopping Center Lease dated March 31, 1997 by and between Satellink Paging,
LLC and Woodmen Of The World Life Insurance Society.
6. Lease Agreement, dated November 1, 1996, by and between Ken Patton and
Satellink Paging, Inc. (Baton Rouge)
7. Modification of Lease Agreement, dated May 1, 1997, by and between Perlis
Realty Company and Dr. Arthor Gabel and David C. Drexler (Cordele)
8. Communications Site Access Agreement, (Newnan, GA) dated May 12, 1995, by
and between Grid-Site Services, Inc. and Atlanta Voice Page, Inc.
9. Communications Site Access Agreement, (Tyrone, GA) dated November 23, 1994,
by and between Grid-Site Services, Inc. and Atlanta Voice Page, Inc.
10. Lease Agreement for Radio Broadcasting Antenna & Base Cabinet, (Atlanta,
GA) dated March 30, 1990, by and between First Bank Building Corp. and
Atlanta Voice Page, Inc.
11. Telecommunications Terminal Site Access Agreement, (Mableton, GA) dated
March 30, 1990 by and between Frank L Hicks and Atlanta Voice Page, Inc.
12. Antenna Site Licenses Between Motorola, Inc, and Atlanta Voice Page, Inc
for the following locations:
A. Ravinia III, Atlanta, GA
B. Griffin/Sunnyside, Griffin, GA
C. Sawnee Mountain, Cumming, GA
D. Highpoint Tower, Snellville, GA
<PAGE>
Schedule 1.3
Permitted Liens
Fulton County, Georgia
Debtor: Satellink Paging Inc.
Secured Party: Advanta Leasing Corp.
File No.: 768418
Collateral: Leased NEWB Equipment; Lease No. 60435
Debtor: Satellink Paging Inc.
Secured Party: Modern Office Machines
File No.: 774430
Collateral: Canon NP 2015s Copier Serial No. CJH 07208
Debtor: Satellink Paging Inc.
Secured Party: American Business Credit Corporation
File No.: 807954
Collateral: Minolta 5420 copier and related equipment S/# 311841
Debtor: Satellink Paging Inc.
Secured Party: Advanta Leasing Corp.
File No.: 819356
Collateral: Minolta Copier and Related Equipment S/# 317909
Debtor: Satellink Paging Inc.
Secured Party: Siemens Credit Corporation
File No.:
Collateral: Seimens 9751 Model 30 EX and Related Equipment
Montgomery County, Alabama
Debtor: Satellink Paging Inc.
Secured Party: Advanta Leasing Corp.
File No.: 819356
Collateral: Minolta Copier and Related Equipment S/# 317907
<PAGE>
Schedule 5.2
Chief Executive Offices; Business and Collateral Locations
Chief Executive Office and Principal Place of Business Parent and Borrower
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Sales Offices
1100 Northmeadow Parkway
Suite 100
Roswell, GA 30076
Albany, GA 31707
2100 Riverchase Center
Suite 220
Birmingham, AL 35244
2100 Highway 360
Building 2/Suite 205
Grand Prairie, TX 75050
11740 Coursey Blvd.
Suite F1
Baton Rouge, LA 78106
1207A 16th Ave East
Cordele, GA 31015
1740W Gordon Street
Valdosta, GA 31602
<PAGE>
Collateral Locations - Borrower
Collateral may be located at the Borrower's Chief Executive Office and at
various locations in Alabama, Georgia, and South Carolina, as provided for in
those certain subcarrier lease agreements to which the Borrower may be a party
from time to time, including, without limitation, the following subcarrier lease
agreements and corresponding transmitter locations:
Provident Broadcasting Co. (WVFJ)
P.O. Box 510
Route 1, Box 410 West
Manchester, Georgia 31816
M&M Partners (WNKS)
P.O. Box 687
1826 Wynnton Road
Columbus, Georgia 31902
Transmitter Site: Cusseta, Georgia
South Georgia Broadcasting Inc. (WBYZ)
Highway 341 South
P.O. Box 389
Baxley, Georgia 31513
Transmitter Site: Griffin Road
Gram Corporation (WGOV, Inc.)
P.O. Box 1167
Stone Mountain, Georgia 30086
Transmitter Site: Highway 84 West, Valdosta, Georgia
Gulf Atlantic Media of GA, Inc. (WZAT/WSGA)
P.O. Box 8247
Savannah, Georgia 31412
Transmitter Site: State Highway 204, 24 KM
West of Savannah
Piedmont Communications Corp. (WPEZ)
544 Mulberry Street, Suite 700
Macon, Georgia 31201
Transmitter Site: WMGT, Channel 41 Tower Site, Cochran
Short Route, Macon, Georgia
<PAGE>
Anniston Radio, Inc. (WHMA)
P.O. Box 278
Anniston, Alabama 36202
Transmitter Site: Top of ColdWater Peak
Woods Community Group (WTVY)
P.O. Box 1089
Dothan, Alabama 36302
Transmitter Site: Webb, Alabama
Jacor Broadcasting (WPCH)
550 Pharr Road, N.E.
Atlanta, Georgia 30363
Transmitter Site: 1800 Briarcliff Road, Atlanta
Colquitt Broadcasting (WMTM)
P.O. Box 788, WMTM Road
Moultrie, Georgia 31776
Colonial Broadcasting, Inc. (WIWI)
P.O. Box 4999
Montgomery, Alabama 36195
Transmitter Site: 1200 Dun Baron Road, Montgomery, Alabama 36117
Clark Broadcasting Corp. (WNGC)
850 Bobbin Mill Road
Athens, Georgia 30610
Transmitter Site: Neese, Georgia
Rowland Radio, Inc. (WBGA)
254 Highway 84
Brunswick, Georgia 31520
Transmitter Site: Hickox, Georgia
HVS Partners (WGUS)
P.O. Box 1475
Augusta, Georgia 30913
Transmitter Site: 500 Carolina Springs Road, North
Augusta, South Carolina
Arrow Communications, Inc. (WFFX)
P.O. Box 2000
Tuscaloosa, Alabama 35403
Transmitter Site: 205 15th Street East, Tuscaloosa, Alabama
<PAGE>
WVNA
509 N. Main Street
Tuscumbia, AL 35674
WMCD - Statesboro
P.O. Box 958
Statesboro, GA 30458
Albany Broadcasting Company, Inc. (WGPC)
2011 Gillionville Road
Albany, GA 31707
Sonic Broadcasting L. P. Fund I (WLET)
340 Jesse Jewell Parkway - Suite 525
Gainsville, GA 30501
Mountain Lakes Broadcasting LLC (WDRM)
401 14th Street S. E.
Decatur, AL 35601
Radio Communications, Inc. (WINL)
110 West 8th Avenue
Linden, AL 36748
Birmingham Communications, Inc. (WODL)
530 Beacon Parkway, West
Suite 300
Birmingham, AL 35209
P & T Broadcasting, Inc. (WLOV)
P. O. Box 266
Lexington, GA 30648
Stewart Broadcasting (WYNR-WGIG)
117 Marina Drive
St. Simons Island, GA 31522
WAAC
P. 0. Box 1207
Valdosta, GA 31603
Colonial Broadcasting Inc. (WLWI)
P. 0. Box 4999
Montgomery, AL 36195
<PAGE>
IJK
P.O. Box
Evergreen, AL 36401
Broadcasting Investment Association (WTSH)
20 Davenport Drive
Rome GA 30161
Scott McElroy (WAVH)
P. O. Box
Mobile, AL 36616
Savanah Valley Broadcasting
1305 Georgia Avenue
North Augusta, SC
<PAGE>
Schedule 5.5
Litigation and Related Proceedings
None
<PAGE>
Schedule 5.8
Intangible Assets
Radio station license; call sign WNZK555, frequency 462.825 (Baton Rouge, LA)
FCC Licenses of Parent as attached hereto.
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WPJZ339 File Number: 9608D050911 License Expiration Date: 12/19/2006
Frequency Advisory No./Service Area:
Pagers -20000*
970506A 8 1 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
B: 75.78000 FXO 1 20K0F1D 125.000 250.000 356 120 34-03-27 084-18-19
20K0F2D HAAT 161
20K0F3E
75.88000 FXO 1 20K0F1D 125.000 250.000 120
20K0F2D
20K0F3E
C: 75.78000 FXO 1 20K0F1D 125.000 250.000 512 51 34-04-00 084-27-10
20K0F2D HAAT 209
20K0F3E
75.88000 FXO 1 20K0F1D 125.000 250.000 51
20K0F2D
20K0F3E
D: 75.78000 FXO 1 20K0F1D 125.000 250.000 512 46 34-04-00 084-27-10
20K0F2D HAAT 209
20K0F3E
75.88000 FX0 1 20K0F1D 125.000 250.000 46
20K0F2D
20K0F3E
TRANSMITTER STREET ADDRESS CITY COUNTY STATE
B: 114O5 N FULTON BLVD ALPHARETTA FULTON GA
C: SWEAT MOUNAIN TOP WIGLE RD MARIETTA COBB GA
D: SWEAT MOUNAIN TOP WIGLE RD MARIETTA COBB GA
PAINTING AND LIGHTING SPECIFICATIONS
SITE B: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21 22
SITE C: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21 22
CONTROL POINTS: 1325 NORTHMEADOW PKY STE 120 ROSWELL GA
CONTROL POINT PHONE: 770-625-2699
ASSOCIATED CALLSIGN: WNRF458
- ----------------------------------------------------------------------------------------------------------
PAGE 1 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WPJZ339 File Number: 9608D050911 License Expiration Date: 12/19/2006
Frequency Advisory No./Service Area
Pagers -20000*
970506A 8 2 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The latitude/1ongitude are authorized in North American Datum 1927 (NAD27).
Additionally, the antenna height to tip, ground elevation, AAT and area of operation units are authorized in metric.
EMISSION DESIGNATOR(S) CONVERTED TO CONFORM TO DESIGNATOR(S) SET OUT IN PART 2
OF THE COMMISSION'S RULES.
- ----------------------------------------------------------------------------------------------------------
PAGE 2 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WNRF458 File Number: 9608D050898 License Expiration Date: 02/04/2007
Frequency Advisory No./Service Area 960330204
Pagers -*5000*
970506A 6 1 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A: 462.85000 FB6C 1 20K0F1D 225.000 1851 439 51 34-04-00 084-27-10
20K0F2D HAAT 0
20K0F3E
B: 462.85000 FB6C 1 20K0F1D 225.000 1705 296 123 33-49-03 084-33-11
20K0F2D HAAT 0
20K0F3E
C: 462.85000 FB6C 1 20K0F1D 225.000 1727 588 49 34-13-47 084-09-45
20K0F2D HAAT 0
20K0F3E
D: 462.85000 FB6C 1 20K0F1D 225.000 1177 338 34 33-51-02 084-02-23
20K0F2D HAAT 0
20K0F3E
75.78000 FXO 1 20K0F1D 125.000 150.000 34
20K0F2D
20K0F3E
75.88000 FXO 1 20K0F1D 125.000 150.000 34
20K0F2D
20K0F3E
E: 462.85000 FB6C 1 20K0F1D 225.000 1795 321 169 33-45-15 084-23-25
20K0F2D HAAT 0
20K0F3E
F: 462.85000 FB6C 1 20KOF1D 225.000 1190 293 135 33-55-16 084-20-07
20K0F2D HAAT 0
20K0F3E
TRANSMITTER STREET ADDRESS CITY COUNTY STATE
A: SWEAT MOUNTAIN WIGLEY RD MARIETTA COBB GA
B: FRANK HICKS 16 COOPER LAKE RD SE MABLETON COBB GA
C: SAWNEE MOUNTAIN CUMMING FORSYTH GA
D: 3292 HIGH POINT CT SNELLVILLE GWINNETT GA
E: 1ST NATIONAL BANK 2 PEACHTREE ATLANTA FULTON GA
F: 3 RAVINIA DR ATLANTA DE KALB GA
- ----------------------------------------------------------------------------------------------------------
PAGE 1 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WNRF458 File Number: 9608D050898 License Expiration Date: 02/04/2007
Frequency Advisory No./Service Area: 960330204
Pagers -*5000*
970506A 6 2 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PAINTING AND LIGHTING SPECIFICATIONS
SITE A: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21 22
SITE B: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 12 21
SITE E: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 21 22
CONTROL POINTS: 1325 NORTHMEADOW PKY STE 120 ROSWELL GA
CONTROL POINT PHONE: 770-625-2699
ADMIN NOTE: SEE ATTACHED #14
STATION CLASS SUFFIX C = INTERCONNECT
STATION CLASS SUFFIX J = TEMPORARY WITH INTERCONNECT
STATION CLASS SUFFIX K = STAND-BY WITH INTERCONNECT
STATION CLASS SUFFIX L = ITINERANT WITH INTERCONNECT
The latitude/longitude are authorized in North American Datum 1927 (NAD27).
Additionally, the antenna, height to tip, ground elevation, AAT and area of
operation units are authorized in metric.
EMISSION DESIGNATOR(S) CONVERTED TO CONFORM TO DESIGNATOR(S)
SET OUT IN PART 2 OF THE COMMISSION'S RULES.
- ----------------------------------------------------------------------------------------------------------
PAGE 2 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WNRT534 File Number: 9605D064043 License Expiration Date: 04/13/2000
Frequency Advisory No./Service Area: 960330203
Pagers -*1000*
970506A 7 1 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A: 462.85000 FB6C 1 16K0F1D 225.000 996.000 384 0 33-36-35 084-54-12
HAAT 213
B: 462.85000 FB6C 1 16K0F1D 225.000 855.000 299 0 33-29-31 084-35-00
HAAT 91
C: 462.85000 FB6C 1 16K0F1D 225.000 2479 512 0 33-04-00 084-27-10
HAAT 51
D: 462.85000 FB6C 1 16K0F1D 225.000 840.000 281 0 33-23-49 084-47-09
HAAT 91
E: 462.85000 FB6C 1 16K0F1D 225.000 935.000 256 0 33-35-33 083-58-15
HAAT 152
F: 462.85000 FB6C 1 16KOF1D 225.000 950.000 287 0 33-20-43 084-18-00
HAAT 152
TRANSMITTER STREET ADDRESS CITY COUNTY STATE
A: FAIRPLAY DOUGLASVILLE DOUGLAS GA
B: 1814 N HWY 74 TYRONE FAYETTE GA
C: TOP SWEAT MOUNTAIN WIGLE RD MARIETTA COBB GA
D: 80 HILLSIDE DR NEWNAN COWETA GA
E: 3 MI S COVINGTON NEWTON GA
F: 5 MI W SUNNY SIDE SPALDING GA
PAINTING AND LIGHTING SPECIFICATIONS
SITE A: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21
SITE B: SEE ATTACHED FORM 715/715A PARAGRAPHS: A H I
SITE C: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21 22
SITE D: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21
SITE E: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 4 13 21
CONTROL POINTS: 1325 NORTHMEADOW PKY STE 120 ROSWELL GA
CONTROL POINT PHONE: 770-625-2699
- ----------------------------------------------------------------------------------------------------------
PAGE 1 of 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/06/1997
Call Sign: WNRT534 File Number: 9605D064043 License Expiration Data: 04/13/2000
Frequency Advisory No./Service Area: 960330203
Pagers -*1000*
970506A 7 2 2A
SATELLINK PAGING LLC
1325 NORTH MEADOW PARKWAY SUITE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATION CLASS SUFFIX C = INTERCONNECT
STATION CLASS SUFFIX J = TEMPORARY WITH INTERCONNECT
STATION CLASS SUFFIX K = STAND-BY WITH INTERCONNECT
STATION CLASS SUFFIX L = ITINERANT WITH INTERCONNECT
The latitude/longitude are authorized in North American Datum 1927 (NAD27).
Additionally, the antenna height to tip, ground elevation, AAT and area of
operation units are authorized in metric.
EMISSION DESIGNATOR(S) CONVERTED TO CONFORM TO DESIGNATOR(S) SET OUT IN PART 2
OF THE COMMISSION'S RULES.
- ----------------------------------------------------------------------------------------------------------
PAGE 2 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/30/1997
Call Sign: WPJY562 File Number: 9704D076479 License Expiration Date: 05/30/2007
Frequency Advisory No./Service Area: 970640165
Pagers - 10000*
970530A 110 1 22
SATELLINK PAGING LLC
1325 N MEADOW PKY STE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A: 462.85000 FB6 1 20K0F3E 225.000 1125 372 58 34-11-35 084-45-30
HAAT 107
B: 462.85000 FB6 1 20K0F3E 225.000 1050 689 43 34-33-57 084-36-41
HAAT 244
C: 462.85000 FB6 1 20KOF3E 225.000 950.000 274 98 34-00-54 083-29-01
HAAT 76
D: 462.85000 FB6 1 20K0F3E 225.000 950.000 280 88 34-11-22 083-27-10
HAAT 99
E: 462.85000 FB6 1 20K0F3E 225.000 975.000 216 52 33-34-43 083-28-42
HAAT 91
TRANSMITTER STREET ADDRESS CITY COUNTY STATE
A: PONDERS MOUNTAIN CARTERSVILLE BARTOW GA
B: GA HWY 115 LONG MOUNTAIN 2.3 MI S CLEVELAND WHITE GA
C: US HWY 29 N ATHENS CLARKE GA
D: STARK ST 200 FT S CITY LIMITS COMMERCE JACKSON GA
E: 204 CARMICHAEL DR MADISON MORGAN GA
PAINTING AND LIGHTING SPECIFICATIONS
SITE C: SEE ATTACHED FORM 715/715A PARAGRAPHS: A H I
SITE D: SEE ATTACHED FORM 715/715A PARAGRAPHS: 1 3 11 21 22
CONTROL POINTS: 1325 N MEADOW PKY STE 120 ROSWELL GA
CONTROL POINT PHONE: 770-625-2699
SPECIAL CONDITIONS BY SITE
SITE C: PARAGRAPH A MODIFIED TO REQUIRE USE OF L-865 MEDIUM INTENSITY LIGHTS IN
LIEU OF L-856. LIGHTS SHALL EMIT A PEAK INTENSITY OF APPROXIMATELY 2,000
CANDELAS AT NIGHT IN LIEU OF 4,000.
The latitude/longitude are authorized in North American Datum 1927 (NAD27).
Additionally, the antenna height to tip, ground elevation, AAT and area of
operation units are authorized in metric.
- ----------------------------------------------------------------------------------------------------------
PAGE 1 OF 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
Federal Communications Commission
Gettysburg, PA 17325-7245 RADIO STATION LICENSE
- --------------------------------------------------------------------------------
Licensee Name: SATELLINK PAGING LLC
Radio Service: IB BUSINESS License Issue Date: 05/30/1997
Call Sign: WPJY562 File Number: 9704D076479 License Expiration Date: 05/30/2007
Frequency Advisory No./Service Area: 970640165
Pagers -10000*
970530A 110 2 2Z
SATELLINK PAGING LLC
1325 N MEADOW PKY STE 120
ROSWELL GA 30076
<TABLE>
<CAPTION>
REGULATORY STATUS: CMRS
- ----------------------------------------------------------------------------------------------------------
Station Technical Specifications
- ----------------------------------------------------------------------------------------------------------
Output
FCC Frequencies Station No. of Emission Power E.R.P. Ground Ant. Hgt. Antenna Antenna
I.D. (MHz) Class Units Designator (Watts) (Watts) Eleva To Tip Latitude Longitude
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EMISSION DESIGNATOR(S) CONVERTED TO CONFORM TO DESIGNATOR(S) SET OUT IN PART 2
OF THE COMMISSION'S RULES.
- ----------------------------------------------------------------------------------------------------------
PAGE 2 of 2
</TABLE>
[LOGO] FEDERAL -----------------------------------------------------
COMMUNICATIONS This authorization becomes invalid and must be
COMMISSION returned to the Commission if the stations are not
placed in operation within eight months, unless an
extension of time has been granted. EXCEPTIONS: 1)
800 MHz trunked and certain 900 MHz station licenses
cancel automatically if not constructed within 1 year
2) IVDS authorizations automatically cancel if
service is not made available in accordance with
Section 95.833(a) of the Commission's Rules 3) There
are no time limitations for placing GMRS stations in
operation.
-----------------------------------------------------
FCC 574-L April 1995
<PAGE>
[logo] Communications -----------------
Industry First Class Mail
Association U.S. Postage Paid
500 Montgomery Street, Suite 700 Permit No. 1060
Alexandria, VA 22314-1561 Alexandria, VA
Important information about -----------------
your radio license application
Please read other side.
1). Applicant Name: Control No.: 970640165
SATELLINK PAGING INC.
Existing Callsign: WPJY562
2). Transmitter Location
CARTERSVILLE BARTOW GA
Your PCIA ID No. is: 1192914
3). Application Dates:
Received Coordinated Filed
3/05/1997 4/03/1997 4/04/1997
LENSGRAF, DAN
4). Time Spent in Days: SATELLINK PAGING INC.
Coordination - 29 1325 NORTHMEADOW PKWY STE 120
Roswell, GA 30076-3896
LENSGRAF, DAN
SATELLINK PAGING INC. Personal Communications Industry Association
1325 NORTHMEADOW PKWY STE 120 Frequency Recommendation Notice
ROSWELL GA 30076-3896 Control #: 970640165 Date: 4/03/97 Radio Svc: IB
THIS APPLICATION WILL BE FILED WITH THE FCC WITHIN 3 WORKING DAYS
<TABLE>
<CAPTION>
Frequency Class Units Emission Power ERP AAT Elev Aat Latitude Longitude
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
462.85000 FB6 1 20K0F3E 225 1125 107 372 58 34:11:35 84:45:30 CARTERSVILLE BARTOW GA
462.85000 FB6 1 20K0F3E 225 1050 244 689 43 34:33:57 84:36:41 CLEVELAND WHITE GA
462.85000 FB6 1 20K0F3E 225 950 76 274 98 34:00:54 83:29:01 ATHENS CLARKE GA
462.85000 FB6 1 20K0F3E 225 950 99 280 88 34:11:22 83:27:10 COMMERCE JACKSON GA
462.85000 FB6 1 20K0F3E 225 975 91 216 52 34:34:43 83:28:42 MADISON MORGAN GA
</TABLE>
**Area of Operation:
Your FCIA ID No. 1192914 ***NOTE: ALL HEIGHTS ARE IN METRIC
SATELLINK PAGING INC.
DAN LENSGRAF
1325 N0RTHMEADOW PKWY STE 120
ROSWELL GA 30076-3896
<PAGE>
[logo] Personal Communications -----------------
Industry First Class Mail
Association U.S. Postage Paid
500 Montgomery Street, Suite 700 Permit No. 1060
Alexandria, VA 22314-1561 Alexandria, VA
Important information about -----------------
your radio license application
Please read other side.
1). Applicant Name: Control No.: 970160036
SATELLINK PAGING INC.
Existing Callsign: IB WNYS772
2). Transmitter Location
LOOKOUT MOUNTAIN HAMILTON TN
Your PCIA ID No. is: 806162
3). Application Dates:
Received Coordinated Filed
1/16/1997 1/31/1997 2/03/1997
SATELLINK PAGING INC.
4). Time Spent in Days: 1100 NORTHMEADOW PKWY STE 100
Coordination - 14 JOE BELL
Monitoring - 1 ROSWELL GA 30076-3871
<PAGE>
[logo] Personal Communications -----------------
Industry First Class Mail
Association U.S. Postage Paid
500 Montgomery Street, Suite 700 Permit No. 1060
Alexandria, VA 22314-1561 Alexandria, VA
Important information about -----------------
your radio license application
Please read other side.
1). Applicant Name: Control No.: 970640164
SATELLITE PAGING, LLC
Existing Callsign: WPJY565
2). Transmitter Location
EATONTON PUNTAM GA
Your PCIA ID No. is: 219714
3). Application Dates:
Received Coordinated Filed
3/05/l997 4/03/1997 4/04/1997
SATELLITE PAGING, LLC
4). Time Spent in Days: 1325 NORTHMEADOW PKWY STE 120
Coordination - 29 ROSWELL GA 30076-3896
<PAGE>
[logo] Personal Communications -----------------
Industry First Class Mail
Association U.S. Postage Paid
500 Montgomery Street, Suite 700 Permit No. 1060
Alexandria, VA 22314-1561 Alexandria, VA
Important information about -----------------
your radio license application
Please read other side.
1). Applicant Name: Control No.: 970160035
SATELLINK PAGING INC.
Existing Callsign: WNZX622
2). Transmitter Location
PIKEVILLE BLEDSOE TN
Your PCIA ID No. is: 806162
3). Application Dates:
Received Coordinated Filed
1/16/1997 1/31/1997 2/03/1997
SATELLINK PAGING INC.
4). Time Spent in Days: 1100 NORTHMEADOW PKWY STE 100
Coordination - 14 JOE BELL
Monitoring - 1 ROSNELL CA 30076-3871
<PAGE>
Schedule 5.9
Federal Tax Identification Number of the Parent
58-1850580
Federal Tax Identification Number of the Borrower
58-2281241
<PAGE>
Schedule 5.10
ERISA Matters
The Borrower contributes to a 401 (k) Profit Sharing Plan which became effective
April 1, 1995.
<PAGE>
Schedule 5.12
Title to Assets
None.
<PAGE>
Schedule 5.19
Corporate and Trade or Fictitious Names
Satellink Paging Inc.
Satellink Paging Southeast II, LLC
Satellink Paging, LLC
Message World
Satellink Paging, Inc.
Flint River Paging
Fast Communications
Call One
<PAGE>
Schedule 5.22
Permitted Investments
Borrower
Investment Loans Equity Ownership
- --------------------------------- -------- ------- ---------
Nations Link, Ltd. $134,106 $50,119 33%
Direct Link Communications L.L.C. 380,799 62,842 85%
<PAGE>
Schedule 5.29
Labor Matters
None.
<PAGE>
Schedule 5.30
Existing Indebtedness
Creditor Amount
- --------------------------- ---------------------------------
Saner Communications $320,000, unsecured, payable on
(Message World) 6/30/97.
The Drexler Company $18,750, unsecured, payable on or
(Flint River) about 8/23/97
Siemens Credit Corporation $123,765 under capital lease
Indebtedness to the Lenders Indebtedness under this Loan
agreement and the Loan Documents.
<PAGE>
Exhibit A
to
Third Amended and Restated
Loan and Security Agreement
dated as of June __, 1997
FORM OF
REVOLVING CREDIT NOTE
New York, New York
$___________ As of June __, 1997
FOR VALUE RECEIVED, the undersigned, SATELLINK PAGING, LLC, a Georgia
limited liability company (hereinafter referred to as "Maker"), promises to pay
to the order of ____________________________(hereinafter referred to as the
"Holder"), at such account or at such other place as Holder may from time to
time designate in writing, the principal sum of __________________UNITED STATES
DOLLARS (U.S. $___________), or if less, the aggregate outstanding principal
amount of Revolving Credit Loans, as such term is defined in the Loan Agreement
referred to hereinbelow, made or issued by Holder to Maker, in lawful money of
the United States, payable in full on the Maturity Date (as defined in the Loan
Agreement).
Interest on the principal balance from time to time outstanding hereunder
shall accrue at the rates and shall be payable in the manner set forth in that
certain Third Amended and Restated Loan and Security Agreement dated as of even
date herewith, by and among Maker, Satellink Communications, Inc., a Georgia
corporation, the Lenders from time to time party thereto, and
Creditanstalt-Bankverein, as Agent for the Lenders (such agreement, as
heretofore, now or hereafter amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"). Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to such terms in the
Loan Agreement.
In no contingency or event whatsoever shall the interest rate charged
pursuant to the terms of this Revolving Credit Note (this "Note") exceed the
highest rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto. In the event that such
a court determines that Holder has received interest hereunder in excess of the
highest applicable rate, Holder shall promptly refund such excess interest to
Maker.
The date and amount of each Revolving Credit Loan made by the Holder to
the Maker of this Note under the Loan Agreement, and each payment of principal
thereof, shall be recorded by Holder on its books and, prior to any transfer of
this Note, endorsed by Holder on the Schedule attached hereto or on any
continuation thereof.
This Note is, in part, a replacement, extension and renewal note for that
certain Revolving Credit Note dated as of January 31, 1997, in the principal
face amount of $16,000,000, executed by Maker in favor of
[Holder/Creditanstalt-Bankverein, an Austrian Banking corporation], which note
<PAGE>
was, in part, a replacement note for that certain Revolving Credit Note dated as
of May 31, 1996, in the principal face amount of $8,500,000, which note was, in
part, a replacement note for that certain Revolving Credit Note dated as of
November 17, 1995, in the principal face amount of $5,000,000, which note was,
in part, a replacement note for that certain Revolving Credit Note dated as of
December 23, 1992, in the principal face amount of $1,500,000. This Note is a
"Revolving Credit Note" referred to in the Loan Agreement, and is subject to all
of the terms and conditions of the Loan Agreement, including, but not limited
to, those related to the acceleration of the indebtedness represented hereby
upon the occurrence of an Event of Default or the reduction of the Commitment.
Payment of this Note is secured by the Collateral.
In the event that all or any portion of the indebtedness evidenced hereby
shall be collected by or through an attorney-at-law, Holder shall be entitled to
collect from Maker all costs of collection, including reasonable attorneys'
fees.
The Maker hereby waives presentment, demand for payment, protest and
notice of protest, notice of dishonor and all other notices in connection with
this Note. This Note shall be payable without right of setoff, any defense of
want or failure of consideration, nonperformance of any condition precedent,
nondelivery or delivery for a special purpose or any other defense of any nature
whatsoever.
THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW). MAKER HEREBY (A)
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS NOTE AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE HOLDER TO BRING PROCEEDINGS AGAINST MAKER IN THE COURTS OF ANY
OTHER JURISDICTION.
AFTER REVIEWING THIS PROVISION SPECIFICALLY WITH ITS COUNSEL, MAKER HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING OUT
OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS NOTE, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
2
<PAGE>
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF MAKER OF HOLDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR TO THE HOLDER TO MAKE THE LOANS EVIDENCED BY THIS NOTE
TO MAKER.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
under seal by its duly authorized officer as of the day and year first written
above.
"MAKER"
SATELLINK PAGING, LLC, a Georgia
limited liability company
By: Satellink Communications, Inc.,
its Manager
By: ________________________________
Name:
Title:
Attest: ____________________________
Name:
Title:
[CORPORATE SEAL]
3
<PAGE>
Schedule to
Revolving Credit Note
dated as of June ___, 1997
of Satellink Paging, LLC,
a Georgia limited liability company
Principal Principal
Amount of Interest Amount of Outstanding
Date Loan Rate Payment Balance
---- ---- ---- ------- -------
<PAGE>
Exhibit B
to Third Amended and Restated
Loan and Security Agreement
dated as of June ___, 1997
FORM OF TERM NOTE
New York, New York
$__________ As of June __,1997
FOR VALUE RECEIVED, the undersigned, SATELLINK PAGING, LLC, a Georgia
limited liability company (hereinafter referred to as "Maker"), promises to pay
to the order of _________________ (hereinafter referred to as the "Holder"), at
such account or at such other place as Holder may from time to time designate in
writing, the principal sum of _____________ UNITED STATES DOLLARS
(U.S.$___________), repayable in accordance with the Loan Agreement referred to
below. Each capitalized term contained herein and not otherwise defined herein
shall have the meaning given to such term in the Loan Agreement.
Interest on the principal balance from time to time outstanding hereunder
shall accrue at the rates and shall be payable in the manner set forth in that
certain Third Amended and Restated Loan and Security Agreement dated as of even
date herewith, by and among Maker, Satellink Communications, Inc., a Georgia
corporation, the Lenders from time to time party thereto, and Creditanstalt-
Bankverein, as Agent for the Lenders (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"). In no contingency or event whatsoever shall the interest rate
charged pursuant to the terms of this Term Note (the "Note") exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto, In the event that such a court
determines that Holder has received interest hereunder in excess of the highest
applicable rate, Holder shall promptly refund such excess interest to Maker.
This Note is, in part, a replacement, renewal and extension of that
certain Term Note, dated as of January 31, 1997, in the principal face amount of
$8,000,000 executed by Maker in favor of [Holder/Creditanstalt-Bankverein, an
Austrian Banking Corporation], which note was in turn a replacement note for
that certain Term Note, dated as of May 31, 1996, in the principal face amount
of $5,500,000, which note was in turn a replacement note for that certain Term
Note, dated as of November 17, 1995, in the principal face amount of $3,500,000,
which note was in turn a replacement note for that certain Term Note dated as of
December 23, 1992, in the principal face amount of $3,500,000. This Note is a
"Term Note" referred to in the Loan Agreement, and is subject to all of the
terms and conditions of the Loan Agreement, including, but not limited to, those
relating to prepayments hereon, and those relating to the acceleration of the
indebtedness represented hereby upon the occurrence of an Event of Default.
Payment of this Note is secured by the Collateral. All prepayments under this
Note shall be applied to the principal installments hereof in the inverse order
of their maturities.
<PAGE>
In the event that all of any portion of the indebtedness evidenced hereby
shall be collected by or through an attorney-at-law, Holder shall be entitled to
collect from Maker all costs of collection, including reasonable attorneys'
fees.
The Maker hereby waives presentment, demand for payment, protest and
notice of protest, notice of dishonor and all other notices in connection with
this Note. This Note shall be payable without right of setoff, any defense of
want or failure of consideration, nonperformance of any condition precedent,
nondelivery or delivery for a special purpose or any other defense of any nature
whatsoever.
THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW). MAKER HEREBY (A)
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS NOTE (B) AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS NOTE AND (C)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE HOLDER TO BRING
PROCEEDINGS AGAINST MAKER IN THE COURTS OF ANY OTHER JURISDICTION.
MAKER HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED
ON OR ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS NOTE, THE
TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF MAKER OF HOLDER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER TO MAKE THE LOANS EVIDENCED BY
THIS NOTE TO MAKER.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
under seal by its duly authorized officer as of the day and year first written
above.
"MAKER"
SATELLINK PAGING, LLC, a Georgia
limited liability company
By: Satellink Communications, Inc.,
its Manager
By: ________________________________
Name:
Title:
Attest: ____________________________
Name:
Title:
[CORPORATE SEAL]
3
<PAGE>
Exhibit C
to
Third Amended and Restated
Loan and Security Agreement
dated as of June ___, 1997
FORM OF NOTICE OF [BORROWING] [CONVERSION] [CONTINUATION]
Creditanstalt-Bankverein
2 Greenwich Plaza
Fourth Floor
Greenwich, Connecticut 06830
Re: Third Amended and Restated Loan and Security Agreement dated as of
June ____, 1997 (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan
Agreement") among Satellink Communications, Inc. ("Parent"),
Satellink Paging, LLC (the "Borrower"), and Creditanstalt-Bankverein
("Bank")
Gentlemen:
This request is delivered in accordance with Article 2.12(a) of the Loan
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Loan Agreement.
Borrower hereby [irrevocably requests) (confirms its irrevocable oral
request) for the following [Loan] [Conversion] [Continuation]:
1. Amount of [Loan] [Conversion] [Continuation]: $______________
2. Type of [Loan] [Conversion] [Continuation] (check one):
(a) If a Loan: ______ Base Rate Loan
______ Eurodollar Loan
(b) If a Continuation: ______ Base Rate Loan
______ Eurodollar Loan
<PAGE>
Creditanstalt-Bankverein
Page 2
(c) If a Conversion: ______ Base Rate Loan to
Eurodollar Loan
______ Eurodollar Loan to
Base Rate
3. Date of[Loan][Conversion]
[Continuation]: _______, _______
4. Duration of Interest Period (if a Eurodollar Loan): ________________
In connection with this request, Borrower hereby certifies to the Agent,
for the benefit of the Lenders, as follows:
(a) The representations and warranties set forth in Article 5 of the Loan
Agreement, the terms of which are incorporated herein by reference, are true and
correct in all material respects on and as of the date hereof; and
(b) On the date hereof, and after giving effect to the [Loan] [Conversion]
[Continuation] requested hereby, no Default or Event of Default has occurred or
is continuing.
Very truly yours,
SATELLINK PAGING, LLC
By: Satellink Communications, Inc.,
its Manager
By: _______________________
Title:
<PAGE>
Exhibit F
to
Third Amended and Restated
Loan and Security Agreement
dated as of June ___, 1997
FORM OF
COMPLIANCE CERTIFICATE
Reference is made to that certain Third Amended and Restated Loan and
Security Agreement dated as of June __,1997 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") by and among SATELLINK COMMUNICATIONS, INC., a Georgia corporation
(the "Parent"), SATELLINK PAGING, LLC, a Georgia limited liability company (the
"Borrower"), the LENDERS from time to time party thereto (the "Lenders") and
CREDITANSTALT-BANKVEREIN, in its capacity as agent for the Lenders (the
"Agent"). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Loan Agreement. The undersigned, being
the _______________ and Chief Financial Officer of the Borrower, hereby delivers
this Compliance Certificate (the "Certificate") to the Bank pursuant to Section
6.2(e) of the Loan Agreement, for the period beginning on ______________, _____
and ending on ________________, _____ (the "Compliance Period").
The undersigned hereby certifies to the Bank that he is the
___________________ and the Chief Financial Officer of the Parent and is
authorized and empowered to issue this certificate in his capacity for and on
behalf of the Parent, and that each of the following calculations is true,
complete and correct in all respects, and has been determined in accordance with
GAAP for the Parent and its consolidated Subsidiaries as of the last day of the
Compliance Period:
I. Interest Coverage Ratio (Section 8.01)
A. Cash Flow for the Compliance Period
1. Net Income $___________
2. Interest Expense $___________
3. depreciation and
amortization $___________
4. income tax expense $___________
5. Cash Flow (the sum of
Items 1 through 4 above) $_________]
B. Interest Expense for the
Compliance Period $___________
<PAGE>
C. Interest Coverage Ratio for the Compliance Period
(Item A(5) divided by Item B) ___________/1.0
D. Applicable Minimum Ratio (from Section 8.01) ___________/1.0
II. Net Worth (Section 8.02)
A. Total Assets as of the last
day of the Compliance Period
1. assets $___________
2. write-ups in the
book value of any
assets $___________
3. treasury stock $___________
4. receivables from
Affiliates $___________
5. unamortized debt
discount and
expense $___________
6. excluded assets (the sum of
items 2 through 5 above) $___________
7. assets less excluded assets
(Item 1 minus Item 6) $___________
B. Total Liabilities as of the last
day of the Compliance Period $___________
C. Net Worth as of the last day of
the Compliance Period (item A(7)
minus Item B) $___________
D. Minimum Net Worth (from Section 8.02) $___________
III. Senior Debt/Cash Flow Ratio (Section 8.03)
A. Senior Debt as of the last day
of the Compliance Period
1. Loans outstanding $___________
2
<PAGE>
2. Other Indebtedness
not subordinate to
the Obligations $___________
3. Senior Debt (the sum of Items
1 and 2 above) $___________
B. Annualized Cash Flow as of the
last day of the Compliance Period
1. Cash Flow from
Section I, Item
A(7) above) $___________
2. Times four X4
3. Annualized Cash Flow $___________
C. Senior Debt/Cash Flow Ratio for the Compliance
Period (Item A(3) divided by Item B(3)) ___________/1.0
D. Applicable Maximum Ratio (from Section 8.03) ___________/1.0
IV. Total Debt/Cash Flow Ratio (Section 8.04)
A. Indebtedness as of the last day
of the Compliance Period $___________
B. Annualized Cash Flow as of the
last day of the Compliance Period
(from III(B) above) $___________
C. Total Debt/Cash Flow Ratio for
the Compliance Period
(Item A divided by Item B) ___________/1.0
D. Applicable Maximum Ratio (from Section 8.04) ___________/1.0
The undersigned further certifies to the Agent for the benefit of the
Lenders that, on and as of the last day of the Compliance Period and as of the
date hereof, no Default or Event of Default has occurred and is continuing.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has set his hand and seal as of the
___ day of ______________, _____.
SATELLINK COMMUNICATIONS, INC.
By: ___________________________
Title: ________________________
(CORPORATE SEAL)
4
<PAGE>
EXHIBIT D
FORM OF STANDARD SUBCARRIER LEASE AGREEMENT
(See Attached)
<PAGE>
STANDARD SUBCARRIER LEASE AGREEMENT
This agreement made this ___ day of ____________, 1995 by and between
Satellink Communications, Inc.,. a Georgia corporation ("LESSEE"), and
_________________ the licensee of radio STATION __________________ ("STATION"),
licensed in the city of ____________________________.
WHEREAS, LESSEE is engaged in the business of distributing diverse
information by utilizing Subsidiary Communications Authorizations ("SCA"); and
WHEREAS, LESSEE desires to lease the use of STATION's 57 kHz SCA
subcarrier channel for the transmission of various material ("Material"), and
STATION is amenable to such use; and
WHEREAS, STATION's licensee owns and operates STATION under authorization
of the Federal Communications Commission ("FCC"); and
WHEREAS, LESSEE desires to transmit Material from any number of sources to
any number of SCA receivers in the coverage area of STATION;
NOW THEREFORE, THE PARTIES HERETO AGREE TO THE FOLLOWING:
1. Subcarrier Availability
(a) STATION hereby leases to LESSEE the exclusive use of STATION's 57 kHz
SCA Subcarrier channel (the "Subcarrier") for the SCA receivers using the
Subcarrier. The Subcarrier shall be available to LESSEE on a twenty-four (24)
hours per day, seven (7) days per week basis, during the term of this agreement.
In the event an FCC ruling shall prohibit such full-time use, and such adverse
ruling limits the period of LESSEE's use, making the continued conduct of
business by LESSEE impossible, as determined by LESSEE, LESSEE may terminate
this Agreement immediately.
(b) The STATION's technical specifications shall be as set forth in
Attachment 1, attached hereto and made part hereof. The parties acknowledge that
the Subcarrier, the time availability, the injection level, and the
specifications set forth in Attachment 1 are integral and essential parts of
this Agreement except that the foregoing shall not require STATION to violate
any rule or regulation of the FCC.
(c) LESSEE intends to install all equipment ("Equipment") as described in
Attachment 5, attached hereto and made part hereof, that it deems necessary for
the transfer of Material to the STATION's transmitting equipment and begin
transmissions over the Subcarrier upon 10 days notice to STATION not later than
ONE Hundred Twenty (120)
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<PAGE>
days from the date of this Agreement. Should LESSEE not install the Equipment
within such time period, STATION shall have the option, but not obligation, to
terminate this Agreement.
(d) During the initial Sixty (60) days after installation, an evaluation
and acceptance of STATION's technical facilities by LESSEE's engineering
personnel shall be conducted so as to certify that such facilities can be
utilized to effect the purposes contemplated herein. During this same Sixty (60)
day period an evaluation and acceptance by STATION's engineering personnel shall
be conducted so as to certify that utilization of such facilities by LESSEE does
not cause material interference to STATION's main channel operation.
2. Consideration. As full consideration for its use of the Subcarrier, LESSEE
shall pay on the Fifteenth (15th) day of each calendar month, after installation
and acceptance as defined in subparagraph 1(d) above, the sum of which STATION
shall accept, as described in Attachment 2 attached hereto and made a part
hereof.
(a) So long as this Agreement is in effect, LESSEE shall pay to STATION
the agreed amount per month.
(b) Payments shall be made to STATION on a monthly basis, except as stated
in Paragraph 8 (a).
3. Permitted Uses.
(a) LESSEE shall employ the Subcarrier for transmission of various
Material. STATION will carry each transmission on the Subcarrier as and when
transmitted by LESSEE.
(b) STATION grants to LESSEE and its customers consent to receive material
transmitted by LESSEE on the Subcarrier. LESSEE has the sole discretion to
transmit Material it selects, provided the Material being transmitted does not
violate any FCC rule or regulation, and is consistent with the STATION's FCC
broadcast license.
(c) LESSEE hereby agrees and warrants to indemnify and hold STATION
harmless against any liability, damage, or claim which arises with regard to
Material transmitted over the Subcarrier.
4. Subcarrier Equipment, Installation, and Maintenance. LESSEE will, at its own
cost and expense, install and maintain all Equipment necessary for the transfer
of Material to the STATION's transmitting equipment, Satellite Earth STATION
Receiving Terminal equipment and other equipment which LESSEE deems necessary
and relevant to the reception of transmitted material.
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<PAGE>
(a) STATION shall:
(1) Provide sufficient and suitable space for the placement of the
Equipment at STATION's studio or transmitter site including
sufficient and suitable space for LESSEE's satellite downlink
receiving facilities.
(2) Take all reasonable steps to make this Equipment secure from
vandalism or unauthorized tampering.
(3) Provide, at its own expense, the required electric current to
operate the Equipment and related facilities as specified by
LESSEE.
(b) LESSEE shall undertake, at its own cost and expense, the entire
installation including the obtaining of contractors for the construction and/or
installation of LESSEE Equipment at STATION's location.
(c) STATION, its employees, or agents shall not permit access to the
Equipment to anyone other than:
(1) STATION's technicians or engineers who require access,
pursuant to specific LESSEE authorization and direction, to
perform necessary maintenance, adjustments or modifications;
or
(2) LESSEE, its employees, or agents. Provided however, that
LESSEE shall give STATION sufficient and reasonable advance
notice of LESSEE's intention to enter STATION's premises and
that STATION personnel may accompany any LESSEE employee or
agent as STATION may require.
(d) After reasonable prior notice to STATION, LESSEE may, at its own
expense, make alterations to the Equipment.
(e) STATION will read and monitor certain transmitting levels of LESSEE's
Equipment and commute this information to LESSEE, or designate, upon request,
but not more than one time during any twenty-four (24) hour period. If more
monitoring is necessary, STATION will permit LESSEE, or designate, to enter
STATION's premises and read monitoring meters or take measurements during normal
working hours.
(f) STATION shall perform routine scheduled and emergency maintenance and
LESSEE shall provide for transmitter and subcarrier downtime as specified in
Attachment 4, attached hereto and made part hereof.
-3-
<PAGE>
(g) STATION shall designate one or more of STATION's employees, including
employee title and telephone number, as identified in Attachment 3, attached
hereto and made a part hereof, who are authorized to communicate with LESSEE
regarding operational and technical matters, and STATION shall notify LESSEE
immediately if any change in such designated employees or telephone numbers
occurs.
(h) All Equipment installed by LESSEE shall remain the property of LESSEE
and shall not be used by any other entity for any other purpose other than that
set forth herein, except with prior written permission of LESSEE.
5. Interference by or to the Subcarrier.
(a) LESSEE acknowledges that the interference-free operation of STATION's
main and stereo channel(s) is of the essence of this Agreement. In that regard,
in the event LESSEE's subcarrier activities cause any material interference to
STATION's main channel operation, except interference attributable to listener
equipment, STATION shall have the right to shut subcarrier operations
immediately and then STATION and LESSEE shall cooperate to cure such
interference immediately. If such interference cannot be cured, LESSEE shall
cease its subcarrier operations on STATION's premises with STATION's assistance,
and shall have the right, but not the obligation, to terminate this Agreement
immediately.
(b) STATION shall not employ either its main and stereo channel or any
additional available subcarriers in any manner which results in material
interference to or degradation of the Subcarrier used by LESSEE under the terms
of the Agreement. The signal provided by STATION to LESSEE on the Subcarrier
shall meet all reasonable performance criteria established by LESSEE, as
specified in Attachment 1.
(c) If, at any time during the term hereof, the Subcarrier is degraded in
performance so as not to permit the normal and proper operation of LESSEE's
subcarrier activities and Equipment; and, notwithstanding anything contained in
this Agreement to the contrary, LESSEE shall have the option, but not the
obligation, to terminate this Agreement upon Fourteen (14) days advance written
notice to STATION; provided however, that if STATION can within such Fourteen
(14) day period correct the degradation to the satisfaction of LESSEE, then, in
such event, the notice of termination shall not be effective.
6. Risk of Loss on STATION and Insurance Coverage.
(a) STATION shall be responsible for all risks of physical damage to or
loss or destruction of the Equipment specifically occasioned by any individual
act or omission of STATION. Moreover, during the term of this Agreement as to
STATION common plant and
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<PAGE>
ground terminal equipment, STATION shall at its expense, keep in effect all risk
and liability insurance policies covering such separate equipment of STATION as
may already be secured with regard to STATION's separate Equipment and common
plant facilities, and as may be permissible by state regulation or law.
(b) LESSEE at its own expense shall secure insurance coverage for the
Equipment installed at STATION's premises. Such coverage shall insure STATION
against any property damage or common hazard loss specifically occasioned by
the operation of the Equipment.
7. Regulatory Authorization.
(a) STATION shall obtain, maintain and renew all such required
authorizations and approvals from the FCC to operate its main channel and to
engage in FM subcarrier multiplex transmissions as herein contemplated.
STATION's obligations pursuant to the preceding sentence shall include but not
be limited to:
1. The maintenance of its main channel license from the FCC to
operate STATION; and
2. Obtaining and maintaining a Subsidiary Communications
Authorization from the FCC, as may be necessary; and
3. The filing of all required reports and documents relating to the
operations of STATION.
(b) STATION will, at its own cost and expense, comply with all local,
state and federal rules and regulations, and obtain authorization sufficiently
broad to cover the transmission of LESSEE material.
8. Responsibility for Failure to Transmit.
(a) If STATION utilizes more than twelve (12) hours per month for
maintenance and repairs, the LESSEE shall have a credit on the monthly lease for
the amount of additional hours of downtime at a pro-rated hourly rate in accord
with the amount payable monthly on the Agreement.
(b) neither party to this Agreement shall be responsible to the other
party, nor shall either party be liable to any third party for damages arising
our of non-performance or delay in performance of the terms and conditions
herein due to acts of GOD, acts of government, wars, riots, strikes, accidents
in transportation, failure of deliveries, or other cause, including Equipment
failure, beyond its control.
-5-
<PAGE>
9. Sale of STATION or Transfer/Assignment of License. This Agreement shall be
binding on any party who may purchase substantially all of the assets of
STATION, and/or accept the transfer of control of STATION or assignment of the
FCC licenses and authorizations of STATION. No such transaction as described in
this paragraph shall be consummated unless the purchaser, transferee, and/or
assignee shall have first agreed to assume, effective with such consummation,
all of STATION's obligations hereunder. STATION shall reasonably notify LESSEE
in writing of any agreement relating to ownership, operation, or transfer of
control of STATION, the consummation of which would require prior FCC approval.
10. Term and Termination.
(a) The initial term of this Agreement shall commence on acceptance as
defined in subparagraph 1(d) and shall continue for Five (5) years thereafter.
(b) This Agreement shall be automatically renewed for additional Five (5)
year periods, up to a maximum of Two (2) renewal terms, unless LESSEE gives
notice in writing to STATION not later than ninety (90) days before the end of
the initial or any renewal term, of its intent not to renew.
(c) In addition to any other provisions hereof and notwithstanding the
foregoing paragraphs, this Agreement may be terminated by LESSEE or STATION,
respectively, upon notice to the other party if:
1. LESSEE fails to pay the compensation set forth in Attachment 2
and fails to sure such failure within Fifteen (15) days after
written notice to LESSEE; or
2. Either party fails to perform materially its obligation
hereunder and does not cure such failure within Fifteen (15) days
after written notice thereof; or
(d) LESSEE may terminate this Agreement specifically with regard to an
adverse ruling of the FCC as described in Section 1.
(e) Further, LESSEE may terminate this Agreement immediately if, within
the Thirty (30) day period under Section 1(d), LESSEE determines, in its sole
discretion, that the STATION's facilities are inadequate for LESSEE's purposes.
11. LESSEE shall have the right to:
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<PAGE>
(a) Interconnect and feed service from its Equipment to any other location
at its expense.
(b) Use the multiplex transmission of the LESSEE services by the STATION
outside of and beyond the confines of the STATION's coverage area; and
(c) Permit other radio STATION's to take off the air said multiplex
transmission by the STATION and retransmit or relay the same by multiplex
transmission to the customers and subscribers of LESSEE's services; and
(d) Retransmit or relay the STATION's multiplex transmission of LESSEE's
Material by telephone line.
12. Assignability. STATION agrees that LESSEE may assign this Agreement to CUE
Paging Corporation, a Delaware Corporation ("CUE"), at any time mutually
acceptable to LESSEE and CUE.
13. Entire Agreement. This Agreement constitutes the sole understanding between
the parties with respect to the subject matter hereof and supersedes all prior
understandings and agreements between them with respect thereto and shall not be
modified except in a writing signed by designated contract officers of each of
the parties as specified in Attachment 3, attached hereto and made a part
hereof.
14. Non-Compete. During the term hereof, including the renewal period, STATION
shall not, either directly or indirectly, engage, participate in, or transmit
any program or service of a competitive nature with LESSEE with respect to the
paging and data information signal furnished by LESSEE under this agreement.
15. Validity of Terms. If any portion of this Agreement shall be held to be
illegal, invalid, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein. Additionally, in lieu of each such
illegal, invalid, or unenforceable provision, there shall be added
automatically, as a part of this Agreement, a provision as similar to such
former provision as shall be legal, valid, and enforceable.
16. No Joint Venture. It is understood and agreed that nothing herein shall be
deemed to create a relationship or partnership, joint venture, agency, or
employment between LESSEE and STATION. Both parties agree that, in their
performance of this Agreement each shall enter all contracts with others,
whether for employment or otherwise, as principal and not as agent for the
other.
-7-
<PAGE>
17. Warranty and Indemnification.
(a) LESSEE agrees it shall hold STATION harmless and indemnify STATION
against all charges, claims, suits, demands, and any liability whatsoever
arising out of or in connection with LESSEE's use, or that of any entity,
organization, or individual with which LESSEE has a relationship associated with
the performance of this Agreement, or with which LESSEE has contracted to
provide services associated with performance hereunder, of STATION's Subcarrier
and with regard to a breach of any obligation or responsibility of LESSEE
herein.
(b) STATION agrees it shall hold LESSEE harmless and indemnify LESSEE
against all charges, claims, suits, demands, and any liability whatsoever
arising due to a breach of any obligation or responsibility of STATION herein.
18. Right of First Refusal. In the event STATION wishes to lease, sell, license,
transfer, or otherwise utilize or convey ("transfer") an additional Subcarrier
signal or rights thereto, either directly or indirectly (including but not
limited to transfers through joint ventures), it shall first give LESSEE twenty
(20) days written notice of the terms (including the identity of the offeror) of
the proposed transfer. LESSEE shall have Ten (10) days from the receipt of such
notices to notify STATION of its election to lease, sell, license, transfer of
otherwise utilize or convey such Subcarrier signal rights on identical terms and
conditions.
19. Right to Finance. LESSEE shall have the right to mortgage, create a security
interest in or collaterally assign this Lease to secure indebtedness and other
obligations in favor of its lenders without the consent of the STATION, provided
that no such mortgage, security interest or collateral assignment shall affect
the fee or the estate of the STATION in and to any of the Premises. If the
holder of such mortgage, security interest or collateral assignment shall give
STATION, before any default shall have occurred in this Lease, written notice
containing the name and address of such lender, thereafter upon its delivery of
notice of such default to LESSEE, STATION shall simultaneously deliver a copy of
such notice to the name and address contained in the aforesaid written notice of
any lender, and any such lender shall have a period of Twenty (20) days from the
receipt of such notice from STATION in which it may cure such default, or if
such default is of a nature that, in the exercise of reasonable diligence, it
cannot be cured within such 20 day period, the lender shall have such additional
time as may be necessary under the circumstances within which to sure such
default. A copy of such notice of default shall, in each instance, be deemed
duly given to any such lender Five (5) days after being deposited in the United
States mail, postage prepaid, and addressed to such lender at the address last
furnished to STATION. STATION will accept performance by any
-8-
<PAGE>
such lender of any term of this Lease required to be performed by LESSEE, with
the same force and effect as though performed by LESSEE. If, by reason of any
default of LESSEE, this Lease, or any extension thereof, shall be terminated at
the election of STATION prior to the stated expiration therefor, STATION will
enter into a new lease with any lender who has given notice as set forth above
for the rent and upon the other terms and conditions set forth in this Lease.
20. STATION warrants and represents that it has all necessary rights and power
to enter into and perform this Agreement and grants to LESSEE the rights herein
granted.
21. Notification Addresses. Any notice, request, instruction, legal process or
other document to be given hereunder shall be in writing and, except as
otherwise provided herein or specifically in writing directed by the recipient,
shall be delivered by certified mail, return receipt requested, as set forth
below:
For LESSEE: For STATION:
Satellink Communications, Inc. ___________________________________
Attn: President ___________________________________
1100 Northmeadow Parkway ___________________________________
Suite 100 ___________________________________
Roswell, GA 30076 ___________________________________
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the day
and year first written above.
LESSEE: STATION:
SATELLINK COMMUNICATIONS, INC. ___________________________________
LICENSEE NAME AND CALL LETTERS
BY: BY:
___________________________________ ___________________________________
PRINT NAME PRINT NAME
___________________________________ ___________________________________
PRINT TITLE PRINT TITLE
___________________________________ ___________________________________
SIGNATURE SIGNATURE
-10-
<PAGE>
ATTACHMENT 1
A. STATION shall lease to LESSEE the exclusive use of STATION's Subcarrier as
defined in Subparagraph 1(a) for the term designated in Paragraph 10, Term and
Termination, and as set forth below:
57 kHz Subcarrier Channel Specifications
Subcarrier Frequency: 57,000 kHz plus or minus 6 Hz.
Subcarrier Modulation: Amplitude modulation with suppressed carrier.
Modulation Characteristics: 1187.5 Hz tone phase modulated with data
at 1187.5 bits per second.
Subcarrier Injection: Subcarrier injection shall equal the
maximum amount permitted under the rules
and regulations set forth by the FCC.
Occupied Bandwidth: 57,000 kHz plus or minus 2400 Hz.
B. STATION shall operate under the following technical specifications for the
purpose of this Agreement:
Performance Requirements - STATION's Transmission System
(a) Composite amplitude response +/- 0.5dB from 54kHz to 60kHz.
(b) Noise (measured as RMS noise) in the composite baseband from 54kHz
to 60kHz shall be 50dB below 100% modulation.
(c) Crosstalk (measured as RMS noise) from any element of the composite
signal into the 54kHz - 60kHz band shall be at least 60dB below 100%
modulation.
(d) Synchronous amplitude modulated noise shall be at least 50dB below
the level representing 100% amplitude modulation.
(e) The 57kHz subcarrier channel shall not pass through a composite
clipper or any other signal processing device.
(f) The environment containing LESSEE's Equipment must be maintained at
a temperature range of +10 to +40 degrees Celsius with 10-90%
relative humidity.
(g) LESSEE shall be allowed a maximum of 9.5% subcarrier injection plus
or minus 0.5%.
-11-
<PAGE>
C. STATION hereby certifies that the following is true and accurate
information regarding its Subcarrier facilities:
STATION's Transmitter Location:
STATION's Licensed Transmitting Power:
STATION's Antenna Height Above Average Terrain:
STATION's Licensed Main Channel Frequency:
STATION's Licensed Expiration Date:
D. All Equipment provided by LESSEE shall be installed at the following
location:
___________________________________
___________________________________
___________________________________
E. STATION shall not alter or change any technical specification in this
Attachment or any STATION facilities related thereto without prior written
notice to LESSEE. If STATION intends to move, alter, or substitute STATION's
technical facilities, STATION shall provide written notice at least Thirty (30)
days prior to filing applications for such changes with the Federal
Communications Commission.
-12-
<PAGE>
CONSIDERATION
Provided that the STATION's facilities are actually utilized by LESSEE, and
subject to all other terms and conditions of the Agreement, LESSEE shall pay
STATION on the Fifteenth (15th) day of each calendar month after installation
and acceptance, the following:
-13-
<PAGE>
ATTACHMENT 3
DESIGNATION OF CONTRACT OFFICERS
In accordance with paragraph 13 of this Agreement, the designated Contract
Officers who are authorized to approve additions, alteration, or modifications
in this Agreement shall be:
FOR THE STATION: ___________________________________
___________________________________
___________________________________
___________________________________
FOR LESSEE: Jerry W. Mayfield, President
Satellink Paging Incorporated
1100 Northmeadow Parkway
Suite 100
Roswell, Georgia 30376
For the purpose of communication regarding operational and technical matters,
other authorized employees shall be:
Name & Title Phone No.
FOR THE STATION: ___________________________________ _________________
___________________________________ _________________
___________________________________ _________________
FOR LESSEE: Robert Poche' Director of Engineering 770-772-9909
-14-
<PAGE>
ATTACHMENT 4
EQUIPMENT MAINTENANCE PROCEDURES AND
PROVISION FOR TRANSMITTER AND SUBCARRIER DOWNTIME
Unless otherwise noted in Attachment 1, the Equipment provided by LESSEE
shall be installed and adjusted using good engineering practice.
Provision for Transmitter and Subcarrier Maintenance Downtime
Maintenance to the STATION's equipment necessary to assure the reliable
transmission of the STATION's main channel, as well as the Subcarrier, may, from
time to time, require that the signal be removed from the air. This maintenance
can be classified under two categories: Scheduled Routine Maintenance and
Emergency Maintenance.
1. Scheduled Routine Maintenance:
Scheduled Routine Maintenance as maintenance that is performed on the
STATION's equipment to minimize unscheduled downtime. LESSEE shall operate
a central network control for the coordination and distribution of data
and other information over the STATION's Subcarrier ("Network Control").
Scheduled Routine Maintenance shall be performed by the STATION according
to the following procedure:
(a) The STATION's Chief Engineer or other appropriate authority as
designated by the STATION shall determine when Scheduled Maintenance
shall occur.
(b) The STATION's Chief Engineer or other appropriate authority shall
provide Network Control with a schedule indicating Scheduled Routine
Maintenance times. Should STATION's Engineer or other appropriate
authority deem it necessary to change such Scheduled Routine
Maintenance times, an updated schedule shall be forwarded to Network
Control and Network Control shall be given at least Twenty-four (24)
hours advanced notice, prior to beginning such maintenance.
(c) When the STATION's Engineer has completed Scheduled Maintenance, the
engineer shall notify Network Control within Thirty (30) minutes
after the service is restored and Maintenance is complete.
-15-
<PAGE>
2. Emergency Maintenance:
Emergency Maintenance is that maintenance that must be performed without
any prior notification as defined in paragraph C(1)(c) above. It may occur
at any time during the STATION's broadcast excessive unscheduled downtime
if the problem is not immediately resolved. Emergency Maintenance shall be
performed by the STATION according to the following procedure:
a. When the emergency situation will allow, the STATION's Engineer
shall notify any Network Control in advance of such maintenance so
that any traffic for the STATION's coverage area may be stored for
later transmission after service is restored.
b. When the STATION's Engineer has completed Emergency Maintenance, the
Engineer shall immediately notify Network Control when the service
is restored and Maintenance is complete so that any traffic for the
STATION's coverage area may be retransmitted.
-16-
<PAGE>
ATTACHMENT 5
THE EQUIPMENT
LESSEE is responsible for providing any and all Equipment necessary to
cause LESSEE's signal to appear on the STATION's Subcarrier as specified in
Attachment 1. STATION agrees to provide LESSEE space and access for installation
and maintenance, as set forth herein. This Equipment may include the following:
1. 70mHz Power Splitter
2. Satellite Dishes and Demodulators
3. Exciter Interface
4. Base Band Generator
5. SCA Generator(s)
6. Downlink receiving facilities including all related interface components,
as determined by LESSEE
7. Remote STATION Monitor
5. Telephone data circuit for Remote STATION Monitor
9. Local paging terminal equipment
10. Local paging telephone circuits
-17-
<PAGE>
Exhibit E
to
Third Amended and Restated
Loan and Security Agreement
dated as of June ___, 1997
FORM OF
COMPLIANCE CERTIFICATE
Reference is made to that certain Third Amended and Restated Loan and
Security Agreement dated as of June __,1997 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") by and among SATELLINK COMMUNICATIONS, INC., a Georgia corporation
(the "Parent"), SATELLINK PAGING, LLC, a Georgia limited liability company (the
"Borrower"), the LENDERS from time to time party thereto (the "Lenders") and
CREDITANSTALT-BANKVEREIN, in its capacity as agent for the Lenders (the
"Agent"). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Loan Agreement. The undersigned, being
the _______________ and Chief Financial Officer of the Borrower, hereby delivers
this Compliance Certificate (the "Certificate") to the Bank pursuant to Section
6.2(e) of the Loan Agreement, for the period beginning on ______________, _____
and ending on ________________, _____ (the "Compliance Period").
The undersigned hereby certifies to the Bank that he is the
___________________ and the Chief Financial Officer of the Parent and is
authorized and empowered to issue this certificate in his capacity for and on
behalf of the Parent, and that each of the following calculations is true,
complete and correct in all respects, and has been determined in accordance with
GAAP for the Parent and its consolidated Subsidiaries as of the last day of the
Compliance Period:
I. Interest Coverage Ratio (Section 8.01)
A. Cash Flow for the Compliance Period
1. Net Income $___________
2. Interest Expense $___________
3. depreciation and
amortization $___________
4. income tax expense $___________
5. Cash Flow (the sum of
Items 1 through 4 above) $_________]
B. Interest Expense for the
Compliance Period $___________
<PAGE>
C. Interest Coverage Ratio for the Compliance Period
(Item A(5) divided by Item B) ___________/1.0
D. Applicable Minimum Ratio (from Section 8.01) ___________/1.0
II. Net Worth (Section 8.02)
A. Total Assets as of the last
day of the Compliance Period
1. assets $___________
2. write-ups in the
book value of any
assets $___________
3. treasury stock $___________
4. receivables from
Affiliates $___________
5. unamortized debt
discount and
expense $___________
6. excluded assets (the sum of
items 2 through 5 above) $___________
7. assets less excluded assets
(Item 1 minus Item 6) $___________
B. Total Liabilities as of the last
day of the Compliance Period $___________
C. Net Worth as of the last day of
the Compliance Period (item A(7)
minus Item B) $___________
D. Minimum Net Worth (from Section 8.02) $___________
III. Senior Debt/Cash Flow Ratio (Section 8.03)
A. Senior Debt as of the last day
of the Compliance Period
1. Loans outstanding $___________
2
<PAGE>
2. Other Indebtedness
not subordinate to
the Obligations $___________
3. Senior Debt (the sum of Items
1 and 2 above) $___________
B. Annualized Cash Flow as of the
last day of the Compliance Period
1. Cash Flow from
Section I, Item
A(7) above) $___________
2. Times four X4
3. Annualized Cash Flow $___________
C. Senior Debt/Cash Flow Ratio for the Compliance
Period (Item A(3) divided by Item B(3)) ___________/1.0
D. Applicable Maximum Ratio (from Section 8.03) ___________/1.0
IV. Total Debt/Cash Flow Ratio (Section 8.04)
A. Indebtedness as of the last day
of the Compliance Period $___________
B. Annualized Cash Flow as of the
last day of the Compliance Period
(from III(B) above) $___________
C. Total Debt/Cash Flow Ratio for
the Compliance Period
(Item A divided by Item B) ___________/1.0
D. Applicable Maximum Ratio (from Section 8.04) ___________/1.0
The undersigned further certifies to the Agent for the benefit of the
Lenders that, on and as of the last day of the Compliance Period and as of the
date hereof, no Default or Event of Default has occurred and is continuing.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has set his hand and seal as of the
___ day of ______________, _____.
SATELLINK COMMUNICATIONS, INC.
By: ___________________________
Title: ________________________
(CORPORATE SEAL)
4
<PAGE>
Exhibit F
to
Third Amended and Restated
Loan and Security Agreement
dated as of June ___, 1997
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT is dated as of
______________________ and made BETWEEN:
(1) ____________________________________________________________________
______________________________________________________________________________
with an address at ______________________________________ (the "Assignor"); and
(2) ____________________________________________________________________
______________________________________________________________________________
__________ ("___________")____________________________________________________
______________________ with an address at ____________________________________
_________________ (the "Assignee").
WHEREAS:
(A) The Assignor is party to the Third Amended and Restated Loan
Agreement, more specifically described in Item 1 of Exhibit A hereto (the "Loan
Agreement"; terms used herein which are defined in the Loan Agreement and not
otherwise defined herein shall have the same meaning as set forth in the Loan
Agreement when used herein).
(B) The Assignor holds certain outstanding Loans under the Loan Agreement
and desires to transfer, sell and assign to Assignee the percentage of such
Loans outstanding on the Assignment Date (as defined herein), which percentage
is set forth in Item 2 of Exhibit A hereto (the "Percentage" the Percentage of
Assignor's Loans to be purchased by Assignee on the Assignment Date are
hereinafter referred to as the "Assigned Loans");
(C) Assignee desires to purchase the Percentage of the Loans outstanding
on the Assignment Date and assume a portion of Assignor's Commitment equal to
the Percentage of Assignor's Commitment (the Percentage of Assignor's Commitment
to be assumed by Assignee on the Assignment Date, the "Assigned Commitment");
(D) The Assignor and Assignee desire to set forth the terms and provisions
of the
<PAGE>
transfers, sales and assignments hereinabove described.
NOW IT IS HEREBY AGREED AND DECLARED as follows:
1. ASSIGNMENT AND TRANSFER
1.01. Subject to the terms and conditions set forth herein, the Assignor
hereby assigns and transfers to the Assignee, without recourse to or
representation or warranty by the Assignor (except as provided in Clause 5.01
hereof), all the Assignor's, rights, title and interest in respect of the
Assigned Loans under the Loan Documents and with effect from the date set forth
in Item 3 of Exhibit A hereto (the "Assignment Date"), and the Assignee hereby
accepts such assignment and transfer as of the Assignment Date (the
"Assignment").
1.02. Upon the occurrence and in consideration of the Assignment, the
Assignee agrees with the Assignor that the Assignee (i) shall assume the
Assigned Commitment, (ii) shall perform all the obligations of the Assignor with
respect to the Assigned Loans and Assigned Commitment under the Loan Agreement
and the other documents and instruments executed in connection therewith (such
obligations of Assignee, including without limitation the obligation to fund
under the Assigned Commitment are hereinafter referred to as the "Assumed
Obligations") so far as such Assumed obligations remain to be performed, and
(iii) shall be bound by the terms and provisions of the Loan Documents to the
same extent and in the same manner as if it were originally a party thereto (the
"Assumption" and, together with the Assignment, the "Transfer").
2. CONSIDERATION
2.01. In consideration of the Assignment, the Assignee agrees to transfer
to the Assignor, on the Assignment Date, the consideration described in the
funding letter agreement of even date herewith between the Assignor and the
Assignee (the "Consideration"). Upon receipt of the Consideration, Assignor
shall send written notice of the Transfer to the Borrower and each other
financial institution party thereto from time to time in the form set forth as
Exhibit B hereto in accordance with Section 13.7 of the Loan Agreement.
2.02. The Assignor and the Assignee agree that all interest on, and fees
and commissions in respect of, the Assigned Loans which have accrued to but
excluding the Assignment Date shall be for the account of the Assignor, and
interest on and fees and commissions in respect of the Assigned Loans which
accrue on and after the Assignment Date shall be for the account of the
Assignee. Either party which receives any such interest, fees and commissions
which is for the account of the other party shall promptly pay the same to the
other and until so paid hold it in trust for the other party. Partial payments
of interest in respect of any period in effect on and continuing after the
Assignment Date shall be applied pro rata for each day of such period.
2.03. All payments to be made hereunder shall be made without setoff,
counterclaim, deduction or withholding in U.S. Dollars.
2
<PAGE>
3. INDEPENDENT INVESTIGATION
The Assignee acknowledges that it has not relied upon any representation,
nor has any representation been made, by the Assignor (except as specified in
Clause 5.01 hereof), and the Assignee further acknowledges that it has made its
own independent investigation based upon such documents and information as it
has deemed appropriate, as to all matters relevant to the Transfer, including
without limitation (a) the financial condition or creditworthiness of all
parties named as borrowers, (b) the rights, obligations and transactions
contemplated by the Loan Documents, and (c) the effectiveness, legality,
validity, collectability or enforceability of any Loan Document. The Assignee
acknowledges that it will, based upon its own independent investigation and such
documents as it deems appropriate, continue to make its own decisions as to the
Assigned Loans, the Assigned Commitment, the Assumed Obligations, the Loan
Documents and this Assignment Agreement.
4. TRANSFER COSTS AND FURTHER ASSURANCES
Each of the parties hereto agrees that it shall bear its own costs and
expenses in connection with the Transfer and with the negotiation, preparation,
execution and performance of this Assignment Agreement. Upon the consummation of
the Transfer hereunder, the Assignor shall request the Borrower to make
appropriate arrangements so that, if required, replacement notes are issued to
the Assignor and new notes are issued to Assignee to reflect the Transfer
hereunder.
5. REPRESENTATIONS AND WARRANTIES
5.01. The Assignor hereby represents and warrants to the Assignee that the
Assignor has full power and authority to take, has duly authorized to be taken,
and has taken, all corporate action necessary to execute and deliver this
Assignment Agreement and to effect the Transfer and to fulfill its obligations
hereunder.
5.02. The Assignee hereby represents and warrants to the Assignor that:
(a) The Assignee has full power and authority to take, has duly
authorized to be taken, and has taken, all corporate action necessary to
execute, deliver and fulfill its obligations hereunder and under the Assumed
Obligations, and has obtained all consents and approvals necessary to its
execution, delivery and performance hereof and the delivery of the
Consideration.
(b) The Assignee is not insolvent or otherwise in any condition that
would entitle any creditor of the Assignee, any person acting or purporting to
act under authority of any legislation pertaining to bankruptcy or creditors'
rights or any banking authority, to require that the Assignor or the Assignor's
agent divest itself of the consideration received pursuant to Clause 2.01 hereof
in respect of the Assignment.
3
<PAGE>
6. COMMUNICATIONS
All notices and other correspondence to be given by one party hereto to
the other shall be given or made by mail, telex or telecopier to the addressee
at its address set forth in the recitals hereto, or to such other address as the
respective addressee may notify to the respective addressor. Any notices shall
be deemed to have been received, if given by mail, when received; if given by
telex, at the time of receipt of the appropriate answerback code; and if given
by telecopier, when received.
7. EXHIBIT
Exhibit A and all of the provisions thereof are hereby incorporated into
this Agreement by reference and form a part hereof as if fully set forth herein.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
on the day and year first above written.
__________________________________
as Assignor
By: ______________________________
Title: _______________________
By: ______________________________
Title: _______________________
Accepted and Agreed to:
__________________________________
as Assignor
By: ______________________________
Title: _______________________
4
<PAGE>
EXHIBIT A
TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
This Exhibit A completes items of
information in the Assignment and Acceptance
Agreement to which this Exhibit A is Attached.
Item 1. Identification of Loan Agreement: Third Amended and Restated Loan and
Security Agreement dated as of June ___, 1997, by and among Satellink
Communications, Inc., a Georgia corporation, Satellink Paging, LLC, a Georgia
limited liability company, the Lenders from time to time party thereto, and
Creditanstalt-Bankverein, as Agent for the Lenders.
Item 2. Percentage: _______%
Item 3. Effective Date: ______________________
Item 4. Name and address of Assignee: _____________________________________
___________________________________________________________________________
______________________________ ______________________________
as Assignor as Assignee
By: __________________________ By: __________________________
Name: ________________________ Name: ________________________
Title: _______________________ Title: _______________________
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT B
TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
NOTICE OF TRANSFER
To the Parties listed on
Schedule A attached hereto:
[Insert on Schedule A address
of Borrower and each other financial
institution party to the Loan Agreement]
Reference is made to the Third Amended and Restated Loan and Security
Agreement dated as of June ___, 1997 among Satellink Communications, Inc., a
Georgia corporation, Satellink Paging, LLC, a Georgia limited liability company,
the Lenders from time to time party thereto, and Creditanstalt-Bankverein, as
Agent for the Lenders (as the same has been amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"). Each capitalized
term contained herein and not otherwise defined herein shall have the meaning
given to such term in the Loan Agreement. In connection with the undersigned's
transfer of all or a portion of its interests under the Loan Agreement, please
be advised of the following:
Assignor Information
Financial Institution Name: _______________________________________:
(1) Prior to Giving Effect to Assignment:
Amount of
Amount of Outstanding Commitment
Facility Commitment Loans Percentage
________________ ________________ ________________ ________________
(2) After Giving Effect To Assignment:
Amount of
Amount of Outstanding Commitment
Facility Commitment Loans Percentage
________________ ________________ ________________ ________________
<PAGE>
ASSIGNEE INFORMATION
Financial Institution Name:
Offices For Notices:
Domestic Lending Office:
Name:
Address:
Attention:
Telex:
Fax:
Telephone:
Eurodollar Lending Office:
Name:
Address:
Attention:
Telex:
Fax:
Telephone:
Commitments and Loans Assigned:
Amount of
Amount of Outstanding Commitment
Facility Commitment Loans Percentage
________________ ________________ ________________ ________________
______________________________
Assignor
By: __________________________
Title: __________________
By: __________________________
Title: __________________
2
<PAGE>
EXHIBIT 10.10
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this "Amendment") is made and entered into as of the 11th day of March, 1998,
---------
by and among SATELLINK COMMUNICATIONS, INC., a Georgia corporation, f/k/a
Satellink Paging, Inc. (hereinafter referred to as "Parent"), SATELLINK PAGING,
------
LLC, a Georgia limited liability company (hereinafter referred to as "Borrower";
--------
Parent and Borrower are sometimes collectively hereinafter referred to as
"Obligors" and individually as an "Obligor"), the financial institutions party
-------- -------
to the Third Restated Loan Agreement referred to below (collectively, the
"Lenders"), and CREDITANSTALT AG, f/k/a Creditanstalt-Bankverein
-------
("Creditanstalt"), an Austrian banking corporation, in its separate capacity as
-------------
agent for the Lenders (in such capacity, the "Agent").
-----
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Parent, Borrower, the Lenders and the Agent are a party to that
certain Third Amended and Restated Loan and Security Agreement dated as of June
27, 1997 (the "Third Restated Loan Agreement") pursuant to which the Lenders
-----------------------------
have (a) made available to Borrower a revolving line of credit for loans and
advances not to exceed in the aggregate $17,000,000 at any one time outstanding
and (b) made to Borrower terms loans in the aggregate original principal amount
of $8,000,000; and
WHEREAS, the Obligors have requested that the Lenders agree to increase the
amount of the revolving line of credit from $17,000,000 to $32,000,000, and the
Lenders have agreed to such request, subject to the terms and conditions hereof;
and
WHEREAS, the Obligors have requested that the Agent and the Lenders amend the
Third Restated Loan Agreement; and
WHEREAS, the Agent and the Lenders are willing to amend the Third Restated
Loan Agreement, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, to induce the
Lenders and the Agent to enter into this Amendment and to extend the financing
provided for herein, and for other good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are acknowledged by the Obligors, the
Obligors, the Lenders and the Agent hereby agree as follows:
1. Defined Terms. All capitalized terms used herein and not otherwise
-------------
defined herein shall have the meanings ascribed to such terms in the Third
Restated Loan Agreement.
<PAGE>
2. Amendments. The Third Restated Loan Agreement is amended as follows,
----------
subject to the satisfaction of the conditions precedent set forth in Section 3
of this Amendment:
2.1. Commitment Definition. Section 1.1 of the Third Restated Agreement is
---------------------
hereby amended by deleting in its entirety the definition of "Commitment"
contained therein and by substituting therefor a new definition of "Commitment"
to read as follows:
"Commitment" shall mean the aggregate obligation of the
----------
Lenders to make Revolving Credit Loans to Borrower, subject to
the terms and conditions hereof, up to an aggregate principal
amount not to exceed at any one time outstanding for all the
Lenders Thirty-Two Million Dollars ($32,000,000).
2.2. Commitment Percentage. Section 1.1 of the Third Restated Agreement
----------------------
is hereby amended by deleting in its entirety the definition of "Commitment
Percentage" contained therein and by substituting therefor a new definition of
"Commitment Percentage" to read as follows:
"Commitment Percentage" shall mean, as to each Lender, that
---------------------
amount, expressed as a percentage, equal to the ratio of the amount
set forth opposite the name of such Lender on the signature pages to
the First Amendment under the heading "Commitment" to the aggregate
amount of the Commitment; provided that the Commitment Percentage of
each Lender shall be increased or decreased, as appropriate, to
reflect any assignments made by such Lender pursuant to Section
13.3(c) hereof.
2.3. New Definition. Section 1.1 of the Third Restated Agreement is hereby
--------------
amended by adding, in appropriate alphabetical order, a new definition of "First
Amendment" to read as follows:
"First Amendment" shall mean that certain First Amendment to
---------------
Third Amended and Restated Loan and Security Agreement, dated as of
March 11, 1998 among the Obligors, the Lenders and the Agent.
2.4. Senior Debt/Cash Flow. Section 1.1 of the Third Restated Agreement
---------------------
is hereby amended by deleting in its entirety the definition of "Senior
Debt/Cash Flow Ratio" contained therein and by substituting therefor a new
definition of "Senior Debt/Cash Flow Ratio" to read as follows:
"Senior Debt/Cash Flow Ratio" shall mean, as of any date, the
---------------------------
ratio of (a) Senior Debt as of such date to (b) four (4) times (i) for
all purposes except Section 3.1 hereof, the Cash Flow for the fiscal
quarter ending on or most recently ended prior to such date and (ii)
for purposes of Section 3.1 hereof, the Cash Flow for the three month
period ending on or most recently ended prior to such date, in each
case calculated on a pro forma basis as if any acquisition made by the
Parent or any Subsidiary of
2
<PAGE>
the Parent during such fiscal quarter or period had been made on the
first day of such fiscal quarter or period.
2.5. Revolving Credit Loans. Section 2.1(a) of the Third Restated Agreement
----------------------
is hereby amended by deleting in its entirety the first sentence thereof and by
substituting therefor a new sentence to read as follows:
Subject to the terms and conditions hereof and provided that there
exists no Default or Event of Default, each of the Lenders, severally
but not jointly, agrees to make revolving loans (the "Revolving Credit
----------------
Loans") as requested by Borrower in accordance with the provisions of
-----
Section 2.3 hereof, to Borrower from time to time on and after the
-----------
date hereof and up to, but not including, the Termination Date in an
aggregate amount not to exceed at any one time outstanding an amount
equal to such Lender's Commitment Percentage of the Commitment,
provided, however, that (x) no Lender shall be required to make any
-------- -------
Revolving Credit Loan if, after giving effect to the making of such
Loan, the Senior Debt/Cash Flow Ratio would be greater than the
applicable maximum ratio then permitted under Section 8.3 hereof; and
-----------
(y) the sum of the aggregate outstanding principal amount of the
Revolving Credit Loans and the aggregate outstanding principal amount of
the Term Loans may not exceed $30,000,000 until such time as the Agent
and the Lenders have received evidence reasonably satisfactory to them
that the Parent has received, and has contributed to the capital of the
Borrower, not less than Three Million Dollars ($3,000,000) in cash
proceeds from the issuance of shares of Capital Stock of Parent on terms
and conditions reasonably satisfactory to the Lenders; provided,
--------
however, that the issuance of such shares of Capital Stock is permitted
-------
by Section 7.6 hereof or has been approved by the Majority Lenders in
accordance with the terms of this Agreement.
2.6. Interest Coverage Ratio. The Third Restated Agreement is hereby further
-----------------------
amended by deleting in its entirety Section 8.1 thereof and by substituting
therefor a new Section 8.1 to read as follows:
8.1 Interest Coverage Ratio. Permit the Interest Coverage
Ratio as of the last day of each fiscal quarter set forth below of to be
less than the applicable ratio set forth opposite such quarter as set
forth below:
Quarter Ending Applicable Ratio
-------------- ----------------
January 31, 1998 through
April 30, 1998 2.30 to 1.00
July 31, 1998 2.80 to 1.00
3
<PAGE>
Thereafter 3.25 to 1.00
2.7. Net Worth. The Third Restated Agreement is hereby further amended by
---------
deleting in its entirety Section 8.2 thereof and by substituting therefor a new
Section 8.2 to read as follows:
8.2 Net Worth. Permit Net Worth as of any date from and after
the Effective Date to be less than the amount set forth opposite the
applicable period as follows:
Applicable Period Amount
----------------- ------
January 1, 1998 through
January 31, 1998 $ 850,000
February 1, 1998 through
July 31, 1998 $ 925,000
August 1, 1998 through
January 31, 1999 $1,000,000
February 1, 1999 through
July 31, 1999 $1,500,000
August 1, 1999 through
January 31, 2000 $2,000,000
February 1, 2000 through
July 31, 2000 $2,750,000
Thereafter $4,000,000
provided, however, that effective upon each issuance of any equity
-------- -------
securities by the Parent, the minimum amounts set forth above for the
period in which such equity issuance occurs and for each period
thereafter shall be automatically increased by an amount equal to
seventy-five percent (75%) of amount by which shareholders' equity is
increased as a result of such equity issuance.
2.8. Senior Debt/Cash Flow Ratio. The Third Restated Agreement is hereby
---------------------------
further amended by deleting in its entirety Section 8.3 thereof and by
substituting therefor a new Section 8.3 to read as follows:
4
<PAGE>
8.3 Senior Debt/Cash Flow Ratio. Permit the Senior Debt/Cash
Flow Ratio during any applicable period set forth below to at any time
be greater than the applicable ratio set forth opposite such
applicable period as set forth below:
Applicable Period Applicable Ratio
----------------- ----------------
Effective Date through
January 31, 1999 4.50 to 1.00
February 1, 1999 through
April 30, 1999 4.25 to 1.00
May 1, 1999 through
July 31, 1999 4.00 to 1.00
August 1, 1999 through
October 31, 1999 3.75 to 1.00
Thereafter 3.50 to 1.00
2.9. Form of Revolving Credit Note. The Third Restated Agreement is hereby
------------------------------
further amended by deleting Exhibit A thereof and by substituting therefor a new
Exhibit A attached hereto as Annex I and by reference made a part hereof.
-------
3. Conditions Precedent. Subject to the other terms and conditions of this
--------------------
Amendment, this Amendment shall not become effective until each of the following
conditions precedent has been satisfied (and, upon the satisfaction of such
conditions precedent, this Amendment shall be effective as of the date hereof):
(a) Giving effect to this Amendment, all conditions precedent to the
making of any Loan set forth in Section 11.2 of the Third Restated Loan
Agreement shall be satisfied;
(b) Borrower shall have paid to the Agent, for the benefit of the
Lenders, the amendment fee set forth in Section 4 of this Amendment;
(c) The Agent shall have received the following documents, each duly
executed and delivered to the Agent, and each to be satisfactory in form and
substance to the Agent, the Lenders, and their respective counsel
(collectively, the "Amendment Documents"):
-------------------
(i) this Amendment;
5
<PAGE>
(ii) new Revolving Credit Notes;
(iii) a certificate of the Secretary of Parent dated the date
hereof certifying (A) that since June 27, 1997, Parent has not filed any
amendment to its Articles of Incorporation, and that such Articles of
Incorporation remain in full force and effect on the date hereof; (B)
that since June 27, 1997, Parent has not amended its By-laws, which By-
laws, as certified to the Agent and the Lenders on such date, remain in
full force and effect on the date hereof; (C) that attached thereto is a
true and complete copy of Resolutions adopted by the Board of Directors
of Parent and/or a duly authorized committee of the Board of Directors
of Parent, authorizing the execution, delivery and performance of this
Amendment and the other Amendment Documents; and (D) as to the
incumbency and genuineness of the signatures of the officers of Parent
executing this Amendment or any of the other Amendment Documents;
(iv) a certificate of the Secretary of Borrower certifying (A)
that since June 27, 1997, Borrower has not filed any amendment to its
Articles of Organization, and that such Articles of Organization remain
in full force and effect as of the date hereof; (B) that since June 27,
1997, Borrower has not amended its Operating Declaration, and that such
Operating Declaration remains in full force and effect as of the date
hereof; (C) that attached thereto is a true and complete copy of
Resolutions adopted by the Board of Directors of the Manager of
Borrower, authorizing the execution, delivery and performance of this
Amendment and the other Amendment Documents; and (D) as to the
incumbency and genuineness of the signatures of the officers of the
Manager of Borrower executing this Amendment or any of the other
Amendment Documents;
(v) the written opinion of Alston & Bird LLP, counsel to Parent
and Borrower, in form and content acceptable to the Lenders;
(vi) copies of all required regulatory approvals including,
without limitation, any which may be required by regulatory authorities
having jurisdiction over Borrower and any that may be required for any
transactions contemplated by this Amendment or any of the other
Amendment Documents; and
(vii) such other documents, instruments and agreements with
respect to the transactions contemplated by this Amendment, in each case
in such form and containing such additional terms and conditions as may
be satisfactory to the
6
<PAGE>
Agent and the Lenders, and containing, without limitation,
representations and warranties which are customary and usual in such
documents; and
(d) The Borrower and each Lender shall have executed and delivered to
the Agent the signature pages to this Amendment.
4. Amendment Fee. Borrower hereby agrees to pay to the Agent for the benefit
-------------
of the Lenders, in consideration of the Lenders entering into this Amendment, an
amendment fee equal to $150,000, to be allocated among the Lenders according to
their respective Commitment Percentages. Such fee shall be fully earned when
paid and shall not be subject to rebate or refund for any reason. Such fee is a
charge for services and is not, nor shall it be deemed to be, interest or a
charge for the use of money.
5. Representations & Warranties. Each Obligor hereby represents and warrants
----------------------------
to the Agent and the Lenders that, after giving effect to this Amendment, all of
such Obligor's representations and warranties contained in the Third Restated
Loan Agreement, as amended hereby, and the other Loan Documents are true and
correct on and as of the date of such Obligor's execution of this Amendment,
except to the extent that such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date)
and no Default or Event of Default as of such date has occurred and is
continuing under any Loan Document. Each Obligor hereby further represents and
warrants that (i) such Obligor has the power and authority to enter into this
Amendment and the other Amendment Documents and to perform all of its
obligations hereunder and thereunder; (ii) the execution and delivery of this
Amendment and the other Amendment Documents have been duly authorized by all
necessary action (corporate or otherwise) on the part of such Obligor; and (iii)
the execution and delivery of this Amendment and the other Amendment Documents
and the performance thereof by such Obligor do not and will not violate the
Articles or Certificate of Incorporation, Articles of Organization, By-laws,
Operating Declaration or other organizational documents of such Obligor and do
not and will not violate or conflict with any law, order, writ, injunction, or
decree of any court, administrative agency or other governmental authority
applicable to such Obligor or any properties of such Obligor.
6. Reaffirmation of Guaranty. Parent hereby (a) consents to the execution
-------------------------
and delivery of this Amendment by Borrower, and agrees to be bound by the terms
and conditions hereof applicable to Parent; (b) acknowledges and agrees that all
Obligations of Borrower under the Loan Agreement, as amended hereby, are
included "Guaranteed Obligations," as such term is defined in that certain
Amended and Restated Guaranty and Agreement, dated as of June 27, 1997 (the
"Guaranty"), executed by Parent in favor of the Lenders and the Agent, and that
such obligations are guaranteed by the Guaranty, and all references in the
Guaranty to the "Guaranteed Obligations" shall hereafter be deemed to include
the Borrower's Obligations under the Loan Agreement, as amended hereby, and the
other instruments, documents and agreements executed and delivered pursuant to
this Amendment or in connection herewith; and (c) acknowledges and agrees that
the Guaranty and its obligations thereunder remain in full force
7
<PAGE>
and effect without release, diminution or impairment, notwithstanding the
execution and delivery of this Amendment.
7. Expenses. Borrower agrees to pay, immediately upon demand by the Agent,
--------
all costs, expenses, attorneys' fees and other charges and expenses actually
incurred by the Agent and the Lenders in connection with the negotiation,
preparation, execution and delivery of this Amendment, all other Amendment
Documents and any other instrument, document, agreement or amendment executed in
connection with this Amendment.
8. Breaches. The breach of any representation, warranty or covenant
--------
contained herein, in any other Amendment Document or in any other document
executed in connection herewith, or the failure to serve or comply with any term
or agreement contained herein shall constitute an Event of Default under the
Third Restated Loan Agreement and the Agent and the Lenders shall be entitled to
exercise all rights and remedies they may have under the Third Restated Loan
Agreement, the other Loan Documents, and any other documents executed in
connection therewith and applicable law.
9. References. All references in the Third Restated Loan Agreement and the
----------
Loan Documents to the Third Restated Loan Agreement shall hereafter be deemed to
be references to the Third Restated Loan Agreement as amended hereby and as the
same may hereafter be amended from time to time.
10. Limitation of Amendment. Except as expressly set forth herein, this
-----------------------
Amendment shall not be deemed to waive, amend or modify any term or condition of
the Third Restated Loan Agreement which is hereby ratified and reaffirmed and
which shall remain in full force and effect, nor to serve as a consent to any
matter prohibited by the terms and conditions thereof.
11. Counterparts. This Amendment may be executed in two or more counterparts,
------------
each of which when fully executed shall be an original, and all of said
counterparts taken together shall be deemed to constitute one and the same
Amendment. Any signature page to this Amendment may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
12. Further Assurances. Borrower and Parent agree to take such further
------------------
action as the Agent and any Lender shall reasonably request in connection
herewith to evidence the amendments herein contained to the Third Restated Loan
Agreement.
13. Successors and Assigns. This Amendment shall be binding upon and inure to
----------------------
the benefit of the successors and permitted assigns of the parties hereto;
provided, however, that no assignment of the rights of any party hereunder shall
- -------- -------
be made except to the extent permitted by, and made in conformity with, Section
13.3 of the Third Restated Agreement.
8
<PAGE>
14. Governing Law. This Amendment shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York, without regard to principles
of conflicts of law.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
under seal on the date first above written.
"PARENT"
SATELLINK COMMUNICATIONS, INC., a
Georgia corporation
By: /s/ Jerry W. Mayfield
---------------------------
Name: Jerry W. Mayfield
----------------------
Title: President
----------------
Attest: /s/ Daniel D. Lensgraf
-----------------------
Name: Daniel D. Lensgraf
----------------------
Title: CFO
----------------
[CORPORATE SEAL]
"BORROWER"
SATELLINK PAGING, LLC, a Georgia limited
liability company
By: Satellink Communications, Inc., Its Manager
By: /s/ Jerry W. Mayfield
-----------------------------------------
Name: Jerry W. Mayfield
-----------------------------
Title: President
----------------------------
Attest: /s/ Daniel D. Lensgraf
-------------------------------------
Name: Daniel D. Lensgraf
-----------------------------
Title: CFO
----------------------------
[CORPORATE SEAL]
10
<PAGE>
"AGENT"
CREDITANSTALT AG
f/k/a Creditanstalt Bankverein
By:
---------------------------
Robert M. Biringer
Executive Vice President
By:
---------------------------
Name:
----------------------
Title:
----------------
11
<PAGE>
Commitment: "LENDER"
$19,200,000
CREDITANSTALT AG
f/k/a Creditanstalt-Bankverein
By:
---------------------------
Robert M. Biringer
Executive Vice President
By:
---------------------------
Name:
----------------------
Title:
----------------
12
<PAGE>
Commitment: "LENDER"
$12,800,000
FINOVA CAPITAL CORPORATION
By:
---------------------------
Name:
----------------------
Title:
----------------
13
<PAGE>
ANNEX I
-------
Exhibit A
to
Third Amended and Restated
Loan and Security Agreement
dated as of June 27, 1997
FORM OF
REVOLVING CREDIT NOTE
New York, New York
$_______________ As of March __, 1998
FOR VALUE RECEIVED, the undersigned, SATELLINK PAGING, LLC, a Georgia limited
liability company (hereinafter referred to as "Maker"), promises to pay to the
-----
order of _________________________________ (hereinafter referred to as
"Holder"), at such account or at such other place as Holder may from time to
------
time designate in writing, the principal sum of __________________________
UNITED STATES DOLLARS (U.S. $____________), or if less, the aggregate
outstanding principal amount of Revolving Credit Loans, as such term is defined
in the Loan Agreement referred to hereinbelow, made or issued by Holder to
Maker, in lawful money of the United States, payable in full on the Maturity
Date (as defined in the Loan Agreement).
Interest on the principal balance from time to time outstanding hereunder
shall accrue at the rates and shall be payable in the manner set forth in that
certain Third Amended and Restated Loan and Security Agreement dated as of June
27, 1997, by and among Maker, Satellink Communications, Inc., a Georgia
corporation, the Lenders from time to time party thereto, and Creditanstalt AG,
f/k/a Creditanstalt-Bankverein, as Agent for the Lenders (such agreement, as
heretofore, now or hereafter amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"). Capitalized terms used
--------------
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Loan Agreement.
In no contingency or event whatsoever shall the interest rate charged pursuant
to the terms of this Revolving Credit Note (this "Note") exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that Holder has received interest hereunder in excess of the highest
applicable rate, Holder shall promptly refund such excess interest to Maker.
The date and amount of each Revolving Credit Loan made by Holder to Maker
under the Loan Agreement, and each payment of principal thereof, shall be
recorded by Holder on its books and, prior to any transfer of this Note,
endorsed by Holder on the Schedule attached hereto or on any continuation
thereof.
<PAGE>
This Note is, in part, a replacement, extension and renewal note for that
certain Revolving Credit Note dated as of June 27, 1997, in the principal face
amount of $____________, executed by Maker in favor of Holder, which note was,
in part, a replacement note for that certain Revolving Credit Note dated as of
January 31, 1997, in the principal face amount of $16,000,000, executed by Maker
in favor of [Holder/Creditanstalt AG, f/k/a Creditanstalt-Bankverein], which
note was, in part, a replacement note for that certain Revolving Credit Note
dated as of May 31, 1996, in the principal face amount of $8,500,000, which note
was, in part, a replacement note for that certain Revolving Credit Note dated as
of November 17, 1995, in the principal face amount of $5,000,000, which note
was, in part, a replacement note for that certain Revolving Credit Note dated as
of December 23, 1992, in the principal face amount of $1,500,000. This Note is
a "Revolving Credit Note" referred to in the Loan Agreement, and is subject to
all of the terms and conditions of the Loan Agreement, including, but not
limited to, those related to the acceleration of the indebtedness represented
hereby upon the occurrence of an Event of Default or the reduction of the
Commitment. Payment of this Note is secured by the Collateral.
In the event that all or any portion of the indebtedness evidenced hereby
shall be collected by or through an attorney-at-law, Holder shall be entitled to
collect from Maker all costs of collection, including reasonable attorneys'
fees.
Maker hereby waives presentment, demand for payment, protest and notice of
protest, notice of dishonor and all other notices in connection with this Note.
This Note shall be payable without right of setoff, any defense of want or
failure of consideration, nonperformance of any condition precedent, nondelivery
or delivery for a special purpose or any other defense of any nature whatsoever.
THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW). MAKER HEREBY (A) SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS NOTE, AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE
<PAGE>
RIGHT OF HOLDER TO BRING PROCEEDINGS AGAINST MAKER IN THE COURTS OF ANY OTHER
JURISDICTION.
AFTER REVIEWING THIS PROVISION SPECIFICALLY WITH ITS COUNSEL, MAKER HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING OUT
OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS NOTE, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF MAKER OR HOLDER. THIS PROVISION IS A
MATERIAL INDUCEMENT TO HOLDER TO MAKE THE LOANS EVIDENCED BY THIS NOTE TO MAKER.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed under
seal by its duly authorized officer as of the day and year first written above.
"MAKER"
SATELLINK PAGING, LLC, a Georgia
limited liability company
By: Satellink Communications, Inc.,
its Manager
By:
-------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE>
Schedule to
Revolving Credit Note
dated as of March __, 1998
of Satellink Paging, LLC,
a Georgia limited liability company
Principal Principal
Amount of Interest Amount of Outstanding
Date Loan Rate Payment Balance
- ---- --------- -------- --------- ---------
<PAGE>
EXHIBIT 10.12
PAGENET
PAGING NETWORK OF ATLANTA, INC.
SALES AND DISTRIBUTION AGREEMENT
--------------------------------
This Agreement, made and entered into this 21 day of May, 1996 by and
between Paging Network of Atlanta, Inc., with its principal place of business at
3475 Lenox Road Suite 500 Atlanta, GA. 30326 ("PageNet") and Satellink Paging
with its principal place of business at _______________________ ("Reseller").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, PageNet has been authorized by the Federal Communications
Commission ("FCC") to provide one-way paging services, including tone-only,
digital display and alphanumeric paging services, in part or all of the areas
served by the 404, 770, 706, 912, 803 telephone areas codes (the "Territory");
and
WHEREAS, Reseller desires to purchase paging services from PageNet on a
nonexclusive basis in accordance with the terms of this Agreement for the
purpose of marketing and reselling such services to members of the public for
use in the Territory; and
WHEREAS, PageNet desires to sell paging services to Reseller for such
resale purposes in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Affiliate" of a party shall mean the entity that controls, is
controlled by or is under common control with such party.
1.2 "Agreement" shall mean this Sales and Distribution Agreement, and
Exhibit A attached hereto.
1.3 "Basic Services" shall have the meaning set forth in Paragraph 2.01
1.4 "Basic Service Rate" shall have the meaning set forth in Paragraph
6.01.
Page 1
<PAGE>
1.5 "End Users" shall mean individuals or entities that purchase paging
services for the use for themselves or for their employees. End User shall also
include agents or subcontractors of Reseller who obtain paging services from
Reseller and/or PageNet and themselves market paging services. Under no
circumstances shall "End Users" include entities or individuals (or affiliates
thereof) licensed by the FCC to provide facilities based telecommunications
services, unless PageNet's written approval shall have first been obtained.
1.6 "FCC" shall have the meaning set forth in the first Whereas clause.
1.7 "Optional Services" shall have the meaning set forth in Paragraph
2.02.
1.8 "PageNet" shall have the meaning set forth in the preamble to this
Agreement.
1.9 "Paging Equipment" shall have the meaning set forth in Paragraph 2.04.
1.10 "Paging Services" shall mean the Basic Services and the Optional
Services.
1.11 "Reseller" shall have the meaning set forth in the preamble to this
Agreement.
1.12 "Term" shall have the meaning set forth in Article IV.
1.13 "Territory" shall have the meaning set forth in the first Whereas
clause.
ARTICLE II
PROVISION OF SERVICE
--------------------
2.01 Basic Services. Subject to the terms of this Agreement, PageNet shall
--------------
provide to Reseller as available in the Territory one-way tone-only, digital
display, and/or alphanumeric paging services ("Basic Services") described in
Exhibit A. Such Basic Services shall be provided on frequencies determined by
PageNet in its sole discretion, for marketing and resale by Reseller to End
Users in the Territory. PageNet shall have no obligation to provide Reseller
with new or different services other than those services which are available for
the Reseller market, except by a written amendment to Exhibit A, which amendment
shall have been approved by both PageNet and Reseller.
2.02 Optional Services. In conjunction with the Basic Services described in
-----------------
Paragraph 2.01, PageNet shall provide to Reseller where available such optional
services set forth in Exhibit A hereto ("Optional Services") as shall be
requested from time to time by Reseller.
Page 2
<PAGE>
2.03 Non-Exclusivity. The Paging Services provided hereunder shall be
---------------
provided to Reseller on a nonexclusive basis, and PageNet and its Affiliates
shall have the right (a) to provide Basic Services and Optional Services to
other entities for resale to End Users in the Territory and (b) to market and
sell such Paging Services, directly or indirectly, to End Users in the
Territory, including customers of Reseller. Nothing in this Agreement shall be
construed to require PageNet or its Affiliates to provide Paging Services to
Reseller for use or resale outside of the Territory.
2.04 Paging Equipment. Reseller shall be responsible for the provision, and
----------------
the maintenance and repair, of paging receivers and accessory equipment ("Paging
Equipment") to all End Users served by Reseller. Such Paging Equipment shall be
compatible with PageNet's existing and future paging system operations. PageNet
shall have the right to disapprove the use of any Paging Equipment that does not
meet its standards of compatibility, which may include the requirement that all
Paging Equipment be capable of operating at the speed and in the format as
defined by PageNet, in its sole discretion. Although PageNet may, in its sole
discretion, provide paging receivers and accessory equipment to the Reseller,
PageNet undertakes herein no obligations to do so. Any provision of such
equipment shall be by separate agreement.
ARTICLE III
OBLIGATIONS OF RESELLER
-----------------------
Throughout the term of this Agreement, Reseller shall market and provide
the Paging Services described in Article II to End Users in the Territory in the
following manner.
3.01 Marketing. Reseller, at its own expense, shall use reasonable efforts
---------
to publicize the availability of and to promote and market the Paging Services
to End Users in the Territory. If advertising and promotional materials for the
Paging Services state that the services are made available through arrangements
with PageNet, such materials shall be presented to PageNet in advance for its
approval, which approval shall not be withheld unreasonably. Any material to
which PageNet does not raise objections within thirty (30) days of its receipt
by PageNet shall be deemed to be approved.
3.02 Level of Services. Reseller shall provide Basic Services and Optional
-----------------
Services to End Users on a prompt, courteous, and efficient basis and shall deal
with End Users honestly and fairly. Reseller shall refrain from any statement,
acts or omissions that would tend to discredit or reflect adversely upon the
reputation of, or the quality of Paging Services provided by, Reseller, PageNet,
or any other entity providing Paging Services in connection with PageNet.
Page 3
<PAGE>
3.03 Paging Equipment. With respect to End Users served by Reseller,
----------------
Reseller shall furnish and maintain, or caused to be furnished and maintained,
Paging Equipment in compliance with the terms of this Agreement and all
applicable governmental requirements and standards.
3.04 End User Fees. Charges to End Users for equipment furnished by
-------------
Reseller shall be as determined by Reseller. Except as otherwise required by
Federal or State regulation, the fees for the Paging Services provided by
Reseller to End Users shall also be established by Reseller. Reseller shall be
responsible for billing and collecting such fees and shall bear the collection
risk related thereto.
ARTICLE IV
TERM
----
The initial term of this Agreement shall commence on the date hereof and
shall continue until the third (3rd) anniversary of the date hereof. The initial
term shall be extended automatically for successive one (1) year terms unless
either party gives written notice of its intent not to so extend more than
ninety (90) days prior to the end of the initial term or any extension thereof.
The initial three (3) year term of this Agreement, plus any extensions, shall be
the "Term" of this Agreement.
ARTICLE V
PROVISION OF PAGING NUMBERS
---------------------------
5.01 Provision. Effective as of the date hereof, and provided Reseller is
---------
not in arrears in amounts due PageNet, PageNet will provide to Reseller
telephone numbers as available within the Territory which are to be used by
Reseller to provide paging Services to End Users in connection with Paging
Equipment supplied by Reseller. Reseller shall acquire no property right in such
numbers, which may be reassigned by PageNet in its sole discretion in the
ordinary course of its business.
5.02 Minimum Period. Any provision of telephone numbers hereunder shall be
--------------
effective for, and Reseller shall be obligated to pay the charges for such
numbers for, a minimum service period of one (1) month.
5.03 Limitation of Assignment of Paging Numbers. PageNet reserves the
------------------------------------------
right, in its sole discretion, to limit the provision of telephone numbers to
Reseller (for tone-only, digital display, alphanumeric paging services, or all)
for technical reasons, including the limited availability of numbers or radio
frequencies for the provision of Paging Services in the Territory.
Page 4
<PAGE>
5.04 Number Activation/Discontinuance. In order to request activation of
--------------------------------
telephone numbers assigned pursuant to Paragraph 5.01, Reseller must utilize the
method of activation requested by PageNet. If a direct access system for pager
programming transactions is required by PageNet, Reseller must provide any
necessary access equipment, including personal computer and modem, to utilize
the direct access system. Further, all capcodes utilized for pager activation
through PageNet's direct access system service are to be issued and secured
through PageNet. PageNet may disconnect any pager(s) with unauthorized
capcode(s) on twenty-four (24) hours notice to Reseller. PageNet shall not be
liable for any failure or inability to provide direct access system service to
Reseller. PageNet reserves the right, in its sole discretion, to discontinue
Reseller's direct access system service at any time. If activation by facsimile
is requested by PageNet, Reseller may request activation of telephone numbers
assigned by faxing specific requests to PageNet's office between 9:00 a.m. and
4:30 p.m. local time Monday through Friday excluding holidays). PageNet may
request Reseller to activate telephone numbers in minimum blocks of 1, if
Reseller does not utilize a direct access system. Resellers not using a direct
access system must make any request for discontinuance of a telephone number in
writing in advance of such discontinuance. If Reseller has not paid any amounts
due PageNet, PageNet shall have the right to discontinue activation of
additional telephone numbers or adding cap codes, without liability of PageNet
to Reseller.
ARTICLE VI
SERVICE FEES
------------
6.01 Basic Services. In consideration for the Basic Services provided by
--------------
PageNet pursuant to Paragraph 2.01, for each telephone number assigned by
PageNet to Reseller pursuant to paragraph 5.01 and 5.02, Reseller shall pay the
monthly Basic Service Rate specified in Exhibit A.
6.02 Optional Services. In consideration for any Optional Services provided
-----------------
by PageNet pursuant to Paragraph 2.02, Reseller shall pay the rates specified in
Exhibit A.
6.03 Manner of Payment. PageNet shall submit to Reseller an invoice for
-----------------
monthly payments due under Paragraphs 6.01 and 6.02 for services rendered in a
month, plus applicable taxes, on or before the third (3rd) business day of the
beginning of such month. Reseller shall pay the full amount set forth in such
invoice, without offset, on or before the tenth (10th) day of such month. All
payments shall be made to PageNet by check, or cash or cash equivalent if
required by PageNet, at the address set forth in Paragraph 14.02 or at such
other address as PageNet may specify from time to time.
6.04 Late Payment. Any payments due from Reseller which are not made by the
------------
date set forth in Paragraph 6.03 shall be assessed a late payment charge
calculated at the lesser of the maximum rate permitted by law or a compounded
rate of one and
Page 5
<PAGE>
one-half percent (1-1/2%) per month on the amount outstanding from the date such
amount was due until the date paid.
6.05 Absolute Obligation. The amounts due to PageNet under this Article VI
-------------------
shall be paid by Reseller regardless of whether Reseller has been paid for the
Paging Services it renders to End Users. The amount of any disputed bill shall
be paid in accord with Section 6.03, together with a written statement by
Reseller of the specific ground for dispute. Any disputed amount shall be
refunded by PageNet with interest calculated as provided in Section 6.04, in the
event and to the extent the dispute is resolved in Reseller's favor through
negotiation or arbitration pursuant to Article XIII.
6.06 Credits for Interruptions. Reseller shall be entitled, upon request,
-------------------------
to a credit for interruptions in service which last in excess of eight (8)
consecutive hours, which credit amount shall be equal to that part of Reseller's
payment to PageNet which is equivalent to the fraction of the relevant month
during which service was interrupted. Such credit shall be applied as a
reduction in future invoices.
ARTICLE VII
REGULATION
----------
Reseller acknowledges that the activities of PageNet and/or Affiliates in
connection with the provision of Paging Services hereunder are regulated by the
FCC and that the activities of PageNet and Reseller in connection with the
transactions contemplated by this Agreement are or may be subject to regulation
by authorities in the individual state(s) of operation. Accordingly, Reseller
and PageNet mutually agree as follows:
7.01 Consents. The execution, delivery and performance of this Agreement
--------
and the transactions contemplated hereby are subject to the receipt of any
necessary prior approvals or authorizations by or from the FCC or any other
Federal, State or Local governmental authority. Reseller and PageNet agree to
use their best efforts to promptly obtain any such approvals or authorizations
applicable to them.
7.02 Compliance with Regulations. Reseller and PageNet shall comply, in all
---------------------------
material respects, with all statutes, laws, regulations, tariffs and orders
adopted or issued by any governmental authority governing the provision of
Paging Services by PageNet to Reseller and by reseller to End Users. In the
event the FCC or any other governmental entity shall require any material
additions, deletions, or modifications to the terms or conditions of this
Agreement, PageNet and Reseller shall use reasonable efforts to reconstitute
this Agreement to comply with such requirements, but only to the extent that
such modifications would not materially affect the rights and obligations of the
parties hereto.
Page 6
<PAGE>
7.03 Records. Reseller shall maintain records regarding its resale
-------
activities to the extent required by the FCC or any other governmental
authority, and such records shall be made available to PageNet for its
inspection upon reasonable request.
7.04 Control of Radio Facilities. Reseller acknowledges that PageNet or
---------------------------
its Affiliate is the FCC licensee of the radio paging facilities used to provide
Paging Services to Reseller hereunder and that PageNet or its Affiliate has the
sole authority and responsibility to ensure that the paging facilities are
operated in accordance with the terms of their licenses and the rules and
regulations of the FCC. No provision of this Agreement shall be construed as
vesting in Reseller any control over the radio paging facilities licensed to
PageNet or its Affiliate, and PageNet or its Affiliate shall maintain full
responsibility for the control, supervision, operation and maintenance of such
facilities. Reseller shall immediately notify PageNet of any complaints received
from End Users relating to the provision of Paging Services over the paging
facilities and shall confirm such complaints to PageNet in writing.
ARTICLE VIII
REPRESENTATION AND WARRANTIES
-----------------------------
PageNet and Reseller represent and warrant that: this Agreement is a legal,
valid and binding obligation of each such party, enforceable in accordance with
its terms, except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the availability of
equitable remedies.
ARTICLE IX
TERMINATION
-----------
Anything set forth herein to the contrary notwithstanding, this Agreement
may be terminated by PageNet or Reseller as provided below:
9.01 Nonpayment. PageNet may terminate this Agreement if Reseller has
----------
failed to pay any amounts due under Article VI, and such failure continues for a
period of ten (10) days after the receipt by Reseller of notice of nonpayment
from PageNet.
9.02 Abandonment. PageNet may terminate this Agreement immediately if
-----------
Reseller has abandoned its business and/or ceased providing support to End Users
and potential customers.
9.03 Other Breaches. Either party may terminate this Agreement if the
--------------
other party commits a material breach or default of any of the provisions of
this Agreement other than those related to payment to PageNet or abandonment and
such breach or default has not been cured within thirty (30) days after receipt
by the
Page 7
<PAGE>
breaching party of the non-breaching party's notice of such breach default.
9.04 Minimum Threshold. If Reseller shall fail to have and maintain a
-----------------
minimum of _______ pager numbers assigned within _____ months of this Agreement,
PageNet may terminate this Agreement at its sole discretion. Prior to
termination, Reseller shall be granted the option of accepting billing and
paying for a minimum of such amount of pager numbers per Exhibit A.
9.05 Government Restrictions. Either party may terminate this Agreement if
-----------------------
the performance of this Agreement pursuant to the terms hereof has been
prohibited by any Federal, State or Local court, Governmental or regulatory
body, and the parties are unable to reconstitute this Agreement pursuant to
Paragraph 7.02.
9.06 After Initial Term. Either party may terminate this Agreement at any
------------------
time following the initial term by providing ninety (90) days written notice to
the other party.
9.07 Consequences of Termination. If this Agreement is terminated by
---------------------------
reason of an uncured breach by Reseller, Reseller shall immediately provide
PageNet with a list of names, addresses and telephone numbers of all End Users
served by Reseller. Upon any termination, PageNet shall have the right to
directly provide Paging Services to such End Users as permitted by law, with no
further liability by PageNet to Reseller. PageNet may also notify (by electronic
signal, voice mail or otherwise) End Users of the fact that service will no
longer be provided to them by PageNet through Reseller, and of the means whereby
continuity of service may be assured. The termination of this Agreement pursuant
to this Article IX shall not relieve the parties of any obligations incurred
hereunder up to and including the date of termination.
ARTICLE X
LIMITATION OF LIABILITY
-----------------------
Notwithstanding any other provision of this Agreement, the liability of
PageNet to Reseller resulting from PageNet's failure or inability to provide the
Paging Services specified herein shall be limited to credits for interruptions
as specified in Paragraph 6.06. Other than such credits, Reseller's sole remedy
for PageNet's failure or inability to perform its obligations under this
Agreement shall be to terminate this Agreement as provided in Article IX. IN NO
EVENT SHALL PAGENET BE LIABLE TO RESELLER OR TO ANY END USERS FOR ANY AMOUNTS
REPRESENTING LOSS OF PROFITS, LOSS OF BUSINESS, INDIRECT, SPECIAL, EXEMPLARY,
CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING FROM THE PERFORMANCE OR NONPERFORMANCE
OF THIS AGREEMENT OR ANY ACTS OR OMISSIONS ASSOCIATED THEREWITH OR RELATED TO
THE USE OF ANY ITEMS OR SERVICES FURNISHED HEREUNDER, WHETHER THE BASIS OF THE
LIABILITY IS BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY), STATUES, OR ANY OTHER LEGAL THEORY.
Page 8
<PAGE>
ARTICLE XI
INDEMNIFICATION
---------------
Reseller shall indemnify and hold harmless PageNet, its Affiliates, their
respective directors, officers, employees, agents, subsidiaries, affiliates,
subcontractors and assignees, or any of them, from and against all claims,
damages and liabilities resulting from the acts or omissions of Reseller or the
failure by Reseller to perform its obligations hereunder.
ARTICLE XII
TRADE NAMES AND TRADE MARKS
---------------------------
Reseller acknowledges and agrees that PageNet (or an Affiliate of PageNet)
is the sole and exclusive owner of all right, title and interest in and to the
trademarks, service marks and trade names "Paging Network," "Paging Network of
Atlanta," "PageNet," "PageMate," "SurePage," "VoiceNow," and all other
trademarks, service marks, corporate names and trade names used from time to
time by PageNet or its Affiliates (collectively, the "Marks"). Reseller agrees
that, at any time during the term hereof or after its expiration or termination,
it will not in any manner represent that it has any right, title or interest in
or to any of the Marks, it will not use any of the Marks in any way, it will not
register or attempt to register any of the Marks (or any mark or name
confusingly similar to any of the Marks) under the laws of any jurisdiction, and
it will not do or cause or suffer to be done any act or thing impairing the
distinctiveness of the Marks or any part of PageNet's rights, title and interest
therein (whether or not the Marks are registered in the jurisdiction(s) in which
Reseller is located or does business). Reseller shall use and display the Marks
exclusively to identify PageNet and the products and Paging Services and
Optional Services provided by PageNet, and only in such form and manner as may
be authorized by PageNet in writing from time to time. All uses of the Marks by
Reseller shall inure to the exclusive benefit of PageNet.
ARTICLE XIII
ARBITRATION
-----------
ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR
ANY BREACH THEREOF, SHALL BE SETTLED BY ARBITRATION IN THE TERRITORY AND IN
ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES THEN IN FORCE OF THE AMERICAN
ARBITRATION ASSOCIATION, AND JUDGMENT UPON THE ORDER RENDERED BY THE
ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
Page 9
<PAGE>
ARTICLE XIV
MISCELLANEOUS
-------------
14.01 Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of the parties and their respective successors and assigns; provided,
however, that neither this Agreement nor Reseller's End User accounts may be
assigned by Reseller in any manner, including in connection with the acquisition
of the stock or assets of Reseller, without the prior written consent of
PageNet, which shall not be unreasonably withheld, and provided that Reseller
shall notify PageNet in writing of the terms of any proposed transfer at least
thirty days prior to its consummation, and provided further, that Reseller shall
have at the same time extended to PageNet a right to acquire Reseller's End User
Accounts and/or rights hereunder on the same terms, which offer shall be
accepted or declined by PageNet in writing within twenty days of PageNet's
receipt thereof. No assignment or transfer of this Agreement or any End User
accounts shall be valid if any monetary amounts remain due and payable to
PageNet by Reseller.
14.02 Notices. Any notice, request, instruction, legal process or other
-------
document to be given hereunder shall be in writing and shall be delivered by
hand delivery, facsimile, or overnight mail service to the address and/or
telephone number set forth below or such other number(s) or addresses as may be
specified by the relevant party, in writing, from time-to-time during the term
hereof.
If to PageNet: PageNet of Atlanta, Inc.
3475 Lenox Road Suite 500
Atlanta, GA 30326
404-841-9100 (Reseller Dept. EXT 151)
Fax: 404-861-0340
If to Reseller: ______________________________________
______________________________________
______________________________________
______________________________________
Fax:__________________________________
Notices sent by the above means shall be conclusively deemed received on
the date shown on the confirmation slip (for notices sent by facsimile
transmission), or in the case of courier or overnight service, the date of
receipt shall be that stated by the return receipt or other evidence provided by
the delivering service.
14.03 Relationship of the Parties. Reseller's relationship to PageNet is
--------------------------
that of an independent contractor and no other relationship is intended or
created between the parties hereto. Nothing in this Agreement shall be construed
to make Reseller an agent of PageNet.
Page 10
<PAGE>
14.04 Choice of Law. This Agreement shall be construed in accordance with
-------------
and governed by the laws of the State of GEORGIA.
14.05 Severability. If any provision of this Agreement is declared or
------------
found to be illegal, unenforceable, or void, the parties shall negotiate in good
faith to agree on a substitute provision that is legal and enforceable and is
as nearly possible consistent with the intentions underlying the original
provision. If the remainder of this Agreement is not materially affected by such
declaration or finding and is capable of substantial performance, then the
remainder shall be enforced to the extent permitted by law.
14.06 No Waiver. No delay or omission by either party to exercise any
---------
right or power shall impair any such right or power or be construed to be a
waiver thereof. A waiver by any party of any of the covenants, conditions or
contracts to be performed by the other or any breach thereof shall not be
construed to be a waiver or any succeeding breach thereof, or of any other
covenant, condition or contract herein contained. No change, waiver or discharge
hereof shall be valid unless it is in writing, and signed by an authorized
representative of the party against which such change, waiver or discharge is
sought to be enforced.
14.07 Counterparts. This Agreement may be executed by the parties in
------------
counterpart copies which together shall constitute the entire agreement between
the parties hereto. When executed, this Agreement shall supersede all prior and
contemporaneous agreements, written or oral, of the parties with respect to the
subject matter hereof and this Agreement may not be amended except by a writing
signed the authorized representative of each party
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
PAGING NETWORK OF ATLANTA, INC.
By: /s/ Ali Walker
--------------------------------------------
Print Name: Ali Walker
------------------------------------
Title: Reseller Manager
-----------------------------------------
RESELLER
By ____________________________________________
Printed Name: __________________________________
Title: _________________________________________
Page 11
<PAGE>
Exhibit A
SCHEDULE OF CHARGES
PAGING NETWORK OF ATLANTA, INC.
A. Basic Service Rate
Basic Service includes pager air time only in PageNet's Territory served by
the (404) (770) (706) (803) (912) telephone area codes.
-----------------------------
Statellink (Reseller) has agreed to purchase a quantity of _______ basic service
activations at a rate of _______ per unit. Both parties to the contract are in
agreement that this pricing is contingent upon the ability of __________________
(Reseller) to obtain the benchmark set forth below:
********************************************************************************
* activations on or before a one-year period from contract date
If the above benchmarks are not met, airtime pricing will increase to reflect
PageNet of Atlanta's normal tier pricing schedule as follows:
1 - 500 units = $****
501 - 1000 units = $****
1001 - 2000 units = $****
2001 - 3000 units = $****
3001 units = $****
********************************************************************************
<TABLE>
B. Optional Services
<S> <C>
Systems (generic) Greeting $***********************************
Custom Greeting $****
MiniMail $****
PageMail $****
PageMail Plus $****
Numeric Retrieval $****
Additional Phone Number $****
Extended Coverage: Carolina's $****
Florida $****
Tennessee $****
</TABLE>
There is no connection fee charge to the Reseller.
A.15 overcall charge shall apply to those accounts that exceed 450 calls during
the period of a month. This will be based on an average number of calls based
on the reseller's total activations.
********************************************************************************
The about rate and benchmarks apply to digital paging. The rate for alphanumeric
airtime is $**** and is subject to an overcall charge of $*********************
*****. The alphanumeric rate shall be considered separate from the digital rate
in that it shall exclude both quantity discounts via pricing tiers and the
calculation method used in determining digital overcalls.
* Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT 10.13
AGENCY AGREEMENT
FOR PRIVATE CARRIER PAGING
(GEORGIA)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Description of System................................................ 1
2. Appointment of Agent................................................. 1
3. Provision of Service................................................. 1
4. Charges to Subscribers............................................... 2
5. Regulation........................................................... 3
6. Schedule of Charges and Payments..................................... 3
7. Regulatory Matters................................................... 3
8. Terms of Agreement................................................... 4
9. Termination of Agreement............................................. 4
10. Non-exclusive........................................................ 5
11. Assignments.......................................................... 5
12. Use of Paging Terminal............................................... 5
13. Indemnification by Agent............................................. 5
14. Liability Insurance.................................................. 6
15. Indemnification by Carrier........................................... 6
16. Carrier's Purchase Rights and Obligations............................ 7
17. Law Governing Agreements............................................. 7
18. Notices.............................................................. 7
19. Remedies............................................................. 8
20. Contingency.......................................................... 8
22. Insolvency........................................................... 9
23. Arbitration.......................................................... 9
24. Successors and Assigns............................................... 9
25. Miscellaneous Provisions............................................. 9
26. Regulatory Bodies.................................................... 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
27. Various Matters...................................................... 10
28. Taxes and Tax Information............................................ 11
</TABLE>
ii
<PAGE>
AGENCY AGREEMENT
FOR PRIVATE CARRIER PAGING
(GEORGIA)
THIS AGREEMENT is entered into between Preferred Networks, Inc.
("Carrier") and SATELLINK PAGING INC. ("Agent").
WHEREAS, Carrier and Agent by this Agreement mutually desire to market
Private Carrier Paging service ("PCP") on the 157.740 frequency, which service
is not currently tariffed, and to thereby make such service available to the
public in a convenient and effective manner.
It is agreed between Carrier and Agent as follows:
1. Description of System. Carrier is authorized to provide PCP in
---------------------
certain areas in Georgia (the "Area").
2. Appointment of Agent.
--------------------
(a) Carrier hereby grants to Agent the right to act as its
non-exclusive agent for the marketing of PCP.
(b) Carrier reserves the right to promote and sell PCP and
equipment to present or future subscribers directly or through its employees,
agents or subsidiaries, and to resellers.
(c) This Agreement applies only to activities in the Area.
3. Provision of Service.
--------------------
(a) Carrier agrees to furnish one-way tone only, numeric display
and alphanumeric paging services and other future services as may exist in
Carrier's discretion. Carrier will issue Cap codes.
(b) Agent may sell only to retail end users of such service.
----------------
(c) Carrier shall make diligent efforts to provide continuous
and uninterrupted paging service to subscribers obtained by Agent, but its
liability to subscribers for failure to do so shall be as prescribed and limited
by contract and applicable law.
(d) Agent will provide pagers for subscribers to whom it sells
paging service.
(e) Carrier shall have the right to disapprove of pagers and
accessories at any time if they are not compatible
<PAGE>
with Carrier's present or future system operation. Agent shall submit to Carrier
technical specifications of each type of pager which Agent plans to place on the
system.
(f) Carrier reserves the right to approve or deny the use of
Carrier's name and any of its logos on any and all promotional material used by
Agent. Such approval will not be unreasonably withheld. An advance copy of all
promotional material containing Carrier's name or logos, or a description of
PCP, must be submitted to Carrier for approval at least twenty (20) days before
use. Materials bearing Carrier's names or logos may not be used after
termination of this Agreement.
(g) Agent will use commercially reasonable efforts at all times
to give prompt, courteous and efficient service to the public, will be governed
in all dealings with members of the public by the highest standards of honesty,
integrity and fair dealing, and will do nothing which would tend to discredit,
dishonor, reflect adversely upon or in any manner injure the reputation of
Carrier.
(h) Agent may utilize subagents in connection with marketing
paging services hereunder, subject to review and prior written approval of such
subagents by Carrier. Carrier may at any time disapprove a subagent for any
reason or no reason. Agent is responsible for the subagents' compliance with the
terms of this Agreement.
(i) If there is a lack of capacity on the PCP system, Carrier
shall allocate any capacity or capacity increase according to applicable
regulatory priorities (if any) and calendar priority of held end user (i.e.
----
retail subscriber) orders. Agent shall maintain accurate records of held orders
for the purposes of this paragraph. If a lack of capacity exists or is
forecasted by Carrier, Agent will not take additional cap codes, but rather will
use and pay for only those cap codes for which it has subscribers.
4. Charges to Agent.
----------------
(a) Service charges by Carrier to Agent for services on its PCP
shall be at the rates established from time to time by Carrier. Current rates
are attached as Exhibit A. Carrier may change rates upon ninety (90) days notice
to Agent. Charges by Agent for pagers whether sold, rented or leased shall be at
Agent's discretion. Agent shall perform all billing, notice and collection
activities with regard to PCP charges made to subscribers and taxes thereon and
such activities shall be pursuant to, and in compliance with, applicable laws,
orders, rules and regulations. Agent shall accept applications for service and
terminate service and may collect deposits for service from subscribers in
accordance with the terms and conditions of applicable laws, orders, rules and
regulations.
-2-
<PAGE>
(b) Agent shall continue to deliver the service charges due from
subscribers to Carrier for each subscriber for whom Agent arranges PCP
regardless of whether such subscribers deliver payments to Agent. After
reasonable attempts by Agent to collect PCP charges from a subscriber, and after
compliance with applicable laws, orders, rules and regulations, Agent may
request Carrier to disconnect such subscriber and if Carrier does not so
disconnect the subscriber within five (5) working days, Agent shall not be
liable to Carrier for that subscriber's service charge accruing after the end of
that five (5) working day period.
(c) All revenue from PCP is Carrier revenue, and the amounts
retained by Agent hereunder constitute Agent's commission. The amount to be paid
to Carrier is set forth in Exhibit A. The transfer of funds described herein is
for convenience only. Agent shall bear the risk of loss of funds until actually
received by Carrier at Carrier's office.
5. Regulation. This Agreement shall remain in effect if PCP becomes
----------
a regulated service. Provided, however, that should any such regulation
materially detrimentally alter Agent's or Carrier's rights or obligations
hereunder, or materially detrimentally change the economic benefit to Agent or
Carrier, the party so detrimentally affected may terminate this Agreement upon
sixty (60) days' written notice to the other party.
6. Schedule of Charges and Payments. Agent shall pay all invoices
--------------------------------
from Carrier within twenty (20) days from date of invoice. Late payments will
bear simple interest at *** per annum or the highest lawful rate, whichever is
lower. Billing shall be in advance for any month, with appropriate usage or
numbers in service additions appearing on the next invoice. Other billings shall
be made as appropriate. Agent will not offset any amounts owing except for
legitimate billing disputes. Agent is obligated to pay amounts owing hereunder
regardless of whether subscribers pay Agent.
7. Regulatory Matters. Agent expressly recognizes that Carrier is
------------------
offering service through licenses issued by the Federal Communications
Commission. Agent therefore agrees as follows:
(a) This Agreement is subject to any necessary agency approval.
(b) Subject to Sections 5 and 28 hereof, this Agreement shall at
all times be subject to such changes or modifications as the Federal
Communications Commission or any other bodies may from time to time lawfully
direct.
-3-
<PAGE>
(c) Each customer placed by Agent on Carrier's PCP system shall
be clearly advised in writing that PCP is provided by Carrier, and, if
applicable, that service is under and pursuant to Carrier's then currently
effective tariffs and that such tariffs are subject to change (to the extent
such is the case).
(d) Agent shall not represent itself as the federal or state
certificated licensee of PCP or make any untrue or misleading representations or
warranties, express or implied, regarding such service. All forms of contracts
entered into between Agent and its customers relating to Carrier's service shall
identify Carrier as the provider of the service.
(e) It is understood that the ultimate control and
responsibility for the standard and quality of service required under the
provisions of any license issued by the Federal Communications Commission to
Carrier as well as any certificate issued to Carrier by any regulatory agency
having jurisdiction shall be that of Carrier. No provision of this Agreement
shall be construed as vesting in the Agent any control whatsoever of the radio
communication facilities and operations.
(f) Agent shall bear its own costs in the performance of this
Agreement. Direct additional costs of non-promotional mailings to Carrier's
customers ordered by regulatory authorities or Carrier's corporate policy shall
be borne solely by Carrier, but mailed by Agent.
(g) A subscriber's PCP shall not be terminated for a failure of
the subscriber to pay Agent for items other than PCP, but Agent may repossess
its pager or take other action.
8. Terms of Agreement. The term of this Agreement shall commence on
------------------
5/4/92, and shall continue until 3/3/93. Unless notice of election to not
continue this Agreement is given at least sixty (60) days prior to expiration of
the preceding term, this Agreement shall continue for successive one-year terms
until so terminated by either party.
9. Termination of Agreement.
------------------------
(a) This Agreement may be terminated at any time by a lawful
order of any Regulatory Commission having jurisdiction hereof.
(b) If either party violates any material provision of this
Agreement or fails to perform any material obligation hereunder and does not
forthwith correct same upon being given ten (10) days' written notice by the
other party of such violation or failure (provided, however, that if such
violation or failure is non-monetary and is not capable of cure
-4-
<PAGE>
within such 10-day period, there shall be no default if the party has commenced
to cure, is vigorously pursuing the cure and completes such cure within twenty
(20) days after the notice of such violation or failure), then such other party
shall have the right of cancellation of this Agreement by giving sixty (60) days
prior written notice. Provided, however, that: (i) the 10-day cure period shall
only apply as to three (3) late payments of invoices from Carrier in any twelve
(12) month period; and (ii) termination will be effective upon delivery of
notice of a failure to maintain insurance required under Section 14, or an event
under Section 22.
(c) The parties recognize that PCP is a communication service
and that the termination of this Agreement cannot be permitted to interfere with
the continuity of PCP to subscribers. Therefore, termination of this Agreement
shall be effected in such manner so as to avoid insofar as possible any
interruption of PCP, provided, however, that this provision shall not expand the
obligations of the parties hereunder.
10. Non-exclusive. This Agreement is a mutually non-exclusive
-------------
arrangement.
11. Assignments. Any assignment of this Agreement or any part
-----------
thereof by Agent, without written consent of the Carrier, shall be null and void
and of no effect. Such consent shall not be unreasonably withheld if the
assignment is to a purchaser of a majority of Agent's business as measured by
gross revenues for the preceding 12 months. carrier may assign this Agreement to
any purchaser of the PCP system for all or any part of the Area and shall be
required only to notify Agent of such assignment.
12. Use of Paging Terminal. At its option, Carrier may grant Agent
----------------------
full remote paging terminals access for those PCP numbers subscribed to by
customers who arrange service through Agent, for the purpose of exchanges,
additions, cancellations or verification of paging number programming used by
Agent. If Agent wishes to use such access, Agent will bear the cost of
installation and maintenance for the segmented data base and for paging terminal
access including the modem and port for the remote access. Agent will also pay
for the data circuit from its facility to Carrier's facility and for any on-site
equipment at Agent's office. Nothing in this Agreement shall be construed to
grant access to Carrier's paging transmission facilities.
13. Indemnification by Agent. Agent shall defend, indemnify and hold
------------------------
harmless Carrier and its present and future owners, directors, officers,
employees, contractors, and agents (collectively the "Indemnitees") and each of
them from and against any and all loss, costs, damages, claims, expenses
(including attorneys' fees), or liabilities (collectively
-5-
<PAGE>
referred to as "Liabilities") by reason of any injury to or death or disease of
any person or damage to or destruction or loss of any property arising out of,
resulting from, or in connection with (i) the performance or nonperformance of
the work contemplated by this Agreement which is or is alleged to be caused by
any act, omission, default or negligence (whether active or passive) of Agent or
its employees, agents, contractors, or subcontractors, or (ii) the failure of
the Agent to comply with any of the provisions of this Agreement or the failure
of Agent to conform to statutes, ordinances, or other regulations or
requirements of any governmental authority in connection with the performance of
the services provided for in this Agreement.
14. Liability Insurance. Agent shall obtain and maintain at all times
-------------------
during the performance of work hereunder such insurance as is typical of similar
companies performing similar activities in the area covered by this Agreement.
Such insurance shall at a minimum be broad form casualty and property damage
insurance in an amount of at least $******* per occurrence for personal injury
or death and $******* per occurrence for property damage, shall be primary
coverage, shall name Carrier as an additional insured, and shall provide at
least ten (10) days notice to Carrier of cancellation, non-renewal or change.
15. Indemnification by Carrier.
--------------------------
(a) Carrier shall defend, indemnify and hold harmless Agent and
its present and future owners, directors, officers, employees, contractors, and
agents (collectively the "Indemnitees") and each of them from and against any
and all loss, costs, damages, claims, expenses (including attorneys' fees), or
liabilities (collectively referred to as "Liabilities") by reason of any injury
to or death or disease of any person or damage to or destruction or loss of any
property arising out of, resulting from, or in connection with (i) the
performance or nonperformance of the work contemplated by this Agreement which
is or is alleged to be caused by any act, omission, default or negligence
(whether active or passive) of Carrier or its employees, agents, contractors or
subcontractors, or (ii) the failure of the Carrier to comply with any of the
provisions of this Agreement or the failure of Carrier to conform to statutes,
ordinances, or other regulations or requirements of any governmental authority
in connection with the performance of the services provided for in this
Agreement.
(b) CARRIER SHALL NOT BE LIABLE UNDER ANY THEORY, WHETHER IN
TORT, CONTRACT OR OTHERWISE, FOR ANY ERROR IN TRANSMISSION OR OTHER FAILURE OF
ANY PAGING MESSAGE TO BE RECEIVED UNLESS A RESULT OF A WILLFUL ACT BY CARRIER
INTENDED TO CAUSE SUCH A FAILURE. WITHOUT LIMITATION, CARRIER SHALL HAVE NO
LIABILITY FOR PAGES NOT SENT OR RECEIVED DURING PERIODS WHEN THE PCP SYSTEM IS
UNDERGOING MAINTENANCE OR REPAIR.
-6-
<PAGE>
16. Carrier's Purchase Rights and Obligations.
-----------------------------------------
(a) If at any time Agent decides to sell all or any of the PCP
subscriber lists, relationships or contracts to any other person, by sale,
merger, contribution or otherwise, the Carrier shall have a first right of
refusal to purchase those list(s), relationship(s) or contract(s). Agent shall,
on a confidential basis, provide to the Carrier complete information concerning
the proposed sale. The Carrier shall have thirty (30) days after it receives the
above information (as well as any additional information given to the
prospective purchaser) to elect to purchase such subscriber list(s),
relationship(s) or contract(s). If the Carrier does not elect to purchase, the
Agent may sell to the prospective purchaser, so long as (i) the sale is on the
same terms as offered to the Carrier; and (ii) the sale closes within 120 days
of the notice to the Carrier from Agent setting forth the original offer.
Transfers under this provision do not also transfer any interest in this
Agreement.
(b) If the Agent is in default hereunder (a default being deemed
to exist for purposes of this Section 16.b. at any time after the cure period
(if any) expires, and at the time of termination of the natural term of this
Agreement, the Carrier may elect to purchase, and the Agent upon such election
by the Carrier must sell, all, but not less than all, the Agent's PCP subscriber
lists, contracts and relationships to the Carrier at a price of ***********
**************** per bona fide unaffiliated active subscriber whose account is
less than sixty-one (61) days overdue, and ******************** per bona fide
unaffiliated active subscriber for those with accounts, in whole or part, more
than sixty (60) days overdue. Agent will immediately make available to the
Carrier, on a timely and confidential basis, at Agent's Georgia office, Agent's
files (including existing summary information) so the Carrier may determine if
the Carrier wishes to purchase. The Carrier will elect whether it wishes to
purchase within five (5) business days after it receives the information at
Agent's Georgia office. Such sale does not include the then existing subscriber
account receivable or pagers.
The price shall be paid in cash, and the Agent shall deliver all files
and information necessary for an efficient and easy transition for the customer
and the Carrier.
This section may be enforced by specific performance.
17. Law Governing Agreement. This Agreement shall be governed by the
-----------------------
laws of the State of Georgia applicable to contracts entered into and to be
wholly performed in that state.
18. Notices. Any notice or communication given or required under this
-------
Agreement by any of the parties to the other
-7-
<PAGE>
party hereto shall be in writing and hand delivered (which shall include hand
delivery actually made by air express carrier), or mailed by registered or
certified mail, postage prepaid, return receipt requested, as follows:
(a) If to Carrier:
Preferred Networks, Inc.
------------------------------------
111 Peachtree Park Drive, NE
Atlanta, Georgia 30309
(b) If to Agent:
Satellink Paging Inc.
------------------------------------
Attn: President
------------------------------------
12 Perimeter Center First Suite 1200
------------------------------------
Atlanta, 6A 30346
------------------------------------
Either party may change the address for notices hereunder by written
notice to the other. Notices shall be deemed given: three days after the date
they are deposited in the U.S. Mails; or when hand delivered.
19. Remedies. The rights and remedies herein provided are cumulative
--------
and are not exclusive of any rights or remedies which Carrier or Agent would
otherwise have.
20. Contingency. Neither of the parties hereto shall be held
-----------
responsible for any delay in performance or failure to perform under this
Agreement caused by fires, strikes, embargoes, government requirements, civil or
military authorities, acts of God or of the public enemy, statutes, regulations,
court orders or other causes beyond its control and not caused or contributed by
the fault or negligence of either party.
21. Subscriber Contracts. All Subscriber contracts for paging service
--------------------
shall include the following provision, unless alternative language is approved
by the Carrier in advance:
By ordering or subscribing to paging services under this
agreement, the subscriber acknowledges that paging messages
may be lost or distorted for many reasons which may be
difficult to determine or verify, including but not limited
to weather conditions, intermittent equipment problems or
equipment failures, subscriber negligence, electronic
interference, etc. The subscriber also acknowledges that the
damages which may result from a lost or distorted paging
message are difficult to ascertain, and that the subscriber
(rather than the carrier(s)
-8-
<PAGE>
providing the service) is in a better position to assure or
otherwise protect itself against such damages. ACCORDINGLY,
NO CARRIER OR OTHER PERSON PROVIDING, SELLING, ARRANGING OR
RESELLING SERVICES ASSOCIATED WITH THIS AGREEMENT SHALL BE
LIABLE FOR ANY CONSEQUENTIAL OR OTHER DAMAGES WHICH MAY
RESULT FROM ANY LOST OR DISTORTED PAGING MESSAGE(S). ANY
LIABILITY RELATING TO SUCH LOST OR DISTORTED MESSAGE(S)
SHALL BE LIMITED TO A REFUND OF THE AMOUNT PAID BY THE
SUBSCRIBER FOR SUCH PAGING SERVICE FOR THE AFFECTED PAGER
FOR THE MONTH DURING WHICH THE CLAIM AROSE.
22. Insolvency. Either party may terminate this Agreement by notice
----------
in writing effective upon delivery in the event the other party is insolvent,
makes an assignment for the benefit of creditors, is unable to pay debts as they
mature, files or has filed against it a petition in any court setting forth or
alleging any of the foregoing (providing such allegation is not being contested
in good faith), or has a trustee or receiver or officer of the court appointed
to control or supervise all or any substantial part of its assets or business.
23. Arbitration. Any controversy or claim arising out of or relating
-----------
to this contract, or the breach thereof, shall be settled by binding arbitration
in Atlanta, Georgia, in accordance with the commercial arbitration rules then in
force of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. The party prevailing in such arbitration shall be entitled to recover
its reasonable attorneys' fees and costs. Provided, however, that either party
may apply to a court of competent jurisdiction if seeking a temporary
restraining order or preliminary injuction.
24. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
25. Miscellaneous Provisions. This Agreement constitutes the entire
------------------------
agreement between the parties with respect to the subject matter hereof and
shall not be modified or amended in any fashion except by instrument in writing
signed by the party charged with such modification.
26. Regulatory Bodies. This Agreement shall at all times be subject
-----------------
to such changes or modifications required by the Federal Communications
Commissions and/or other federal, state or local bodies, commissions,
jurisdictions, or courts, or
-9-
<PAGE>
arbitration bodies. Where any provision of this Agreement is declared invalid
or any changes or modifications are made by a body, commission, jurisdiction,
arbitration body or court and such invalid provision or such change or
modification substantially detrimentally affects any material right, obligation
or benefit of a party hereto, the party detrimentally affected may terminate
this Agreement upon giving the notice hereinabove provided for.
27. Various Matters.
---------------
(a) Agent shall not knowingly permit subscribers to use any
equipment which is incompatible with PCP, such, incompatibility being determined
by the Carrier in its sole discretion or permit the use of PCP by Subscribers
for any unlawful or improper purpose.
(b) Agent will follow the Carrier's reasonable standards and
guidelines applicable to Agent (if any) concerning the offering of PCP and
pagers, as in effect from time to time.
(c) IN NO EVENT SHALL THE COMPANY OR ANY CARRIER OR LICENSEE BE
LIABLE, WHETHER IN CONTRACT OR IN TORT OR UNDER ANY OTHER LEGAL THEORY, FOR (1)
ANY LOSS OF USE, REVENUE, OR PROFITS, (2) ANY COSTS OF CAPITAL OR OF SUBSTITUTE
USE, (3) ANY INCIDENTAL, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES, OR (4) ANY
OTHER LOSS OR CLAIM OF ANY SIMILAR TYPE FOR ANY DAMAGE OR LOSS TO RESELLER.
(d) The Carrier may reassign telephone numbers and Agent and the
Subscriber shall have no interest in the number.
(e) The parties will act hereunder in good faith.
(f) Agent may obtain pagers from the Carrier on mutually
acceptable terms negotiated from time to time. If the Carrier leases any pagers
to Agent, Agent will not obscure or make illegible the Carrier's name and
indication of ownership (if any) on the rental pager. If the Carrier so
requests, Agent will follow those procedures set forth in the Uniform
Commercial Code (or comparable law) as adopted in the relevant state to further
ensure that the rental pagers owned by the Carrier, but in Agent's,
Subscriber's or other's possession, will not become subject to claims of
other's.
(g) Agent will not disclose the Carrier's pricing, referral list
(if any), customer list or other confidential information which may come into
its possession, except as may be required by governmental regulation or court
order (as to which Agent will inform the Carrier as far in advance as possible),
or use such information for its own purpose during, or for a period of three
years after termination of, this Agreement.
-10-
<PAGE>
28. Taxes and Tax Information. Agent will provide Carrier with
-------------------------
current information concerning the state, local, regulatory body and other
taxes, fees and assessments being charged subscribers for PCP. Agent is
responsible for collecting all taxes, fees and assessments and will remit such
amounts along with its corresponding service or other payment Carrier,
regardless of whether such amount is collected from a subscriber.
DATE: March 4, 1992
-------------------------------
AGENT: Satellink Paging Inc PREFERRED NETWORKS, INC.
---------------------------
By [SIGNATURE ILLEGIBLE] By [SIGNATURE ILLEGIBLE]
------------------------------- -------------------------------
as PRESIDENT as ____________________________
-----------------------------
Date March 4, 1992 Date ____________________________
-----------------------------
-11-
<PAGE>
[LOGO] PREFERRED NETWORKS, INC.
EXHIBIT A
PRICING SCHEDULE
<TABLE>
<CAPTION>
SERVICE GREETING COMPLETION LIST 1001 3001 5001
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
D1/Display Tone Fast Busy **** **** **** ****
D2/Display Tone Page Sent **** **** **** ****
D3/Display Tone Company Name **** **** **** ****
D4/Display Enter # Company Name **** **** **** ****
D5/Display Reach # Company Name **** **** **** ****
D6/Display Name Company Name **** **** **** ****
D7/Display Custom Company Name **** **** **** ****
T1/Tone Tone Fast Busy **** **** **** ****
T2/Tone Tone Page Sent **** **** **** ****
T3/Tone Tone Company Name **** **** **** ****
A1/Alphanumeric* **** **** **** ****
* Rate does not include display/tone service;
****-call limit on each number; over-calls
billed at $**** per call
Numeric Retrieval [D4 through D7 only] **** **** **** ****
800-Access** [D1 through D3 only (W1 through W3)] **** **** **** ****
</TABLE>
**800-Access does not include local display/tone DID number;
***-call limit on each number; over-calls billed at $****
per call
Agent Detailed Billing Package - $*/month or $**/Year
[01/28/91]
111 Peachtree Park Drive, NE * Atlanta, Georgia 30309 * 404/355-7010
* Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
<PAGE>
[LOGO APPEARS HERE] PREFERRED NETWORKS, INC.
DISCOUNT LEVELS
<TABLE>
<CAPTION>
LEVEL # UNITS DISCOUNT
- ---------------------------------------------------------------------
<S> <C> <C>
Level 1 0 - 1,000 *%
Level 2 1,001 - 3,000 **%
Level 3 3,001 - 5,000 **%
Level 4 5,001 & above **%
</TABLE>
NOTE:
* Volume discount is based upon the total number of units without respect of
category.
* Inactive numbers reserved will be billed at $**** per month.
* Each agent will receive *******************.
* Numbers are assigned in blocks of **.
* Capcodes will be coordinated through PNI.
111 Peachtree Park Drive, NE * Atlanta, Georgia 30309 * 404/355-7010
<PAGE>
PREFERRED NETWORKS, INC.
INTERCONNECT/CO-LOCATION AIRTIME PRICE SHEET
SOUTHEAST REGION
REVISION DATE:
05/18/96
<TABLE>
<CAPTION>
----------------------------------------------------------
0-5000 5001-10,000 10,001-20,000 20,001-Above
----------------------------------------------------------
DIGITAL SERVICE Rate 1 Rate 2 Rate 3 Rate 4
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Local $**** $**** $**** $****
2400 ****
Expanded $**** $**** $**** $****
2400 ****
Regional $**** $**** $**** $****
2400 ****
- --------------------------------------------------------------------------------
ALPHA SERVICE
- --------------------------------------------------------------------------------
Local $**** $**** $**** $****
RESERVE CAPCODE FEES:
- --------------------------------------------------------------------------------
$**** $**** $**** $****
- --------------------------------------------------------------------------------
</TABLE>
NOTES:
- --------------------------------------------------------------------------------
Capcodes will be assigned in groups of *** and must be assigned by PNI to be
valid Capcodes showing any activity during the month will be charged as an
Active Capcode Above Airtime Rates are regressive
Volume Discount is based upon total number of units without respect ot category
Reserve Capcode Fees are charged when reserve capcode amount exceeds allotted
buffer Expanded, Regional and All Alpha Services must be 1200 or 2400 Baud
Alpha Service includes *** Calls, *** Characters per call; Overcalls billed at
$**** per call Expanded and Regional Service includes *** Calls; Overcalls
billed at $**** per call
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________________
DATE: _____________________________
- ---------------------------------------------
Originator: ___________________________
Pricing Systems: ___________________________
VP Sales:
- ---------------------------------------------
<PAGE>
PREFERRED NETWORKS, INC.
Interconnect/Co-Location Airtime Price Sheet
Southeast Region
Secondary Market
Atlanta
REVISION DATE: FREQUENCY
08/13/96 462,825
158.10
929,125
<TABLE>
<CAPTION>
------------------------------------------------------------
0-5000 5001-10,000 10,001-20,000 20,001-ABOVE
------------------------------------------------------------
DIGITAL SERVICE Rate 1 Rate 2 Rate 4
------------------------------------------------------------
<S> <C> <C> <C> <C>
LOCAL $**** $**** $**** $****
EXPANDED $**** $**** $**** $****
REGIONAL $**** $**** $**** $****
ALPHA SERVICE
- --------------------------------------------------------------------------------
LOCAL $**** $**** $**** $****
RESERVE CAPCODE FEES:
- --------------------------------------------------------------------------------
$**** $**** $**** $****
- --------------------------------------------------------------------------------
</TABLE>
NOTES;
- --------------------------------------------------------------------------------
Capcodes will be assigned in groups of *** and must be assigned by PNT to be
valid
Capcodes showing any activity during the month will be charged as an Active
Capcode
Above Airtime Rates are regressive
Volume Discount is based upon total number of units without respect to category
Reserve Capcode Fees are charged when reserve capcode amount exceeds allotted
buffer 512 and 2400 Baud service may not be available in all markets
Expanded, Regional and All Alpha Services must be 1200 or 2400 Baud
Alpha Services include *** Calls, *** Characters per call; Overcalls billed at
$**** per call
Expanded and Regional Coverage includes *** Calls; Overcalls billed at $**** per
call
- --------------------------------------------------------------------------------
CONTRACTING PRICING APPROVAL: _________________________
DATE: _________________________
_____________________________________________
Originator: __________________________
Pricing Systems: __________________________
VP Sales: [SIGNATURE ILLEGIBLE]
- ---------------------------------------------
<PAGE>
PREFERRED NETWORKS, INC.
Interconnect/Co-Location Airtime Price Sheet
Southeast Region
Secondary Market
Alabama
REVISION DATE: FREQUENCY
08/13/96 157.740
<TABLE>
<CAPTION>
------------------------------------------------------------
0-5000 5001-10,000 10,001-20,000 20,001-ABOVE
------------------------------------------------------------
DIGITAL SERVICE Rate 1 Rate 2 Rate 3 Rate 4
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Local $**** $**** $**** $****
Expanded $**** $**** $**** $****
Regional $**** $**** $**** $****
ALPHA SERVICE
- --------------------------------------------------------------------------------
Local $**** $**** $**** $****
RESERVE CAPCODE FEES:
- --------------------------------------------------------------------------------
$**** $**** $**** $****
- --------------------------------------------------------------------------------
</TABLE>
NOTES:
- --------------------------------------------------------------------------------
Capcodes will be assigned in groups of *** and must be assigned by PNI to be
valid
Capcodes showing any activity during the month will be charged as an Active
Capcode
Above Airtime Rates are regressive
Volume Discount is based upon total number of units without respect to category
Reserve Capcode Fees are charged when reserve capcode amount exceeds allotted
buffer 512 and 2400 Baud service may not be available in all markets
Expanded, Regional and All Alpha Services must be 1200 or 2400 Baud
Alpha Services include *** Calls, *** Characters per call; Overcalls billed at
$**** per call
Expanded and Regional Coverage includes *** Calls; Overcalls billed at $**** per
call
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _________________________
DATE: _________________________
- ---------------------------------------------
Originator: __________________________
Pricing Systems: __________________________
VP Sales: [SIGNATURE ILLEGIBLE]
- ---------------------------------------------
<PAGE>
PREFERRED NETWORKS, INC.
Interconnect/Co-Location Airtime Price Sheet
Southeast Region
Secondary Market
REVISION DATE: FREQUENCY
08/13/96 157,740
<TABLE>
<CAPTION>
------------------------------------------------------------
0-5000 5001-10,000 10,001-20,000 20,001-ABOVE
------------------------------------------------------------
<S> <C> <C> <C> <C>
Digital Service Rate 1 Rate 2 Rate 3 Rate 4
------------------------------------------------------------
Local $**** $**** $**** $****
Expanded $**** $**** $**** $****
Regional $**** $**** $**** $****
Alpha Service
- --------------------------------------------------------------------------------
Local $**** $**** $**** $****
Reserve Capcode Fees:
- --------------------------------------------------------------------------------
$**** $**** $**** $****
- --------------------------------------------------------------------------------
</TABLE>
Notes:
- --------------------------------------------------------------------------------
Capcodes will be assigned in groups of *** and must be assigned by PNT to be
valid
Capcodes showing any activity during the month will be charged as an Active
Capcode
Above Airtime Rates are regressive
Volume Discount is based upon total number of units without respect to category
Reserve Capcode Fees are charged when reserve capcode amount exceeds allotted
buffer 512 and 2400 Baud service may not be available in all markets
Expanded, Regional and All Alpha Services must be 1200 or 2400 Baud
Alpha Services include *** Calls, *** Characters per call; Overcalls billed at
$**** per call
Expanded and Regional Coverage includes *** Calls; Overcalls billed at $**** per
call
- --------------------------------------------------------------------------------
Contracting Pricing Approval: _________________________
Date: _________________________
- ---------------------------------------------
Originator: __________________________
Pricing Systems: __________________________
VP Sales: [SIGNATURE ILLEGIBLE]
- ---------------------------------------------
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT ATLANTA
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
--------------------------------------------------
0-300 301-600 601-900 901-1200 1200-ABOVE
-------------------------------------------------
DIGITAL SERVICE Rate 1 Rate 2 Rate 3 Rate 4 Rate 5
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greeting Competition
----------------------
D1-Basic Tone Fast Busy $**** $**** $**** $**** $****
D2 Tone Page Sent $**** $**** $**** $**** $****
D3-Standard Tone Company Name $**** $**** $**** $**** $****
D4-Promotional Enter# Company Name $**** $**** $**** $**** $****
D5 Reached# Company Name $**** $**** $**** $**** $****
D6 Name Company Name $**** $**** $**** $**** $****
D7-Custom Custom Company Name $**** $**** $**** $**** $****
- --------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICES HAS UNLIMITED CALL COUNTS INCLUDED
PNT RESERVES THE RIGHT TO DISCONNECT ABUSERS OVER *** CALLS PER MONTH
LATA NUMBER
- --------------------------------------------------------------------------------------------
Lata Number $****
- --------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS UNLIMITED CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- --------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- --------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- --------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- --------------------------------------------------------------------------------------------
------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- -------------------------------------------------------------------------------------------
800 Number $****
- -------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE; DOES NOT INCLUDE LOCAL DID
WITH SERVICE
800 NUMBER HAS *** CALL COUNTS; OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- --------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- --------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $*** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT ATLANTA
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 $****
N5 - N6 - N7 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALL INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICE RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED FREE OF CHARGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
___________________________________________
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
- -------------------------------------------
<PAGE>
PREFERRED NETWORK RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT AUGUSTA
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
----------------------------------------------------
0-300 301-600 601-900 901-1200 1200-ABOVE
----------------------------------------------------
DIGITAL SERVICE RATE 1 RATE 2 RATE 3 RATE 4 RATE 5
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greeting Completion
----------------------
D1-BASIC TONE FAST BUSY $**** $**** $**** $**** $****
D2 TONE PAGE SENT $**** $**** $**** $**** $****
D3-STANDARD TONE COMPANY NAME $**** $**** $**** $**** $****
D4-PROMOTIONAL ENTER# COMPANY NAME $**** $**** $**** $**** $****
D5 REACHED# COMPANY NAME $**** $**** $**** $**** $****
D6 NAME COMPANY NAME $**** $**** $**** $**** $****
D7-CUSTOM CUSTOM COMPANY NAME $**** $**** $**** $**** $****
- -------------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICE HAS *** CALL COUNTS INCLUDED
PNT RESERVES THE RIGHT TO DISCONNECT ABUSERS OF OVER **** CALLS PER MONTH
LATA NUMBER
- -------------------------------------------------------------------------------------------------
Lata Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- -------------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- -------------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICES LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- -------------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- -------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- -------------------------------------------------------------------------------------------------
800 Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE; DOES NOT INCLUDE LOCAL DID
WITH SERVICE
800 NUMBER HAS *** CALL COUNTS; OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- -------------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- -------------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $*** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT AUGUSTA
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
ACTIVE NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICE RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED ***
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
___________________________________________
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
___________________________________________
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT BIRMINGHAM
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
----------------------------------------------------
0-300 301-600 601-900 901-1200 1200-ABOVE
----------------------------------------------------
DIGITAL SERVICE RATE 1 RATE 2 RATE 3 RATE 4 RATE 5
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greeting Completion
----------------------
D1-Basic Tone Fast Busy $**** $**** $**** $**** $****
D2 Tone Page Sent $**** $**** $**** $**** $****
D3-Standard Tone Company Name $**** $**** $**** $**** $****
D4-Promotional Enter# Company Name $**** $**** $**** $**** $****
D5 Reached# Company Name $**** $**** $**** $**** $****
D6 Name Company Name $**** $**** $**** $**** $****
D7-custom Custom Company Name $**** $**** $**** $**** $****
- -------------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICE HAS *** CALL COUNTS INCLUDED
PNT RESERVES THE RIGHT TO DISCONNECT ABUSERS OF OVER **** CALLS PER MONTH
LATA NUMBER
- -------------------------------------------------------------------------------------------------
Lata Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- -------------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- -------------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- -------------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- -------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- -------------------------------------------------------------------------------------------------
800 Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE; DOES NOT INCLUDE LOCAL DID
WITH SERVICE
800 NUMBER HAS *** CALL COUNTS; OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- -------------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- -------------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT BIRMINGHAM
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 - N5 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
ACTIVE NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICE RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED FREE OF CHARGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
___________________________________________
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
___________________________________________
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT Columbus
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
0-300 301-600 801-900 901-1200 1200-ABOVE
----------------------------------------------------------------------------
DIGITAL SERVICE Rate 1 Rate 2 Rate 3 Rate 4 Rate 5
- ------------------------------------------------------------------------------------------------------
GREETING COMPLETION
------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
D1-Basic Tone Fast Busy $**** $**** $**** $**** $****
D-2 Tone Page Sent $**** $**** $**** $**** $****
D3-Standard Tone Company Name $**** $**** $**** $**** $****
D4-Promotional Enter # Company Name $**** $**** $**** $**** $****
D5 Reached # Company Name $**** $**** $**** $**** $****
D6 Name Company Name $**** $**** $**** $**** $****
D7-Custom Custom Company Name $**** $**** $**** $**** $****
- ------------------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICE HAS *** CALL COUNTS INCLUDED
PNI RESERVES THE RIGHT TO DISCONNECT ABUSERS OF OVER **** CALLS PER MONTH
LATA NUMBER
- ------------------------------------------------------------------------------------------------------
Lata Number $****
- ------------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- ------------------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- ------------------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- ------------------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- ------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- ------------------------------------------------------------------------------------------------------
800 Number $****
- ------------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE; DOES NOT INCLUDE LOCAL DID WITH SERVICE
800 NUMBER HAS *** CALL COUNTS; OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- ------------------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- ------------------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT COLUMBUS
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 - N5 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
ACTIVE NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICE RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED FREE OF CHARGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
___________________________________________
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
___________________________________________
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT MACON
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
----------------------------------------------------
0-300 301-600 601-900 901-1200 1200-ABOVE
----------------------------------------------------
DIGITAL SERVICE RATE 1 RATE 2 RATE 3 RATE 4 RATE 5
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greeting Completion
----------------------
D1-BASIC TONE FAST BUSY $**** $**** $**** $**** $****
D2 TONE PAGE SENT $**** $**** $**** $**** $****
D3-STANDARD TONE COMPANY NAME $**** $**** $**** $**** $****
D4-PROMOTIONAL ENTER# COMPANY NAME $**** $**** $**** $**** $****
D5 REACHED# COMPANY NAME $**** $**** $**** $**** $****
D6 NAME COMPANY NAME $**** $**** $**** $**** $****
D7-CUSTOM CUSTOM COMPANY NAME $**** $**** $**** $**** $****
- -------------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICE HAS *** CALL COUNTS INCLUDED
PNT RESERVES THE RIGHTS TO DISCONNECT ABUSERS OF OVER **** CALLS PER MONTH
LATA NUMBER
- -------------------------------------------------------------------------------------------------
Lata Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- -------------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- -------------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- -------------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- -------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- -------------------------------------------------------------------------------------------------
800 Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE; DOES NOT INCLUDE LOCAL DID
WITH SERVICE
800 NUMBER HAS *** CALL COUNTS; OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- -------------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- -------------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT MACON
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
ACTIVE NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICE RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED FREE OF CHARGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
___________________________________________
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
___________________________________________
<PAGE>
PREFERRED NETWORK RESELLER AIRTIME PRICE SHEET
REVISION DATE: SATELLINK-CONTRACT WASHINGTON
05/31/96 ACTIVE TELEPHONE NUMBERS
<TABLE>
<CAPTION>
----------------------------------------------------
0-300 301-500 601-900 901-1200 1200-ABOVE
----------------------------------------------------
DIGITAL SERVICE RATE 1 RATE 2 RATE 3 RATE 4 RATE 5
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greeting Completion
----------------------
D1-Basic Tone Fast Busy $**** $**** $**** $**** $****
D2 Tone Page Sent $**** $**** $**** $**** $****
D3-standard Tone Company Name $**** $**** $**** $**** $****
D4-promotional Enter# Company Name $**** $**** $**** $**** $****
D5 Reached# Company Name $**** $**** $**** $**** $****
D6 Name Company Name $**** $**** $**** $**** $****
D7-custom Custom Company Name $**** $**** $**** $**** $****
- -------------------------------------------------------------------------------------------------
LOCAL DIGITAL SERVICE HAS *** CALL COUNTS INCLUDED
PNI RESERVES THE RIGHT TO DISCONNECT ABUSERS 0F OVER **** CALLS PER MONTH
LATA NUMBER
- -------------------------------------------------------------------------------------------------
Lata Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC & STANDARD DIGITAL SERVICE
LATA NUMBER HAS *** CALLS INCLUDED, OVERCALLS BILLED AT $*** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
NUMERIC MESSAGE RETRIEVAL
- -------------------------------------------------------------------------------------------------
Numeric Message Retrieval $****
- -------------------------------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ONLY AVAILABLE WITH PROMOTIONAL AND CUSTOM DIGITAL SERVICE
ALPHA SERVICE
- -------------------------------------------------------------------------------------------------
Alphanumeric (A1) 1200 Baud $****
- -------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
ALPHA SERVICE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
ALPHA SERVICE DOES NOT ALLOW NETWORK COVERAGE
800 NUMBER
- -------------------------------------------------------------------------------------------------
800 Number $****
- -------------------------------------------------------------------------------------------------
ONLY AVAILABLE WITH BASIC AND STANDARD DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE, DOES NOT INCLUDE LOCAL DID
WITH SERVICE
800 NUMBER HAS *** CALL COUNTS, OVERCALLS BILLED AT $**** PER CALL
PAGE MEMO:
- -------------------------------------------------------------------------------------------------
V1-Voice/Display 20 Sec Greet/20 Sec Msg x 10/24 hrs $****
V2-Voice/Display 20 Sec Greet/20 Sec Msg x 20/48 hr $****
V3-Voice/Display 30 Sec Greet/30 Sec Msg x 20/48 hr $****
- -------------------------------------------------------------------------------------------------
PAGE MEMO SERVICES HAVE *** CALL COUNT; OVERCALLS BILLED AT $**** PER CALL
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
</TABLE>
<PAGE>
PREFERRED NETWORKS RESELLER AIRTIME PRICE SHEET
REVISION DATE : SATELLINK-CONTRACT WASHINGTON
05/31/96 ACTIVE TELEPHONE NUMBERS
------------------------------------------------------
------------------------------------------------------
NETWORK COVERAGES
- --------------------------------------------------------------------------------
N1 $****
N2 $****
N3 $****
N4 $****
- --------------------------------------------------------------------------------
PAGER MUST BE 1200 OR 2400 BAUD POCSAG
PAGER MUST HAVE A NETWORK CAPCODE
NETWORK COVERAGE ONLY AVAILABLE WITH DIGITAL SERVICE
RATE IS IN ADDITION TO DIGITAL SERVICE LISTED ABOVE
EXPANDED COVERAGE HAS *** CALLS INCLUDED; OVERCALLS BILLED AT $**** PER CALL
RESERVED NUMBERS:
- --------------------------------------------------------------------------------
Digital $****
Alpha $****
800 $****
- --------------------------------------------------------------------------------
ACTIVE NUMBERS AND TEMPORARILY DISCONNECTED NUMBERS WILL BE BILLED AT DIGITAL
SERVICES RATES
NUMBERS PERMANENTLY DISCONNECTED OR IN RESERVE POOL WILL BE BILLED AT RESERVE
RATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DETAILED BILLING: PROVIDED FREE OF CHARGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES: VOLUME DISCOUNT IS BASED UPON TOTAL NUMBER OF UNITS WITHOUT RESPECT TO
CATEGORY
EACH RESELLER WILL RECEIVE ******************* AT THE BASIC RATE
CAPCODES AND NUMBERS WILL BE ASSIGNED BY PREFERRED NETWORKS
SPECIAL PROMPT RECORDINGS ARE BASED UPON AVAILABILITY
- --------------------------------------------------------------------------------
CONTRACT PRICING APPROVAL: _____________________
DATE: _____________________
- -------------------------------------------
ORIGINATOR: _____________________
PRICING SYSTEMS: _____________________
VP SALES:
- -------------------------------------------
<PAGE>
PREFERRED NETWORKS, INC. SATELLINK, INC.
- --------------------------------------------------------------------------------
AIRTIME RATES INTERCONNECT / CO-LOCATE
REVISION: 1/15/98
INTERCONNECT / CO-LOCATE RATE STRUCTURE FOR SATELLINK
- -----------------------------------------------------
157.74 MHZ NETWORK FOR GEORGIA MARKETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
RATE 1 RATE 2 RATE 3 RATE 4 RATE 5 RATE 6 RATE 7
- -----------------------------------------------------------------------------------------------------------
0-5,000 5,001- 10,001- 20,001- 30,001- 50,001- 80,001
10,000 20,000 30,000 50,000 80,000 AND ABOVE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIGITAL SERVICE
Local Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Expanded Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Regional Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
ALPHA SURCHARGE
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Alpha local only
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Satellink is currently billed at Rate 3.2400 baud may not be available in all
markets.
157.740, 462.825, 158.10 MHZ NETWORK FOR SOUTHEAST REGION OUTER MARKETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
RATE 1 RATE 2 RATE 3 RATE 4 RATE 5 RATE 6 RATE 7
- -----------------------------------------------------------------------------------------------------------
0-5,000 5,001- 10.001- 20,001- 30,001- 50,001- 80,001
10,000 20,000 30,000 50,000 80,000 AND ABOVE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIGITAL SERVICE
Local Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Expanded Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Regional Service
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
ALPHA SURCHARGE
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
Alpha local only
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Satellink is currently billed at Rate 3. 2400 baud may not be available in
all markets.
929.1125 MHZ NETWORK FOR SOUTHEAST MARKETS (FLORIDA AND GEORGIA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
RATE 1 RATE 2 RATE 3 RATE 4 RATE 5 RATE 6 RATE 7
- -----------------------------------------------------------------------------------------------------------
0-5,000 5,001- 10,001- 20,001- 30,001- 50,001- 80,001
10,000 20,000 30,000 50,000 80,000 AND ABOVE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIGITAL SERVICE
Local 1200 baud **** **** **** **** **** **** ****
Local 2400 baud **** **** **** **** **** **** ****
ALPHA SERVICE
1200 baud **** **** **** **** **** **** ****
2400 baud **** **** **** **** **** **** ****
- -----------------------------------------------------------------------------------------------------------
</TABLE>
APPROVED: [SIGNATURE ILLEGIBLE] DATE: 1/15/98
----------------------------- -----------------
Gary Park, Vice President of Sales
and Marketing
<PAGE>
EXHIBIT 10.16
DISTRIBUTION AGREEMENT
----------------------
This Agreement is made and entered into between CUE Paging
Corporation, a Delaware corporation, with its principal offices at 2737 Campus
Drive, Irvine, California ("CUE") and Satellink Paging, Inc., with its principal
place of business at 12 Perimeter Center East, Suite 1200, Atlanta, Georgia (the
"Distributor").
WHEREAS, CUE provides National Telecommunication Services using 57 KHz
subcarriers of FM broadcast stations and offers nationwide network services
which qualify under Part 90 of the Federal Communications Commission's Rules and
Regulations;
AND WHEREAS, the Distributor offers cellular telephone and/or paging
services and wishes to purchase Airtime and Network services from CUE to offer
nationwide and regional paging services in the Metropolitan Statistical Areas
("MSA"), indentified in Schedule "A;"
NOW THEREFORE, in consideration of the foregoing and the
representations and warranties contained in this Agreement, the parties agree as
follows:
1. Exclusivity. CUE hereby grants to the Distributor the exclusive
-----------
right to purchase Airtime and Network services from CUE in the MSA for the
purpose of providing regional paging and the non-exclusive right to purchase
Airtime and Network services for the purpose of providing nationwide paging in
the MSA.
1.1 The Distributor agrees:
(a) not to provide paging services using the CUE Network to
subscribers not located in the MSA;
(b) not to use FM subcarrier pagers other than pagers supplied
by CUE pursuant to paragraph 8 of this Agreement during the
first two (2) years of this Agreement; and
(c) not to use an FM subcarrier Network other than the CUE
Network or to purchase Airtime and Network services from any
supplier other than CUE during the term of this Agreement.
2. Network Charges. The Distributor agrees to purchase Network
---------------
services for FM subcarrier paging exclusively from CUE and to pay CUE pursuant
to Schedule "B":
<PAGE>
(a) A one-time installation charge of $____________, payable on
execution of this Agreement or on the date the regional FM
subcarrier transmitter commences, whichever is later; and
(b) a monthly charge of $________________.
3. Airtime Charges. The Distributor agrees to purchase Airtime on the CUE
---------------
Network at a rate of $*** per month per pager for nationwide service and $***
per month per pager for regional service provided that:
(a) the minimum average Airtime charge per pager shall be at least
$*** per month; and
(b) The minimum amount paid to CUE for Airtime by the Distributor
shall be $*** per month per MSA.
3.1 The Distributor agrees to provide within fifteen (15) days after
execution of this Agreement a list of all pager cap codes in service in the MSA
and to provide the additions and deletions on the 30th day of each month
thereafter during the term of this Agreement.
4. Price Increases. It is agreed that the monthly Airtime and Network
---------------
charges set out in Paragraphs 2 and 3 above shall remain constant for year 1990
at the prices set out therein, Thereafter, these charges may be increased at the
sole discretion of CUE provided that the price increase in any year will not
exceed the increase in the United States All Cities Consumer Price Index for
that year over the previous year.
5. Telephone Charges. The Distributor agrees to pay CUE the amount of
-----------------
$*** per month for each regional pager processed through CUE's paging terminal
to reimburse CUE for long distance phone charges incurred by CUE in providing
regional service to the Distributor.
6. Effective Date. The monthly Network charge referred to in Paragraph
--------------
2(b) and the Airtime charges referred to in Paragraphs 2(b), 3 and 5 commence on
the date this Agreement is executed or on the date the regional FM subcarrier
transmitter commences, whichever is later.
7. Cooperative Marketing Program. The Distributor and CUE each agree to
-----------------------------
fund a national advertising program by an
2
<PAGE>
amount equal to $*** per month per pager using the CUE Network in the MSA.
This amount shall be paid monthly and shall be used to fund national marketing
activities of mutual benefit of the Distributor and CUE.
8. Equipment Supply. CUE agrees to supply the Distributor with
----------------
pagers which operate on the CUE Network at a price of $*** per pager, payable
within thirty (30) days of shipment by CUE of such pagers, provided that the
Distributor:
(a) provides CUE with monthly ninety (90) day rolling forecasts
indicating the number of pagers that the Distributor desires
to purchase or lease from CUE;
(b) purchases FM subcarrier pagers exclusively from CUE during
the first two (2) years of this Agreement; and
(c) does not resell or re-lease the pager to any other party
except end users or supply pagers to subscribers not located
in the MSA identified in Schedule "A,"
8.1. Equipment Lease. CUE shall also supply such pagers on a
---------------
thirty-six (36) month lease at $*** per month provided that:
(a) the Distributor meets the usual commercial credit
requirements imposed by third party leasing organizations;
and
(b) the Distributor meets all the requirements specified in
paragraphs 8(a), 8(b) and 8(c).
8.2 Rolling Forecast. In each rolling forecast, the number of pagers
----------------
forecasted for the first thirty (30) days shall be 100% firm, the number of
pagers forecasted for the second thirty (30) days shall be 75% firm and the
number of pagers forecasted for the third thirty (30) day period shall be 50%
firm.
8.3 The rolling forecast is to be provided by the Distributor to CUE
by the 15th day of each and every month during the term of this Agreement. The
first rolling forecast will be provided to CUE on the fourteenth (14th) day
after the execution of this Agreement.
3
<PAGE>
8.4 Price Increases. The price for the pager, specified in Paragraph
---------------
6 above, shall remain constant in the years 1990 and 1991 and thereafter may be
changed at the sole discretion of CUE provided that the price change shall not
exceed the change in the United States All Cities Consumer Price Index for each
year after 1991 over 1990.
9. Regular Warranty. CUE warrants all pagers supplied hereunder
----------------
against defects in material and workmanship. CUE further warrants that the
pagers will respond correctly to at least forty-eight (48) of fifty (50) pages
when tested under laboratory conditions (the performance standard). CUE will
repair or replace all pagers sold hereunder that are defective in material or
workmanship warranted under normal conditions of service (defined as including
normal wear and tear, but excluding abuse or improper treatment) or fail to meet
the performance standard at any time within one year of delivery. CUE and the
Distributor agree that the failure of products to meet the performance standard
either when delivered to the buyer or after a period of service will impose
costs on the Distributor very difficult or impossible to determine precisely.
Accordingly, CUE agrees to pay the Distributor liquidated damages of $*** for
each unit in excess of *** of those delivered in any month that fails to meet
the performance standard when received and further agrees to pay the Distributor
liquidated damages of $*** for each unit in excess of *** of those delivered
in any month that under normal conditions of service fails to meet the
performance standard within one year of receipt by the buyer.
9.1 Extended Warranty. CUE will agree to extend the foregoing
-----------------
warranty for one year periods up to a total of three years for an annual fee not
to exceed *** of the Distributor's original sales price.
9.2 Limitation of Warranty. The aforesaid warranties are expressly
----------------------
in lieu of all other conditions and warranties, express, implied or statutory,
including without limitation any implied warranties of merchantability or of
fitness and all other obligations and liabilities of CUE with respect to any
defect or deficiency applicable to or resulting directly or indirectly from the
products supplied hereunder whether in contact or in tort or otherwise. CUE's
warranty liability shall under no circumstances exceed the invoice price of any
product for which the warranty claim is made, nor shall CUE in any event be
liable for consequential or special damages or lost profits. In the absence of
evidence satisfactory to CUE as to the actual date of sales of any product for
use, such date shall for the purpose of this
4
<PAGE>
paragraph be deemed to be sixty (60) days from the date of sale to the
Distributor.
10. Payment Terms. Payment for equipment or services will be due
-------------
within thirty (30) days of receipt and in the event of any failure to pay within
this term the Distributor shall provide CUE with a Letter of Credit in an amount
equal to all future pager orders, which Letter of Credit shall be implemented
prior to shipment.
10.1 The Distributor agrees to pay CUE interest on any amounts unpaid
after the thirty (30) day period at the rate of prime plus *** percent.
11. National Accounts. The Distributor agrees that it will
-----------------
participate in the National Accounts Program described in Paragraph 11.1 below.
11.1 The Distributor agrees that the National Accounts specified in
the attached Schedule "C" shall be billed by CUE directly and such National
Accounts shall be CUE-owned subsribers provided that:
(a) in the event the Distributor sells paging services in its
MSA to a National Account, the Distributor shall receive a
one-time fee of $*** per National Account, if
(i) the account has not already been signed by CUE as a
National Account;
(ii) the Distributor signs the National Account to an
agreement on CUE's National Account Program; and
(iii) the aggregate orders in the first six (6) months are
for a minimum of *** pagers;
(b) the Distributor will also receive a commission of $*** per
month for each National Account pager sold and installed in
the Distributor's MSA so long as such pagers are active and
paid for;
(c) the Distributor will receive a commission of $*** per month
for each pager sold to a
5
<PAGE>
National Account signed by the Distributor where the pager
is located outside the MSA; and
(d) the Distributor will receive a service fee of $*** per
month per pager for each National Account pager shipped into
the MSA as a result of the sale by CUE or another
Distributor to such National Account.
12. National Message Center. The Distributor agrees to provide all
-----------------------
nationwide subscribers with access to the CUE National Message Center. The
Distributor shall pay to CUE an amount equal to $*** per minute for use of such
services.
13. Default. In the event the Distributor defaults with respect to
-------
any of the terms or conditions of this Agreement, including all amendments,
schedules and the two promissory notes attached hereto and incorporated herein
by reference, or fails to make any payment required hereunder for thirty (30)
consecutive days, upon notice from CUE, the Distributor shall transfer to CUE
all of the Distributor's current subscribers (or customers) using or being
provided with nationwide or regional services in the MSA. All contracts, billing
data and other pertinent information shall be transferred to CUE within ten (10)
days of the notice from CUE.
13.1 Upon transferring current subscribers to CUE, and CUE finding
such subscribers acceptable, the Distributor shall receive compensation equal to
$*** per pager, which compensation shall be first applied to any outstanding
indebtedness to CUE. In the occurrence of an Event of Default, the Distributor
not only agrees to transfer the Distributor's subscribers to CUE as provided for
in paragraph 13 above, but also agrees to cease using any CUE service mark,
trademark and/or name in the MSA.
14. Other Agreements. The Distributor agrees not to enter into any
----------------
agreements relating to paging except local paging with companies engaged in
supply of paging services without CUE's prior written approval.
15. Government Regulations. Services provided under this Agreement
----------------------
by both parties shall be in accordance with all applicable rules and regulations
of the Federal Communications Commission and any applicable State Regulatory
Commission.
6
<PAGE>
16. Control of Network. It is understood that the control and
------------------
responsibility for the standards and quality of nationwide and regional data
distribution services supplied by CUE shall be retained, rest and remain solely
the prerogative and obligation of CUE. No provision of this Agreement shall be
construed as vesting in the Distributor any control whatsoever of CUE's radio
communication facilities and operations. The Distributor shall promptly, upon
the day of receipt, report to CUE any complaints received from subscribers
relating to the nationwide or regional services provided by CUE under this
Agreement.
17. Service. Each party shall make reasonable efforts to provide
-------
continuous, uninterrupted and errorless services to the other hereunder, but in
no event shall the providing party be liable to the receiving party for damages
incurred by it or its subscribers on account of any failure to provide such
services.
18. No Representations or Warranties. Except as provided in Paragraph
--------------------------------
9 of this Agreement, the Distributor shall not make any representations or
warranties, either express or implied, in regard to the nationwide and regional
services or pagers provided by CUE hereunder. The nationwide and regional
services and/or pagers shall carry only such warranties as shall be provided in
writing by CUE. CUE MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE NATIONWIDE AND REGIONAL SERVICES OR THE PAGERS PROVIDED
HEREUNDER.
19. Independent Contractors. The respective parties hereto are
-----------------------
independent contractors and nothing herein shall be deemed to create a
relationship of partnership, joint venture, principal and agent or franchisee.
This Agreement does not entitle either party to make commitments of any kind for
the account of the other party as agent or otherwise or to assume or create any
obligations, express or implied, on behalf of the other party, or to bind the
other party in any respect, and each party agrees to, and will, indemnify and
hold the other party harmless in this regard.
20. Coverage of Signal. CUE's Nationwide Network shall provide
------------------
adequate coverage for nationwide and regional services in the MSA to the
Distributor. On execution of this Agreement, the Distributor shall have
satisfied itself that coverage being provided by CUE in the MSA is adequate to
meet the business requirements of the Distributor. CUE shall be under no
obligation to expand the CUE Network or the paging signal in the
7
<PAGE>
MSA unless such obligation is agreed to in writing by the parties and attached
hereto as a Schedule to this Agreement.
21. Termination. If the Distributor violates any provisions of this
-----------
Agreement, including all amendments and exhibits hereto, or fails to perform
any obligations hereunder and if upon being given thirty (30) days' written
notice by CUE of such violation, the Distributor does not correct any such
violation, or if such violation is willful, then CUE shall have the right of
cancellation of this Agreement by giving the Distributor sixty (60) days'
written notice. If this occurs, CUE shall have the right to require the
Distributor to transfer its subscribers to CUE in accordance with the provisions
of Paragraph 13 above. Such an occurrence will constitute an Event of Default as
defined in the promissory notes copies of which are attached hereto and entitles
CUE to all rights and remedies provided herein.
21.1 If CUE violates any provision of this Agreement or fails to
perform any obligations hereunder and if upon being given thirty (30) days'
written notice by the Distributor of such violation CUE does not correct any
such violation, or if such violation is willful, then the Distributor shall have
the right of cancellation of this Agreement by giving CUE sixty (60) days'
written notice.
21.2 Notwithstanding the provisions of Paragraph 21 above, this
Agreement shall automatically terminate, at the option of CUE, upon the
occurrence of (1) the Distributor ceasing to provide nationwide or regional
services hereunder for any reason, (2) the Distributor making any general
assignment or trust mortgage for the benefit of creditors or is adjudged a
bankrupt, or (3) transfer of ownership or control of the Distributor. In such
event, CUE shall have an immediate right to cancel this Agreement.
21.3 The parties recognize that the services offered by both parties
are communications services and that the termination of this Agreement cannot be
permitted to interfere with the continuity of such services to all subscribers.
Therefore, termination of this Agreement shall be effected in such "best
efforts" manner by both parties as to avoid, insofar as possible, any
interruption of services to subscribers. Provided, however, that if upon default
the Distributor does not transfer the subscribers to CUE as provided in
Paragraph 13 above, CUE may immediately deactivate or invalidate the
Distributor's subscribers upon notice to the Distributor.
8
<PAGE>
22. Discontinuance of Operations. In the event that CUE decides for
----------------------------
any reason to discontinue Network operations or services provided hereunder, CUE
shall:
(a) give the Distributor at least ninety (90) days' notice of
discontinuance of operation;
(b) if requested, assign any FM subcarrier agreements used to
provide service in the MSA to the Distributor; and
(c) offer to sell the Distributor, at the then depreciated cost,
any equipment located at the radio station, necessary to
operate on the FM subcarrier paging system.
23. Tradenames. The Distributor shall provide nationwide and
----------
regional paging services under its own name provided that whenever the
Distributor advertises paging services the advertisement shall contain the
following logo:
[LOGO OF CUE APPEARS HERE]
24. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally or by certified
mail, return receipt requested, or mailed to the parties at the following
addresses:
If to the Distributor: Satellink Paging, Inc.
Attention: President
12 Perimeter Center East
Suite 1200
Atlanta, Georgia 30346
With a Copy To: V. Scott Killingsworth
Powell, Goldstein, Frazer & Murphy
1100 C & S National Bank Building
35 Broad Street
Atlanta, Georgia 30335
9
<PAGE>
If to CUE: CUE Paging Corporation
Attention: President
2737 Campus Drive
Irvine, California 92715
25. Assignment. This Agreement and the rights granted may not be
----------
assigned or transferred in whole or in part by the Distributor without prior
written consent of CUE. Such consent shall also be required in the event that
the controlling shareholder interest in the Distributor changes. This Agreement
shall be binding upon and adhere to the benefit of the parties hereto and their
approved successors and assigns.
26. Severability. If any of the provisions contained in this Agreement be
------------
deemed invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired hereby.
27. Miscellaneous. This Agreement, including all amendments, schedules and
-------------
two (2) attached promissory notes which are hereby incorporated by reference:
(a) constitutes the entire Agreement between the parties pertaining
to the subject matter hereof and supersedes all prior agreements
and understandings, both written and oral. Any variation of this
Agreement must be made in writing and signed by both CUE and the
Distributor;
(b) except as expressly stated herein, is not intended to and shall
not confer upon any other person any rights or remedies hereunder
or otherwise with respect to the subject matter hereof; and
(c) shall be governed by the laws of the State of New York.
28. Term. The term of this Agreement if ten (10) years, subject to renewal
----
for a further ten (10) year term at the option of either party if the
Distributor is not in default in any payment of or terms and conditions of
this Agreement at the renewal date.
29. Arbitration. All disputes arising in connection with this Agreement
-----------
shall be finally settled under the Rules of
10
<PAGE>
Conciliation and Arbitration of the International Chamber of Commerce by three
(3) arbitrators appointed in accordance with the said Rules. The arbitration
shall be held in New York, New York.
IN WITNESS wherever the parties hereto have caused this Agreement to
be executed by their duly authorized officers this 2nd day of April, 1990.
CUE PAGING CORPORATION
By: Gordon E. Kaiser
________________________ -----------------------------------
Witness Title: Chairman & Chief Executive Officer
-----------------------------------
SATELLINK PAGING, INC.
By: Jerry W. Mayfield
________________________ -----------------------------------
Witness Title: Executive Vice President
-----------------------------------
11
<PAGE>
SCHEDULE "A"
------------
REGION
Metropolitan Statistical Area (MSA)
- -------------------------------------
1. Anniston, AL
2. *Birmingham, AL
3. Dothan, AL
4. *Florence, AL
5. Gadsden, AL
6. *Huntsville-Decatur, AL
7. *Mobile, AL
8. Montgomery, AL
9. *Tuscaloosa, AL
10. Albany, GA
11. Athens, GA
12. Atlanta, GA
13. Augusta, GA
14. Columbus, GA
15. Macon-Warner Robins, GA
16. Svannah, GA
17. *Asheville, NC
18. *Burlington, NC
19. Charlotte-Gastonia-Rockhill, NC
20. Fayetteville, NC
21. Greensboro-Winston-Salem-High Point, NC
22. Hickory, NC
23. Jacksonville, NC
24. Raleigh-Durham, NC
25. *Wilmington, NC
26. Anderson, SC
27. Charleston, SC
28. Columbia, SC
29. *Florence, SC
30. Greenville-Spartanburg, SC
31. *Biloxi-Gulfport, MS
32. *Jackson, MS
33. *Pascagoula, MS
????? on-MSA Markets
- -------------------
Baxley, GA 12. *Bude-Natchez, MS
Burnswick/Waycross, GA 13. *Columbus/Starkville, MS
Manchester, GA 14. *Greenwood, MS
Moultrie, GA 15. *Laurel, MS
Rockmart/Rome/Dalton, GA 16. *Oxford, MS
Valdosta 17. *Tupelo, MS
*Vidalia, GA
*Forest City, NC
*Lexington, NC
Washington/Greenville, NC
Evergreen, AL
Distributor will have operational within 120 days.
CUE has right to sell to MCCA within 120 days, as provided for in Paragraph
17 of the Amendment to the Distribution Agreement.
<PAGE>
SCHEDULE "B"
------------
NETWORK CHARGES
<TABLE>
<CAPTION>
MSA POPULATION MSA INSTALLATION MONTHLY
Class [000] Group Charge Charge
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A 6,000 plus 1 - 4 *** ***
B 4,000-5,999 5 - 7 $*** ***
C 2,500-3,999 8 - 13 $*** $***
D 1,000-2,499 14 - 37 $*** $***
E 500-999 38 - 74 $*** $***
F 250-499 75 - 132 $*** $***
G 100-249 133 - 258 $*** $***
H 50-99 259 + $*** $***
I 30-49 N/A $*** $***
</TABLE>
*Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
13
<PAGE>
AMENDMENT
TO THE DISTRIBUTION AGREEMENT
DATED APRIL 2, 1990
This Amendment amends that certain Distribution Agreement dated April
2, 1990 between CUE Paging Corporation and Satellink Paging, Inc. (the
Distribution Agreement as herein amended is referred to herein as the
"Agreement").
1. The Agreement is contingent upon CUE and Satellink entering into
a mutually acceptable Financing Agreement, which Agreement shall become Schedule
"C" to the Agreement and shall be incorporated in the Agreement by reference.
2. CUE agrees to waive the payment provided under Paragraph 2 of the
Agreement on the condition that:
(a) Satellink retains ownership of the SCA generator equipment
located in the MSA identified in Schedule "A" of the
Agreement;
(b) Satellink retains the subcarrier leases applicable to these
MSAs and makes all necessary payments thereon to the
broadcasters/licensees;
(c) Satellink allows CUE to distribute nationwide paging signals
over the local subcarrier without charge;
(d) Satellink allows CUE to distribute non-paging traffic over
the local subcarrier without charge provided such traffic is
off-peak, provided, however, that paging traffic will have
priority over non-paging traffic;
(e) In the event that Satellink decides for any reason to
discontinue operations or services provided hereunder,
Satellink shall:
(i) give CUE at least ninety (90) days' notice of
discontinuance of operation;
(ii) if requested, assign any FM subcarrier agreements
used to provide service in the MSA to CUE; and
<PAGE>
(iii) offer to sell CUE, at the then depreciated cost,
any equipment located at the radio station,
necessary to operate on the FM subcarrier paging
system; and
(f) In the event that Satellink makes any general assignment or
trust mortgage for the benefit of creditors or is adjudged a
bankrupt, Satellink shall:
(i) give CUE at lease ninety (90) days' notice of
discontinuance of operation;
(ii) if requested, assign any FM subcarrier agreements
used to provide service in the MSA to CUE; and
(iii) offer to sell CUE, at the then depreciated cost,
any equipment located at the radio station
necessary to operate on the FM subcarrier paging
system.
3. (a) Paragraph 1 to the Agreement is hereby amended to provide
that the Distributor's exclusive right to purchase Airtime
and Network services for regional paging is subject to the
pre-existing contracts that CUE has entered into with
respect to regional paging listed on Schedule "D" hereto.
(b) With respect to nationwide paging services to customers in
the Distributor's MSA, (i) the pricing and discounts made
available by CUE to the Distributor will equal that made
available by CUE to any other distributor(s) and/or any
other national marketing contractor(s), and (ii) then either
the Distributor will receive a rebate from CUE, or such
other nationwide distributor(s) or national marketing
contractor(s) will be assessed an additional charge by CUE,
to adjust for the additional regional costs that Distributor
pays.
2
<PAGE>
4. Paragraph 1.1(a) of the Agreement is hereby amended to provide
that the Distributor may nevertheless continue to provide paging services to
those customers in the Distributor's client base as of April 1, 1990 that are
not located in the MSA. A list of each such customer is attached hereto as
Schedule "E."
5. For the purposes of this Agreement, (i) the Metropolitan
Statistical Areas referred to in Schedule A hereto shall mean cellular
Metropolitan Communications Commission; and (ii) a region, for delimiting
regional paging, shall mean any area not to exceed five (5) contiguous states
unless agreed to in writing.
6. Paragraph 7 of the Agreement is amended to provide that national
marketing activities shall be directed solely to publications and events
broadcast, disseminated or advertised nationwide. Sales leads resulting from
such national marketing activities that pertain to potential customers located
in the Distributor's MSA will be given to the Distributor.
7. Paragraph 8(c) of the Agreement is further amended to provide
that the Distributor may nevertheless sell or lease pagers and airtime (i) to
those authorized resellers listed in Schedule F, provided that the authorized
resellers will restrict their activities to those MSA's listed in Schedule F and
that if such authorized resellers fail to so restrict their activities the
Distributor will immediately terminate its relationship with that authorized
reseller, (ii) to those customers not located in the MSA that are in the
Distributor's existing client base, which customers are listed on Schedule E,
and (iii) to Arch Communications ("Arch"), provided that not later than 120 days
after the date hereof (as such period may be extended as hereinafter provided)
Distributor shall either terminate its existing Distribution Agency Agreement
with Arch or obtain from Arch an amendment to such agreement to provide that all
sales of Distributor's products and services by Arch thereunder shall be to end
users who shall be the direct customers of Distributor. The 120 days period
specified in clause (iii) shall be extended by CUE for up to an additional sixty
(60) days upon request of the Distributor subject to approval of such extension
by any third parties whose consent thereto may be required by the terms of any
agreements with such third parties to which CUE is a party. If Distributor shall
fail to terminate the Distribution Agency Agreement or to obtain the agreement
of Arch to the amendment thereof within the time and as provided above, then
upon the lapse of such time period, Distributor shall release all rights
3
<PAGE>
and interest in distributing, selling or promoting the products and services of
CUE within the MSA's located in the states of North Carolina and South Carolina
by executing all documents necessary for such release; and the principal balance
then remaining under the Distributor's five-year-term promissory note of even
date herewith in favor of CUE shall be reduced by a credit equal to the sum of
the fees paid by the Distributor with respect to North Carolina and South
Carolina plus the Distributor's start-up and buildout costs incurred in
connection therewith. Distributor shall provide adequate proof of fees paid and
start-up and buildout costs incurred. CUE covenants and agrees that, if
Distributor shall release its rights and interest with respect to the states of
North Carolina and South Carolina as above provided, CUE will not, for the
period of one (1) year following the effective date of such release, enter into
any Distribution Agreement or agreement or arrangement substantially similar
thereto with any entity that was on April 2, 1990 or at any time thereafter a
distributor or reseller of Distrubutor in any MSA located in either North
Carolina or South Carolina.
8. Paragraph 11.1 of the Agreement is amended to provide that with
respect to Kodak the parties will mutually agree on variations in the National
Account program that may be necessary to provide service to Kodak. Variations in
the National Account program for other subscribers is the Distributor's current
customer base will be discussed and considered by the Parties.
9. Paragraphs 13 and 13.1 of the Agreement are amended to provide
that, upon the transfer to CUE of the Distributor's current subscribers, the
compensation shall be the fair market value of such subscriber base as
determined by the mutual agreement of the parties or, failing such agreement,
determined by arbitration in accordance with Section 29 of the Agreement. The
$*** per pager paid by CUE upon such transfer shall be applied against the
fair market value so determined, and CUE shall promptly pay to the Distributor
the amount by which such fair market value exceeds $*** per pager, or the
Distributor shall refund to CUE the amount by which $*** per pager exceeds
such fair market value, as the case may be.
10. Paragraph 14 of the Agreement is amended to provide that the
Distributor may nevertheless enter into agreements to provide solely local
paging services without CUE's approval.
11. Paragraph 16 of the Agreement is amended to provide that the
control and responsibility for the equipment
4
<PAGE>
owned or leased by the Distributor shall be retained, rest and remain solely the
prerogative and obligation of the Distributor. No provision of this Agreement
shall be construed as vesting in CUE any control whatsoever of the Distributor's
communication facilities and operations, absent an Event of Default or
termination of services by the Distributor.
12. (a) Paragraph 20 of the Agreement is amended to provide that the
Distributor may expand its system in the MSA in its sole
discretion and at its sole cost.
(b) Paragraph 20 of the Agreement is amended to provide that, if
the traffic over the CUE Network reaches *** of capacity,
CUE will adjust its nationwide and regional service
distribution so as to optimize service.
13. The parties agree the Distributor shall attempt to raise, within
120 days of the date of this Agreement, new common equity funding for the
Distributor equal to at least *** percent of the total debt of the
Distributor on the date of this Agreement, which shall be in the form of cash
invested for the issuance of additional shares of Distributor's common or
preferred stock. If the Distributor is unable to obtain such additional equity
funds, it shall, at its option, either:
(a) release all rights and interest in distributing, selling or
promoting the products and services of CUE within the MSA's
located in the states of North Carolina and South Carolina
by executing all documents necessary for such release; and
the principal balance then remaining under the Distributor's
five-year-term promissory note of even date herewith in
favor of CUE shall be reduced by a credit equal to the sum
of the fees paid by the Distributor with respect to North
and South Carolina plus the Distributor's start-up and
buildout costs incurred in connection therewith. Distributor
shall provide adequate proof of fees paid and start-up and
buildout costs incurred; or,
(b) Immediately reduce its debt to CUE, evidenced by the
Promissory Note, attached hereto as Exhibit "___" and
incorporated herein by
5
<PAGE>
reference, by the sum of *** Dollars.
14. The Distributor shall have a period of 120 days within which to
install the equipment for the provision of service to those Metropolitan
Statistical Areas in North Carolina, South Carolina and Alabama that are marked
with an asterisk on Schedule "A" to the Distribution Agreement. As to each such
Metropolitan Statistical Area with respect to which the Distributor does not
satisfy the foregoing requirement, the Distributor shall relinquish and reconvey
to CUE the Distributor's rights and interest in distributing, selling or
promoting the products and services of CUE within such Metropolitan Statistical
Areas and the principal balance then remaining under the Distributor's
five-year-term promissory note of even date herewith in favor of CUE shall be
reduced by a credit equal to the fees paid by the Distributor attributable to
such relinquished Metropolitan Statistical Areas.
15. Paragraph 1.1(c) is hereby amended to provide that if CUE Airtime
and Network services should suffer a lack of capacity, the Distributor shall
have the right to arrange additional Airtime and Network services through other
sources, provided that the Distributor notifies CUE in working of any lack of
capacity which Distributor believes exists or will exist at least 120 days
before utilizing any other such sources. Lack of adequate capacity shall be
deemed to exist if the response time between a completed call to the paging
switch and notification of the pager exceeds three (3) minutes at peak time of
day as verified by an independent engineer.
16. Paragraph 1.1(c) is hereby amended to provide that if CUE Airtime
and Network services should suffer a lack of capacity, the Distributor shall
have the right to arrange additional Airtime and Network services through other
sources, provided that the Distributor notifies CUE in working of any lack of
capacity which Distributor believes exists or will exist at least 120 days
before utilizing any other such sources. Lack of adequate capacity shall be
deemed to exist if the response time between a completed call to the paging
switch and notification of the pager exceeds three (3) minutes at peak time of
day as verified by an independent engineer.
17. (a) The parties agree that CUE, for a period of 120 days from
the date hereof, will attempt to sell all distribution
rights to its products and services within the state of
Mississippi to Mobile Communication
6
<PAGE>
Corporation of America ("MCCA"). If such rights are sold,
the principal balance then remaining due under the
Distributor's five-year-term promissory note of even date
herewith shall be reduced by the total cost of all capital
expenditures made by Distributor within the state of
Mississippi and by any and all franchise or affiliation fees
paid by Distributor. Distributor shall provide satisfactory
proof of the amount of such capital expenditures, franchise
and affiliation fees to CUE. Any amount received by CUE as
an affiliation fee for distribution rights formerly held by
Distributor in Mississippi in excess of the affiliation fee
paid by Distributor shall be paid to Distributor by CUE.
(b) If CUE fails to sell such distribution rights within 120
days, those rights shall continue in Distributor, provided
that Distributor agrees to establish operational facilities
in the following markets within one hundred eighty (180)
days of the date hereof:
1. Bude-Natchez, MS
2. Columbus/Starkville, MS
3. Greenwood, MS
4. Laurel, MS
5. Oxford, MS
6. Tupelo, MS
If Distributor will not agree to establish such facilities within one hundred
eighty (180) days of the date hereof or fails to establish such facilities
--
within one hundred eighty (180) days of the date hereof, distribution rights for
CUE's products and services in the state of Mississippi will be transferred to
CUE by Distributor for an amount determined and paid in accordance with the
terms outlined in Paragraph 17 (a).
18. All schedules contemplated in the Agreement or in this Amendment
that are not attached upon the execution hereof shall be prepared in good faith
and attached to the originals of such documents within fourteen (14) days after
the execution hereof, whereupon such schedules shall automatically be
incorporated therein.
7
<PAGE>
19. All rights and remedies provided either party to the Agreement in
the event of default or termination of services, whether contained in the
Agreement, its Amendments or its exhibits, shall survive the termination of the
Agreement.
AGREED TO AND ACCEPTED this 2nd day of April, 1990.
CUE PAGING CORPORATION
/s/ K. J. Smith By: /s/ Gordon E. Kaiser
- --------------- ---------------------------
Witness Title: Chairman and Chief Executive Officer
-------------------------------------
SATELLINK PAGING, INC.
By: /s/ Jerry W. Mayfield
_______________ ---------------------------
Witness Title: Executive Vice President
---------------------------
8
<PAGE>
EXHIBIT 10.17
07/20/90
REGIONAL AFFILIATE AGREEMENT
This Agreement is made and entered into between CUE Paging Corporation, a
Delaware corporation, with its principal offices at 2737 Campus Drive, Irvine,
California ("CUE"), and CR, INC. (COMMUNICATIONS RESOURCES) with its principal
place of business at 2100 N. Hwy. 360, #1307, Grand Prairie, Tx. 75050
("Affiliate").
Whereas CUE provides National Telecommunications Services using 57 KHz
subcarriers of FM broadcast stations and offers nationwide network services
which qualify under Part 90 of the Federal Communications Commission's Rules and
Regulations;
And whereas, the Affiliate wishes to purchase Airtime and Network services from
CUE to offer nationwide and regional paging services in the Service Area,
identified in Schedule "A";
Now therefore, in consideration of the foregoing and the representations and
warranties contained in this Agreement, the parties agree as follows:
1. SERVICE AREA. CUE hereby grants to the Affiliate the exclusive right to
purchase Airtime and Network services from CUE in the Service Area
identified in Schedule "A" for the purpose of providing regional paging and
the non-exclusive right to purchase Airtime and Network services for the
purpose of providing nationwide paging in the Service Area.
1.1 The Affiliate agrees:
(a) not to provide paging services using the CUE Network to subscribers
not located in the Service Area;
(b) not to use FM subcarrier pagers other than pagers supplied by CUE
pursuant to Paragraph 9 of this Agreement during the first two (2)
years of this Agreement; and
(c) not to use an FM subcarrier Network other than the CUE Network or to
purchase FM subcarrier Airtime from any party
<PAGE>
other than CUE during the term of the Agreement unless the CUE Network
does not have sufficient capacity.
2. NETWORK CHARGES. The Affiliate agrees to purchase Network services for FM
subcarrier paging from CUE and to pay CUE:
(a) a one-time installation charge of $ ******** payable on execution of
---------
this Agreement or on the date the regional FM subcarrier transmitter
commences, whichever is later; and
(b) a monthly charge of $ *******.
--------
3. AIRTIME CHARGES. The Affiliate agrees to purchase Airtime on the CUE
Network at a rate of $***** per month per pager for nationwide service and
$**** per month per pager for regional service provided that:
(a) the minimum average Airtime charge per pager shall be at least $****
per month; and
(b) the minimum amount paid to CUE for Airtime by the Affiliate shall be
$****** per month per MSA as defined in Schedule "A".
3.1 The Affiliate agrees to provide a list of all pager cap codes in service
in the Service Area and to provide the additions and deletions on the 30th
day of each month thereafter during the term of this Agreement. This
information shall be provided by fax to the fax number specified in
Paragraph 26.
3.2 REGIONAL PAGING DEFINITION. Regional Paging is defined as paging service in
5 contiguous states as defined in Schedule "B".
4. PRICE INCREASES. It is agreed that the monthly Airtime and Network charges
set out in Paragraphs 2 and 3 above shall remain constant for year 1990 at
the prices set out therein. Thereafter, these charges may be increased or
decreased at the sole discretion of CUE, provided that the price increase
in any year will not exceed the increase in the United States All Cities
Consumer Price Index for that year over the previous year.
<PAGE>
5. TELEPHONE CHARGES. The Affiliate agrees to pay CUE the amount of $**** per
month for each regional pager using the CUE 800 telephone service. This
charge does not apply if the Affiliate incurs the cost of transmitting the
page to CUE's terminal.
6. SERVICE ESTABLISHMENT. The Affiliate agrees to pay to CUE a fee of $****
each time Affiliate activates a pager.
7. EFFECTIVE DATE. The monthly Network and Airtime charges commence on the
date this Agreement is executed or on the date the regional FM subcarrier
transmitter commences, whichever is later.
8. COOPERATIVE MARKETING PROGRAM. The Affiliate and CUE each agree to fund a
national advertising program by an amount equal to $**** per month per
pager using the CUE network in the MSA. This amount shall be paid monthly
and shall be used to fund national marketing activities of mutual benefit
to the Affiliate and CUE.
9. EQUIPMENT SUPPLY. CUE agrees to supply the Affiliate with pagers which
operate on the CUE Network at a price of $*** per pager, payable within
thirty (30) days of shipment by CUE of such pagers, provided that the
Affiliate:
(a) provides CUE with monthly ninety (90) day rolling forecasts indicating
the number of pagers that the Affiliate desires to purchase or lease
from CUE; and
(b) purchases FM subcarrier pagers exclusively from CUE during the first
two (2) years of this Agreement.
9.1 EQUIPMENT LEASE. CUE will make available a lease program which provides
that the pagers can be leased on a thirty-six (36) month lease at $*** per
month provided that:
(a) the Affiliate meets the usual commercial credit requirements imposed
by third party leasing organizations; and
(b) the Affiliate meets all the requirements specified in Paragraphs 9 (a) and
9 (b).
9.2 ROLLING FORECAST. In each rolling forecast, the number of pagers forecasted
for the first thirty (30) days shall be 100% firm, the number
<PAGE>
of pagers forecasted for the second thirty (30) days shall be 75% firm and
the number of pagers forecasted for the third thirty (30) day period shall
be 50% firm.
9.3 The rolling forecast is to be provided by the Affiliate to CUE by the 15th
day of each and every month during the term of this Agreement. The first
rolling forecast will be provided to CUE the fourteenth (14th) day after
the execution of this Agreement.
9.4 PRICE INCREASES. The price for the pager, specified in Paragraph 9 above,
shall remain constant in the years 1990 and 1991 and thereafter may be
changed at the sole discretion of CUE provided that the price change shall
not exceed the charge in the United States All Cities Consumer Price Index
for each year after 1991 over 1990.
10. REGULAR WARRANTY. CUE warrants all pagers supplied hereunder against
defects in material and workmanship. CUE further warrants that the pager
will respond correctly to at least forty-eight (48) of fifty (50) pages
when tested under laboratory conditions (the performance standard). CUE
will repair or replace all pagers sold hereunder that are defective in
material or workmanship warranted under normal conditions of service
(defined as including normal wear and tear, but excluding abuse or improper
treatment) or failure to meet the performance standard at any time within
one year of delivery.
10.1 EXTENDED WARRANTY. CUE will agree to extend the foregoing warranty for one
year periods up to a total of three years for an annual fee not to exceed
10% of the Affiliate's original sales price.
10.2 LIMITATION OF WARRANTY. The aforesaid warranties are expressly in lieu of
all other conditions and warranties, express, implied or statutory,
including without limitation any obligations and liabilities of CUE with
respect to any defect or deficiency applicable to or resulting directly or
indirectly from the products supplied hereunder, whether in contract or in
tort, or otherwise. CUE's warranty liability shall under no circumstances
exceed the invoice price of any product for which the warranty claim is
made, nor shall CUE in any event be liable for consequential or special
damages or lost profits. In the absence of evidence satisfactory to CUE as
to the actual date of sales of any product for use, such date shall for the
purpose of this paragraph be deemed to be sixty (60) days from the date of
sale to the Affiliate.
11. PAYMENT TERMS. Payment for pagers will be due within thirty (30) days of
receipt and in the event of any failure to pay within this term the
Affiliate shall provide CUE with a Letter of Credit in an amount
<PAGE>
equal to all future pager orders, which Letter of Credit shall be
implemented prior to shipment.
11.1 Payment for Airtime is due upon receipt of invoice, on the basis of
the number of pagers in service on the 30th day of the previous
month. In the event of failure to pay, the Affiliate shall provide
CUE with a Letter of Credit in an amount equal to all future Airtime
charges, which Letter of Credit shall be implemented prior to the
date of the next invoice.
11.2 The Affiliate agrees to pay CUE interest on any amounts unpaid after
the thirty (30) day period at the rate of prime plus two (2%)
percent. In the event of any failure to pay for pagers or airtime
within the thirty (30) days the Affiliate shall provide CUE with a
Letter of Credit in an amount equal to all future pager orders or
monthly airtime charge, which Letter of Credit shall be implemented
prior to shipment or service.
12 USE OF RESELLERS. Affiliate agrees not to resell or re-lease the
pagers or airtime to any other party unless the other party agrees
in writing to restrict its activities to the Service Area where the
Affiliate is authorized to provide service pursuant to the Agreement
and to be bound by Paragraph 1.1 in this Agreement.
12.1 If the reseller violates this Agreement, the Affiliate agrees upon
receiving notice from CUE to immediately cease the resale or release
of the pager to the reseller contravening the Agreement. The
Affiliate will provide CUE with the name and address of all
resellers the Affiliate has contracted with.
13. NATIONAL ACCOUNTS. The Affiliate agrees to participate in the
National Accounts Program described in Paragraph 13.1 below.
13.1 The Affiliate agrees that the National Accounts specified in the
attached Schedule "C" shall be billed by CUE directly and such
National Accounts shall be CUE owned subscribers provided that:
(a) in the event the Affiliate sells paging services in its MSA
to a National Account, the Affiliate shall receive a one-
time fee of $*** per National Account if;
(i) the Account has not already been signed by CUE as a
National Account;
(ii) the Affiliate signs the National Account to an
agreement on CUE's National Account Program; and
<PAGE>
(iii) the aggregate orders in the first six (6) months are
for a minimum of fifty (50) pagers;
(b) the Affiliate will also receive a commission of $***** per month
for each National Account pager sold and installed in the
Affiliate's Service Area so long as such pagers are active and
paid for;
(c) the Affiliate will receive a commission of $**** per month for
each National Account pager signed by the Affiliate where the
pager is located outside the Service Area; and
(d) the Affiliate will receive a service fee of $**** per month per
pager for each National Account pager shipped into the Service
Area as a result of the sale by CUE or another Affiliate to such
National Account.
(e) the above commissions will be reduced to the extent that it is
necessary to reduce the end user price below the rates
established in CUE's Rate Card.
14. NATIONAL MESSAGE CENTER. The Affiliate agrees to provide all
nationwide subscribers with access to the CUE National Voice Message
Center. The Affiliate shall pay to CUE an amount equal to $**** per
minute for use of such services. The Affiliate also agrees to offer to
nationwide subscribers "CUE 800 VOice Messaging on the terms specified
in Schedule "D".
15. DEFAULT. In the event the Affiliate defaults with respect to any of
the terms or conditions of this Agreement, including all amendments
and schedules attached hereto and incorporated herein by reference, or
fails to make any payment required hereunder for thirty (30)
consecutive days, and if within thirty (30) days written notice from
CUE of such violation, the Affiliate does not correct any such
violation, or if such violation is willful, then CUE shall have the
right of cancellation of this Agreement by giving the Affiliate thirty
(30) days written notice. If this occurs, the Affiliate shall transfer
to CUE all of the Affiliate's current subscribers using or being
provided with nationwide of regional services in the Service Area. All
contracts, billing data and other pertinent information shall be
transferred to CUE within ten (10) days of the notice from CUE.
15.1 Upon transferring current subscribers to CUE, and CUE finding such
subscribers current in their payments, the Affiliate shall receive
compensation equal to $****** per pager, which compensation shall be
first applied to any outstanding indebtedness to CUE. In the
occurrence of an Event of Default, the Affiliate not only agrees to
<PAGE>
transfer the Affiliate's subscribers to CUE as provided for in Paragraph 15
above, but also agrees to cease using any CUE service mark, trademark
and/or name in the Service Area.
16. OTHER AGREEMENTS. The Affiliate agrees not to enter into any agreements
relating to paging except local paging with conpanies engaged in supply of
paging services without CUE's prior written approval.
17. GOVERNMENT REGULATIONS. Services provided under this Agreement by both
parties shall be in accordance with all applicable rules and regulations of
the Federal Communications Commission and any applicable State Regulatory
Commission.
18. CONTROL OF NETWORK. CUE will use its best effort to maintain and improve
the quality of the network, however, it us understood that the control and
responsibility for the standards and quality of nationwide and regional
data distribution services supplied by CUE shall be retained, rest and
remain solely the prerogative and obligation of CUE. No provision of this
Agreement shall be construed as vesting in the Affiliate any control
whatsoever of CUE's radio communications facilities and operations. The
Affiliate shall promptly, upon the day of receipt, report to CUE any
complaints received from subscribers relating to the nationwide or regional
services provided by CUE under this Agreement.
19. SERVICE. Each party shall make reasonable efforts to provide continuous,
uninterrupted and errorless services to the other hereunder, but in no
event shall the providing party be liable to the receiving party for
damages incurred by it or its subscribes on account of any failure to
provide such services. In the event service is discontinued for more than
24 consecutive hours CUE shall provide a credit to the Affiliate equal to
an airtime charge for the period when Service was unavailable.
20. NO REPRESENTATIONS OR WARRANTIES. Except as provided in Paragraph 10 of
this Agreement, the Affiliate shall not make any representations or
warranties, either expressed or implied, in regard to the nationwide and
regional services or pagers provided by CUE hereunder. The nationwide and
regional services and/or pagers shall carry only such warranties as shall
be provided in writing by CUE. CUE MAKES NO WARRANTIES, WITHER EXPRESS OR
IMPLIED, INCLUDING WARRANTIES AS TO
<PAGE>
20. NO REPRESENTATIONS OR WARRANTIES. Except as provided in Paragraph 10 of
this Agreement, the Distributor shall not make any representations or
warranties, either expressed or implied, in regard to the nationwide and
regional services or pagers provided by CUE hereunder. The nationwide and
regional services and/or pagers shall carry only such warranties as shall
be provided in writing by CUE. CUE MAKES NO WARRANTIES, EITHER EXPRESS OR
IMPLIED, INCLUDING WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE NATIONWIDE AND REGIONAL SERVICES OR
THE PAGERS PROVIDED HEREUNDER.
21. INDEPENDENT CONTRACTORS. The respective parties hereto are independent
contractors and nothing herein shall be deemed to create a relationship of
partnership, joint venture, principal and agent or franchisee. The
Agreement does not entitle either party to make commitments of any kind for
the account of the other party as agent or otherwise or to assume or create
any obligations, express or implied, on behalf of the other party, or to
bind the other party in any respect and each agrees to and will indemnify
and hold the other party harmless in this regard.
22. COVERAGE OF SIGNAL. CUE's Nationwide Network shall provide adequate
coverage for nationwide and regional paging services in the Service Area to
the Distributor. CUE will expand the coverage in the Service Area at the
request of the Distributor provided the Distributor and CUE mutually agree
on the appropriate increase in the local Distributor charge.
23. TERMINATION. If the Distributor violates any provisions of this Agreement,
including all amendments and exhibits hereto, or fails to perform any
obligations hereunder and if upon being given thirty (30) days' written
notice by CUE of such violation, the Distrubutor does not correct any such
violations, or if such violation is willful, then CUE shall have the right
of cancellation of this Agreement by giving the Distributor sixty (60)
days' written notice. If this occurs, CUE shall have the right to require
the Distributor to transfer its subscribers to CUE in accordance with the
provisions of Paragraph 14 above.
<PAGE>
23.1 If CUE violates any provision of this Agreement or fails to perform any
obligations hereunder and if upon being given thirty (30) days' written
notice by the Distributor or such violations CUE does not correct any such
violation, or if such violation is willful, then the Distributor shall have
the right of cancellation of this Agreement by giving CUE sixty (60) days'
written notice.
23.2 Notwithstanding the provision of Paragraph 22 above, the Agreement shall
automatically terminate, at the option of CUE, upon the occurrence of (1)
the Distributor ceasing to provide nationwide or regional services
hereunder for any reason, (2) the Distributor making any general assignment
or trust mortgage for the benefit of creditors or is adjudged a bankrupt.
In such event, CUE shall have an immediate right to cancel this Agreement.
23.3 The parties recognize that the services offered by both parties are
communications services and that the termination of this Agreement cannot
be permitted to interfere with the continuity of such services to all
subscribers. Therefore, termination of this Agreement shall be effected in
such "best efforts" manner by both parties as to avoid, insofar as
possible, that if upon default the Distributor does not transfer the
subscribers to CUE as provided in paragraph 14 above, CUE may immediately
deactivate or invalidate the Distributor's subscribers upon notice to the
Distributor.
24 DISCONTINUANCE OF OPERATIONS. In the event that CUE decides for any reason
to discontinue Network operations or services provided hereunder, CUE
shall:
(a) give the Distributor at least ninety (90) days' notice of
discontinuance of operation;
(b) if requested, assign any FM subcarrier agreements used to provide
service in the Service Area to the Distributor; and
(c) offer to sell the Distributor, at the then depreciated cost, any
equipment located at the radio station, necessary to operate on the FM
subcarrier paging system.
<PAGE>
23.3 The Parties recognize that the services offered by both parties are
communications services and that the termination of this Agreement
cannot be permitted to interfere with the continuity of such services
to all subscribers. Therefore, termination of this Agreement shall be
effected in such "best efforts" manner by both parties as to avoid,
insofar as possible, any interuption of services to subcribers
provided, however that if upon default the Affiliate does not transfer
the subscribers to CUE as provided in paragraph 15 above, CUE may
immediately deactivate or invalidate the Affiliate's subscribers upon
notice to the Affiliate.
24. DISCONTINUANCE OF OPERATIONS. In the event that CUE decides for any
reason to discontinue Network operations or services provided
hereunder, CUE shall;
(a) give the Affiliate at least ninety (90) days notice of
discontinuance of operation;
(b) if requested, assign any FM subcarrier agreements used to provide
service in the Service Area to the Affiliate; and
(c) offer to sell the Affiliate, at the then depreciated cost, any
equipment located at the radio station, necessary to operate on
the FM subcarrier paging system. If the Affiliate elects to
purchase the radio station equipment pursuant to this paragraph;
the Affiliate shall receive a credit up to the amount or the one
time Network charge paid under paragraph 2(a) of this Agreement
or a similar provision under a previous agreement.
25. TRADENAMES. The Affiliate shall provide nationwide and regional paging
services under its own name provided that whenever the Affiliate
advertises paging services, the advertisement shall contain the
following logo:
[LOGO OF NATIONWIDE NETWORK APPEARS HERE]
25.1 Any other use of the CUE name or logo requires the prior written
approval of CUE.
<PAGE>
26. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or
by certified mail, return receipt requested, or mailed to the
parties at the following addresses:
If to the Affiliate: CR, INC. (COMMUNICATIONS RESOURCES)
ATTN: President
P.O. Box 120861
Arlington, Texas 76012
FAX (214) 660-1398
If to CUE: CUE Paging Corporation
Attention: President
2737 Campus Drive
Irvine, California 92715
Fax No. 714-833-9336
27. ASSIGNMENT. This Agreement and the rights granted may not be
assigned or transferred in whole or in part by the Affiliate
without prior written consent of CUE, which consent will not be
unnecessarily withheld. Such consent shall also be required in
the event that the controlling shareholder interest in the
Affiliate changes which consent will not be unreasonably
withheld. This Agreement shall be binding upon and adhere to the
benefit of the parties hereto and their approved successors and
assigns.
27.1 Consent is not required in the case of a transfer to a related
party. A Related Party is defined as a party in which the
Affiliate has a controling shareholder interest.
27.1 In the case of a transfer to a non-related party, CUE shall have
a first right of refusal to acquire the interest in the Agreement
or interest in the Affiliate on terms identical to those agreed
to by the non-related party. CUE must exercise this first right
of refusal within thirty (30) days of being given notice by the
Affiliate, which notice must contain the terms on which the
purchaser has agreed to acquire the Agreement or Affiliate.
28. SEVERABILITY. If any of the provisions contained in this
Agreement are deemed invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be
affected or impaired hereby.
29. MISCELLANEOUS. This Agreement, including all amendments, and
<PAGE>
schedules;
(a) constitutes the entire Agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements and
understandings, both written and oral. Any variation of this Agreement
must be made in writing and signed by both CUE and the Affiliate;
(b) except as expressly stated herein, is not intended to and shall not
confer upon any other person any rights or remedies hereunder or
otherwise with respect to the subject matter hereof; and
(c) shall be governed by the laws of the State of New York.
30. TERM. The term of this Agreement is ten (10) years, subject to renewal for
a further ten year term at the option of the Affiliate if the Affiliate is
not in default in any payment or the terms and conditions of this Agreement
at the renewal date. The Affiliate shall give CUE 180 days notice if the
Affiliate intends to renew.
IN WITNESS wherever the parties hereto have caused this Agreement to be
executed by their duly authorized officers this 20 day of August, 1990.
CUE PAGING CORPORATION
/s/ Carol Browning By: /s/ Gordon E. Kaiser
- ---------------------- ---------------------------------
Witness Title: Chairman
------------------------------
CR, INC. (COMMUNICATIONS RESOURCES)
/s/ Lori Schilling By: /s/ Larry Simmons
- ---------------------- ---------------------------------
Larry Simmons
Witness Title: President
------------------------------
<PAGE>
SCHEDULE "A"
SERVICE AREA
- --------------------------------------------------------------------------------
MARKET MSA NO
DALLAS/FT. WORTH 009
<PAGE>
SCHEDULE "B"
DEFINITION OF REGION
- --------------------------------------------------------------------------------
TEXAS, NEW MEXICO, OKLAHOMA, ARKANSAS, LOUISIANA
<PAGE>
SCHEDULE "C"
NATIONAL ACCOUNTS
- --------------------------------------------------------------------------------
National Accounts are defined as:
(a) All Corporations and subsidiaries listed in the annual Fortune "500"
list published by Fortune Magazine and,
(b) the Federal Government
<PAGE>
SCHEDULE "D"
CUE 800
CUE provides both paging and non-paging subscribers with CUE 800 Message Service
on the terms listed below. CUE Distributors are entitled to act as Resellers of
the service and receive rebates and monthly residuals indicated in the Reseller
Rebate Schedule. All accounts will be billed directly by CUE.
A. SERVICE DESCRIPTION
THE 1-800 NETWORK (BASIC SERVICE) INCLUDES:
YOUR OWN PERSONAL 1-800 NUMBER
Unlimited calls
Voice Mailbox capable of:
60 Messages
5 Minutes in length max
7 Day hold time if the message is "Played"
14 Day hold time if the message is "Unplayed"
ADDITIONAL FEATURES INCLUDE:
. Toll Saver
. Speed Dial
. Directories
. Bulletin Boards
. "Make a Message" for others in the network
. "Make a Message" for Groups of users in the network
. "Give a Message" to other users in the network
. Rotational Boxes (for additional message storage over 60 min
. Time and Date stamp on all messages received
<PAGE>
B. SERVICE RATE SCHEDULE
Subscription Fee (One time)....................$*****
1-800 Network (Basic Service) per month........$*****
Plus ************** U.S. Origination or
************** Canadian Origination (U.S. Dollars)
C. RESELLER REBATE SCHEDULE:
PRODUCT OF SERVICE RATE OF CHARGE RESELLER PERCENT OR REBATE
Subscriber installation fee not to exceed ****************
$****** installation
$*************
*************
******************
********
1-800 based voice phone Currently ***************
service/user fees $*********** ******************
****************
The ***************************************** shall be paid to Reseller by CUE
on or before the 15th day of each calendar month for prior months receipts.
Reseller will collect from subscriber a ********************************
**************** as well as a completed application, and immediately submit all
directly to CUE. Upon receipt of all good funds, CUE will return subscriber
***************** as stated above in Reseller Percent or Rebate Schedule to
Reseller.
For the purpose of this Agreement, "net usage" shall be defined as subscriber's
1-800 usage fees less telephone use expenses and bad debt.
<PAGE>
Amendment to Regional Affiliate Agreement
Dated July 24, 1990
The following clause is added to the said agreement:
31. "Most Favored Nation. CUE agrees that all Affiliates will be required to
enter an agreement substantially the same as this Agreement and if more
advantageous terms or prices are offered to any other Affiliate such terms shall
be immediately offered to all Affiliates.
Agreed to this twenty-fourth day of July, 1990 by Cue Paging Corporation and
Communications Resources.
CUE PAGING CORPORATION COMMUNICATIONS RESOURCES
/s/ Gordon E. Kaiser /s/ Larry Simmons
- -------------------------- ----------------------------
Chairman President
- -------------------------- ----------------------------
<PAGE>
EXHIBIT 10.18
[The Company has entered into agreements substantially similar in all
material respects to this agreement. A schedule of such similar agreements is
attached to this exhibit.]
DISTRIBUTION AGENCY AGREEMENT
THIS AGREEMENT, made and entered into this 29th day of November, 1989 by
and between SATELLINK PAGING INC., a Georgia corporation, with its principal
place of business at 12 Perimeter Center East, Suite 1200, Atlanta, GA 30346
(hereinafter referred to as CARRIER) and Southern Connections Inc, with its
pricipal place of business at 509 South 7th Street, Opelika, AL 36801
(hereinafter referred to as AGENT).
WHEREAS, CARRIER is a supplier of telecommunications services utilizing
Subsidiary Communications Authorizations ("SCA") of FM broadcast stations and
conventional one-way business frequencies and qualifies under Part 90 of the
Federal Communications Commission ("FCC") Rules and Regulations to provide
paging communications services as a Private Carrier Paging Company ("PCP") in
the market areas consisting of the States of Georgia, Alabama, North Carolina,
South Carolina, and Mississippi ("Market Area"); and
WHEREAS, CARRIER is an affiliate of CUE Paging Corporation, a supplier of
national telecommunications services using the subcarriers of FM broadcast
stations who offer such nationwide services under the service mark of CUE(TM)
and will provide to CARRIER, for resale, paging communications services which
qualify under Part 90 of the FCC's Rules and Regulations; and
WHEREAS, the local, statewide, and regional paging services supplied by
CARRIER and the nationwide paging services provided to CARRIER for resale by
CUE will, hereinafter, be referred to as CARRIER's service or services; and
WHEREAS, AGENT has applied to CARRIER for the right to act as CARRIER's
Distribution Agent, on a non-exclusive, independent basis, for the purpose of
selling and distributing to the public, in the area described herein below, the
one-way radio communication services provided by CARRIER; and
WHEREAS, CARRIER desires to accept AGENT's above described application and
to act upon it in the manner and to the extent hereinafter provided; and
WHEREAS, both CARRIER and AGENT recognize the compatible nature of their
individual goals in expanding the public acceptance of the communication
services offered by CARRIER as well as the benefits which will accrue to the
public through the cooperation envisioned by this Agreement in using their
respective resources;
-1-
<PAGE>
NOW, THEREFORE, in consideration of the foregoing recital and the mutual
covenants hereinafter set forth and other good and valuable consideration, it is
agreed between CARRIER and AGENT as follows:
1. CARRIER hereby appoints AGENT as CARRIER's non-exclusive Distribution
Agent to promote CARRIER's radio communication services within the territory
described in Exhibit A attached hereto and made a part hereof. AGENT agrees not
to act as CARRIER's Distribution Agent, or to promote or make any sales of
CARRIER's services, outside of said territory. Nor will AGENT make sales to
customers within the territory of services to be provided outside of the
territory without CARRIER's consent.
2. AGENT agrees to pay all costs incurred by CARRIER in procuring,
developing and maintaining any and all hardware and software, needed to allow
CARRIER's paging terminal equipment to accomplish the activation and deletion of
paging numbers provided to AGENT, and related billing and record keeping
functions.
3. AGENT acknowledges and agrees that neither CARRIER nor any
representative of CARRIER has made any representation, warranty, or guarantee
that AGENT will or may derive income under this Agreement, it being distinctly
understood that AGENT has entered into this Agreement solely on the basis of
AGENT's independent evaluation of the merits and prospects of this transaction
and not on the basic of any representations of any type by or on behalf of
CARRIER. It is further acknowledged that this Agreement is not made in order to
enable AGENT to start a business.
4. AGENT may at its own expense, market, promote and advertise the radio
communication services of CARRIER in an attempt to increase the public's
awareness of the range of communication services available for its use. All such
material shall include the words "Signal transmission and interconnection
provided by Statellink Paging Inc., and affiliate of CUE Paging Corporation".
Any Statellink or CUE Nationwide promotional or advertising material shall be
first approved by CARRIER, which approval shall not be unreasonably withheld.
AGENT acknowledges and understands that CARRIER will not be providing AGENT with
a sales or marketing program or with any significant sales or marketing
assistance hereunder and that CARRIER is relying on AGENT's ability to promote
and sell CARRIER'S services effectively.
5. AGENT shall be empowered to contact, solicit, contract with, and
accept on behalf of CARRIER, in accordance with the terms hereof, subscribers to
CARRIER's radio communication services from among all classes of potential users
of such service.
-2-
<PAGE>
6. All radio communication service provided to subscribers, secured by
AGENT, shall be provided by CARRIER pursuant to CARRIER's Private Carrier Paging
Status and as outlined in this Agreement. CARRIER's obligations and
responsibilities shall be limited solely to those stipulated by and arising from
CARRIER's Private Carrier Paging Status and as outlined in this Agreement. AGENT
realizes the eligibility requirements on the users of private radio systems.
Eligibility is not open to federal or local government units, or to private
individuals. Private carriers are required to maintain a current list of paging
customers and the basis of their eligibility.
7. Should CARRIER apply for and be granted a Certificate of Public
Convenience and Necessity from any State Public Utility Regulatory Commission
("PUC") allowing CARRIER to become a Radio Common Carrier ("RCC"), all radio
communication services provided to subscribers, including those secured by
AGENT, shall be provided by CARRIER pursuant to CARRIER's duly filed tariff.
CARRIER's obligations and responsibilities shall be limited solely to those
stipulated in and arising out of CARRIER's duly filed tariff.
8. Insofar as CARRIER's radio communication services are concerned, AGENT
shall function as a conduit or agent passing through, to the CARRIER, potential
subscribers who will be in privity of contract with CARRIER by virtue of their
inclusion into the class of users covered by CARRIER's PCP or RCC status. AGENT
will at all times give prompt, courteous and efficient service to the public,
will be governed in all dealings with members of the public by the highest
standards of honesty, integrity and fair dealings, and will do nothing which
would tend to discredit, dishonor, reflect adversely upon or in any manner
injure the reputation of CARRIER or any other agent of CARRIER.
9. In addition to AGENT's function as a conduit or AGENT for CARRIER,
AGENT shall have the option to sell or lease directly to CARRIER's potential
subscribers such communication equipment, maintenance service, associated
services and facilities as are compatible with the service offered by CARRIER,
after establishing such compatibility of AGENT's equipment. CARRIER shall
endeavor to maintain during the term of this Agreement such compatibility so
long as the state of the art permits and replacement parts are readily available
for CARRIER's equipment. Agent will be given reasonable advance notice of any
proposed major changes to CARRIER's system.
10. Any equipment sale or lease of equipment and such associated services
and facilities which the subscriber chooses to purchase or lease directly from
AGENT shall be provided separate and apart from the system usage and dispatch
offering of CARRIER and CARRIER shall have no responsibility or liability with
respect thereto.
-3-
<PAGE>
11. AGENT shall maintain a sufficient inventory of spare units, batteries,
and associated equipment to insure that the subscriber may anticipate reasonably
expeditious repairs and relatively uninterrupted service. In addition, in event
that AGENT assumes responsibility for the maintenance and repair of equipment
sold or leased by AGENT, then AGENT must maintain the integrity and quality of
service to the public by insuring that all maintenance and repair is performed
in compliance with FCC standards and requirements and those, if any, established
by PUC and that all units are operationally compatible with CARRIER'S system.
12. AGENT customer contracts will be divided into two classes: Class A
customer contracts shall be considered those customer contracts where AGENT has
purchased the equipment under contract and rented, leased, or sold said
equipment to the customer contracts where AGENT has rented the service,
equipment and airtime, from CARRIER and contracted with the subscriber for such
service. AGENT will receive all payments from subscribers and be responsible for
all billing, collection, and bad debt recovery. Further, AGENT agrees to
maintain at all times, and to furnish CARRIER not later than the Tenth (10th)
day of each month, a current list of all subscribers it places on CARRIER'S
systems, identifying each subscribers name, business, address and telephone
number. CARRIER shall not be obligated to provide service to any subscriber
whose name, business, address and telephone number is not so provided. AGENT
agrees to deliver promptly to CARRIER, upon CARRIER's request, any and all
records necessary for CARRIER to audit AGENT's billable subscribers. CARRIER
will not, during the term of this Agreement or any extension thereof, knowingly
solicit any subscriber placed on the system by AGENT. AGENT will not, during the
term of this Agreement or any extension thereof, knowingly solicit any
subscriber placed on the system by CARRIER.
13. AGENT will remit to CARRIER the total amount of monies due hereunder
for each monthly period in accordance with the formula established in Exhibit B
attached hereto and made a part hereof. Said monies shall be paid by the AGENT
to CARRIER by the Tenth (10th) day of each month, whether such money has been
collected by AGENT or not.
14. CARRIER may, subject to all required regulatory approvals, change,
delete or modify any rate, charge, category or classification contained in
Exhibit B should CARRIER in its sole discretion deem such amendment appropriate.
CARRIER will give AGENT written notice for Nationwide no later than thirty (30)
days and for local, statewide and regional no later than sixty (60) days prior
to the effective date of any such amendment and all radio communication service
provided to subscribers secured by AGENT shall conform with the terms of such
amendment.
-4-
<PAGE>
15. It is understood that the ultimate control and responsibility for the
standard and quality of service required under the provisions of any license
issued by the FCC to CARRIER as well as any Certificate of Public Convenience
and Necessity issued to CARRIER by any state PUC shall be retained, rest and
remain the prerogative and obligation solely of the CARRIER. No provision of
this Agreement shall be construed as vesting in the AGENT any control whatsoever
of the radio communication facilities and operations of the CARRIER. CARRIER
shall make every reasonable effort to provide continuous, uninterrupted and
errorless service to subscriber but its liability for failure to do so shall be
limited and in no event shall exceed one month's dispatch fees.
16. Notwithstanding anything herein to the contrary, it is understood that
the CARRIER will maintain day-to-day control, operation, and supervision of all
station facilities in the provision of CARRIER's service. To that end, AGENT
shall promptly, upon the day of receipt, report to CARRIER any complaints
received from subscribers relating to the service provided by CARRIER.
17. AGENT's subscriber contracts and invoices shall include the words,
"Signal transmission and interconnection services provided by Satellink Paging
Inc." The contract shall also state that the service is licensed by the FCC and
authorized by the PUC (if applicable) and is provided in compliance with the
rules and regulations of such agency(ies).
18. In order to insure the compatible initiation of service to subscribers
obtained directly by employees of CARRIER and those subscribers placed on
CARRIER's service through the efforts of AGENT, CARRIER shall coordinate the
assignment of all related code numbers, phone numbers, identification numbers,
etc. AGENT shall be liable for payment of related charges for all numbers for
a minimum of thirty (30) days. Thereafter, AGENT shall give CARRIER a thirty
(30) day deactivation notice prior to CARRIER deactivating a nationwide code
number and a twenty-four (24) hour notice prior to CARRIER deactivating a code
number for any service other than nationwide.
19. (a) An AGENT'S application for, or AGENT's receipt of, through
application or acquisition, a license or grant for authority, from either the
FCC or the PUC, to provide, in CARRIER's Market Area, similar services to those
provided by CARRIER shall be deemed a competitive act, inconsistent with the
intent of this Agreement and may cause this Agreement to be canceled immediately
at the sole discretion of CARRIER.
-5-
<PAGE>
(b) Should AGENT apply with CARRIER to distribute CARRIER's services
in territories within CARRIER's Market Area other than described in Exhibit A
and, at which time, CARRIER is not able to supply said services, AGENT may
contract with another service provider within said territory to supply those
services. Otherwise, during the term of this Agreement and any extension thereof
AGENT shall not become a radio common carrier, private carrier or enter a
similar Agreement with another radio common carrier or private carrier, or enter
into any Agreement to market or in any way service another radio common carrier
or private carrier's service in CARRIER's Market Area. Upon termination of this
Agreement for any reason except for the provisions under Sub-paragraph 25 (c),
AGENT agrees that for a period of Two (2) years from the date of such
termination, it will not become a radio common carrier, private carrier, or
enter into a similar Agreement with another radio common carrier or private
carrier, or enter into any Agreement to market or in any way service another
radio common carrier or private carrier service in CARRIER's Market Area, and
will not directly or indirectly solicit for communications service of the type
provided under this Agreement subscribers within the Market Area covered by this
Agreement.
20. AGENT shall not make any representations or warranties either
expressed or implied in regard to any services provided by CARRIER except as
provided herein. AGENT shall refer subscriber complaints to CARRIER in the event
of any questions concerning rules, regulations, conditions of service.
21. CARRIER reserves the right to promote and sell the same equipment,
products and supporting services as the AGENT to customers directly or through
its regularly employed sales force (including independent contractors) and
CARRIER shall not be liable to AGENT for a commission or damages in lieu thereof
on any such sale or lease by CARRIER.
22. (a) CARRIER reserves the right, but not the obligation, to appoint
other agents in a similar capacity within the territory described in Exhibit A.
(b) CARRIER reserves the right to appoint agents in a similar
capacity within CARRIER's Market Area other than the territory described in
Exhibit A. AGENT is eligible to apply to become an agent in areas where CARRIER
elects to appoint agents on a non-exclusive basis within CARRIER's Market Area.
23. AGENT's subscribers shall be prohibited from resale of CARRIER's
services. AGENT is prohibited from enlisting "Sub-Agents" to act on AGENT's or
CARRIER behalf.
-6-
<PAGE>
24 It is agreed that AGENT's relationship to CARRIER is that of
independent contractor and that no other relationship is intended or created
between the parties hereto. Nothing in this Agreement shall be construed so as
to make AGENT an employee of CARRIER. Except as specifically provided in this
Agreement CARRIER shall not have the right to control AGENT'S method of
operation, the business organization of AGENT, its promotional activities,
management, marketing plan or business affairs.
25. (a) This Agreement shall become effective upon the date set forth
above and shall remain in effect for Five (5) years. AGENT may at its option,
extend this Agreement for One (1) successive five (5) year term by giving notice
of such extension to CARRIER no more than One Hundred Eighty (180) days and not
less than Ninety (90) days prior to the end of a term; provided, however, that
this Agreement or any successive Agreement may be terminated at any time (i) by
an order of any regulatory commission having jurisdiction thereof or (ii) by
CARRIER as to all or any portion of the radio communications services to be
provided by CARRIER hereunder, in the event CARRIER elects to discontinue
providing such services within all or any part of the territory described in
Exhibit A. In respect to CUE Nationwide services, CARRIER will provide such
service to AGENT as provided to CARRIER and under the same terms as set forth in
CARRIER's Affiliation Agreement with CUE Paging Corporation.
(b) If AGENT violated any provisions of this Agreement or fails to
perform any obligation hereunder and does not forthwith correct any such
violation upon being given Thirty (30) days written notice by CARRIER of such
violation or if such violation is willful, then CARRIER shall the right of
cancellation of this Agreement by giving AGENT Sixty (60) days prior written
notice. If AGENT does not, after prior written notice, conform his service to
CARRIER's reasonable instructions in all other respects provided for herein,
then CARRIER shall also have the right of cancellation of this Agreement upon
giving AGENT written notice thereof.
(c) If CARRIER violates any provision of provisions of this Agreement
or fails to perform any obligation hereunder and does not forthwith correct any
such violation upon being given Thirty (30) days written notice by AGENT of such
violation or if such violation is willful, then AGENT shall have the right of
cancellation of this Agreement by giving CARRIER prior written notice of not
less than sixty (60) days nor more than One Hundred Eighty (180) days of AGENT's
intention to do so.
(d) If AGENT fails to pay to CARRIER charges as specified in
Paragraph 12, CARRIER shall have the right to cancel this Agreement by giving
Thirty (30) days prior written notice to AGENT, and in such event CARRIER shall
have the right to continue to extent service to subscribers placed on the system
by AGENT
-7-
<PAGE>
and to collect from such subscribers the applicable charge or charges thereof,
such subscribers shall become CARRIER's customers should AGENT not cure such
default by bringing its account current during the thirty (30) day notice
period. Provided however, that AGENT shall have the right during the Thirty (30)
day notice period to cure such default by bringing its account current, and, in
which event, the contact will continue in force.
26. Upon notice of termination of this Agreement, for reason as provided
in Sub-paragraph 25(a) or 25(b) or 25(c) other than by order of any State or
Federal regulatory commission or by CARRIER's discontinuance of services, AGENT
shall have the right during the respective notice period to sell and transfer
its equipment and customer contracts to any third party, or to otherwise arrange
for service to its customers provided, however, CARRIER shall have the right for
a period of Thirty (30) days after written notice to it of such proposed sale
and transfer to meet any third party's bonafide offer and to acquire such
equipment and contracts itself. If, however, on the expiration of the respective
notice period AGENT has not received a bonafide offer for its equipment and
customer contracts, or has otherwise been unable to assure uninterrupted service
to such customers, then, in such events, AGENT shall, at CARRIER's option, sell,
assign, and transfer free and clear of all encumbrances and CARRIER shall
purchase all of AGENT's customer contracts and equipment owned by AGENT on the
following terms:
a. Closing to be not more than Thirty (30) days from expiration of
the respective notice.
b. Equipment owned by AGENT shall be sold and purchased for a cash
sum equal to the net book value thereof as of the last day of the calendar month
next preceding closing, applying depreciation on a straight line basis over
Forty-Eight (48) months.
c. All Class B customer contracts shall be assigned and transferred
to CARRIER at no charge to CARRIER. All Class A customer contracts of those
customers whose accounts are current, i.e., not more than Twenty (20) days past
due at closing, shall be sold and purchased for: (1) [***] Dollars per unit in
service upon termination of this Agreement for any reason as provided in Sub-
paragraph 25(c); or (2) [***] Dollars per unit in service upon termination of
this Agreement for any reason as provided in Sub-paragraph 25(a) or 25(b).
d. Customer contracts of those customers not current, i.e.,
Twenty-one (21) or more days past due at closing, shall be transferred and
assigned to CARRIER at closing. AGENT and CARRIER agree to cooperate and make
every good faith effort to bring such accounts current, partial payments, if
any, to be applied in total to the oldest invoices. As and when such accounts
are brought current, CARRIER will pay to AGENT in cash the amounts
-8-
<PAGE>
described in Sub-paragraph 26(c). Such payment to be made each month for all
accounts brought current during the preceding calendar month. CARRIER, however,
reserves the right, in its discretion and at any time to terminate service to
any such customer for nonpayment of account. AGENT will not receive payment for
any customer whose account is not brought current within ninety (90) days from
closing. AGENT will be liable for all airtime and service rental charges through
closing. AGENT will be liable for the replacement of Class B customer equipment
out to any customer whose account is not brought current within ninety (90) days
from closing.
e. AGENT will be entitled to receive all monies paid by subscribers
placed on the system by AGENT for service rendered to and including close of
business on the day next preceding closing, irrespective of which party may
collect such funds.
27. (a) Notwithstanding any of the provisions of this Agreement to the
contrary, AGENT will indemnify CARRIER and save CARRIER harmless from and
against any and all claims, actions, damages, consequential damages, liabilities
and expenses occasioned wholly, or in part, by any act or omission of AGENT, its
agents or employees. In case CARRIER shall, without fault on its part, be made a
party to any litigation commenced by or against AGENT, then AGENT shall protect
and hold CARRIER harmless, and shall pay all costs, expenses and reasonable
attorney's fees incurred or paid by CARRIER in connection with said litigation.
(b) Notwithstanding any of the provisions of this Agreement to the
contrary, CARRIER will indemnify AGENT and save AGENT harmless from and against
any and all claims, actions, damages, consequential damages, liabilities and
expenses occasioned wholly, or in part, by any act or omission of CARRIER, its
agents or employees. In case AGENT shall, without fault on its part, be made a
party to any litigation commenced by or against CARRIER, then CARRIER shall
protect and hold AGENT harmless, and shall pay all costs, expenses and
reasonable attorney's fees incurred or paid by AGENT in connection with said
litigation.
(c) AGENT agrees to maintain in effect during the term of this
Agreement, a liability insurance policy with a reputable carrier with limits of
no less than [***] per occurrance naming CARRIER as an additional insured.
28. Neither shall AGENT's interest herein, nor any part of it, be
transferred or assigned by AGENT without the prior and expressed written consent
thereto by CARRIER. Subject to the provisions of this paragraph, the Agreement
shall be binding upon and inure the benefit of the parties, their successors,
permitted transferees and assigns.
-9-
<PAGE>
29. This Agreement incorporates by reference the standards for
non-discriminatory service established by the FCC and binds AGENT to adhere to
these standards in all practices and activities undertaken pursuant to this
Agreement.
30. Any notice, request, instruction, legal process, or other document to
be given hereunder shall be in writing and shall be delivered by registered
mail, return receipt requested, as set forth below:
If to CARRIER: President
SATELLINK PAGING INC.
12 Perimeter Center East
Suite 1200
Atlanta, GA 30346
If to AGENT: SOUTHERN CONNECTIONS, INC.
-----------------------------
509 South 7th Street
-----------------------------
P.O. Box 167
-----------------------------
Opelika, AL 36801
-----------------------------
_____________________________
31. It is understood and agreed by the parties hereto that this instrument
constitutes the entire Agreement between the parties hereto and supercedes all
prior or contemporaneous Agreements, written or oral of every sort.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and year first above written.
CARRIER: AGENT:
SATELLINK PAGING INC. SOUTHERN CONNECTIONS
BY: /s/ Jerry W. Mayfield BY: /s/ Rose Anne Hurd
-------------------------------- ----------------------------
PRINT NAME: Jerry W. Mayfield PRINT NAME: Rose Anne Hurd
------------------------ --------------------
TITLE: Executive Vice President TITLE: President
---------------------------- -------------------------
-10-
<PAGE>
EXHIBIT A
DISTRIBUTION AGENCY AGREEMENT
AGENT TERRITORY
AGENT'S TERRITORY SHALL CONSIST OF THE GEOGRAPHIC AREA PRESENTLY MARKETED BY
AGENT'S SALES OFFICES LOCATED IN:
OPELIKA AL
LAGRANGE GA
WEST POINT GA
FIVE POINTS AL
LAFAYETTE AL
ALEXANDER AL
DADEVILLE AL
LANETT AL
AUBURN AL
NOTASULGA AL
TUSKEEGEE AL
HURTSBORO AL
CRAWFORD COUNTY, AL
AUTAUGA COUNTY, AL
BULLOCK COUNTY, AL
CRENSHAW COUNTY, AL
ELMORE COUNTY, AL
LOWNDES COUNTY, AL
MACON COUNTY, AL
MONTGOMERY COUNTY, AL
PIKE COUNTY, AL
AGENT'S MARKETING EFFORTS SHALL BE CONFINED TO THE STATES OF ALABAMA AND
GEORGIA.
<PAGE>
EXHIBIT B
- ---------
DISTRIBUTION AGENT RATE SCHEDULE
--------------------------------
Effective March 1, 1991
The following Airtime dispatch charges and charges for related services shall
apply (monthly per pager):
1001-
Airtime Volume Dispatch: 0-1000 3000 3000+
------ ----- -----
(Includes Atlanta or Macon DID)
+Regional Numeric Display [***] [***] [***]
Nationwide Numeric Display [***]
Additional Services (Effective January 1, 1991):
*"1-800 DID" (Georgia Statewide Only)
-Includes *** accesses [***]
-Per access over [***]
*"1-800 Regional Access"
-Includes *** accesses [***]
-Per access over [***]
Multiple Address [***]
Group Call
Regional [***]
Nationwide [***]
**Pager Activation
-Nationwide Only [***]
*1-800 overcalls are based on the aggregate amount of accesses above 40
assesses per 1-800 subscriber
**One time only charge
+Regional coverage:
- Georgia Region - Alabama, Georgia, Florida, South Carolina, North Carolina
- Alabama Region - Alabama, Mississippi, Tennessee, Georgia, Florida
AGENT airtime volume price breaks shall be based on the cumulative number of
subscribers placed by AGENT on CARRIER's regional and nationwide services.
<PAGE>
0-250 251-1000 1000+
----- -------- -----
*Sale of Equipment (Annual Contract Volume):
Mobira MBS-88 [***] [***] [***]
-All Mobira equipment includes a
one (1) year warranty.
For sales demonstration purposes, CARRIER will provide to AGENT regional access
codes and nationwide access codes at CARRIER's cost from CUE, presently $[***]
per month per regional access code and $[***] per month per Nationwide access
code, plus 1-800 charges. The number of demo codes provided will equal the
number of sales personnel employed by AGENT.
Should CARRIER receive a rate increase from CUE Paging Corporation or its
telephone carrier, AGENT's rate may be increased in direct proportion to
CARRIER's increase.
*Any future price breaks made available to CARRIER will be directly passed on to
AGENT. AGENT will be required to execute an ANNUAL VOLUME EQUIPMENT PURCHASE
AGREEMENT. Should AGENT not meet the volume requirements of the Agreement, the
difference in the respective volume price agreed to and the price of the volume
actually purchased will be retroactively charged to AGENT.
[***]Pricing information has been omitted from this schedule and from the form
of Distribution Agency Agreement pursuant to a confidential treatment request
filed with the Commission.
<PAGE>
Schedule to Exhibit 10.18
The Company has entered into Distribution Agency Agreements with each of
Page South and ProPage, Inc. Each of these Distribution Agency Agreements is
substantially identical in all material respects except as to the parties
thereto, the dates of election and pricing information contained therein. The
material details in which such details differ from the Distribution Agency
Agreement filed as Exhibit 10.18 are as follows:
Contracting Party Date Pricing
- ----------------- ---- -------
Page South May 1, 1989 *
ProPage, Inc. October 29, 1989 *
* Pricing information has been omitted from this Schedule and from the form
of Distribution Agency Agreement pursuant to a confidential treatment request
filed with the Commission.
<PAGE>
EXHIBIT 10.19
- --------------------------------------------------------------------------------
RESELLER AGREEMENT
This Reseller Agreement, as the same may be amended, supplemented, or modified
from time to time ("Agreement"), is made and entered into by and between
Destineer Corporation ("Destineer"), a Delaware corporation, and SATELLINK
PAGING, INC. d/b/a Satellink Messaging ("Reseller"), a Georgia corporation.
1. The term of this Agreement shall commence as of the Effective Date (as
defined in the attached Terms and Conditions) and shall continue for a period of
one (1) year thereafter (the "Initial Term").
2. The parties' rights and obligations under this Agreement are set forth in
the Terms and Conditions attached hereto and the accompanying exhibits which are
incorporated by reference herein.
3. Reseller's address for purposes of Section 15 of the attached Terms and
COnditions shall be 1100 North Meadow, Suite 100; Roswell, GA 30076; telephone
number (770) 772-9909; facsimile number _________________; attention Jerry
Mayfield.
In Witness Whereof, Destineer and Reseller have executed this Agreement on the
dates noted below.
DESTINEER CORPORATION
Date:10/17/97 /s/ Calvin C. LaRoche
------------ --------------------------------
By: Calvin C. LaRoche
-----------------------------
Title: SVP, DESTINEER
--------------------------
SATELLINK PAGING INC.
Date:10/16/97 /s/ Jerry W. Mayfield
------------ --------------------------------
By: Jerry W. Mayfield
-----------------------------
Title: President
--------------------------
- --------------------------------------------------------------------------------
CONFIDENTIAL
<PAGE>
PAGE 3
Terms and Conditions
Page 1 of 2
TERMS AND CONDITIONS
1. Definitions.
(a) Affiliate: As applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including with currelative
meanings, the terms "controlling", "controlled by", and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Period through the ownership of voting securities, by contract or
otherwise.
(b) Ancillary Services: The ancillary services, support and rights
identified and described in more detail in Exhibit "A" attached hereto.
(c) Cap Code: A Device specific identification code, to be assigned by
Reseller to each Device placed in service on the SkyTel Network in accordance
with the provisions of Section 6(d) below.
(d) Confidential Information: Any business, marketing, sales, financial or
technical information including, without limitation, any information relating to
the present and future business operations or financial condition, and all other
information of any kind which may reasurably be deemed confidential or
proprietary, disclosed by one party to the other pursuant to this Agreement,
which is designated or identified as "confidential", "proprietary", or in some
other manner to indicate its confidential nature. Notwithstanding the above,
"Confidential Information" does not include information that (i) is or becomes
generally known or available by publication, commercial use, or otherwise
through no fault of the receiving party; (ii) was known by the receiving party
at the time of disclosure by the disclosing party as evidenced by competent
written proof; (iii) is independently developed by the receiving party without
use of the disclosing party's Confidential Information; or (iv) is lawfully
obtained from a third Person who has the right to make such disclosure.
(e) Device: Any wireless messaging unit that Destineer, in its sole
discretion, deems acceptable for use on the SkyTel Network, a current listing of
which is set forth in Exhibit "B" attached hereto.
(f) Effective Date: The date this Agreement is executed by Destineer.
Notwithstanding the Effective Date of this Agreement, if Reseller is an existing
reseller of Destineer or its Affiliates, pricing under this Agreement shall not
become effective until the first day of the first Destineer billing cycle
immediately following the Effective Date.
(g) Person: Any individual, company, corporation, firm, partnership, joint
venture, association, organization, or trust, in each case whether or not having
a separable legal identity.
(h) PIN: A unique, Subscriber specific, personal identification number,
mailbox identification number, or other form of identification number, which may
include, without limitation, a personal toll free number, to be assigned by
Reseller in accordance with the provisions of Section 6(d) below.
(i) SkyTel: SkyTel Corp., a Delaware corporation and Affiliate of
Destineer.
(j) SkyTel Marks: The trade names, trademarks, logos, and service marks
owned by or licensed to Destineer that are listed in Exhibit "C" attached
hereto, as Exhibit "C" may be amended from time to time.
(k) SkyTel Network: Collectively, the one-way and two-way wireless
messaging systems owned and operated by Destineer and its Affiliates to provide
the SkyTel Services.
(l) SkyTel Services: The wireless messaging service offerings provided by
Destineer and its Affiliates as more fully described in Exhibit "D" attached
hereto. Notwithstanding the provision of Section 16(j) below. Destineer may
revise Exhibit "D" from time to time in its sole discretion upon the delivery
written notice to Reseller at least ninety (90) days prior to the effective date
such revision.
(m) Subscriber: A customer of Reseller that, by virtue of the reseller
relationship established hereunder, is an end-user of the SkyTel Services.
(n) UIS or Unit in Service: A SkyTel Service account activated ?? Reseller
that consists of (I) "Basic Services" (see Exhibit "I)" attached hereto or (II)
Voice Mail services. For example, a SkyWord service account constitutes one (1)
UIS: a SkyWork service account activated in connection with Voice Mail services
constitutes two (2) UIS.
2. Authority
(a) Destineer grants Reseller a non-exclusive right to resell the SkyTel
Services in the United States in accordance with the Terms and Conditions of
this Agreement, and, in connection therewith, Reseller shall use its best
efforts to promote, market and sell the SkyTel Services to Subscribers. The
right ???? authority granted herein is subject to and conditioned upon
Reseller's satisfaction of Destineer's standard credit review policies and
procedures.
(b) Notwithstanding the provision of Section 2(a) above, all personnel of
Reseller involved in the promotion, marketing and sale of wireless messaging
services provided over the advanced messaging network owned and operated by
Destineer and its Affiliates, as a condition of Reseller's right to promote,
market and sell such services, must undergo and successfully complete training
on the ???? and utilization of such services in accordance with the provisions
set forth in Exhibit "A-I" attached hereto.
(c) Notwithstanding anything to the contrary herein, Destineer and its
Affiliates expressly reserve the right to promote, solicit, market and sell the
SkyTel Services directly to Subscribers and other Persons, whether located
within or outside of the United States.
3. Price and Payment.
(a) Reseller shall compensate Destineer for the SkyTel Services in
accordance with the pricing schedule attached hereto as Exhibit "E". Monthly
service fees shall be payable by Reseller in advance and are not contingent upon
usage. Reseller shall pay applicable usage and other charges in arrears.
Notwithstanding the provisions of Section 16(j) below, Destineer reserves the
right to modify the fees and charges set forth in Exhibit "E" upon at least
thirty (30) days advance written notice to Reseller. Prices charged by Reseller
to Subscribers for the SkyTel Services shall be determined solely by Reseller.
(b) To the extent requested by Reseller, Reseller shall compensate
Destineer for the Ancillary Services in accordance with the rates and charges
set forth in Exhibit "A" attached hereto.
(c) Destineer shall invoice Reseller on a monthly basis for all fees and
charges accruing hereunder. Such fees and charges shall be due and payable by
Reseller as of the date of Destineer's invoice. Any balance not paid within
thirty (30) days following such due date shall bear interest from and after the
maximum rate allowed by law. All taxes relating to this Agreement, the SkyTel
Services and the Ancillary Services, except taxes based upon the income of
Destineer, shall be paid by Reseller.
(d) Reseller shall be liable to Destineer for all fees and charges
accruing hereunder, whether or not Reseller collects any amounts from its
Subscriber(s). Reseller shall bear all risks and expenses incurred in connection
with performance of its obligations and activities under this Agreement.
(e) [LETTER OR CREDIT/PAYMENT SECURITY PROVISION, IF APPLICABLE]
CONFIDENTIAL
<PAGE>
Terms and Conditions
Page 2
4. Reseller Obligations.
(a) Reseller shall conduct its operations in an orderly, competent and
professional manner, and shall ensure that its officers, agents, employees and
representatives employ the highest standards of business conduct. Reseller shall
ensure that each of its employees performing any operations in connection with
the provision of the SkyTel Services are adequately trained, prior to the
commencement of any such operations, and are competent to perform their
respective duties.
(b) In providing the SkyTel Services to its Subscribers, Reseller shall
comply with all laws, rules and regulations promulgated by the FCC applicable to
the activities of Reseller hereunder, as well as with all message length,
message volume and other such operational procedures and limitations established
by Destineer from time to time.
(c) Except to the extent otherwise requested by Reseller and expressly set
forth in Exhibit "A" attached hereto, Reseller shall be solely responsible for
the provision of any and all sales and associated activities (including, without
limitation, billings to and collections from Subscribers), Devices and customer
support services to its Subscribers as related to the SkyTel Network, and shall
be solely responsible for any and all costs and expenses related thereto.
(d) Reseller shall not misrepresent the SkyTel Services to Subscribers or
otherwise make any claims, representations or warranties in connection with the
SkyTel Services other than expressly authorized by Destineer.
(e) Reseller shall ensure that provisions consistent with the provisions
set forth in Section 9 hereof are incorporated in all agreements between
Reseller and its Subscribers relative to the provision of the SkyTel Services.
Reseller shall make the form of all such agreements available to Destineer for
review and shall incorporate any modifications or amendments therein that
Destineer may reasonably request.
5. Destineer Obligations.
(a) Destineer and its Affiliates shall, at all times, have the sole and
exclusive control and authority over the design, construction, development,
management, operation, and maintenance of the SkyTel Network and the SkyTel
Services.
(b) Destineer shall provide Subscribers, through a carrier or carriers of
Destineer's choice, toll-free or local dial up access to the SkyTel Network from
any point in the continental United States, Alaska and Hawaii, and shall ensure
that the SkyTel Services provided to Subscribers shall be of at least the grade
and quality as provided by SkyTel to its direct customers.
(c) To the extent requested by Reseller, Destineer shall provide the
Ancillary Services to Reseller in accordance with the provisions set forth in
Exhibit "A" attached hereto.
6. Devices.
(a) General, Reseller and its Subscribers shall only activate the Devices
listed in Exhibit "B" in connection with the SkyTel Services. All Devices placed
in service on the SkyTel Network by or through Reseller shall comply with the
provisions of this Agreement, including, without limitation, the provisions of
this Section 6(a) and, to the extent applicable, the restrictions relative to
use of the SkyTel Marks in Retail Distribution as set forth in Exhibit "A-5"
attached hereto. Notwithstanding the provisions of Section 16(j) hereof,
Destineer may revise the Device listing set forth in Exhibit "B" from time to
time upon the delivery of written notice to Reseller at least ninety (90) days
prior to the effective date of such revision. If Destineer amends Exhibit "B" in
such a manner whereby previously authorized Devices are no longer authorized for
use on the SkyTel Network, Reseller shall take such actions as are necessary, at
Reseller's sole cost and expense, to substitute authorized Devices for the
previously authorized Devices then utilized by Subscribers in accordance with
the following time frames:(i)for Devices utilized on the one-way wireless
messaging networks owned and operated by Destineer and Affiliates, within
thirty-six (36) months following the effective date of revision to Exhibit "B",
and (ii) for Devices utilized on the two-way wire messaging network owned and
operated by Destineer and its Affiliates, with forty-eight (48) months following
the effective date of the revision to Exhibit "H".
(b) Procurement. At Reseller's request, Destineer shall sell Devices
Reseller at the prices set forth in Exhibit "B", provided that the Devices
requested are available by Destineer for distribution to Reseller, determined by
Destineer in its sole discretion. Subject to the provisions Section 6(a) above.
Reseller may also obtain Devices from the Devices manufacturer or from any other
authorized source of such Devices.
(c) Activation. All Devices activated on the SkyTel Network, Reseller
shall be ended and activated only in accordance with directive policies and
procedures established by Destineer, which, with respect to the two-way wireless
messaging network owned and operated by Destineer and Affiliates, may include,
without limitation, coding and activation of the Devices at the manufacturer
level or by or at the direction of Destineer.
(d) Cap Code and PIN Coordination.
(i) Reseller shall assign Cap Codes and PINs to Devices utilized by
Subscribers only from blocks of Cap Codes and PINs to be allocated ? Reseller by
Destineer. Destineer will use commercially reasonable efforts to make a
sufficient number of Cap Codes and PINs available to Reseller as shall be
necessary to service the number of Subscribers which Reseller, in the exercise
of its reasonable judgment, projects will utilize the SkyTel Services.
(ii) All PINs and Cap Codes assigned to Reseller by Destineer shall
remain the property of Destineer. Destineer shall have the right to utilize
PIN(s) and Cap Codes which are not utilized by Reseller, as well as those
associated with deactivated Devices, as Destineer may determine from time to
time in its sole discretion.
7. SkyTel Marks. The SkyTel Services and Devices provided by Reseller to its
Subscribers shall be private branded (i.e., except to the extent otherwise
provided herein, Reseller shall have no right or authority to market, promote or
sell the SkyTel Services and related Devices under any brand, trade or service
marks owned by or licensed to Destineer or its Affiliates). Notwithstanding the
foregoing, Destineer shall, to the extent requested by Reseller, license to
Reseller the right to utilize the SkyTel Marks in connection with such
activities in accordance with and subject to the provisions set forth in Exhibit
"A-5" attached hereto.
8. Representations and Warranties. Each party represents and warrants to the
other that (a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of its incorporation; (b) it has all
requisite corporate power and authority to enter into this Agreement and to
carry out and perform its obligations under the terms of this Agreement; (c)
this Agreement has been duly authorized, executed, and delivered and constitutes
a valid and binding obligation of such party enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency, moratorium,
and other laws of general application affecting the enforcement of creditors'
rights; and (d) the execution, delivery, and performance of and compliance with
this Agreement does not and will not conflict with, or constitute a default
under, or result in the creation of, any mortgage, pledge, lien, encumbrance, or
charge upon any of the properties or assets of such party, nor result in any
violation of (i) any term of its certificate of incorporation or bylaws, (ii) in
any material respect, any term or provision of any mortgage, indenture,
contract, agreement, instrument, judgment, or decree, or (iii) to the best of
its knowledge, any order, statute, rule, or regulation applicable to such party,
the violation of which would have a material adverse effect on its business or
properties.
9. Limitation of Liabilities.
CONFIDENTIAL
<PAGE>
Terms and Conditions
Page 3
(a) DESTINEER AND ITS AFFILIATES MAKE NO WARRANTIES, EITHER EXPRESS OR
IMPLIED, CONCERNING THE SKYTEL SERVICES, THE SKYTEL NETWORK OR THE ANCILLARY
SERVICES, AND HEREBY EXPRESSLY DISCLAIM ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE. UNDER
NO CIRCUMSTANCES SHALL DESTINEER OR ITS AFFILIATES BE LIABLE TO RESELLER OR ANY
OTHER PERSON, INCLUDING, WITHOUT LIMITATION, SUBSCRIBERS, FOR ANY LOSS, INJURY,
OR DAMAGE, OF WHATEVER KIND OR NATURE, RESULTING FROM OR ARISING OUT OF ANY
MISTAKES, ERRORS, OMISSIONS, DELAYS OR INTERRUPTIONS IN THE RECEIPT,
TRANSMISSION, OR STORAGE OF ANY MESSAGES, SIGNALS OR INFORMATION ARISING OUT OF
OR IN CONNECTION WITH THE SKYTEL SERVICES OR USE OF THE SKYTEL NETWORK, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, DESTINEER AND ITS AFFILIATES SHALL IN
NO EVENT BE LIABLE TO RESELLER OR ANY OTHER PERSON, INCLUDING, WITHOUT
LIMITATION, SUBSCRIBER, FOR INDIRECT, INCIDENTAL OR SPECIAL DAMAGES, LOST
PROFITS, LOST SAVINGS OR ANY OTHER FORM OR CONSEQUENTIAL DAMAGES REGARDLESS OF
THE FORM OF ACTION, EVEN IF DESTINEER HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, WHETHER RESULTING FROM BREACH OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR OTHERWISE.
(b) DESTINEER MAKES NO WARRANTIES AS TO ANY DEVICES, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE, TO THE EXTENT LEGALLY PERMISSIBLE. DESTINEER SHALL
ASSIGN ALL MANUFACTURER'S WARRANTIES FOR SUCH DEVICES, IF ANY, TO RESELLER.
10. Term.
(a) The Initial Term of this Agreement shall be as specified on the
signature page of this Agreement. The term of this Agreement shall automatically
renew for additional, successive one (1) year terms at the expiration of the
Initial Term and at each anniversary thereof, unless either party provides the
other party with prior written notice of its intention not to renew this
Agreement at least ninety (90) days prior to the expiration of the then current
term.
(b) Upon any termination of this Agreement, Destineer and Reseller shall,
subject to the provisions of Sections 10(c) and 11(c) below, be released from
all obligations and liabilities to the other occurring or arising after the date
of such termination or the transactions contemplated hereby, except with respect
to those obligations which by their nature are designed to survive termination;
provided that no such termination will relieve Reseller from any amount due and
owing hereunder or any liability arising from any breach of this Agreement
occurring prior to termination.
(c) Termination of this Agreement shall not affect or diminish Reseller's
obligation to make payment to Destineer for services provided before or after
the date of termination, and such obligation shall survive termination of this
Agreement. Upon any termination of this Agreement, the parties shall, subject to
the provisions of Section 11(c) below, cooperate in good faith to effect an
orderly wind-down of the relationship created under this Agreement. Destineer's
provision of the SkyTel Services to Reseller following the date of any such
termination shall be expressly conditioned upon and subject to Reseller's
compliance with the Terms and Conditions of this Agreement, including, without
limitation, Reseller's timely payment to Destineer for services provided in
accordance with the first sentence of this Section 10(c).
11. Default.
(a) The following shall constitute an Event of Default: (i) failure by
Reseller to make any payment when due; (ii) failure by either party to observe
or perform in any material respect any of the covenants or agreements contained
in this Agreement; or (iii) a party's insolvency, assignment for benefit of
creditors, appointment or sufferance of appointment of a trustee receiver or
similar officer, or commencement of a proceeding seek reorganization,
rehabilitation, liquidation or similar relief under bankruptcy, insolvency or
similar debtor-relief statutes.
(b) Upon the occurrence of an Event of Default, the party not in ????
shall have the right to terminate this Agreement upon written notice to the
other party and the failure of the other party to cure such Default within
thirty (30) days of receiving such written notice. Notwithstanding anything
herein ???? the contrary. Destineer shall have the right, at its option, to
immediately terminate this Agreement, without further notice or right to cure,
upon ???? occurrence of any second or subsequent Default under Section 3(c) ????
within any given twelve (12) month period.
(c) In the event of termination of this Agreement by Destineer due ?????
the occurrence of an Event of Default by Reseller, Reseller shall provide
Destineer immediate access to all pertinent Subscriber records, including ????
not limited to, each Subscriber's name , address, PIN(s), and payment history as
well as all other Subscriber related records requested by Destineer whereafter
Destineer and its Affiliates shall have the absolute right, without notice to
Reseller, to take whatever action Destineer deems necessary ???? advisable to
solicit the business of such Subscribers for the benefit of Destineer and its
Affiliates. Reseller's obligations under this Section shall survive the
termination of this Agreement.
12. Assignment. This Agreement, including any rights or obligations and this
Agreement, may not be assigned or transferred, directly or indirectly, ???
either of the parties to any other Person without the prior written consent ???
the other party. In the event of any assignment or transfer of this Agreement
all terms and conditions hereof shall be binding upon and ???? to the assignee
as though such assignee were an original party herein. For purposes of this
provision, an "assignment" or "transfer" shall mean and include without
limitation, (a) any voluntary or involuntary assignment by Reseller ????
contract, law or otherwise, (b) the merger of Reseller or any controlling
Affiliate into any third Person, or (c) a change in control of Reseller or an
???? controlling Affiliate of Reseller that occurs by reason of (i) the sale of
controlling interest in the voting stock of Reseller or any controlling
Affiliate of Reseller, or (ii) a merger of a third Person into Reseller or any
controlling Affiliate of Reseller. Notwithstanding the above, Destineer may
assign this Agreement, without the prior consent of Reseller, to any Affiliate
of Destineer or to any Person acquiring all or substantially all of the assets
or a controlling interest in the voting stock of Destineer. SkyTel or any
controlling Affiliate of Destineer.
13. Indemnity and Insurance.
(a) Indemnity.
(i) Reseller shall defend, indemnify, and hold Destineer and its
Affiliates harmless from and against any and all liabilities, losses, damages
and costs, including reasonable attorney's fees, resulting from, arising out of,
or in any way connected with (A) any breach by Reseller of any warranty ??
representation, agreement, or obligation contained herein, (B) the performance
of Reseller's duties and obligations hereunder, or (C) any unauthorized use of
the SkyTel Marks by Reseller. Reseller's obligations under this Section shall
survive the termination of this Agreement.
(ii) Destineer shall defend, indemnify, and hold Reseller harmless
from and against any and all liabilities, losses, damages and costs, including
reasonable attorney's fees, resulting from, arising out of, or in any way
connected with (A) any breach by Destineer of any warranty, representation,
agreement, or obligation contained herein, or (B) the performance of Destineer's
duties and obligations hereunder. Destineer's obligations under this Section
shall survive the termination of this Agreement.
(b) Insurance. Reseller shall maintain comprehensive general liability
insurance in a combined single limit of not less than [***], which shall
cover bodily injury (including death) and property damage. Purchase and
CONFIDENTIAL
<PAGE>
maintenance of such insurance shall not be construed as relieving Reseller of
any of its obligations hereunder.
14. Confidentially. Each party acknowledges that, during the term of this
Agreement, it will be entrusted with Confidential Information relating to the
business of the other party. Neither party will use the other's Confidential
Information for purposes other than those necessary to further the purposes of
this Agreement. Neither party will disclose to third Persons the other's
Confidential Information without the prior written consent of the other party.
Each party understands, acknowledges and agrees that the terms and conditions of
this Agreement are confidential and restricted by this Section as to disclosure
to any third Person. Should either party be required under applicable law, rule
or regulation, or pursuant to the order of any court or governmental entity of
legal process of any governmental entity of competent jurisdiction to disclose
Confidential Information of the disclosing party in the receiving party's
possession, custody or control, the receiving party shall use commercially
reasonable efforts to: (a) give at least thirty (30) days prior written notice
of such disclosure to the disclosing party: (b) limit such disclosure; and (c)
make such disclosure only to the extent so required. The parties' obligations
hereunder with respect to Confidential Information shall survive the expiration
or earlier termination of this Agreement.
15. Notices. Any notice or other communication herein required or permitted to
be given shall be in writing and may be personally served, telecopied, telexed,
or sent by overnight courier, and shall be deemed to have been received when (a)
delivered in person or received by telecopy or telex, or (b) one (1) business
day after delivery to the office of such overnight courier service with postage
prepaid and properly addressed to the other party, at the following respective
addresses:
To Destineer: Destineer Corporation
200 South ?? Street
?? Centre South, Suite 1006
Jackson, Mississippi 39201
Telephone:(601) 944-1300
Fascimile: (601) 944-3225
Attention: Senior Vice President, Wholesale Distribution
To Reseller: See address specified on the signature page of this Agreement.
or to such other address or addresses as either party may from time to time
designate as to itself by like notice.
16. Miscellaneous.
(a) Laws, Rules and Regulations. This Agreement is subject to all laws,
rules, regulations, and ordinances relative to, among other things, the
provision of wireless messaging services, including, without limitation, the
Communications Act of 1934 and the Telecommunications Act of 1996, as amended,
and all rules and regulations promulgated thereunder.
(b) Force Majeure. Neither party will be liable for any nonperformance
under this Agreement due to causes beyond its reasonable control that ?? not
have been reasonably anticipated by the non-performing party as of Effective
Date and that cannot be reasonably avoided or overcome; provided the non-
performing party gives the other party prompt written notice such cause
promptly, and in any event within fifteen (15) calendar days discovery thereof.
(c) Independent Parties. None of the provisions of this Agreement shall
be deemed to constitute a partnership, joint venture, or any other ??
relationship between the parties hereto, and neither party shall have ??
authority to blad the other in any manner. Neither party shall have or ?? itself
out as having any right, authority or agency to act on behalf of the other party
in any capacity or in any manner, except as may be ????????? authorized in this
Agreement.
(d) Applicable Law. The validity, construction and performance of ??
Agreement will be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the principles of conflict of laws.
(c) Severability. If any provision of this Agreement shall be held in ??
illegal, invalid, or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the parties, and the
validity, legality, and enforceability of the remaining provisions shall not any
way be affected or impaired thereby.
(f) No Waiver. No delay or failure by Destineer in exercising any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right. Failure Destineer to enforce
any right under this Agreement will not be deemed a waiver of future enforcement
of that or any other right.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument.
(h) Headings. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
(i) Construction. This Agreement has been negotiated by the parties and
their respective counsel. This Agreement will be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either party based on draftmanship of the Agreement or otherwise.
(j) Complete Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
and replaces all prior or contemporaneous understandings or agreements, written
or oral, between Reseller and Destineer or any of its Affiliates regarding such
subject matter. No amendment to or modification of this Agreement will be
binding unless in writing and signed by a duly authorized representative of both
parties.
Revised June 25, 1997
CONFIDENTIAL
<PAGE>
Exhibit "A"
Ancillary Services
Destineer shall provide the Ancillary Services and rights set forth in the
attachments designated below at the prices set forth in such attachments.
Exhibit "A-1"; Training
Exhibit "A-2"; Reseller Support Services
Exhibit "A-3"; Device Repair and Replacement Services
Exhibit "A-4"; Sales and Marketing Services
Exhibit "A-5"; License Rights
<PAGE>
EXHIBIT "A-2"
PAGE 1 OF 1
EXHIBIT "A-1"
TRAINING
1. As a condition of the rights granted to Reseller hereunder to resell SkyTel
Services utilizing the advanced messaging network owned and operated by
Destineer and its Affiliates, all personnel of Reseller involved in the
promotion, marketing and sale of such services shall undergo and successfully
complete the training and certification program established by Destineer for
resellers of such services, which program and certification process shall be
conducted in accordance with Destineer policies and procedures and which may be
amended by Destineer from time to time. Only such personnel of Reseller that
have completed such training and certification program to the satisfaction of
Destineer may represent Reseller in the sale and support of such services. Such
training and certification program shall be implemented on a fair and even basis
with respect to Reseller, as with all resellers of such services, and shall be
imposed on Reseller only to the extent Destineer reasonably believes is
necessary (a) to familiarize such personnel with the advanced messaging network
owned and operated by Destineer and its Affiliates, the SkyTel Services provided
over such network, and use of the related Devices, and (b) for Reseller to
promote and market such services in a professional and competent manner.
2. At no charge to Reseller, Destineer shall, at times and locations mutually
agreeable to the parties, train a mutually agreeable number of Reseller's
personnel to conduct such training and certification programs for Reseller's
employees on behalf of Destineer. To the extent requested by Reseller, Destineer
shall also conduct training and certification programs for Reseller's other
personnel; provided, however, that, in such an event, Reseller shall bear all
costs and expenses associated with such training and certification programs,
shall reimburse Destineer for all reasonable out-of pocket travel and lodging
expenses, and shall pay to Destineer the fees and charges, as applicable, as
specified in the attached pricing schedule.
3. To the extent requested by Reseller, Destineer shall also conduct, at times
locations mutually agreeable to Reseller and Destineer, training sessions for
employees of Reseller involved in the promotion, marketing and sale of SkyTel's
one-way wireless messaging services. Reseller shall bear all costs and expenses
associated with such training sessions, shall reimburse Destineer for all
reasonable out-of pocket travel and lodging expenses, and shall pay to Destineer
the fees and charges, as applicable, as specified in the attached pricing
schedule.
CONFIDENTIAL
<PAGE>
EXHIBIT "A-2"
PAGE 1 OF 1
TRAINING PRICING SCHEDULE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Item Price Description
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Print Materials
- ----------------------------------------------------------------------------------------------------------------------------------
1. SkyGuide $**** per copy, print Workbook with written exercises and quizzes (SkyTel Cor
$**** per disk, elec cpy Products/Svcs)
- ----------------------------------------------------------------------------------------------------------------------------------
2. 5-day selling skills course $***** per manual, print 12 modules for selling skills: presentation skills
$**** per module, print competition; presenting SkyTel capabilities; intro to
$**** per disk, elec cpy SkyTel sales process; selling in F1000; building acct.
relationships letter writing; telemarketing; qualifying
customers and identifying applications; selling the
SkyTel solution account maintenance; developing an
action plan
- ----------------------------------------------------------------------------------------------------------------------------------
3. Customer Service Instructor's $***** per manual, print The SkyTel System (one-way system only)
Guide $**** per disk, elec cpy
- ----------------------------------------------------------------------------------------------------------------------------------
4. Customer Service Participant $***** per manual, print The SkyTel System (one-way system only)
Guide for one-way services $**** per disk, elec cpy
- ----------------------------------------------------------------------------------------------------------------------------------
5. Self-study guides $**** per copy, print Ex: intro to networked environments; popular LAN-based
$**** per disk, elec cpy e-mail systems
- ----------------------------------------------------------------------------------------------------------------------------------
6. Edits to print materials $** per hour
- ----------------------------------------------------------------------------------------------------------------------------------
Audiocassette
- ----------------------------------------------------------------------------------------------------------------------------------
Basic Selling Skills $***** per set Set of 6 audiocassettes with workbook (audio scripts and
Worksheets)
- ----------------------------------------------------------------------------------------------------------------------------------
Video
- ----------------------------------------------------------------------------------------------------------------------------------
1. Custom Video $****** per finished Includes scripting, production, and editing
minute
- ----------------------------------------------------------------------------------------------------------------------------------
2. Video duplication $**** per tape duplication for custom videotape
- ----------------------------------------------------------------------------------------------------------------------------------
3. 2-Way Coverage $**** per tape
- ----------------------------------------------------------------------------------------------------------------------------------
4. 5 minutes to Tango $**** per tape covers hardware features for the 2-Way unit
- ----------------------------------------------------------------------------------------------------------------------------------
Facilitated Training
- ----------------------------------------------------------------------------------------------------------------------------------
Products & Svc, Operations $*** per day Plus T&E, and cost of duplicating materials
Selling Skills $*** per day Plus T&E, and cost of duplicating materials
- ----------------------------------------------------------------------------------------------------------------------------------
Computer Based Materials
- ----------------------------------------------------------------------------------------------------------------------------------
1. COMPEL, presentations $**** per module; Basic PC Requirements: 8 MB RAM: 16MB preferred 486
(multimedia) for one-way includes speakers notes, minimum; Pentium preferred; color monitor optional;
products and services, 10 all on disk. sound blaster compatible sound card
modules/disks 10 modules/disks
- ----------------------------------------------------------------------------------------------------------------------------------
2. Develop New PowerPoint $*/slide, color electronic version only; PC format
presentations
- ----------------------------------------------------------------------------------------------------------------------------------
3. Existing PowerPoint $**** per disk, electronic
Presentations version only
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONFIDENTIAL
* Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
<PAGE>
Exhibit "A-2"
Page 1 of 1
Revised October 25, 1996
Exhibit "A-2"
Reseller Support Services
Destineer shall provide telephone support to Reseller five (5) days a week
(excluding Destineer recognized holidays) during the hours of 7:00 a.m. to 7:00
p.m. CST to assist Reseller in Subscriber related matters. To the extent
Reseller utilizes Destineer to support base functions for Subscribers capable of
being supported by Reseller, Destineer reserves the right to charge Reseller a
service fee of $[***] per call times the number of Subscriber PINs covered by
the call.
Revised October 10, 1996
CONFIDENTIAL
* Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT "A-3"
PAGE 1 OF 1
Exhibit "A-3"
Device Repair and Replacement Services
Notwithstanding the provisions of Section 9(b) of the Terms and Conditions,
Destineer shall, at Reseller's request, repair or replace defective or damaged
Devices sold to Reseller by Destineer in accordance with Section 6(b) of the
Terms and Conditions, if any, for which claims are made during the applicable
manufacturer's warranty period, subject to any limitations contained in the
applicable manufacturer's warranty. Destineer shall not be responsible for any
costs or expenses related to the repair or replacement of Devices which are not
covered by an applicable manufacturer's warranty (including, without limitation,
shipping costs). In the event that Destineer elects to replace in warranty
Devices in connection with this Exhibit "A-3", Reseller shall reasonably assist
Destineer in coordinating such replacement efforts with its Subscribers.
Revised October 11, 1996
CONFIDENTIAL
<PAGE>
EXHIBIT "A-4"
PAGE 1 OF 1
Exhibit "A-4"
Sales and Marketing Services
Specific services and pricing have yet to be developed, but, subject to the
mutual agreement of the parties, may be added to this Exhibit "A-4" at a later
time.
CONFIDENTIAL
<PAGE>
Exhibit "A-5"
Page 1 of 1
Exhibit "A-5"
License Rights
1. To the extent requested by Reseller, and subject to the provisions set
forth herein, Destineer hereby grants to Reseller a non-exclusive, non-
transferable license, during the term of this Agreement, to use the SkyTel Marks
soley in connection with the marketing, advertisement and promotion of the
SkyTel Services; provided, however, that Reseller shall have no such license or
right to use the SkyTel Marks, and Reseller shall be expressly prohibited from
using the SkyTel Marks, in connection with activities performed by Reseller in
the Retail Distribution (as such term is defined below) of the SkyTel Services.
Reseller's use of the SkyTel Marks in all marketing, advertising and promotional
materials and activities shall be subject to the prior written approval of
Destineer, which shall not be unreasonably withheld or delayed. Reseller shall
comply with all guidelines provided by Destineer with respect to the graphic
reproduction and use of the SkyTel Marks. This license cannot be sub-licensed,
assigned or otherwise transferred by Reseller to any third Person without the
express prior written consent of Destineer. The license granted by Destineer to
Reseller hereunder shall automatically and immediately terminate upon any
termination of this Agreement.
2. The license granted to Reseller herein is subject to the reservation in
Destineer of all right, title, and interest in and to the SkyTel Marks.
Reseller's right to use the SkyTel Marks shall be limited to and shall arise
only out of the license granted hereunder. Reseller shall not assert the
invalidity, unenforceabillity, or contest the ownership by Destineer or its
Affiliates of the SkyTel Marks in any action or proceeding of any kind or
nature, and shall not take any action that may prejudice Destineer's rights in
the SkyTel Marks, render the same generic, or otherwise weaken their validity or
diminish their associated goodwill.
3. In consideration of such license rights, Reseller shall pay to Destineer,
on a monthly basis, a royalty equal to $[***] per Device activated by Reseller
on the SkyTel Network, from and after the Effective Date, which bears a SkyTel
Mark. Reseller shall (a) cooperate with Destineer in good faith to keep
Destineer timely apprised of the number of Devices utilized by Reseller which
bear or incorporate a SkyTel Mark, and (b) keep and maintain commercially
appropriate books and records as may be reasonably necessary to verify the
number of such Devices utilized by Reseller and the amount of royalties due to
Destineer on account thereof. During the term of this Agreement and for a period
of two (2) years thereafter, Destineer shall be entitled, on reasonable advance
written notice to Reseller, to retain independent certified public accountants
to review Reseller books and records for the purpose of verifying the accuracy
of the accounting for royalties paid to Destineer in accordance with this
Exhibit "A-5". Any underpayment or overpayment determined as a result of the
review will be reflected in the next scheduled royalty payment by Reseller to
Destineer. If such review verifies an underpayment error of greater than
[***] of the aggregate roylaties paid for the period being reviewed.
Reseller shall pay the cost of such examination, and in any event, shall
promptly pay to Destineer the amount of such underpayment plus [***] annual
simple interest on the underpayment, commencing when the underpayment should
have been paid and ending when the underpayment is paid.
4. Reseller's right to utilize the SkyTel marks, and the license granted
hereunder, is expressly conditioned upon, in addition to Reseller's compliance
with all Terms and Conditions of the Agreement, Reseller meeting and complying
with the following conditions:
(a) Reseller shall use the SkyTel Marks only in connection with the
marketing, advertisement and promotion of the SkyTel Services, and shall at all
times conduct such marketing, advertisement and promotional activities in a
professional and competent manner, as well as within any additional conditions
and limitations which Destineer may impose from time to time.
(b) Reseller shall establish and maintain a customer support division to
assist Subscribers which operates and is available to Subscribers twenty-four
(24) hours a day, seven (7) days a week, and shall comply with all other service
quality standards promulgated by Destineer from time to time.
5. As used herein, the term "Retail Distribution" shall mean and include sales
or other activities performed with or in the following channels: (a) traditional
consumer electronics retailers, (b) direct mail/catolog retailers (e.g.
Crutchfield, Sharper Image, llammacher-Schlemmer, and other such mass merchants
selling directly to end-users through direct marketing communications), (c)
direct marketing activities, (d) military retail dealers, (e) office supply and
other specialty dealers (e.g., office/computer supply, beeper stores), and (f)
premium/inceptive companies. For purposes of this definition, the term "direct
marketing activities" means any activities conducted by, or in conjunction with,
retailers, including, for example, using outside sales forces or placing
advertisements or promotional materials in catalogs of retail-oriented
companies. The term "direct marketing activities" does not, however, include the
placement of advertisements in media (other than (a) through (f) above) directly
and solely by Reseller.
6. The failure of Reseller to abide by and comply with any of the provisions
set forth in this Exhibit "A-5" shall give Destineer, at its sole discretion,
the right, in addition to any other rights afforded to Destineer in the
Agreement, to immediately revoke and terminate the license granted hereunder.
Revised October 14, 1996
CONFIDENTIAL
* Pricing information has been omitted from this Exhibit and from the Agreement
pursuant to a confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT "B"
PAGE 1 OF 1
Exhibit "B"
Authorized Devices
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Manufacturer Model Equipment Type Baud Rate Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One-Way Network:
Motorola Bravo* Numeric 2400 [***]
Motorola Bravo Plus* Numeric 2400 [***]
Motorola Advisor Gold Alpha-Flex 6400 $[***]
Motorola FLX(TM) Alpha-Flex 6400 [***]
Motorola Wordline FLX(TM) Numeric-Flex 6400 $[***]
Motorola Bravo FLX(TM) Numeric-Flex 6400 $[***]
Motorola Pro Encore FLX(TM) Numeric-Flex 6400 [***]
Motorola Pronto FLX(TM) Numeric-Flex 6400 [***]
Motorola Ultra Express Numeric-Flex 6400 [***]
NEC FLX(TM) Numeric-Flex 6400 [***]
Express Extra
Two-Way Network: FLX(TM)
Exec
Motorola Alphanumeric- 6400 $[***]
Motorola Reflex 6400 $[***]
Wireless Access Alphanumeric- 6400 $[***]
PageFinder Reflex
Tango Alphanumeric-
AccessLink Reflex
- ------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
* May only be used by Subscribers authorized to receive International Service
in non-Flex capable countries. Use of alphanumeric POCSAG pagers by
Subscribers in connection with activations of International Service
following the Effective Date shall be subject to Destineer's approval on a
case-by-case basis.
CONFIDENTIAL
* Pricing information has been omitted from this Exhibit and from the
Agreement pursuant to a confidential treatment request filed with the
Commission.
<PAGE>
EXHIBIT "C"
PAGE 1 OF 1
EXHIBIT "C"
SKYTEL MARKS
1. How the World Stays in Touch(SM)
2. Nationwide Now(SM)
3. SkyMail(R)
4. SkyNews(R)
5. SkyPager(R)
6. SkyTalk(R)
7. SkyTel(R)
8. SkyTel logo(R) (one-way and two-way)
9. SkyTel 2-Way(SM)
10. SkyTel Access(TM) Software
11. SkyWord(R)
12. SkyWord Access(TM) Software
13. SkyWriter(TM)
REVISED OCTOBER 10, 1996
CONFIDENTIAL
<PAGE>
EXHIBIT "D"
PAGE 1
Exhibit "D"
SkyTel Services
I. ONE-WAY NETWORK:
A. Basic Services: Any one-way wireless messaging capabilities provided
by or through SkyTel in the United States which Destineer makes
available for resale by third parties that constitute "basic
services", as defined under applicable FCC rules, policy statements or
other FCC pronouncements. Basic Services presently consist of those
services described below.
1. SkyPager: Numeric service.
2. SkyWord: Alphanumeric service.
B Enhanced Services: Any one-way wireless messaging capabilities
provided by or through SkyTel in the United States which Destineer
makes available for resale by third parties that constitute "enhanced
services", as defined under applicable FCC rules, policy statements or
other FCC pronouncements. Enhanced Services presently consist of those
services described below.
1. Operator Dispatch: Operator assistance to generate alphanumeric
messages.
2. Voice Mail: Voice mailbox that accepts detailed messages from
callers and notifies the Subscriber that a message has been
received (generic and SkyTalk branded).
3. SkyNews:* News headlines provided twice daily free of charge.
4. International Service: Provision of the SkyTel Services, on a
"follow me" basis, over the global messaging network owned and
operated by Desineer's Affiliate, Mtel International, Inc.
C. Coverage:
1. Nationwide: Covers service areas in all fifty (50) states.
2. Regional: Divides country into six (6) zones; Subscriber may
select any one (1) zone.
3. Metro: Divides country into sixty (60) zones; Subscriber may
select any one (1) zone.
4. Nationwide Now: Subscriber may temporarily expand Regional or
Metro coverage to Nationwide coverage.
II. TWO-WAY (ADVANCED MESSAGING) NETWORK:
A. Basic Services: Any wireless messaging capabilities provided by or
through SkyTel in the United States utilizing narrowband PCS
frequencies which Destineer makes available for resale by third
parties that constitute "basic services", as defined under applicable
FCC rules, policy statements or other FCC pronouncements. Basic
Services presently consist of those services described below.
1. SkyWord Plus: Alphanumeric Services.
2. SkyTel 2-Way: Alphanumeric Services.
B. Enhanced Service: Any wireless messaging capabilities provided by or
through SkyTel in the United States utilizing narrowband PCS
frequencies which Destineer makes available for resale by third
parties that constitute "enhanced services", as defined under
applicable FCC rules, policy statements or other FCC pronouncements.
Enhanced Services presently consist of those services described below.
1. Operator Dispatch: Operator assistance to generate alphanumeric
messages.
2. Voice Mail: Voice mailbox that accepts detailed messages from
callers and notifies the Subscriber that a SkyTalk message has
been received (generic and SkyTalk branded).
3. SkyNews:* News headlines provided twice daily free of charge.
C. Coverage: All SkyTel Plus and SkyTel 2-Way coverage locations across
the nation.
Notes to Exhibit "D":
* To the extent Reseller utilizes the "SkyNews" service or any other
information service provided by Destineer and its Affiliates which contains
informational content and data ("Licensed Content") supplied through Dow Jones &
Company, Inc. or any other Person unaffiliated with Destineer (a "Content
Provider"). Reseller agrees to, and shall ensure that each of its Subscribers
procuring any such services from Reseller agrees to (through incorporation of
appropriate provisions in its Subscriber agreements), the following: (a) that
Reseller (except to the extent permitted in this Agreement) and its Subscribers
shall not republish reproduce, redistribute, broadcast, display or resell any
headline, information or other content contained in the Licensed Content, (b)
that the Licensed Content is the property of the Content Provider and its
licensors and may be protected by copyright, and that neither Reseller nor its
Subscribers shall acquire any proprietary interest in the Licensed Content, (c)
that the Content Provider, its licensors, Destineer and its Affiliates disclaim
all warranties, including the implied warranties of mechantability or fitness
for a particular purpose, for the Licensed Content and that the Content
Provider, its licensors, Destineer and its Affiliates disclaim all liability to
Reseller and its Subscribers with respect to the Licensed Content, including,
without limitation, for any negligence or errors in procuring, editing, writing,
reporting or delivering the Licensed Content, and for any inaccuracies or errors
in or omission from, the Licensed Content, and for any indirect, incidental,
consequential or special damages arising therefrom.
REVISED JUNE 25, 1997
CONFIDENTIAL
<PAGE>
Exhibit "E"
Page 1 of 4
Exhibit "E"
RATES AND CHARGES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SKYTEL One-Way Network Advanced Messaging Network
SERVICES (SkyTel F1 & F2) (Destineer F1)
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Services SkyPager Skyword SkyWord Plus SkyTel 2-Way
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC SERVICES - MONTHLY RECURRING CHARGE/4/
- -----------------------------------------------------------------------------------------------------------------------------------
Coverage Nationwide Regional Metro Nationwide Regional Metro Nationwide Nationwide
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 - 1,000 UIS/e/ $***** $***** $***** $***** $***** $***** $***** $*****
1,001 - 2,500 UIS $***** $***** $***** $***** $***** $***** $***** $*****
2,501 - 5,000 UIS $***** $***** $***** $***** $***** $***** $***** $*****
5,001 - 10,000 UIS $***** $***** $***** $***** $***** $***** $***** $*****
10,001 - 20,000 UIS $***** $***** $***** $***** $***** $***** $***** $*****
20,001 - 40,000 UIS $***** $***** $***** $***** $***** $***** $***** $*****
40,001 - 50,000 UIS $***** $***** $***** $***** $***** $***** $***** $*****
50,000 + UIS $***** $***** $***** $***** $***** $***** $***** $*****
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC SERVICES - OVERCALL INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
Characters Per Message Block *** *** *** *** *** *** *** ***
Block Allowance/ UIS/Month *** *** *** *** *** *** *** ***
Charge/Block in Excess of Allowance *** *** *** *** *** *** *** ***
- ------------------------------------------------------------------------------------------------------------------------------------
ONE TIME CHARGES
- ------------------------------------------------------------------------------------------------------------------------------------
Activation Fee (d) $**** $**** $**** $**** $0**** $**** $**** $****
Operator Dispatch Registration Fee **** **** **** $**** $5**** $**** $**** $****
- ------------------------------------------------------------------------------------------------------------------------------------
ENHANCED SERVICES - MONTHLY RECURRING CHARGES
- ------------------------------------------------------------------------------------------------------------------------------------
Personal 800/888 Number $**** $**** $**** $**** $**** $**** $**** $****
Voice Mail (includes 45 min/mon/UIS):
Generic $**** $**** $**** $**** $**** $**** $**** $****
SkyTalk Branded $**** $**** $**** $**** $**** $**** $**** $****
- ------------------------------------------------------------------------------------------------------------------------------------
ENHANCED SERVICES - USAGE/OVERCALL CHARGES
- ------------------------------------------------------------------------------------------------------------------------------------
Operator Dispatch (charge per message) *** *** *** *** *** *** *** ***
Voice Mail (per min. charge over 45 min.
allowance): Generic *** *** *** *** *** *** *** ***
SkyTalk Branded *** *** *** *** *** *** *** ***
Nationwide Now (per message block) *** *** *** *** *** *** *** ***
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONFIDENTIAL
<PAGE>
EXHIBIT "E"
PAGE 2 OF 4
NOTES:
(a) Services provided over the Skytel Network to Reseller prior to the
Effective Date for resale to Subscribers which are not identified in the
pricing schedule will continue to be provided on a "grandfather" basis at
Reseller's existing prices through June 30, 1997, at which time such
services shall be eliminated.
(b) Pricing is conditioned on use of FLEX technology pagers. Services provided
in connection with POCSAG pagers will incur an additional **% surcharge on
monthly recurring fees and an additional **% surcharge on overcall/usage
charges (with the exception of POCSAG pagers which are utilized by
Subscribers authorized to receive International Service in non-FLEX capable
countries). Reseller shall remove all 1200 baud alphanumeric POCSAG pagers
from the SkyTel Network on or before December 31, 1996. Reseller shall
remove all 1200 baud numeric POCSAG pagers form the SkyTel Network on or
before October 1, 1997.
(c) In the event interconnection carriers from which Destineer and its
Affiliates procure toll-free services are allowed, as a result of any rule,
regulation or order implemented by the FCC, to pass through local exchange
carrier or other surcharges which increase Destineer's and its Affiliates'
net toll-free telephone related costs, Destineer reserves the right to
allocate to Reseller those portions of such surcharges that can be
attributed to Reseller's and its Subscriber's usage of the SkyTel Services.
(d) Includes airtime and non-specialized SkyNews services.
(e) For pricing tier purposes, all one-way and two-way UIS are aggregated.
(f) "No charge" pricing conditioned upon activation by Reseller through
electronic means acceptable to Destineer; a $***** activation fee will be
imposed for each service account Reseller activates through Destineer
customer service.
REVISED JUNE 25, 1997
<PAGE>
EXHIBIT "E"
PAGE 3 OF 4
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SERVICES(R)
- ------------------------------------------------------------------------------------------------------------------------------------
Service Type S??least(b) Follow-Me Frequent(c) Follow-Me(d)
- ------------------------------------------------------------------------------------------------------------------------------------
CANADA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Numeric:
Monthly Recurring Charge $**** $****** $****
Message Allowance/UIS Month (20 characters message limit) *** *** **
Charge per Message in Excess of Allowance $ **** $ **** $****
Alphanumeric
Monthly Recurring Charge $***** $***** $****
Character Allowance/UIS/Month ***** ***** *
Charge per Character in Excess of Allowance ** ** **
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER COUNTRIES(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Numeric:
Monthly Recurring Charge $***** $***** $****
Message Allowance/UIS/Month (20 characters msg limit) *** *** *
Charge per Message in Excess of Allowance $ **** $ **** $****
Alphanumeric
Monthly Recurring Charge $***** $***** $****
Character Allowance/UIS/Month ***** ***** *
Charge per Character in Excess of Allowance ** ** **
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(a) Available for SkyTel One-Way Services only. All charges are in addition to
domestic charges.
(b) Messages broadcast in the United States and in one (1) Subscriber
designated country which cannot be changed.
(c) Messages broadcast in the United States and in one (1) Subscriber
designated country which can be changed at Subscriber's discretion.
(d) At Subscriber's direction, messages broadcast in the United States and in
one (1) Subscriber designated country, which can be changed at Subscriber's
discretion.
(e) Any country interconnected to the Global Messaging Network owned and
operated by Destineer's and SkyTel's Affiliate, Mtel International, Inc.
Revised October 11, 1996
CONFIDENTIAL
<PAGE>
Exhibit "E"
Page 4 of 4
- --------------------------------------------------------------------------------
INTERNATIONAL ONE-WAY VOICE MAIL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Charges Monthly Recurring Charge Per Minute/Overall Charges
<S> <C> <C>
- --------------------------------------------------------------------------------
Option A
- --------------------------------------------------------------------------------
America Service ** $****
Europe Service ** $****
Pacific Service ** $****
- --------------------------------------------------------------------------------
Option B
- --------------------------------------------------------------------------------
20 Minute Talk Time $***** $****
45 Minute Talk Time $***** $****
90 Minute Talk Time $****** $****
- --------------------------------------------------------------------------------
</TABLE>
Notes:
International Voice Mail Service conditioned on Subscriber having domestic Voice
Mail service. All Charges are in addition to domestic Voice Mail service
charges.
Usage and overcall transaction rates are per minute, billed in six (6) second
increments.
Message length options are 30 seconds, 1, 2, 3 or 5 minutes, with 3 minutes
being the standard.
Extended talk times delineated in Option B are from any international location
covered by the plan.
Revised October 14, 1996
<PAGE>
Exhibit 10.20
STOCK PURCHASE AGREEMENT
BY AND AMONG
SATELLINK PAGING, LLC,
AND
HYDE'S STAY IN TOUCH, INC.
AND
R. DANIEL HYDE, JR.
DATED AS OF APRIL 9, 1998
<PAGE>
<TABLE>
<CAPTION>
Page
----
CONTENTS
<S> <C>
PARTIES............................................................. 1
PREAMBLE............................................................ 1
ARTICLE 1 - PURCHASE AND SALE....................................... 1
1.1 Purchase and Sale.......................................... 1
1.2 Time and Place of Closing.................................. 1
1.3 Closing Balance Sheet...................................... 2
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF HYDE'S AND THE
SHAREHOLDER......................................................... 3
2.1 Organization, Standing, and Power.......................... 3
2.2 Authority of Hyde's; No Breach By Agreement................ 3
2.3 Authority of Shareholder; No Breach By Agreement........... 4
2.4 Capital Stock.............................................. 4
2.5 Hyde's Subsidiaries........................................ 5
2.6 Financial Statements....................................... 5
2.7 Absence of Undisclosed Liabilities......................... 5
2.8 Absence of Certain Changes or Events....................... 5
2.9 Tax Matters................................................ 6
2.10 Assets..................................................... 7
2.11 Intellectual Property...................................... 7
2.12 Environmental Matters...................................... 8
2.13 Compliance with Laws....................................... 9
2.14 Labor Relations............................................ 9
2.15 Employee Benefit Plans..................................... 9
2.16 Material Contracts......................................... 10
2.17 Legal Proceedings.......................................... 11
2.18 Reports.................................................... 11
2.19 Statements True and Correct................................ 11
2.20 Regulatory Matters......................................... 11
2.21 Charter Provisions......................................... 12
2.22 Consents and Approvals..................................... 12
2.23 Brokerage.................................................. 12
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SATELLINK............. 12
3.1 Organization, Standing, and Power.......................... 12
3.2 Authority; No Breach By Agreement.......................... 12
3.3 Brokerage.................................................. 13
ARTICLE 4 - CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS............. 13
4.1 Operation of Business Pending Closing...................... 13
4.2 Access to Information...................................... 14
4.3 Schedules.................................................. 14
4.4 Best Efforts............................................... 14
4.5 Exclusive Dealings......................................... 14
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
4.6 Expenses................................................... 15
4.7 Assignment of FCC License.................................. 15
4.8 Certain Tax Matters........................................ 15
ARTICLE 5 - CONDITIONS TO CLOSING.................................. 15
5.1 Conditions To Obligations Of Satellink..................... 15
5.2 Conditions to Obligations of Hyde's and Shareholder........ 17
ARTICLE 6 - TERMINATION............................................ 19
6.1 When Agreement May be Terminated........................... 19
6.2 Effect of Termination...................................... 19
6.3 Payment of Expenses on Termination......................... 19
ARTICLE 7 - INDEMNIFICATION........................................ 20
7.1 Definitions................................................ 20
7.2 Agreement of Buyer Indemnitor to Indemnify................. 21
7.3 Agreement of Seller Indemnitor to Indemnify................ 21
7.4 Procedures for Indemnification............................. 22
7.5 Third Party Claims......................................... 22
7.6 Indemnification Exclusive Remedy........................... 23
7.7 Time Limitations........................................... 24
7.8 Limitations as to Amount................................... 24
7.9 Subrogation................................................ 24
7.10 Satellink's Right of Set-Off............................... 24
7.11 Taxes and Insurance........................................ 25
ARTICLE 8 - MISCELLANEOUS......................................... 25
8.1 Definitions................................................ 25
8.2 Nature And Survival of Representations..................... 31
8.3 Amendment.................................................. 31
8.4 Waiver..................................................... 31
8.5 Governing Law.............................................. 32
8.6 Notices.................................................... 32
8.7 Invalid Provision.......................................... 33
8.8 Assignment................................................. 33
8.9 Binding Effect............................................. 33
8.10 Further Assurances......................................... 33
8.11 Headings................................................... 33
8.12 Person and Gender.......................................... 34
8.13 Entire Agreement........................................... 34
8.14 Arbitration................................................ 34
8.15 Breakup Fee................................................ 34
8.16 Execution in Counterparts.................................. 34
8.17 Interpretations............................................ 34
8.18 Confidentiality............................................ 35
SIGNATURES......................................................... 36
</TABLE>
-ii-
<PAGE>
LIST OF EXHIBITS
----------------
EXHIBIT DESCRIPTION
- -------- -----------
A. Form of Promissory Note.
B. Form of Hyde's' Legal Opinion.
C. Form of Non-Compete Agreement.
D. Form of Satellink's Legal Opinion.
-iii-
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of April 9, 1998, by and among SATELLINK PAGING, LLC ("SATELLINK"), A
GEORGIA LIMITED LIABILITY COMPANY,; AND HYDE'S STAY IN TOUCH, INC. ("HYDE'S"), A
LOUISIANA CORPORATION; AND THE SOLE SHAREHOLDER OF HYDE'S, R. DANIEL HYDE, JR.
("SHAREHOLDER").
PREAMBLE
--------
Shareholder is the record and beneficial owner of all of the issued and
outstanding shares of Hyde's Common Stock (the "SHARES"). Shareholder desires
to sell all of the Shares to Satellink, and Satellink desires to purchase the
Shares from Shareholder, upon the terms and subject to the conditions set forth
in this Agreement. The transactions described in this Agreement are subject to
the approval of the Federal Communications Commission (the "FCC") and the
satisfaction of certain other conditions described in this Agreement.
Certain terms used in this Agreement are defined in Section 8.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
PURCHASE AND SALE
-----------------
1.1 PURCHASE AND SALE. Upon the terms and subject to the conditions
-----------------
of this Agreement, Shareholder shall sell to Satellink, and Satellink shall
purchase from such Shareholder, all of the Shares (the "STOCK PURCHASE"). The
purchase price for the Shares purchased hereunder (the "PURCHASE PRICE") shall
be an amount equal to the Net Equity Value determined by reference to the
Closing Financial Data.
1.2 TIME AND PLACE OF CLOSING.
-------------------------
(a) The closing of the transactions contemplated hereby (the
"CLOSING") will take place at 9:00 A.M. on the date that the Closing Date
occurs, or at such other time as the Parties, acting through their authorized
officers, may mutually agree. The Closing shall be held at the offices of Alston
& Bird llp, 1201 W. Peachtree Street, Atlanta, Georgia 30309-3424. Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Closing to occur on the last business day of the
month in which the FCC consents to the transactions contemplated by this
Agreement; provided however, that if such Consent is granted
<PAGE>
on or after the twenty-fifth (25) calendar day of such month, then the Closing
will take place on the fifth business day of the following month.
(b) Not later than five (5) business days prior to the Closing Date,
Hyde's shall deliver or cause to be delivered to Satellink the Estimated
Financial Data. At the Closing Shareholder shall deliver to Satellink the
certificate or certificates representing the Shares sold by Shareholder
hereunder, which certificate shall be duly endorsed by Shareholder for transfer
to Satellink or accompanied by a duly executed assignment separate from such
certificate. At the Closing, Satellink shall (a) pay to Shareholder, against
delivery of a certificate or certificates duly endorsed for transfer
representing the Shares respectively sold hereunder by Shareholder an amount
equal to: (i) ninety percent (90%) of the Estimated Purchase Price, plus (ii)
all cash and cash equivalents held by Hyde's as of the Closing Date; plus (iii)
the aggregate purchase price of all pagers held in inventory by Hyde's as of the
Closing Date, which payment shall be made by certified check or wire transfer to
an account specified by Shareholder, and (b) deliver to Shareholder a promissory
note (the "NOTE") substantially in the form set forth as EXHIBIT A hereto in an
---------
amount equal to ten percent (10%) of the Estimated Purchase Price.
1.3 CLOSING BALANCE SHEET
---------------------
(a) Within thirty (30) days after the Closing Date, Shareholder will
cause to be prepared and delivered to Satellink the Closing Financial Data,
which Closing Financial Data shall be accompanied by a Schedule setting forth
the difference, if any, between the Net Equity Value based on the Closing
Financial Data and the Net Equity Value based on the Estimated Financial Data
(collectively, the "ADJUSTMENT DATA"), prepared in accordance with GAAP.
(b) Within thirty (30) days after receipt of the Adjustment Data (the
"NOTIFICATION PERIOD"), Satellink will notify Shareholder in writing of any
objections Satellink may have to the Adjustment Data. In the absence of such
written objections timely made, Satellink shall be deemed to have approved the
Adjustment Data for purposes of the adjustment, if any, to be made pursuant to
this Section 1.3 on the expiration of the Notification Period. If Satellink
timely notifies Shareholder in writing of objections to the Adjustment Data, and
if any such objections cannot be resolved by Shareholder and Satellink within
thirty (30) days after receipt by Shareholder of such objections, such dispute
shall immediately be referred to a mutually satisfactory independent certified
public accounting firm of national reputation which has not been employed by
either Satellink or Hyde's, or any affiliate of either Satellink or Hyde's,
during the one (1) year preceding the date of such referral and which has agreed
to meet the time deadlines imposed herein. The determination of such firm with
respect to such dispute (the "DETERMINATION"), which shall occur on or prior to
ninety (90) days after the Adjustment Data has been received by Satellink, shall
be conclusive and binding on the parties hereto. Satellink and Shareholder shall
each pay one-half of the fees of such firm incurred in resolving such dispute.
Hyde's shall, upon request of Satellink make available to Arthur Andersen & Co.,
accountants for Satellink, all work papers prepared in connection with the
preparation of the Closing Financial Data.
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<PAGE>
(c) If the aggregate amount of the Purchase Price based upon the Net
Equity Value based on the Closing Financial Data (as the same may be adjusted as
a result of any agreement between Shareholder and Satellink with respect to any
objection raised by Satellink or as a result of the Determination) is greater
than the Estimated Purchase Price, Satellink shall pay to Shareholder an amount
equal to such difference. Such payment shall be made by wire transfer within two
(2) business days following the earliest to occur of (i) final approval of the
Adjustment Data by Satellink, (ii) expiration of the Notification Period with no
written objections being received by Shareholder, or (iii) receipt by
Shareholder and Satellink of the Determination. If, however, the aggregate
amount of the Purchase Price based on the Net Equity Value based on the Closing
Financial Data (as the same may be adjusted as a result of any agreement between
Shareholder and Satellink with respect to any objection raised by Satellink as a
result of the Determination) is less than the Estimated Purchase Price,
Shareholder shall pay to Satellink an amount equal to such difference. Such
payment shall be made: (A) first by offsetting against the Note such difference;
and (B) the balance, if any, by wire transfer to the account of Satellink within
two (2) business days following the earliest to occur of: (i) final approval of
the Adjustment Financial Data by Satellink: (ii) expiration of the Notification
Period with no written objections being received by Shareholder; or (iii)
receipt by Shareholder and Satellink of the Determination.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
-------------------------------------------------
SHAREHOLDER HEREBY REPRESENTS AND WARRANTS TO SATELLINK AS FOLLOWS:
2.1 ORGANIZATION, STANDING, AND POWER. Hyde's is a corporation duly
---------------------------------
organized, validly existing, and in good standing under the Laws of the State of
Louisiana, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Hyde's operates and
conducts its business exclusively in the States of Louisiana and Texas (but only
through the ownership or lease of tower space and the transmission of paging
messages) and has applied to qualify to transact business as a foreign
corporation in good standing in the State of Texas. The minute book and other
organizational documents for Hyde's have been made available to Satellink for
its review and are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board and shareholders thereof.
2.2 AUTHORITY OF HYDE'S; NO BREACH BY AGREEMENT.
-------------------------------------------
(a) Hyde's has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Stock Purchase, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Hyde's. Subject to
such requisite shareholder approval, this Agreement represents a legal, valid,
and binding obligation of Hyde's, enforceable against Hyde's in accordance with
its terms.
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<PAGE>
(b) Neither the execution and delivery of this Agreement by Hyde's,
nor the consummation by Hyde's of the transactions contemplated hereby, nor
compliance by Hyde's with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Hyde's articles of incorporation or
bylaws or any resolution adopted by the Board of Hyde's, or (ii) except as
disclosed on SCHEDULE 2.2, constitute or result in a Default under, or require
any Consent pursuant to, or result in the creation of any Lien on any Asset of
Hyde's under any Contract or Permit of Hyde's or, (iii) constitute or result in
a Default under, or require any Consent pursuant to, any Law or Order applicable
to Hyde's or any of its material Assets (including any Satellink Entity or
Hyde's becoming subject to or liable for the payment of any Tax or any of the
Assets owned by any Satellink Entity or Hyde's being reassessed or revalued by
any Taxing authority).
(c) Other than Consents required from the FCC, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Hyde's of the Stock Purchase and the other transactions
contemplated in this Agreement.
2.3 AUTHORITY OF SHAREHOLDER; NO BREACH BY AGREEMENT.
------------------------------------------------
(a) Shareholder has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and Shareholder's
Closing Documents and to perform its obligations under this Agreement and
Shareholder's Closing Documents. This Agreement represents a legal, valid, and
binding obligation of Shareholder, enforceable against Shareholder in accordance
with its terms. Upon the execution and delivery by Shareholder of Shareholder's
Closing Documents, Shareholder's Closing Documents will constitute the legal,
valid, and binding obligations of Shareholder, enforceable against Shareholder
in accordance with their respective terms.
(b) Neither the execution and delivery of this Agreement by
Shareholder, nor the consummation by Shareholder of the transactions
contemplated hereby, nor compliance by Shareholder with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of Hyde's
articles of incorporation or bylaws, or (ii) except as disclosed on SCHEDULE
2.3, constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of Hyde's under, any
Contract or Permit of Hyde's, or, (iii) violate any Law or Order applicable to
Shareholder or to Hyde's or any of its material Assets.
(c) Other than Consents required from the FCC no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Shareholder of the transactions contemplated in this Agreement.
2.4 CAPITAL STOCK.
-------------
(a) The authorized capital stock of Hyde's consists of (i) 9,970.6424
shares of Hyde's Common Stock, of which 70.6424 shares are issued and
outstanding as of the date of this Agreement and not more than 70.6424 shares
will be issued and outstanding on the Closing Date, and (ii) no shares of
preferred stock. All of the issued and outstanding shares of capital stock of
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<PAGE>
Hyde's are duly and validly issued and outstanding and are fully paid and
nonassessable under the LBCL. None of the outstanding shares of capital stock
of Hyde's has been issued in violation of any preemptive rights of the current
or past shareholders of Hyde's.
(b) There are no shares of capital stock or other equity securities of
Hyde's outstanding and no outstanding Equity Rights relating to the capital
stock of Hyde's. Shareholder is the owner of all right, title and interest
(legal and beneficial) in and to all of the Shares , free and clear of all
Liens, and the Shares represent all of the issued and outstanding shares of
Hyde's capital stock. Except as specifically contemplated by this Agreement, no
Person has any Contract or any right or privilege (whether pre-emptive or
contractual) capable of becoming a Contract for the purchase from Shareholder of
any of the Shares, or any Contract or Equity Right for the purchase,
subscription or issuance of any securities of Hyde's.
2.5 HYDE'S SUBSIDIARIES. Hyde's does not, directly or indirectly,
-------------------
own any stock of, or other interest in, any Person. Hyde's does business under
the names Stay in Touch Paging, Stay in Touch of Monroe, Thrifty Paging and Stay
in Touch Paging of Natchitoches.
2.6 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.6 are (a)
--------------------
the audited balance sheets of Hyde's as of December 31, 1997, 1996 and 1995 and
the related statements of income, stockholders' equity and statements of cash
flows of each of the years ended December 31, 1997, 1996 and 1995 (the
"FINANCIAL STATEMENTS"). The Financial Statements: (a) have been prepared in
--------------------
accordance with GAAP consistently applied (except as may be indicated therein or
in the notes thereto); (b) present fairly the financial position of Hyde's as of
the dates indicated and present fairly the results of each of Hyde's operations
for the periods then ended; and (c) are in accordance with the books and records
of Hyde's, which have been properly maintained and, to the Knowledge of Hyde's,
are complete and correct in all material respects.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Hyde's does not have any
----------------------------------
Liabilities of the type required by GAAP to be reflected on the balance sheet of
Hyde's as of December 31, 1997 included in the Financial Statements which are
not reflected therein or in the notes thereto. Hyde's has not incurred or paid
any Liability since December 31, 1997, except for such Liabilities incurred or
paid: (i) in the ordinary course of business consistent with past business
practice; or (ii) in connection with the transactions contemplated by this
Agreement. Hyde's is not directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability or any Person.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1997,
------------------------------------
except as disclosed in the Financial Statements delivered prior to the date of
this Agreement: (i) there have been no events, changes, or occurrences which
have had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect; and (ii) Hyde's has not intentionally or grossly
negligently taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of Hyde's provided in Article 4.
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<PAGE>
2.9 TAX MATTERS. Except as set forth on SCHEDULE 2.9:
-----------
(a) Hyde's has timely filed with the appropriate Governmental
Authorities all required Tax Returns in all jurisdictions in which Tax Returns
are required to be filed, and such Tax Returns are correct and complete in all
material respects. Hyde's is not currently the beneficiary of any extension of
time within which to file any Tax Returns. All Taxes (whether or not shown on
any Tax Return) for all periods ending on or before the Closing Date, have been
fully paid or appropriate deposits or adequate accruals have been made therefor
in the Financial Statements and will be made therefor in the Estimated Financial
Data.
(b) The reserves for Taxes in the Estimated Financial Data will be
sufficient for the payment of all unpaid Liabilities for Taxes of Hyde's
(whether or not disputed) for all activities which occurred and all assets owned
for the periods ended on or before the Closing Date. Hyde's has not been
delinquent in the payment of any Tax, assessment, deposit or other charge by any
Governmental Authority and no Liability is pending or has been assessed,
asserted, or threatened against Hyde's or any of its assets in connection with
any Tax. Hyde's has not received any notice of assessment or proposed
assessment in connection with any Tax Returns and there are no pending Tax
examinations of or Tax claims asserted against Hyde's or any of its assets,
including without limitation, any claim by any Governmental Authority in any
jurisdiction where Hyde's did not file Tax Returns that Hyde's is or may be
subject to or liable for Taxes imposed by that Governmental Authority or
jurisdiction. There are no Liens for any Taxes on any of Hyde's assets.
(c) None of Hyde's Tax Returns have ever been audited by the IRS or
any other Governmental Authority and Hyde's has not waived any statute of
limitations in respect of Taxes or agreed to a Tax assessment or deficiency. For
federal income Tax purposes, Hyde's has been a "small business corporation" as
defined in Section 1361(b) of the Code with a valid election and qualified to be
taxed under the provisions of Subchapter S of the Code at all times during its
existence, and Hyde's will be an S corporation up to and including the Closing
Date. Hyde's has qualified at all times during its existence to be taxed under
similar provisions of state and local income Tax law in each jurisdiction in
which it is required to file Tax Returns. Hyde's has not filed any consent under
Section 341(f) of the Code relating to collapsible corporations. No Tax is
required to be withheld pursuant to Section 1445 of the Code as a result of any
of the transfers contemplated by this Agreement and Hyde's will provide any
certificate requested by Satellink at Closing with respect thereto.
(d) Neither Hyde's nor any Subsidiary of Hyde's has, in the past 10
years, acquired assets from another corporation in a transaction in which Hyde's
or such Subsidiary's Tax basis for the acquired assets was determined, in whole
or in part, by reference to the Tax basis of the acquired assets (or any other
property) in the hands of the transferor.
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<PAGE>
2.10 ASSETS.
------
(a) Hyde's has good and marketable title, free and clear of all
Liens, to all of its Assets. All tangible properties used in the businesses of
Hyde's are in good condition, reasonable wear and tear excepted, and are usable
in the ordinary course of business consistent with Hyde's past practices.
(b) All items of inventory of Hyde's reflected on the most recent
balance sheet included in the Financial Statements delivered prior to the date
of this Agreement and prior to the Closing Date consisted and will consist, as
applicable, of items of a quality and quantity usable and salable in the
ordinary course of business and conform to generally accepted standards in the
industry in which Hyde's is a part.
(c) The accounts receivable of Hyde's as set forth on the most recent
balance sheet included in the Financial Statements delivered prior to the date
of this Agreement or arising since the date thereof; have arisen solely out of
bona fide sales and deliveries of goods, performance of services and other
business transactions in the ordinary course of business consistent with past
practice; are not, to the Knowledge of Hyde's, subject to valid defenses, set-
offs or counterclaims; and are, to the Knowledge of Hyde's, collectible within
90 days after billing at the full recorded amount thereof.
(d) All Assets which are material to Hyde's business, held under
leases or subleases by Hyde's, are held under valid Contracts enforceable in
accordance with their respective terms, and each such Contract is in full force
and effect.
(e) Hyde's currently maintains insurance as set forth on SCHEDULE
2.10(E). Hyde's has not received notice from any insurance carrier that: (i) any
policy of insurance will be canceled or that coverage thereunder will be reduced
or eliminated; or (ii) premium costs with respect to such policies of insurance
will be substantially increased. Except as set forth on SCHEDULE 2.10(E) there
are presently no claims for amounts exceeding in any individual case $1,000
pending under such policies of insurance and no notices of claims in excess of
such amounts have been given by Hyde's under such policies.
(f) The Assets of Hyde's include all Assets required to operate the
business of Hyde's as presently conducted.
2.11 INTELLECTUAL PROPERTY. SCHEDULE 2.11 contains a true and
---------------------
complete list of all Intellectual Property owned or used by Hyde's, including a
brief description of each item of Intellectual Property and the nature of Hyde's
interest thereon. To the Knowledge of Hyde's, Hyde's owns or has a license to
use all of the Intellectual Property used by Hyde's in the course of its
business. Hyde's is the owner of or has a license to any Intellectual Property
sold or licensed to a third party by Hyde's in connection with Hyde's Entity's
business operations, and Hyde's has the right to convey by sale or license any
Intellectual Property so conveyed. Hyde's is not in Default under any of its
Intellectual Property licenses. No proceedings have been instituted, or
-7-
<PAGE>
are pending or to the Knowledge of Hyde's threatened, which challenge the rights
of Hyde's with respect to Intellectual Property used, sold or licensed by Hyde's
in the course of its business, nor has any person claimed or alleged any rights
to such Intellectual Property. To the Knowledge of Hyde's, the conduct of the
business of Hyde's does not infringe any Intellectual Property of any other
person and Hyde's has not received notice of any claim alleging such
infringement. Notwithstanding anything to the contrary set forth herein, there
has been no registration by Hyde's of any intellectual property other than the
registration of the name "Thrifty Paging" as a trade name, trademark and service
mark with the State of Louisiana and incorporation of Hyde's in the State of
Louisiana. Except as on SCHEDULE 2.11, Hyde's is not obligated to pay any
recurring royalties to any Person with respect to any such Intellectual
Property. Except as disclosed in SCHEDULE 2.11, every officer, director, or
employee of Hyde's is a party to any Contract which requires such officer,
director or employee to assign any interest in any Intellectual Property to
Hyde's and to keep confidential any trade secrets, proprietary data, customer
information, or other business information of Hyde's, and no such officer,
director or employee is party to any Contract with any Person other than Hyde's
which requires such officer, director or employee to assign any interest in any
Intellectual Property to any Person other than Hyde's or to keep confidential
any trade secrets, proprietary data, customer information, or other business
information of any Person other than Hyde's. Except as disclosed in SCHEDULE
2.11, no officer, director or employee of Hyde's is party to any Contract which
restricts or prohibits such officer, director or employee from engaging in
activities competitive with any Person, including Hyde's.
2.12 ENVIRONMENTAL MATTERS.
---------------------
(a) To the Knowledge of Hyde's, Hyde's, its Participation Facilities,
and its Operating Properties are, and have been, in compliance with all
Environmental Law, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of Hyde's,
threatened before any court, governmental agency, or authority or other forum in
which Hyde's or any of its Operating Properties or Participation Facilities (or
Hyde's in respect of such Operating Property or Participation Facility) has been
or, with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by Hyde's or any of its Operating Properties or Participation
Facilities, nor, to the Knowledge of Hyde's, is there any reasonable basis for
any Litigation of a type described in this sentence.
(c) During the period of (i) Hyde's ownership or operation of any of
its current properties, (ii) Hyde's participation in the management of any
Participation Facility, or (iii) Hyde's holding of a security interest in a
Operating Property, to the Knowledge of Hyde's, there have been no releases,
discharges, spillages, or disposals of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) such properties. Prior to
the period of (i) Hyde's ownership or operation of any of its current
properties, (ii) Hyde's participation in the
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management of any Participation Facility, or (iii) Hyde's holding of a security
interest in a Operating Property, to the Knowledge of Hyde's, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property.
2.13 COMPLIANCE WITH LAWS. Hyde's has in effect all Permits
--------------------
necessary for it to own, lease, or operate its Assets and to carry on its
business as now conducted, and there has occurred no Default under any such
Permit. Hyde's:
(a) is not in Default under any of the provisions of its articles of
Incorporation or bylaws (or other governing instruments);
(b) is not in Default under any Laws, Orders, or Permits applicable
to its business or employees conducting its business; or
(c) has not since January 1, 1995, received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that Hyde's is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening to
revoke any Permits or FCC Licenses, or (iii) requiring Hyde's to enter into
or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Satellink.
2.14 LABOR RELATIONS. Hyde's is not the subject of any Litigation
---------------
asserting that it has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or comparable state law) or seeking to compel
Hyde's to bargain with any labor organization as to wages or conditions of
employment, nor is Hyde's party to any collective bargaining agreement, nor is
there any strike or other labor dispute involving Hyde's, pending or threatened,
or to the Knowledge of Hyde's, is there any activity involving Hyde's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
2.15 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Except as set forth on SCHEDULE 2.15, Hyde's has no pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, written
employee programs, arrangements, or agreements, medical, vision, dental, or
other health plans, life insurance plans, and other employee benefit plans or
fringe benefit plans, including "employee benefit plans" as that term is defined
in Section 3(3) of ERISA, currently adopted, for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees,
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<PAGE>
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "HYDE'S BENEFIT
PLANS").
(b) Hyde's has not engaged in a transaction with respect to any Hyde's
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof, would subject Hyde's to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA.
(c) Within the six-year period preceding the Closing Date, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by Hyde's with respect to any ongoing, frozen, or terminated single-
employer plan or the single-employer plan of any ERISA Affiliate. Hyde's has not
incurred any withdrawal Liability with respect to a multi-employer plan under
Subtitle B of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Hyde's Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(d) Hyde's does not have any Liability for retiree health and life
benefits under any of the Hyde's Benefit Plans and there are no restrictions on
the rights of Hyde's to amend or terminate any such retiree health or benefit
Plan without incurring any Liability thereunder.
(e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of Hyde's from Hyde's
under any Hyde's Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Hyde's Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit.
(f) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Hyde's and their respective beneficiaries, other than entitlements
accrued pursuant to funded retirement plans subject to the provisions of Section
412 of the Internal Revenue Code or Section 302 of ERISA, have been fully
reflected on the Hyde's Financial Statements to the extent required by and in
accordance with GAAP.
2.16 MATERIAL CONTRACTS. Except as disclosed on SCHEDULE 2.16, Hyde's
------------------
is not, nor are any of Hyde's Assets, businesses, or operations, a party to, or
bound or affected by, or receives benefits under: (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $20,000; (ii) any Contract
relating to the borrowing of money by Hyde's or the guarantee by Hyde's of any
such obligation (other than Contracts evidencing trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business);
(iii) any Contract which prohibits or restricts Hyde's from engaging in any
business activities in any geographic area,
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<PAGE>
line of business or otherwise in competition with any other Person; (iv) any
Contract between or among Hyde's and any Affiliate of Hyde's; (v) any Contract
involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses); (vi) any
Contract relating to the purchase or sale of any goods or services (other than
Contracts entered into in the ordinary course of business and involving payments
under any individual Contract not in excess of $1,000), as of the date of this
Agreement (together with all Contracts referred to in Sections 2.10(d) and
2.15(a), the "HYDE'S CONTRACTS"). With respect to each Hyde's Contract and
except as disclosed in SCHEDULE 2.16: (i) the Contract is in full force and
effect; (ii) Hyde's is not in Default thereunder; (iii) Hyde's has not
repudiated or waived any material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of Hyde's, in Default in
any respect or has repudiated or waived any material provision thereunder. All
of the indebtedness of Hyde's for money borrowed is prepayable at any time by
Hyde's without penalty or premium.
2.17 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
-----------------
or, to the Knowledge of Hyde's, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against Hyde's, or against any director,
employee or employee benefit plan of Hyde's, or against any Asset, interest, or
right of any of them, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against Hyde's.
SCHEDULE 2.17 contains a summary of all Litigation as of the date of this
Agreement to which Hyde's is a party and which names Hyde's as a defendant or
cross-defendant or for which Hyde's has any potential Liability.
2.18 REPORTS. Since January 1, 1993, or the date of organization if
-------
later, Hyde's has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect). As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
2.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
---------------------------
instrument, or other writing furnished or to be furnished by Hyde's or any
Affiliate thereof to Satellink or any Affiliate of Satellink pursuant to this
Agreement or any other document, agreement, or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents that
Hyde's or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable Law.
2.20 REGULATORY MATTERS. Neither Hyde's nor Shareholder or any
------------------
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is
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<PAGE>
reasonably likely to materially impede or delay receipt of any Consents of
Regulatory Authorities necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
2.21 CHARTER PROVISIONS. Hyde's and Shareholder have taken all
------------------
action so that the entering into of this Agreement and the consummation of the
Stock Purchase and the other transactions contemplated by this Agreement do not
and will not result in the grant of any rights to any Person under the articles
of incorporation, bylaws or other governing instruments of Hyde's or restrict or
impair the ability of any Satellink Entity to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of Hyde's that may be directly
or indirectly acquired or controlled by them.
2.22 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 2.22, the
----------------------
execution, delivery and performance of this Agreement by Hyde's and the
consummation of the transactions contemplated hereby do not require any consent,
approvals or authorization of, or registration or filing with, any Person or
Governmental Authority.
2.23 BROKERAGE. Neither Hyde's nor Shareholder has made any agreement
---------
or taken any other action which might cause anyone to become entitled to a
broker's fee or commission as a result of the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SATELLINK
-------------------------------------------
Satellink hereby represents and warrants to Hyde's and Shareholder as
follows:
3.13 ORGANIZATION, STANDING, AND POWER. Satellink is a limited
---------------------------------
liability company duly organized, validly existing, and in good standing under
the Laws of the State of Georgia, and has the power and authority to carry on
its business as now conducted and to own, lease and operate its material Assets.
Satellink is duly qualified or licensed to transact business as a foreign
limited liability company in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.
3.2 AUTHORITY; NO BREACH BY AGREEMENT.
---------------------------------
(a) Satellink has the power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Stock Purchase, have been duly and validly authorized by all
necessary action in respect thereof on the part of Satellink. This Agreement
represents a legal, valid, and binding obligation of Satellink, enforceable
against Satellink in accordance with its terms.
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<PAGE>
(b) Neither the execution and delivery of this Agreement by Satellink,
nor the consummation by Satellink of the transactions contemplated hereby, nor
compliance by Satellink with any of the provisions hereof, will: (i) conflict
with or result in a breach of any provision of Satellink's Operating Agreement;
or (ii) constitute or result in a Default under, or require any Consent pursuant
to any Contract or Permit of any Satellink Entity; or (iii) constitute or result
in a Default under, or require any Consent pursuant to, any Law or Order
applicable to any Satellink Entity or any of their respective material Assets
(including any Satellink Entity or Hyde's becoming subject to or liable for the
payment of any Tax or any of the Assets owned by any Satellink Entity or Hyde's
being reassessed or revalued by any Taxing authority).
(c) Other than the FCC no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Satellink of the
Stock Purchase and the other transactions contemplated in this Agreement.
3.3 BROKERAGE. Except with regard to The Breckenridge Group, whose fees
---------
and expenses are the sole responsibility of Satellink, Satellink has not made
any agreement or taken any other action which might cause any person or entity
to become entitled to a broker's fee or a commission as a result of the
transactions contemplated hereby.
ARTICLE 4
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
-------------------------------------------
4.1 OPERATION OF BUSINESS PENDING CLOSING.
-------------------------------------
(a) Prior to the Closing Date, except as set forth in subsection (b)
below and except as necessary to effect the transactions contemplated by this
Agreement, or except with the prior consent of Satellink, Hyde's shall conduct
its business in the usual and ordinary course as currently being conducted, and
without limiting the generality of the foregoing clause, Hyde's shall not do any
of the following:
(i) amend its articles of incorporation or bylaws, or merge,
consolidate, liquidate or dissolve;
(ii) issue any capital stock, any securities convertible or
exchangeable into capital stock, or any options, warrants or rights with respect
to capital stock, or split, subdivide or reclassify its capital stock;
(iii) declare or pay any dividend or make any other distribution
on its capital stock;
(iv) increase the compensation or benefits of officers or
employees of Hyde's or pay any bonuses except for normal and customary increases
made or bonuses paid or accrued in accordance with past practices;
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<PAGE>
(v) create or incur any Lien on any of its properties; or,
except for the issuance of insurance contracts or policies and the settlement of
insurance claims in the ordinary course of business, incur or assume any
guaranty or other liability to discharge an obligation of another, or incur or
assume any obligations for money borrowed, or cancel or discount any material
debt owed to it;
(vi) enter into or terminate any Hyde's Contract;
(vii) make any expenditure for fixed assets in excess of $10,000
for any single item or $100,000 in the aggregate;
(viii) do or fail to do anything that will cause a breach of, or
default under, any Hyde's Contract; or
(ix) make any change (whether or not material) in its accounting
procedures, methods, policies or practices or the manner in which Hyde's
maintains its records.
(b) Notwithstanding subsection (a) above, prior to the Closing Date,
Hyde's shall pay all accrued but unpaid bonuses owed by Hyde's to its employees.
4.2 ACCESS TO INFORMATION. Subject to the provisions of Section 8.18,
---------------------
Hyde's and Shareholder shall give to Satellink and its authorized
representatives, during normal business hours, reasonable access to all of
Hyde's contracts, books and records, and Hyde's shall furnish to Satellink and
its authorized representatives such additional financial, legal and other
information with respect to Hyde's that Satellink may reasonably request.
4.3 SCHEDULES. At any time and from time to time between the date
---------
hereof and the date that is two business days prior to the Closing Date, Hyde's
shall have the right and the continuing obligation to supplement any of the
Schedules contained in Article 2 hereof, respectively, with respect to any
matter arising or coming to the Knowledge of Hyde's after the date hereof that,
if existing, occurring or known at such date, would have been required to be set
forth or described in such Schedules.
4.4 BEST EFFORTS. Each of the Parties agrees to use its best efforts
------------
to take, or to cause to be taken, all reasonable actions and to do, or to cause
to be done, all reasonable things necessary, proper or advisable under
applicable Laws to perform their respective agreements, undertakings and
obligations hereunder and to consummate the transactions contemplated by this
Agreement. None of the Parties will intentionally take or intentionally permit
to be taken any action that would be in breach of the terms or provisions of
this Agreement or that would cause any of the representations contained herein
to be or become untrue.
4.5 EXCLUSIVE DEALINGS. Unless and until this Agreement is terminated
------------------
prior to Closing pursuant to Article 6, neither Hyde's nor any of its
Affiliates, officers, directors, agents, advisers or Shareholder shall (i)
directly or indirectly, solicit or entertain offers from, negotiate
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with or in any manner encourage, discuss, accept or consider any proposal of any
other corporation, firm or individual for the sale of any of the Shares or of
all or substantially all of the assets of Hyde's, whether through the direct
purchase, merger, consolidation or other business combination (each an
"ACQUISITION PROPOSAL"); or (ii) knowingly enter into any agreement or
--------------------
understanding, whether oral or written, that would prevent the consummation of
the transaction proposed hereby.
4.6 EXPENSES. If Closing does not occur as set forth in this Agreement,
--------
the expenses of the parties hereto shall be paid as provided in Section 6.03.
4.7 ASSIGNMENT OF FCC LICENSES. Promptly upon execution of this
--------------------------
Agreement, Hyde's agrees to execute all applications and any amendments thereto
or additional applications, that may be necessary to obtain the FCC's Consent to
the assignment of the FCC Licenses to Satellink. Satellink agrees to prepare all
such applications and any amendments thereto and to cooperate with Hyde's in
discharging this responsibility.
4.8 CERTAIN TAX MATTERS.
-------------------
(a) Satellink, on the one hand, and Hyde's and Shareholder, on the
other hand, shall provide the other parties to this Agreement, at the expense of
the requesting party, with such assistance as may reasonably be requested by any
of them in connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, or any judicial or administrative
proceedings relating to Liability for Taxes, and each will retain and provide
the requesting party with any records or information that may be relevant to any
of the foregoing
(b) Satellink shall prepare or cause to be prepared, and file or cause
to be filed, all Tax Returns for Hyde's for all periods ending on or prior to
the Closing Date which are filed after the Closing Date. Satellink shall permit
Shareholder to review and comment on each such Tax Return prior to filing.
(c) Shareholder shall be responsible for the payment of all
Liabilities of Hyde's for Taxes related or allocable to a period ending on or
before the Closing Date. Hyde's and Satellink shall be responsible for all
Taxes for periods commencing after the Closing Date.
(d) All transfer Taxes (including, but not limited to, all stamp
duties, in respect of the transfer or sale of all Shares) incurred by the
Stockholders in connection with the transactions contemplated by this Agreement
will be borne by Shareholder. Shareholder will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer
Taxes.
ARTICLE 5
CONDITIONS TO CLOSING
---------------------
5.1 CONDITIONS TO OBLIGATIONS OF SATELLINK. The obligations of
--------------------------------------
Satellink to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at Closing
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<PAGE>
of the following conditions (any one or more of which may be waived in whole or
in part by Satellink at Satellink's option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of each of Hyde's and Shareholder contained in this Agreement
shall be true and correct on and as of the time of Closing, with the same force
and effect as though such representations and warranties had been made on, as of
and with reference to such time and Satellink shall have received certificates
to such effect signed by Shareholder and an authorized officer of Hyde's.
(b) Performance and Compliance. Hyde's shall have performed all of
--------------------------
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing, and Satellink
shall have received a certificate to such effect signed by an authorized officer
of Hyde's.
(c) Opinion of Counsel. Satellink shall have received from Greer &
------------------
Frazier, counsel for Hyde's, an opinion dated the Closing Date substantially in
the form of EXHIBIT B.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on Hyde's' and Shareholder's part to effectuate and consummate the transactions
contemplated hereby shall be delivered to Satellink and shall be in form and
substance reasonably satisfactory to Satellink and its counsel.
(e) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby or
which would limit or materially adversely affect Satellink's ownership or
control of Hyde's or the business of Hyde's, and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any Governmental Authority: (i) challenging any of the transactions contemplated
by this Agreement or seeking monetary relief by reason of the consummation of
such transactions; or (ii) which might have a Material Adverse Effect on the
future conduct of the business of Hyde's.
(f) No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect with respect to Hyde's, or any condition or event which
is reasonably likely to result in a Material Adverse Effect, subsequent to
December 31, 1997.
(g) Incumbency Certificate. Hyde's shall have delivered to Satellink
----------------------
an incumbency certificate dated the Closing Date certifying the incumbency of
all officers of Hyde's who have executed this Agreement or any of the other
agreements, documents or instruments required to be delivered hereunder. This
certificate shall contain specimens of the signatures of each of such officers
and shall be executed by an officer of Hyde's other than an officer whose
incumbency or authority is certified.
(h) Certificate of Good Standing. Hyde's shall have delivered to
----------------------------
Satellink, with respect to Hyde's, a certificate of the Secretary of State of
Louisiana, dated not more than 10
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<PAGE>
days before the Closing Date, stating that Hyde's is a corporation in good
standing under the laws of such state and has paid all applicable Taxes due to
such state.
(i) Certified Copies of Resolutions. Hyde's shall have delivered to
-------------------------------
Satellink copies, certified by the duly qualified and acting Secretary or
Assistant Secretary of Hyde's, of resolutions adopted by the Board of Hyde's,
and of resolutions adopted by the shareholders of Hyde's, approving this
Agreement and the consummation of the transactions contemplated hereby.
(j) Delivery of Original Records. Hyde's shall have delivered to
----------------------------
Satellink the original corporate minute books for Hyde's, along with the
certificates representing the issued and outstanding shares of capital stock of
Hyde's.
(k) Consents. Hyde's shall have obtained the consents of all third
--------
parties to the Contracts and leases set forth on SCHEDULES 2.2 and 2.3 and shall
deliver written evidence of such consents at the Closing.
(l) Non-Compete. Each of Messrs. R. Daniel Hyde, Jr., R. Daniel Hyde,
-----------
III and Steven P. Hyde shall have entered into, executed and delivered a Non-
Compete Agreement substantially in the form of EXHIBIT C hereto.
---------
(m) Repayment of Debt. All debts and other amounts owed by
-----------------
Shareholder to Hyde's shall be repaid in full and Hyde's shall deliver
satisfactory evidence of such repayment to Satellink at Closing.
(n) Assignment of FCC Licenses. The FCC shall have approved the
--------------------------
assignment of all FCC licenses to Satellink.
(o) Shareholder Releases. Satellink shall have received from
--------------------
Shareholder a Shareholder's release duly executed by Shareholder.
(p) Texas Qualification. Hyde's shall be duly qualified or licensed
-------------------
to transact business as a foreign corporation in good standing in the State of
Texas. Hyde's shall have paid all franchise taxes, penalties and late fees, if
any, owed to the State of Texas as a result of Hyde's conduct of business
therein. Hyde's shall have taken all actions and executed such agreements and
undertakings as Satellink and its counsel shall reasonably require to ensure
that any past failure by Hyde's to qualify to transact business as a foreign
corporation in the State of Texas has not and will not have a Material Adverse
Effect on Hyde's.
5.2 CONDITIONS TO OBLIGATIONS OF HYDE'S AND SHAREHOLDER. The obligations
---------------------------------------------------
of Hyde's and Shareholder to proceed with the Closing under this Agreement are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Hyde's or
Shareholder's at Hyde's or Shareholder's option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of Satellink contained in this Agreement shall be true and
correct on and as of the time
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<PAGE>
of Closing, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time, and Hyde's
shall have received a certificate to such effect signed by authorized officers
of Satellink.
(b) Performance and Compliance. Satellink shall have performed all of
--------------------------
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing, and Hyde's
shall have received a certificate to such effect signed by authorized officers
of Satellink.
(c) Opinion of Counsel. Hyde's shall have received from Alston & Bird
------------------
llp, counsel for Satellink, an opinion dated the Closing Date substantially in
the form of EXHIBIT D.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on Satellink's part to effectuate and consummate the transactions contemplated
hereby shall be delivered to Hyde's and shall be in form and substance
reasonably satisfactory to Hyde's and its counsel.
(e) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby,
and there shall not have been threatened, nor shall there be pending, any action
or proceeding by or before any Governmental Authority challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions.
(f) Incumbency Certificate. Satellink shall have delivered to Hyde's
----------------------
an incumbency certificate dated the Closing Date certifying the incumbency of
all officers of the Manager of Satellink who have executed this Agreement or any
of the other agreements, documents or instruments required to be delivered
hereunder. This certificate shall contain specimens of the signatures of each
of such officers and shall be executed by officers of the Manager of Satellink
other than an officer whose incumbency or authority is certified.
(g) Certificate of Good Standing.. Satellink shall have delivered to
-----------------------------
Hyde's a certificate of the Secretary of State of Georgia, dated not more than
10 days before the Closing Date, stating that Satellink is a limited liability
company in good standing under the laws of the State of Georgia.
(h) Certified Copies of Resolutions. Satellink shall have delivered
-------------------------------
to Hyde's copies, certified by the duly qualified and acting Secretary or
Assistant Secretary of Satellink, of resolutions adopted by the Manager of
Satellink approving this Agreement and the consummation of the transactions
contemplated hereby.
(i) Non-Compete. Satellink shall have entered into, executed and
-----------
delivered to each of Messrs. R. Daniel Hyde, Jr., R. Daniel Hyde, III and Steven
P. Hyde the Non-Compete Agreement substantially in the form of EXHIBIT C hereto.
---------
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(j) Promissory Note. Satellink shall have entered into, executed and
---------------
delivered to Shareholder the Note substantially in the form of EXHIBIT A hereto.
---------
ARTICLE 6
TERMINATION
6.1 WHEN AGREEMENT MAY BE TERMINATED. This Agreement may be terminated at
--------------------------------
any time prior to Closing:
(a) By Satellink (i) at any time if any representation and warranty of
Hyde's or Shareholder contained in Article 2 was incorrect in any material
respect when made or becomes incorrect in any material respect at any time after
the date hereof and prior to the Effective Time, (ii) at any time if Hyde's
fails to comply in any material respect with any provision of Article 4 binding
upon it, or (iii) upon written notice to Hyde's given on or at any time after
July 31, 1998 if all the conditions precedent set forth in Section 5.1 to be
performed by Hyde's have not been performed by that date; or
(b) By Hyde's: (i) at any time if any representation and warranty of
Satellink contained in Article 3 was incorrect in any material respect when made
or becomes incorrect in any material respect at any time after the date hereof
and prior to the Effective Time, or (ii) upon written notice to Satellink given
on or at any time after July 31, 1998 if all the conditions precedent set forth
in Section 5.2 to be performed by Satellink have not been performed by that
date.
(c) By mutual consent of Hyde's and Satellink.
6.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
---------------------
by either Satellink on the one hand, or Hyde's, on the other, as provided above,
this Agreement shall forthwith terminate and there shall be no liability on the
part of any party or any party's officers or directors, except for liabilities
arising from a breach of this Agreement prior to such termination, liabilities
set forth in Section 6.3 below and Section 8.18. The provisions of Section 6.3,
together with the provisions of Section 8.18 shall survive for a period of one
year following the termination of this Agreement and shall not be extinguished
thereby.
6.3 PAYMENT OF EXPENSES ON TERMINATION.
----------------------------------
(a) If this Agreement is terminated by Satellink pursuant to Section
6.1(a), Hyde's shall pay and reimburse Satellink for all expenses Satellink
incurred prior to such termination in connection with the preparation of this
Agreement and the transactions contemplated hereby, provided however, that
Hyde's shall not be obligated to reimburse Satellink for any expenses in excess
of $50,000. If this Agreement is terminated by Hyde's pursuant to Section
6.01(b), Satellink shall pay and reimburse Hyde's
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for all expenses Hyde's incurred prior to such termination in connection with
the preparation of this Agreement and the transactions contemplated hereby,
provided however, that Satellink shall not be obligated to reimburse Hyde's for
any expenses in excess of $50,000. If this Agreement is terminated by Satellink
and Hyde's pursuant to Section 6.01(c) or by Satellink pursuant to Section 6.1
as a result of the failure of the FCC to approve the assignment of the FCC
Licenses to Satellink, which failure shall not be the result of any intentional
act or grossly negligent omission by Hyde's, each party shall bear its own
expenses incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(b) In order to be entitled to any reimbursement of expenses pursuant
to Section 6.03(a), the terminating party shall give the breaching party ten
(10) day's written notice of its intent to terminate this Agreement. If prior
to the expiration of such ten (10) day period (the "Notice Period"), the
breaching party gives the terminating party written notice of its intent to
cure, the breaching party shall have seven (7) days from the expiration of the
Notice Period to cure such breach, if cure is possible. Upon the expiration of
such seven (7) days or the failure of the breaching party to cure, the
terminating party shall be entitled to reimbursement of expenses in accordance
with Section 6.3(a).
ARTICLE 7
INDEMNIFICATION
7.1 DEFINITIONS
-----------
For the purposes of this Article:
(a) "BUYER INDEMNITEES" shall mean Satellink and its agents,
-----------------
representatives, employees, officers, directors, shareholders, controlling
persons and Affiliates.
(b) "BUYER INDEMNITOR" shall mean Shareholder.
----------------
(c) "INDEMNIFICATION CLAIM" shall mean a claim for indemnification
----------------------
hereunder.
(d) "INDEMNITEE" shall mean Buyer Indemnitee or Seller Indemnitee, as
-----------
appropriate.
(e) "INDEMNITOR" shall mean Buyer Indemnitor or Seller Indemnitor, as
-----------
appropriate.
(f) "LOSSES" shall mean any and all demands, claims, actions or causes
------
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(g) "SELLER INDEMNITEE" shall mean Shareholder.
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(h) "SELLER INDEMNITOR" shall mean Satellink.
(i) "THIRD PARTY CLAIM" shall mean any claim, suit or proceeding
-----------------
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
7.2 AGREEMENT OF BUYER INDEMNITOR TO INDEMNIFY
------------------------------------------
(a) Subject to the terms and conditions of this Article, Buyer
Indemnitor agrees, to indemnify, defend, and hold harmless Buyer Indemnitees,
and each of them, from, against, for, and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, a Buyer Indemnitee and
resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Buyer Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Schedule, or Exhibit furnished by Buyer
Indemnitor or Hyde's in connection herewith, provided however, that for purposes
of this Article 7, except for the representations and warranties set forth in
Sections 2.11 and 2.12, any qualification of such representations and warranties
by reference to the materiality of matters stated therein or as to matters
having or not having a Material Adverse Effect, and any limitation of such
representations and warranties as being "to the Knowledge of," "known to" or
words of similar effect, shall be disregarded in determining the inaccuracy,
untruth, incompleteness or breach thereof; or
(ii) a breach of or failure to perform any material covenant or
agreement of Buyer Indemnitor made in this Agreement.
7.3 AGREEMENT OF SELLER INDEMNITOR TO INDEMNIFY
-------------------------------------------
(a) Subject to the terms and conditions of this Article, Seller
Indemnitor agrees, to indemnify, defend, and hold harmless Seller Indemnitees,
and each of them, from, against, for, and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, a Seller Indemnitee and
resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of Seller Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Schedule, or Exhibit furnished by Seller
Indemnitor in connection herewith, provided however, that for purposes of this
Article 7, any qualification of such representations and warranties by reference
to the materiality of matters stated therein or as to matters having or not
having a Material Adverse Effect, and any limitation of such representations and
warranties as being "to the Knowledge of," "known to" or words of similar
effect, shall be disregarded in determining the inaccuracy, untruth,
incompleteness or breach thereof; or
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(ii) a breach of or failure to perform any material covenant or
agreement of Seller Indemnitor made in this Agreement.
7.4 PROCEDURES FOR INDEMNIFICATION.
------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 7.4 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, I Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in Section
8.14 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or by any other final adjudication, Indemnitor shall pay the amount of
such Indemnification Claim in accordance with the instructions of the Indemnitee
within ten (10) days of the date such amount is determined.
7.5 THIRD PARTY CLAIMS. The obligations and liabilities of the parties
------------------
hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitor of any liability
that it may have with respect to such claim except to the extent Indemnitor
demonstrates that the defense of such claim is prejudiced by such failure. The
assumption of the defense, compromise and settlement of any such Third Party
Claim by Indemnitor shall be an acknowledgment of the obligation of Indemnitors
to indemnify Indemnitee with respect to such claim hereunder. If Indemnitee
desires to participate in, but not control, any such defense, compromise and
settlement, it may do so at its sole cost and expense. If, however, Indemnitor
fails or refuses to undertake the defense of such Third Party Claim within ten
(10) days after written notice of such claim has been given to Indemnitor by
Indemnitee, Indemnitee shall have the right to undertake the defense, compromise
and settlement of such claim with
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counsel of its own choosing. In the circumstances described in the preceding
sentence, Indemnitee shall, promptly upon its assumption of the defense of such
claim, make an Indemnification Claim as specified in Section 7.2 which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the purposes
of the procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party Claim
or the litigation or resolution thereof involves an issue or matter which could
have a material adverse effect on the business, operations, assets, properties
or prospects of Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of Indemnitee),
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by Indemnitor, and the costs and
expenses of Indemnitee in connection therewith shall be included as part of the
indemnification obligations of Indemnitor hereunder, provided however, that
Indemnitor shall not compromise or settle any such Third Party Claim without the
prior written consent of Indemnitee, which consent will not be unreasonably
withheld. If Indemnitee shall elect to exercise such right, Indemnitors shall
have the right to participate in, but not control, the defense, compromise and
settlement of such Third Party Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitors under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $50,000.00 or less where Indemnitor has not responded within ten
(10) business days of notice of a proposed settlement. If Indemnitor assumes
the defense of such a Third Party Claim, (a) no compromise or settlement thereof
may be effected by Indemnitor without Indemnitee's consent unless (i) there is
no finding or admission of any violation of law or any violation of the rights
of any person and no effect on any other claim that may be made against
Indemnitee (ii) the sole relief provided is monetary damages that are paid in
full by Indemnitor and (iii) the compromise or settlement includes, as an
unconditional term thereof, the giving by the claimant or the plaintiff to
Indemnitee of a release, in form and substance satisfactory to Indemnitee, from
all liability in respect of such Third Party Claim, and (b) Indemnitee shall
have no liability with respect to any compromise or settlement thereof effected
without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
7.6 INDEMNIFICATION EXCLUSIVE REMEDY. The indemnification provisions
--------------------------------
in this Article 7 shall be the exclusive remedy as between Satellink and
Shareholder for any breach of the representations and warranties contained
herein or related hereto, but such provisions shall not be
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the exclusive remedy for a failure of a party to timely perform any agreement or
undertaking of such party set forth herein (other than representations and
warranties), and any party damaged by such failure of performance shall have
such rights and remedies with respect to such failure of performance as are
provided by law or in equity.
7.7 TIME LIMITATIONS.
---------------
Buyer Indemnitor shall have no liability under clause (a)(i) of
Section 7.2 with respect to: (a) the breach of any representation or warranty,
other than those set forth in Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.9, 2.10(a),
2.12, 2.13 and 2.15 hereof, unless on or before five (5) years after the Closing
Date Buyer Indemnitor is given notice asserting an Indemnification Claim with
respect thereto; (b) the breach of the representations and warranties of Buyer
Indemnitor contained in Section 2.9 hereof, unless notice asserting an
Indemnification Claim based thereon is given to Buyer Indemnitor prior to the
expiration of the period of time when deficiencies may be assessed against
Hyde's with respect to any tax period ended on or prior to the Effective Time;
and (c) the breach of the representations and warranties of Buyer Indemnitor
contained in Sections 2.12 and 2.15 unless on or before seven (7) years after
the Closing Date Buyer Indemnitor is given notice asserting an Indemnification
Claim with respect thereto. An Indemnification Claim based upon a breach of the
representations and warranties set forth in Sections 2.2, 2.3, 2.4, 2.5, 2.10(a)
or 2.13 or based upon the failure of any Buyer Indemnitor to perform the
covenants and agreements to be performed by them hereunder may be made at any
time.
7.8 LIMITATIONS AS TO AMOUNT. Notwithstanding anything to the
------------------------
contrary in this Agreement, Indemnitor shall be obligated to indemnify
Indemnitee only with respect to Losses actually paid, suffered or incurred, if
any only to the extent that the aggregate amount of such Losses exceeds $50,000
up to a maximum aggregate amount equal to the Purchase Price.
7.9 SUBROGATION. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitors shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
7.10 SATELLINK'S RIGHT OF SET-OFF. Notwithstanding anything to the
-----------------------------
contrary herein contained, Satellink shall have the right to set-off against and
deduct from the Note (a) any amount which Indemnitor becomes obligated (whether
by agreement between one or more of the Indemnitor and Satellink or by
arbitration award) to pay to Satellink hereunder, and (b) any other amounts
which may be payable by the Indemnitor to Satellink under this Agreement or by
virtue of the transactions provided for herein. Satellink's right of set-off
shall be superior to any right of Indemnitor to request or direct payment of any
part or all of the Note to or for the account of Indemnitor. Prior to
exercising the aforementioned right of set-off, Satellink shall give Indemnitor
ten (10) days written notice of its intent to exercise such right. If within
ten (10) days of receiving such notice, Indemnitor objects in writing to
Satellink's exercise of its right of set-off, then Satellink shall set aside and
hold the disputed amount free of any obligation to pay over the
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disputed amount to or at the direction of Indemnitor, and Satellink's asserted
right of set-off will be submitted to arbitration pursuant to Section 8.14
hereof. Notwithstanding anything to the contrary in this Agreement, all amounts
set aside and held pending the resolution of arbitration shall remain set aside
and held until the final resolution of such arbitration pursuant to Section 8.14
hereof. If at the time for payment of the Note, an Indemnification Claim has
been asserted by Satellink but the Indemnitor obligation with respect thereto
has not been finally determined or agreed upon, Satellink may withhold payment
of such portion of the Note as shall be sufficient to pay and reimburse
Satellink for all Losses upon which the Indemnification Claim is based and shall
not be required to pay such withheld amount over to Indemnitor until ten (10)
days following the final determination or agreement that the Indemnitors are not
obligated to Indemnitees with respect to such Indemnification Claim or if
obligated the Indemnitor have paid and satisfied such Indemnification Claim in
full.
7.11 TAXES AND INSURANCE. Indemnitor and Indemnitees shall make
-------------------
appropriate adjustments for tax benefits, insurance coverage and payments from
third parties in determining Losses for purposes of this Article 7. All
indemnification payments under this Article 7 shall be deemed adjustments to the
Purchase Price.
ARTICLE 8
MISCELLANEOUS
-------------
8.1 DEFINITIONS.
-----------
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any
10% or greater equity or voting interest of such Person; or (iii) any other
Person for which a Person described in clause (ii) acts in any such
capacity.
"AGREEMENT" shall mean this Stock Purchase Agreement, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BOARD" shall mean the Board of Directors of Hyde's.
"CLOSING DATE" shall mean the date on which the Closing occurs.
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"CLOSING FINANCIAL DATA" shall mean the unaudited income statement,
balance sheet and statement of cash flow of Hyde's for the twelve (12) month
period ended or the last day of the month preceding the month in which the
Closing Date occurs.
"CONFIDENTIAL INFORMATION" shall mean any confidential or proprietary
information about Shareholder or Hyde's; provided that it does not include
information which Satellink can demonstrate: (i) is or becomes generally
available to or known by the public other than as a result of improper
disclosure by Satellink; (ii) is obtained by Satellink from a source other
than Hyde's, provided that such source was not bound by a duty of
confidentiality to Hyde's with respect to such information; or (iii)
Satellink independently develops, without recourse to the Confidential
Information.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, (ii)
any occurrence of any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time or
the giving of notice would give rise to a right of any Person to exercise any
remedy or obtain any relief under, terminate or revoke, suspend, cancel, or
modify or change the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"EBITDA" shall mean Hyde's earnings without deduction for interest,
income taxes, depreciation, amortization, officer's insurance premiums,
officer's travel and entertainment and administrative fees.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or
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otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"EQUITY RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants,
or other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity Rights.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ESTIMATED FINANCIAL DATA" shall mean the unaudited income statement
balance sheet and statement of cash flow of Hyde's for the twelve month
period ended March 31, 1998.
"ESTIMATED PURCHASE PRICE" shall mean the Net Equity Value determined
by reference to the Estimated Financial Data.
"EXHIBITS" A through D inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"FCC" shall mean the Federal Communications Commission.
"FCC LICENSE" means all of the right, title and interest of Hyde's
and/or Shareholder in and to the licenses, permits, certificates, and
governmental authorizations of Hyde's and/or Shareholder related to the
operation of a radio station, including without limitation, FCC licenses for
call signs WPLS710, WNVG895, WPLR493, WPFK860, WPEW921, WPIV669, WPKY249,
WPDW222, WPBK913, WPGX829, WPKI269, WNMX586, WPFM424, WNRL353, WT5252255
together with any applications and temporary authorizations for FCC licenses.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GLLCA" shall mean the Georgia Limited Liability Company Act.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or
other governmental or public agency, instrumentality, commission, authority,
board or body.
"GROSS ENTERPRISE VALUE" shall be equal to the sum of: (i) Hyde's
EBITDA for the twelve month period ended on the last day of the month
preceding the month in which the Closing Date occurs, multiplied by five.
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"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic substance
(as those terms are defined by any applicable Environmental Laws) and (ii)
any chemicals, pollutants, contaminants, petroleum, petroleum products, or
oil (and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HYDE'S COMMON STOCK" shall mean the no par value common stock of
Hyde's.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, technology
rights and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises, know-
how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer, chief
operating officer, general counsel, any assistant or deputy general counsel,
or any senior, executive or other vice president of such Person.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute applicable
to a Person or its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"LBCL" shall mean the Louisiana Business Corporation Law.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty
or endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (iii) Liens which do not materially impair
the use of or title to the Assets subject to such Lien.
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"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect to the
property, business, operations, prospects or financial condition of Hyde's or
Satellink.
"NET EQUITY VALUE" shall equal the Gross Enterprise Value less: (i)
all liabilities of Hyde's which are required by GAAP to be reflected on
Hyde's balance sheet; and (ii) all amounts owed to Hyde's by Shareholder.
"OPERATING PROPERTY" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in which
such Party or Subsidiary holds a security interest or other interest
(including an interest in a fiduciary capacity), and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such facility
or property.
"PARTY" shall mean either Hyde's, Shareholder or Satellink, and
"PARTIES" shall mean Hyde's, Shareholder and Satellink.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"REGULATORY AUTHORITIES" shall mean, collectively, the FCC, the
Federal Trade Commission, the United States Department of Justice, and all
other federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction over the
Parties and their respective Subsidiaries.
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"SATELLINK ENTITIES" shall mean, collectively, Satellink and
Satellink Communications, Inc..
"SHAREHOLDER'S CLOSING DOCUMENTS" shall mean all certificates to be
delivered by Shareholder pursuant to Section 5.1(a).
"SUBSIDIARIES" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities
of which are owned or controlled in a fiduciary capacity), (ii) in the case
of partnerships, serves as a general partner, (iii) in the case of a limited
liability company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or managing members
thereof.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in connection
with Taxes, including any return of an affiliated or combined or unitary
group that includes a Party or its Subsidiaries.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single
business and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposes
or required to be withheld by the United States or any state, county, local
or foreign government or subdivision or agency thereof, including any
interest, penalties, and additions imposed thereon or with respect thereto.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Acquisition Proposal Section 4.5
Adjustment Data Section 1.3
Buyer Indemnitee Section 7.1
Buyer Indemnitor Section 7.1
Closing Section 1.2
Closing Financial Data Section 1.3
Determination Section 1.3
ERISA Affiliate Section 2.15(b)
Estimated Financial Data Section 1.3
Financial Statements Section 2.6
Hyde's Benefit Plans Section 2.15
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Hyde's Contracts Section 2.16
Hyde's ERISA Plan Section 2.15
Hyde's Pension Plan Section 2.15
Indemnitee Section 7.1
Indemnitor Section 7.1
Indemnitor Representative Section 7.1
Indemnification Claim Section 7.1
Losses Section 7.1
Note Section 1.2
Notification Period Section 1.3
Notice Period Section 6.3
Purchase Price Section 1.1
Seller Indemnitee Section 7.1
Seller Indemnitor Section 7.1
Stock Purchase Section 1.1
Takeover Laws Section 2.21
Third Party Claim Section 7.1
Treasury Regulation Section 4.8
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
8.2 NATURE AND SURVIVAL OF REPRESENTATIONS. The representations,
--------------------------------------
warranties, covenants and agreements contained in this Agreement shall survive
the Closing until that date which is five (5) years after the Closing Date,
except that: (i) the representations and warranties contained in Section 2.9
shall survive the Closing until the expiration of the period of time when
deficiencies may be assessed against Hyde's with respect to any tax period ended
on or prior to the Effective Time; (ii) the representations and warranties
contained in Sections 2.12 and 2.15 shall survive the Closing until the seventh
anniversary of the Closing Date; and (iii) the representations and warranties
contained in Sections 2.2, 2.3, 2.4, 2.5, 2.10(a) and 2.13 shall survive
indefinitely. Satellink acknowledges that it has been afforded the opportunity
to perform such investigation of Hyde's as it deems necessary or appropriate;
however, no investigation by Satellink will diminish or obviate any of the
representations, warranties, covenants or agreements or Satellink's right to
rely upon such representations, warranties, covenants and agreements.
8.3 AMENDMENT. This Agreement may not be amended or modified without the
---------
prior written consent of all parties.
8.4 WAIVER. Failure to insist upon strict compliance with any of the
------
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
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8.5 GOVERNING LAW. Notwithstanding the place where this Agreement may be
-------------
executed by any of the parties, the parties expressly agree that this Agreement
shall in all respects be governed by, and construed in accordance with, the laws
of the State of Louisiana without regard for its conflict of laws doctrine.
8.6 NOTICES. Any notice or other communication to be given hereunder
-------
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
If to Satellink:
Satellink Paging LLC
1325 Northmeadow Parkway
Suite 120
Roswell, Georgia 30076
Attention: Mr. Jerry W. Mayfield
Telephone: (770) 625-2599
Telecopy: (770) 625-2651
with a copy (which shall not constitute notice) to:
Alston & Bird LLP
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
Attention: Sidney J. Nurkin, Esq.
Telephone: (404) 881-7000
Telecopy: (404) 881-7777
If to Hyde's:
Hyde's Stay in Touch, Inc.
5709 Shoreline
Shreveport, Louisiana 71119
Attn: Mr. R. Daniel Hyde, Jr.
Telephone: (318) 425-2255
Telecopy: (318) 869-4552
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with a copy (which shall not constitute notice) to:
Greer & Frazier
Post Office Box 404
Shreveport, Louisiana 71162-0404
Attn: John M. Frazier, Esq.
Telephone: (318) 222-0202
Telecopy: (318) 226-1364
If to Shareholder:
Mr. R. Daniel Hyde, Jr.
5709 Shoreline
Shreveport, Louisiana 71119
Telephone: (318) 631-6324
Telecopy: ________________
with a copy (which shall not constitute notice) to:
Greer & Frazier
Post Office Box 404
Shreveport, Louisiana 71162-0404
Attn: John M. Frazier, Esq.
Telephone: (318) 222-0202
Telecopy: (318) 226-1364
8.7 INVALID PROVISION. If any provision of this Agreement shall be
-----------------
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
8.8 ASSIGNMENT. This Agreement may not be assigned or delegated by any
----------
party without the prior written consent of all other parties, which consent
shall not be unreasonably withheld or delayed. In the event of assignment of
this Agreement the original parties shall remain bound to the obligations,
terms, conditions and provisions of this Agreement.
8.9 BINDING EFFECT. This Agreement shall be binding upon and inure to
--------------
the benefit of the Parties and their respective permitted successors and
assigns.
8.10 FURTHER ASSURANCES. Each Party agrees to execute and deliver all such
------------------
further instruments and do all such further acts as may be reasonably necessary
or appropriate to effectuate this Agreement.
8.11 HEADINGS. Headings and captions contained in this Agreement are
--------
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.
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8.12 PERSON AND GENDER. The masculine gender shall include the feminine
-----------------
and neuter genders and the singular shall include the plural.
8.13 ENTIRE AGREEMENT. This Agreement, together with its Schedules and
----------------
Exhibits, and the Letter of Intent and confidentiality agreement referenced
therein, constitute the entire agreement of the parties with respect to matters
set forth in this Agreement and the Letter of Intent, and supersede any prior
understanding or agreement, oral or written, with respect to such matters. To
the extent that the provisions of this Agreement and the Letter of Intent may be
inconsistent, the provisions of this Agreement shall control.
8.14 ARBITRATION. The parties agree that any dispute between or among
-----------
them arising out of or based upon this Agreement, or the consummation of the
transactions provided for herein shall be submitted to and resolved by
arbitration in Shreveport, Louisiana in accordance with the rules and procedures
of the American Arbitration Association, and the decision of a single arbitrator
in such dispute shall be final and binding on the parties to such arbitration
proceeding. Except as the arbitrator may otherwise award or assess the expenses
of any such proceeding, each party shall bear its own costs and expenses,
including the expense of its counsel, in any such arbitration proceeding. The
arbitrator shall be appointed by agreement of the parties. If there is no
agreement upon a single arbitrator within fifteen (15) days after the submission
of the dispute for arbitration, the arbitrator shall be selected by the
following procedure: Satellink shall appoint one (1) arbitrator and Shareholder
shall appoint one (1) arbitrator and the two appointed arbitrators shall select
a mutually agreeable third arbitrator, which arbitrator shall arbitrate the
dispute in accordance with this Section 8.14. If either of the two arbitrators
is not so appointed or if the two arbitrators refuse or fail to appoint the
third arbitrator within 30 days after the expiration of the aforementioned 15
day period, either party may request the American Arbitration Association to
make the appointment in default in accordance with its rules then obtaining and
the parties shall abide by any appointment so made.
8.15 BREAKUP FEE. If Hyde's or any of its Affiliates, officers, directors,
-----------
agents, advisors or shareholders breach the covenants set forth in Section 4.5
and, at any time on or prior to May 31, 1999, accept an Acquisition Proposal,
then Hyde's shall become liable to Satellink for $50,000 (the "BREAKUP FEE").
-----------
The Breakup Fee shall be payable by cashier's check or wire transfer within five
(5) days of receipt by Hyde's of written notice from Satellink . The Breakup Fee
shall be Satellink's exclusive remedy for any breach of the covenants set forth
in Section 4.5.
8.16 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
-------------------------
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
8.17 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
---------------
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all
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parties and their attorneys and shall be construed and interpreted according to
the ordinary meaning of the words used so as fairly to accomplish the purposes
and intentions of all parties hereto.
8.18 CONFIDENTIALITY Except as and to the extent required by law,
---------------
Satellink shall not disclose or use any Confidential Information with respect to
Hyde's or Shareholder furnished, or to furnished, by either or their respective
representatives to Satellink or its representatives in connection herewith at
any time or in any manner other than in connection with its evaluation, and/or
consummation of the proposed acquisition of Shares. If the proposed acquisition
is not consummated for any reason, Satellink shall promptly destroy or return to
Hyde's (and shall cause all of its agents and representatives to promptly
destroy or return to Hyde's any Confidential Information in its possession.
Satellink specifically agrees with Hyde's that Satellink shall not, under any
circumstances except as and to the extent required by law, disclose these
negotiations or pending sales of the stock of Hyde's to any person, which
disclosure might reasonably result in employees of Hyde's becoming aware of such
negotiation or sale. Satellink further agrees that it shall not contact or
communicate with any employee or representative of Hyde's regarding the
negotiations for or this pending sale other than the following employees and
agents of Hyde's: R. Daniel Hyde, Jr.; Linda Davidson; Joe Miot; James N.
Rachel; James W. Walker; and John M. Frazier.
[Signatures on Next Page]
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<PAGE>
IN WITNESS WHEREOF, Shareholder has executed this Agreement under seal and
each of the other Parties has caused this Agreement to be executed on its behalf
by its duly authorized officers as of the day and year first above written.
SATELLINK PAGING, LLC
By: SATELLINK COMMUNICATIONS, INC.,
its Manager
By: /s/ Jerry W. Mayfield
----------------------------------
Jerry W. Mayfield
President
HYDE'S STAY IN TOUCH, INC.
By: /s/ R. Daniel Hyde, Jr.
----------------------------------
R. Daniel Hyde, Jr.
President
THE SHAREHOLDER:
/s/ R. Daniel Hyde, Jr. (SEAL)
--------------------
R. Daniel Hyde, Jr.
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EXHIBIT 21.1
LIST OF SUBSIDIARIES
--------------------
Upon the effectiveness of the transactions contemplated by the
Contribution and Subscription Agreement, the Company's direct and indirect
subsidiaries will consist of:
Satellink Paging, LLC
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Exhibit 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
and to all references to our firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
April 8, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITOR
As Independent auditor for Hyde's Stay In Touch, Inc., I hereby consent to the
use of my report and to the references to me included in or made part of this
registration statement.
James N. Rachel
/s/ James N. Rachel
Shreveport, Louisiana
April 8, 1998
