<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 6, 1995
------------------------
PRONET INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-16029 75-1832168
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
600 DATA DRIVE 75075
SUITE 100 (Zip Code)
PLANO, TEXAS
(Address of principal
executive offices)
</TABLE>
Registrant's telephone number, including area code: (214) 964-9500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 6, 1995, Contact Communications Inc., a Delaware corporation ("CCI")
and wholly-owned subsidiary of ProNet Inc. (the "Company"), completed the
acquisition of substantially all of the paging assets of Americom Paging
Corporation, a Texas corporation ("Americom"), for approximately $17.5 million
comprised of approximately $8.8 million paid in cash at closing and a $8.7
million deferred payment which is due and payable on or before July 6, 1996, and
is payable, at the Company's discretion, either in shares of common stock of the
Company, or cash, pursuant to an Asset Purchase Agreement dated as of May 24,
1995, by and among Americom (formerly known as American 900 Paging, Inc.),
Gregory W. Hadley and Mo Shebaclo (collectively, the "Shareholders", and
together with Americom, the "Sellers") and CCI. Concurrently with the closing of
the Americom acquisition, CCI entered into noncompetition agreements with the
Sellers. The acquisition was effective as of July 1, 1995.
Americom is a provider of commercial paging services and serves
approximately 80,000 subscribers in the greater Houston area. The assets
acquired include accounts receivable, pager inventory and property and equipment
that are used in the conduct of such radio paging system business. CCI intends
to continue to use the assets acquired from Americom to provide paging services
and does not intend to devote such assets to other purposes.
The Company funded the Americom acquisition with proceeds from its recent
issuance of its 11 7/8% Senior Subordinated Debentures due 2005. The
consideration paid for the assets of Americom was determined through arm's
length negotiations between CCI and the Sellers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements and pro forma financial information are
attached hereto and filed as part of this report:
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
- Audited Balance Sheets of Americom as of December 31, 1994 and 1993.
- Audited Statements of Operations and Cash Flows for Americom for the years
ended December 31, 1994 and 1993.
- Unaudited Balance Sheet of Americom as of March 31, 1995.
- Unaudited Statement of Operations and Cash Flows for Americom for the
three months ended March 31, 1995.
(B) PRO FORMA FINANCIAL INFORMATION.
- Unaudited Pro Forma Condensed Consolidated Balance Sheet for the Company
as of March 31, 1995, consolidating the assets and certain liabilities of
Carrier Paging Systems, Inc. ("Carrier"), Metropolitan Houston Paging
Services, Inc. ("Metropolitan"), All City Communication Company, Inc.
("All City") and Americom.
- Unaudited Pro Forma Condensed Consolidated Statements of Operations for
the Company for the year ended December 31, 1994 and the three months
ended March 31, 1995, incorporating the operating revenues and expenses of
Contact Communications, Inc. ("Contact"), Radio Call Company, Inc. and
Affiliates ("Radio Call"), the RCC Division of Chicago Communication
Service, Inc. ("ChiComm"), High Tech Communications Corp. ("High Tech"),
Signet Paging of Charlotte, Inc. ("Signet"), Carrier, Metropolitan, All
City and Americom.
The Pro Forma Condensed Consolidated Statements of Operations include
reasonable estimates of costs and expenses which will be incurred by the Company
in connection with the operation of Contact, Radio Call, ChiComm, High Tech,
Signet, Carrier, Metropolitan, All City and Americom. Operating results for the
three month period are not necessarily indicative of results that may be
expected for the full year. The pro forma condensed consolidated financial
statements should be read in conjunction with the historical consolidated
financial statements of the Registrant and the financial statements of Americom
included in this Form 8-K.
(C) EXHIBITS.
10.1 Asset Purchase Agreement by and among Americom Paging Corporation,
Gregory W. Hadley, Mo Shebaclo and Contact Communications Inc. dated
as of May 24, 1995.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRONET INC.
(Registrant)
By: ________/s/_JAN E. GAULDING_______
Jan E. Gaulding
Senior Vice President and Chief
Financial Officer
(principal financial and accounting
officer)
Date: July 7, 1995
3
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
PRONET INC. AND SUBSIDIARIES
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
PRONET INC. CARRIER METROPOLITAN ALL CITY AMERICOM
----------- ---------- ------------ ------------ ---------- CARRIER
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, PRO FORMA
1995 (A) 1995 1995 1995 1995 ADJUSTMENTS
----------- ---------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.................... $ 5,368,400 $ 102,048 $1,558,400 $ 974 $ 180,109 $ (102,048)(5)
Trade accounts receivable, net of allowance
for doubtful accounts....................... 4,653,659 245,005 103,208 232,205 469,352 0
Inventories.................................. 3,848,215 141,150 50,509 52,946 409,607 0
Other current assets......................... 2,696,250 19,527 338,732 12,087 77,388 (19,527)(5)
----------- ---------- ------------ ------------ ---------- -------------
TOTAL CURRENT ASSETS....................... 16,566,524 507,730 2,050,849 298,212 1,136,456 (121,575)
EQUIPMENT
Pagers....................................... 25,257,281 800,001 0 3,045,165 0 (574,328)(5)
Communications equipment..................... 14,930,821 797,320 6,068,030 1,690,012 2,519,284 (572,403)(5)
Security systems equipment................... 10,842,531 0 0 0 0 0
Office and other equipment................... 3,743,036 56,764 757,536 255,918 0 (40,751)(5)
----------- ---------- ------------ ------------ ---------- -------------
54,773,669 1,654,085 6,825,566 4,991,095 2,519,284 (1,187,482)
Less allowance for depreciation.............. 26,880,105 1,187,482 2,864,832 3,665,204 1,237,711 (1,187,482)(5)
----------- ---------- ------------ ------------ ---------- -------------
27,893,564 466,603 3,960,734 1,325,891 1,281,573 0
OTHER ASSETS, net of amortization.............. 42,510,951 192,340 0 167,549 (34,409) 5,679,968(6)
----------- ---------- ------------ ------------ ---------- -------------
$86,971,039 $1,166,673 $6,011,583 $ 1,791,652 $2,383,620 $ 5,558,393
----------- ---------- ------------ ------------ ---------- -------------
----------- ---------- ------------ ------------ ---------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables............................... $ 1,419,930 $ 92,322 $ 209,245 $ 476,782 $ 204,770 $ (7,317)(5)
Other accrued expenses and liabilities....... 7,761,327 330,630 138,898 413,649 740,768 (190,569)(5)
Current maturities of long-term debt......... 0 554,438 0 300,000 1,677,700 (554,438)(5)
----------- ---------- ------------ ------------ ---------- -------------
TOTAL CURRENT LIABILITIES.................. 9,181,257 977,390 348,143 1,190,431 2,623,238 (752,324)
LONG-TERM DEBT, less current maturities........ 21,900,000 0 0 10,832,233 103,700 3,500,000(7)
DEFERRED PAYMENTS.............................. 5,332,298 0 0 0 0 3,000,000(7)
DEFERRED TAX LIABILITIES....................... 145,596 0 513,433 0 0 0
SHAREHOLDERS' EQUITY
Common stock................................. 65,472 200 1,800 501 1,000 (200)(5)
Additional capital........................... 49,684,973 0 4,555,839 2,577,212 0 0
Retained earnings............................ 2,091,255 189,083 592,368 (12,808,725) (344,318) (189,083)(5)
Owner's Equity............................... 0 0 0 0 0 0
Less treasury stock at cost.................. (1,429,812) 0 0 0 0 0
----------- ---------- ------------ ------------ ---------- -------------
50,411,888 189,283 5,150,007 (10,231,012) (343,318) (189,283)
----------- ---------- ------------ ------------ ---------- -------------
$86,971,039 $1,166,673 $6,011,583 $ 1,791,652 $2,383,620 $ 5,558,393
----------- ---------- ------------ ------------ ---------- -------------
----------- ---------- ------------ ------------ ---------- -------------
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
<CAPTION>
PRO FORMA
BALANCE SHEET
METROPOLITAN ALL CITY AMERICOM AT
PRO FORMA PRO FORMA PRO FORMA MARCH 31,
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS 1995
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.................... $ (1,349,155)(5) $ (974)(5) $ (180,109)(5) $ 5,577,645
Trade accounts receivable, net of allowance
for doubtful accounts....................... 0 0 (361,352)(5) 5,342,077
Inventories.................................. 0 0 (197,607)(5) 4,304,820
Other current assets......................... 0 0 0 3,124,457
-------------- -------------- -------------- ---------------
TOTAL CURRENT ASSETS....................... (1,349,155) (974) (739,068) 18,348,999
EQUIPMENT
Pagers....................................... 0 (2,236,213)(5) 0 26,291,906
Communications equipment..................... (2,615,657)(5) (1,241,058)(5) (1,687,717)(5) 19,888,632
Security systems equipment................... 0 0 0 10,842,531
Office and other equipment................... (249,175)(5) (187,933)(5) 0 4,335,395
-------------- -------------- -------------- ---------------
(2,864,832) (3,665,204) (1,687,717) 61,358,464
Less allowance for depreciation.............. (2,864,832)(5) (3,665,204)(5) (1,237,711)(5) 26,880,105
-------------- -------------- -------------- ---------------
0 0 (450,006) 34,478,359
OTHER ASSETS, net of amortization.............. 17,060,250(6) 4,638,713(6) 16,345,454(6) 86,560,816
-------------- -------------- -------------- ---------------
$ 15,711,095 $ 4,637,739 $ 15,156,380 $ 139,388,174
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
LI
CURRENT LIABILITIES
Trade payables............................... $ 0 $ (476,782)(5) $ (204,770)(5) $ 1,714,180
Other accrued expenses and liabilities....... (138,898)(5) (384,258)(5) (697,768)(5) 7,973,779
Current maturities of long-term debt......... 0 (300,000)(5) (1,677,700)(5) 0
-------------- -------------- -------------- ---------------
TOTAL CURRENT LIABILITIES.................. (138,898) (1,161,040) (2,580,238) 9,687,959
LONG-TERM DEBT, less current maturities........ 21,000,000(7) (4,782,233)(7) 8,681,300(7) 61,235,000
DEFERRED PAYMENTS.............................. 0 350,000(7) 8,712,000(7) 17,394,298
DEFERRED TAX LIABILITIES....................... 0 0 0 659,029
SHAREHOLDERS' EQUITY
Common stock................................. (1,800)(5) (501)(5) (1,000)(5) 65,472
Additional capital........................... (4,555,839)(5) (2,577,212)(5) 0 49,684,973
Retained earnings............................ (592,368)(5) 12,808,725(5) 344,318(5) 2,091,255
Owner's Equity............................... 0 0 0 0
Less treasury stock at cost.................. 0 0 0 (1,429,812)
-------------- -------------- -------------- ---------------
(5,150,007) 10,231,012 343,318 50,411,888
-------------- -------------- -------------- ---------------
$ 15,711,095 $ 4,637,739 $ 15,156,380 $ 139,388,174
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
See accompanying Notes to Unaudited Pro Forma C
<FN>
- --------------------------
(A) Amounts include Contact (acquired March 1, 1994), Radio Call and ChiComm
(acquired August 1, 1994), High Tech (acquired December 31, 1994) and
Signet (acquired March 1, 1995).
</TABLE>
4
<PAGE>
PRONET INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
HISTORICAL RESULTS FOR THE PERIOD FROM JANUARY 1, 1994 TO THE DATE
INDICATED
---------------------------------------------------------------------------
CONTACT RADIO CALL RCC DIVISION
COMMUNICATIONS, COMPANY, INC. OF CHICAGO
PRONET INC. INC. AND COMMUNICATION HIGH TECH
------------ ---------------- AFFILIATES SERVICE, INC. ------------
DECEMBER 31, FEBRUARY 28, ------------- -------------- DECEMBER 31,
1994 1994 JULY 29, 1994 JULY 31, 1994 1994
------------ ---------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues........................... $33,078,998 $ 1,598,419 $ 3,199,644 $2,224,507 $ 290,716
Paging equipment revenues.................... 6,638,587 743,048 738,132 337,911 0
Cost of paging equipment revenues............ (6,643,194) (955,717) (536,247) (295,653) 0
------------ ---------------- ------------- -------------- ------------
33,074,391 1,385,750 3,401,529 2,266,765 290,716
COST OF SALES AND SERVICES..................... 9,184,861 201,783 754,757 486,000 86,159
GROSS MARGIN................................... 23,889,530 1,183,967 2,646,772 1,780,765 204,557
EXPENSES
Sales, General & Administrative.............. 12,126,202 1,021,828 2,180,698 792,000 219,951
Depreciation and amortization................ 8,573,909 92,921 689,403 412,925 127,585
------------ ---------------- ------------- -------------- ------------
20,700,111 1,114,749 2,870,101 1,204,925 347,536
------------ ---------------- ------------- -------------- ------------
OPERATING INCOME (LOSS).................... 3,189,419 69,218 (223,329) 575,840 (142,979)
OTHER INCOME (EXPENSE)
Interest Expense............................. (1,774,089) (46,019) (43,781) (140,221) 0
Interest and Other Income.................... 173,024 0 0 0 0
------------ ---------------- ------------- -------------- ------------
(1,601,065) (46,019) (43,781) (140,221) 0
INCOME (LOSS) BEFORE INCOME
TAXES..................................... 1,588,354 23,199 (267,110) 435,619 (142,979)
Provision (benefit) for income taxes........... 895,453 0 (58,896) 0 0
------------ ---------------- ------------- -------------- ------------
NET INCOME (LOSS).......................... $ 692,901 $ 23,199 $ (208,214) $ 435,619 $ (142,979)
------------ ---------------- ------------- -------------- ------------
------------ ---------------- ------------- -------------- ------------
EARNINGS PER SHARE............................. $ 0.16
------------
------------
WEIGHTED AVERAGE SHARES........................ 4,392,863
------------
------------
<CAPTION>
SIGNET CARRIER METROPOLITAN ALL CITY AMERICOM
------------ ------------ ------------- ------------ ------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1994 1994 1994
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues........................... $4,750,322 $2,434,790 $ 4,834,561 $3,257,045 $3,477,357
Paging equipment revenues.................... 1,099,976 900,539 152,389 387,257 1,105,423
Cost of paging equipment revenues............ (1,089,118) (1,185,274) (156,329) (299,505) (1,015,567)
------------ ------------ ------------- ------------ ------------
4,761,180 2,150,055 4,830,621 3,344,797 3,567,213
COST OF SALES AND SERVICES..................... 1,148,968 202,813 1,516,933 833,005 856,472
GROSS MARGIN................................... 3,612,212 1,947,242 3,313,688 2,511,792 2,710,741
EXPENSES
Sales, General & Administrative.............. 2,287,592 1,603,121 1,622,247 1,669,730 1,764,386
Depreciation and amortization................ 626,714 227,675 597,050 1,225,004 381,450
------------ ------------ ------------- ------------ ------------
2,914,306 1,830,796 2,219,297 2,894,734 2,145,836
------------ ------------ ------------- ------------ ------------
OPERATING INCOME (LOSS).................... 697,906 116,446 1,094,391 (382,942) 564,905
OTHER INCOME (EXPENSE)
Interest Expense............................. (292,167) (124,271) 0 (1,595,160) (290,596)
Interest and Other Income.................... 4,790 0 27,185 0 0
------------ ------------ ------------- ------------ ------------
(287,377) (124,271) 27,185 (1,595,160) (290,596)
INCOME (LOSS) BEFORE INCOME
TAXES..................................... 410,529 (7,825) 1,121,576 (1,978,102) 274,309
Provision (benefit) for income taxes........... 0 0 381,336 25 0
------------ ------------ ------------- ------------ ------------
NET INCOME (LOSS).......................... $ 410,529 $ (7,825) $ 740,240 $(1,978,127) $ 274,309
------------ ------------ ------------- ------------ ------------
------------ ------------ ------------- ------------ ------------
EARNINGS PER SHARE.............................
WEIGHTED AVERAGE SHARES........................
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
5
<PAGE>
PRONET INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CONTACT RADIO CALL CHICOMM HIGH TECH SIGNET
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues.............................. $ 0 $ 0 $ 0 $ 0 $ 0
Paging equipment revenues....................... 0 0 0 0 0
Cost of paging equipment revenues............... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
0 0 0 0 0
COST OF SALES AND SERVICES........................ 0 0 0 0 0
GROSS MARGIN...................................... 0 0 0 0 0
EXPENSES
Sales, General & Administrative................. (425,228)(3) (534,617)(3) 58,333(3) 0(3) (210,000)(3)
Depreciation and amortization................... 196,558(1) 170,284(1) 397,650(1) 76,514(1) 477,184(1)
------------ ------------ ------------ ------------ ------------
(228,670) (364,333) 455,983 76,514 267,184
------------ ------------ ------------ ------------ ------------
OPERATING INCOME (LOSS)....................... 228,670 364,333 (455,983) (76,514) (267,184)
OTHER INCOME (EXPENSE)
Interest Expense................................ (138,981)(2) (227,381)(2) (176,146)(2) (32,800)(2) (265,833)(2)
Interest and Other Income....................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
(138,981) (227,381) (176,146) (32,800) (265,833)
INCOME (LOSS) BEFORE INCOME TAXES............. 89,689 136,952 (632,129) (109,314) (533,017)
Provision (benefit) for income taxes.............. 109,163(4) 11,338(4) (71,802)(4) (92,184)(4) (44,755)(4)
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS)............................. $ (19,474) $ 125,614 $ (560,327) $ (17,130) $ (488,262)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
EARNINGS PER SHARE................................
WEIGHTED AVERAGE SHARES...........................
<CAPTION>
PRO FORMA
CARRIER METROPOLITAN ALL CITY AMERICOM YEAR ENDED
PRO FORMA PRO FORMA PRO FORMA PRO FORMA DECEMBER 31,
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS 1994
------------ -------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues.............................. $ 0 $ 0 $ (348,607)(3) $ 0 $58,797,752
Paging equipment revenues....................... 0 0 0 0 12,103,262
Cost of paging equipment revenues............... 0 0 0 0 (12,176,604)
------------ -------------- ------------- -------------- ------------
0 0 (348,607) 0 58,724,410
COST OF SALES AND SERVICES........................ 0 0 (45,819)(3) 0 15,225,932
GROSS MARGIN...................................... 0 0 (302,788) 0 43,498,478
EXPENSES
Sales, General & Administrative................. (813,646)(3) (214,300)(3) (769,318)(3) 0(3) 22,378,979
Depreciation and amortization................... 392,640(1) 1,137,350(1) (169,337)(1) 1,178,051(1) 16,811,530
------------ -------------- ------------- -------------- ------------
(421,006) 923,050 (938,655) 1,178,051 39,190,509
------------ -------------- ------------- -------------- ------------
OPERATING INCOME (LOSS)....................... 421,006 (923,050) 635,867 (1,178,051) 4,307,969
OTHER INCOME (EXPENSE)
Interest Expense................................ (129,620)(2) (1,482,600)(2) 1,035,550(2) (308,154)(2) (6,032,269)
Interest and Other Income....................... 0 0 0 0 204,999
------------ -------------- ------------- -------------- ------------
(129,620) (1,482,600) 1,035,550 (308,154) (5,827,270)
INCOME (LOSS) BEFORE INCOME TAXES............. 291,386 (2,405,650) 1,671,417 (1,486,205) (1,519,301)
Provision (benefit) for income taxes.............. 103,609(4) (434,947)(4) (112,083)(4) (442,808)(4) 243,449
------------ -------------- ------------- -------------- ------------
NET INCOME (LOSS)............................. $ 187,777 $ (1,970,703) $ 1,783,500 $ (1,043,397) $(1,762,750)
------------ -------------- ------------- -------------- ------------
------------ -------------- ------------- -------------- ------------
EARNINGS PER SHARE................................ $ (0.40)
------------
------------
WEIGHTED AVERAGE SHARES........................... 4,392,863
------------
------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
6
<PAGE>
PRONET INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
HISTORICAL RESULTS FOR THE PERIOD FROM JANUARY 1, 1995 TO THE DATE INDICATED
------------------------------------------------------------------------------
PRONET INC. SIGNET CARRIER METROPOLITAN ALL CITY AMERICOM
----------- ------------ ----------- ------------ ----------- ----------- SIGNET
MARCH 31, FEBRUARY 28, MARCH 31, MARCH 31, MARCH 31, MARCH 31, PRO FORMA
1995 1995 1995 1995 1995 1995 ADJUSTMENTS
----------- ------------ ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues................ $10,487,788 $ 871,772 $ 532,166 $1,408,364 $ 862,810 $ 962,758 $ 0
Paging equipment revenues......... 2,195,743 109,268 196,829 26,423 69,352 212,344 0
Cost of paging equipment
revenues......................... (2,065,236) (109,188) (179,036) (30,239) (55,370) (193,889) 0
----------- ------------ ----------- ------------ ----------- ----------- ------------
10,618,295 871,852 549,959 1,404,548 876,792 981,213 0
COST OF SALES AND SERVICES.......... 2,466,451 273,378 59,046 392,284 210,538 180,969 0
GROSS MARGIN........................ 8,151,844 598,474 490,913 1,012,264 666,254 800,244 0
EXPENSES
Sales, General & Administrative... 4,638,132 366,838 285,706 404,212 340,170 316,029 (38,333)(3)
Depreciation and amortization..... 2,744,868 17,300 54,292 159,990 200,483 104,238 79,530(1)
----------- ------------ ----------- ------------ ----------- ----------- ------------
7,383,000 384,138 339,998 564,202 540,653 420,267 41,197
----------- ------------ ----------- ------------ ----------- ----------- ------------
OPERATING INCOME (LOSS)......... 768,844 214,336 150,915 448,062 125,601 379,977 (41,197)
OTHER INCOME (EXPENSE)
Interest Expense.................. (386,076) (53,566) (25,820) 0 (396,331) (2,843) (39,434)(2)
Interest and Other Income......... 41,399 1,658 942 12,709 0 42,778 0
----------- ------------ ----------- ------------ ----------- ----------- ------------
(344,677) (51,908) (24,878) 12,709 (396,331) 39,935 (39,434)
INCOME (LOSS) BEFORE INCOME
TAXES.......................... 424,167 162,428 126,037 460,771 (270,730) 419,912 (80,631)
Provision for income taxes........ 358,422 0 638 156,662 0 0 29,887(4)
----------- ------------ ----------- ------------ ----------- ----------- ------------
NET INCOME (LOSS)............... $ 65,745 $ 162,428 $ 125,399 $ 304,109 $(270,730) $ 419,912 $ (110,518)
----------- ------------ ----------- ------------ ----------- ----------- ------------
----------- ------------ ----------- ------------ ----------- ----------- ------------
EARNINGS PER SHARE.................. $ 0.01
-----------
-----------
WEIGHTED AVERAGE SHARES............. 6,627,131
-----------
-----------
<CAPTION>
PRO FORMA 3
CARRIER METROPOLITAN ALL CITY AMERICOM MOS ENDED
PRO FORMA PRO FORMA PRO FORMA PRO FORMA MARCH 31,
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET REVENUES
Recurring revenues................ $ 0 $ 0 $ (83,231)(3) $ 0 $15,042,427
Paging equipment revenues......... 0 0 0 0 2,809,959
Cost of paging equipment
revenues......................... 0 0 0 0 (2,632,958)
------------ ------------ ------------ ------------ ------------
0 0 (83,231) 0 15,219,428
COST OF SALES AND SERVICES.......... 0 0 (7,475)(3) 0 3,575,191
GROSS MARGIN........................ 0 0 (75,756) 0 11,644,237
EXPENSES
Sales, General & Administrative... (143,412)(3) (39,950)(3) (93,063)(3) 0(3) 6,036,329
Depreciation and amortization..... 98,160(1) 284,338(1) (42,334)(1) 294,512(1) 3,995,377
------------ ------------ ------------ ------------ ------------
(45,252) 244,388 (135,397) 294,512 10,031,706
------------ ------------ ------------ ------------ ------------
OPERATING INCOME (LOSS)......... 45,252 (244,388) 59,641 (294,512) 1,612,531
OTHER INCOME (EXPENSE)
Interest Expense.................. (38,055)(2) (370,650)(2) 257,581(2) (132,157)(2) (1,187,351)
Interest and Other Income......... 0 0 0 0 99,486
------------ ------------ ------------ ------------ ------------
(38,055) (370,650) 257,581 (132,157) (1,087,865)
INCOME (LOSS) BEFORE INCOME
TAXES.......................... 7,197 (615,038) 317,222 (426,669) 524,666
Provision for income taxes........ 48,044(4) (109,136)(4) 16,987(4) (2,427)(4) 499,077
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS)............... $ (40,847) $(505,902) $ 300,235 $ (424,242) $ 25,589
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
EARNINGS PER SHARE.................. $ 0.00
------------
------------
WEIGHTED AVERAGE SHARES............. 6,627,131
------------
------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
7
<PAGE>
PRONET INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On March 1, 1994, ProNet Inc. (the "Company") completed the acquisition of
all of the outstanding capital stock of Contact Communications, Inc. ("Contact")
for approximately $19 million and filed a Form 8-K/A on May 12, 1994. Effective
August 1, 1994, the Company completed two additional acquisitions. The first of
these acquisitions involved the purchase of substantially all of the paging
assets of Radio Call Company, Inc. ("Radio Call") and certain of its affiliates
for approximately $7.8 million in cash. The second acquisition involved the
purchase of substantially all of the Chicago area paging assets of the RCC
Division of Chicago Communication Service, Inc., ("ChiComm") for consideration
of approximately $9.8 million, comprised of approximately $8.9 million paid in
cash at closing and a $950,000 deferred payment. The Company filed a Form 8-K/A
on October 14, 1994, for the Radio Call and ChiComm acquisitions.
Effective December 31, 1994, ProNet completed the acquisition of
substantially all of the paging assets of High Tech Communications Corp. ("High
Tech") for approximately $900,000, comprised of $700,000 paid in cash at closing
and a $200,000 deferred payment. There was no Form 8-K filed by the Company for
this acquisition as it did not qualify as a significant subsidiary of the
Company in accordance with the definition of significant subsidiary in Rule 1-02
(v) of Regulation S-X.
On March 1, 1995, Contact Communications Inc., a Delaware corporation
("CCI") and wholly-owned subsidiary of the Company, completed the acquisition of
substantially all of the paging assets of Signet Paging of Charlotte, Inc.
("Signet") for approximately $9.0 million, comprised of approximately $4.8
million paid in cash at closing and a $4.2 million deferred payment. The Company
filed a Form 8-K/A related to the Signet acquisition on May 12, 1995.
On April 1, 1995, CCI completed the acquisition of substantially all of the
paging assets of Carrier Paging Systems, Inc. ("Carrier") for approximately $6.5
million, comprised of approximately $3.5 million paid in cash at closing and a
$3.0 million deferred payment. The Company filed a Form 8-K/A for the Carrier
acquisition on June 2, 1995.
On May 3, 1995, CCI completed the acquisition of all of the outstanding
capital stock of Metropolitan for approximately $21.0 million which was paid in
cash at closing. The Company filed a Form 8-K for the Metropolitan acquisition
on May 18, 1995.
On May 19, 1995, CCI completed the acquisition of substantially all of the
paging assets of All City for approximately $6.4 million comprised of
approximately $6.0 million paid in cash at closing and a $350,000 deferred
payment. The Company filed a Form 8-K for the All City acquisition on June 2,
1995.
On July 6, 1995, CCI completed the acquisition of substantially all of the
paging assets of Americom Paging Corporation, a Texas corporation ("Americom"),
for approximately $17.5 million comprised of approximately $8.8 million paid in
cash at closing and a $8.7 million deferred payment, pursuant to an Asset
Purchase Agreement dated as of May 24, 1995, by and among Americom (formerly
known as American 900 Paging, Inc.), Gregory W. Hadley and Mo Shebaclo
(collectively, the "Shareholders", and together with Americom, the "Sellers")
and CCI. Concurrently with the closing of the Americom acquisition, CCI entered
into noncompetition agreements with the Sellers. The acquisition was effective
as of July 1, 1995.
All deferred payments are due and payable one year from the closing of the
respective transactions. These balances are payable, at the Company's
discretion, either in cash or shares of the Company's common stock based on
market value at the date of payment.
The unaudited pro forma condensed financial statements reflect the
transactions as though Contact, Radio Call, ChiComm, High Tech, Signet, Carrier,
Metropolitan, All City and Americom had been acquired at the beginning of the
periods presented. Americom's year end is December 31 which is
8
<PAGE>
PRONET INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
consistent with the Company. Since Contact was acquired on March 1, 1994,
Contact's results of operations for the two months ended February 28, 1994 are
used to arrive at the pro forma results for the year ended December 31, 1994.
Because Radio Call and ChiComm were acquired on August 1, 1994, their results of
operations for the seven months ended July 31, 1994 are used to arrive at the
pro forma results for the year ended December 31, 1994. Because Signet was
acquired on March 1, 1995, its results of operations for the two months ended
February 28, 1995 are used to arrive at the pro forma results for the three
months ended March 31, 1995. Since Carrier, Metropolitan, All City and Americom
were acquired subsequent to March 31, 1995, their results of operations for the
three months ended March 31, 1995 are used to arrive at the pro forma results
for the three months ended March 31, 1995.
The accompanying Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 1994, and the three months ended March 31, 1995
have been prepared by combining the historical results of Contact, Radio Call,
ChiComm, High Tech, Signet, Carrier, Metropolitan, All City and Americom for
such periods and reflect the following adjustments:
(1) Pro forma adjustments are made to the statements of operations to reflect
additional depreciation and amortization expense based on the fair value of
the assets acquired as if the acquisitions had occurred at the beginning of
the periods presented. Pro forma depreciation is computed by the
straight-line method over the remaining estimated useful lives of the
assets. The noncompetition agreements are amortized using the straight-line
method over a five year term, and goodwill is amortized using the
straight-line method over a 15-year term.
(2) Pro forma adjustments reflect the impact on interest expense due to the
financing of the acquisitions which includes amounts borrowed under the
Company's line of credit and term loan facility and amounts due pursuant to
the Signet, All City and Americom deferred payments.
(3) The pro forma adjustments to selling, general and administrative expenses
are representative of expenses that either would or would not have been
incurred if the acquisitions had occurred at the beginning of the periods
presented. For Radio Call, Contact, Carrier and Metropolitan, cost savings
relate to decreased salaries, office rent and professional fees. For
ChiComm, additional costs relate to increased salaries and office rent. For
Signet, cost savings relate to decreased salaries and professional fees and
additional costs relate to increased office rent. For High Tech, no pro
forma adjustments to selling, general and administrative expenses are
recorded. For All City, a reduction in revenues and cost of sales and
services related to the telephone answering service ("TAS") operations that
were not included in the purchase is recorded. All City cost savings relate
to decreased salaries and TAS related expenses. For Americom, cost savings,
related to decreased salaries, were offset by increases to bad debt and lost
pager reserves. Thus, no savings for Americom are recorded.
(4) A pro forma adjustment is made to reflect the effect upon the income tax
provision as if the acquisitions had occurred at the beginning of the
periods presented. The primary differences in the effective tax rate between
the Company's historical financial statements and the pro forma statements
are state taxes and the amortization of goodwill related to the Contact and
Metropolitan acquisitions which is assumed not to be deductible for tax
purposes.
The accompanying Pro Forma Consolidated Balance Sheet as of March 31, 1995,
has been prepared as if the acquisitions of Carrier, Metropolitan, All City and
Americom had occurred on that date and includes the following adjustments to
reflect the acquisitions (Contact, Radio Call, ChiComm, High Tech and Signet are
reflected in the March 31, 1995 Balance Sheet of ProNet Inc.):
9
<PAGE>
PRONET INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) A pro forma adjustment is made to reflect the fair value of those assets and
liabilities that were acquired as a result of the acquisition of Carrier,
Metropolitan, All City and Americom. The Company did not acquire cash or
assume certain trade payables, certain accrued expenses or existing
long-term debt for Carrier, All City or Americom.
(6) A pro forma adjustment is made to goodwill equal to the excess of the
purchase price over the fair values assigned to assets and liabilities
assumed.
(7) A pro forma adjustment is made to record the borrowings under the line of
credit and term loan facility to finance the acquisitions of Carrier,
Metropolitan, All City and Americom.
The pro forma condensed financial information presented is not necessarily
indicative of either the results of operations that would have occurred had the
acquisition taken place at the beginning of the periods presented or of future
results of operations of the combined operations.
10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Americom Paging Corporation:
We have audited the accompanying balance sheets of Americom Paging
Corporation as of December 31, 1994 and 1993, and the related statements of
operations, changes in shareholders' deficit, and cash flows for the years 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 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 financial position of Americom Paging Corporation
as of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 5 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters is
also described in note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
KPMG PEAT MARWICK LLP
April 17, 1995
Houston, Texas
11
<PAGE>
AMERICOM PAGING CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Current assets:
Cash and cash equivalents............................................................... $ 180,109 $ -- $ --
Accounts receivable, less allowance for doubtful accounts of $487,774 and $146,377, in
1994 and 1993, respectively............................................................ 469,353 288,822 313,171
Inventories (note 2).................................................................... 409,607 218,818 37,222
Prepaid expenses and other current assets............................................... 77,387 82,963 79,564
----------- ---------- -----------
Total current assets.................................................................. 1,136,456 590,603 429,957
Fixtures and equipment, at cost (notes 2 and 4)........................................... 2,519,284 2,524,908 2,290,103
Less accumulated depreciation......................................................... 1,237,711 1,154,412 677,424
----------- ---------- -----------
Net fixtures and equipment............................................................ 1,281,573 1,370,496 1,612,679
Other assets.............................................................................. (34,409) 17,990 --
----------- ---------- -----------
$ 2,383,620 $1,979,089 $ 2,042,636
----------- ---------- -----------
----------- ---------- -----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Bank overdraft.......................................................................... $ -- $ 44,172 $ 253,575
Accounts payable........................................................................ 204,770 212,012 200,628
Accrued expenses and other liabilities.................................................. 740,490 252,054 331,039
Current portion of long-term debt (note 2).............................................. 1,677,700 2,144,985 --
Other notes payable..................................................................... 103,700 88,818 47,002
----------- ---------- -----------
Total current liabilities............................................................. 2,726,660 2,742,041 832,244
Long-term debt (note 2)................................................................... -- -- 2,247,653
----------- ---------- -----------
Total liabilities..................................................................... 2,726,660 2,742,041 3,079,897
----------- ---------- -----------
Shareholders' deficit:
Common stock, $1.00 par value, 1,000 shares authorized, issued, and outstanding......... 1,000 1,000 1,000
Accumulated deficit..................................................................... (344,040) (763,952) (1,038,261)
----------- ---------- -----------
Total shareholders' deficit........................................................... (343,040) (762,952) (1,037,261)
Commitments and contingencies (notes 3 and 5).............................................
----------- ---------- -----------
$ 2,383,620 $1,979,089 $ 2,042,636
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
AMERICOM PAGING CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------
1995 1994 1993
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Services and rental revenues............ $962,758 $ 3,477,357 $ 2,243,640
Product sales........................... 212,344 1,105,423 1,922,884
Cost of products sold................... (193,889) (1,015,567) (1,798,892)
------------ ----------- -----------
Gross profit 981,213 3,567,213 2,367,632
Operating expenses:
Services, rent and maintenance........ 180,969 856,472 864,497
Selling............................... 6,367 165,784 12,030
General and administrative............ 309,663 1,598,602 1,341,613
Depreciation.......................... 104,238 381,450 291,000
------------ ----------- -----------
Total operating expenses............ 601,237 3,002,308 2,509,140
------------ ----------- -----------
Operating income (loss)............. 379,976 564,905 (141,508)
------------ ----------- -----------
Other (income) expenses:
Interest expense...................... 2,843 231,846 313,651
Other, net............................ (42,779) 58,750 (28,276)
------------ ----------- -----------
Net income (loss)................... $419,912 $ 274,309 $ (426,883)
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
AMERICOM PAGING CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
TOTAL
COMMON ACCUMULATED SHAREHOLDERS'
STOCK DEFICIT DEFICIT
----------- -------------- --------------
<S> <C> <C> <C>
Balances at December 31, 1992.......................................... $ 1,000 $ (611,378) $ (610,378)
Net loss............................................................... -- (426,883) (426,883)
----------- -------------- --------------
Balances at December 31, 1993.......................................... 1,000 (1,038,261) (1,037,261)
Net income............................................................. -- 274,309 274,309
----------- -------------- --------------
Balances at December 31, 1994.......................................... 1,000 (763,952) (762,952)
Net income (unaudited)................................................. -- 419,912 419,912
----------- -------------- --------------
Balances at March 31, 1995............................................. $ 1,000 $ (344,040) $ (343,040)
----------- -------------- --------------
----------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
AMERICOM PAGING CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------
1995 1994 1993
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................................. $419,912 $ 274,309 $ (426,883)
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities:
Depreciation................................................................ 104,238 381,450 291,000
Reserve for lost pagers..................................................... -- 67,500 55,908
Changes in operating assets and liabilities:
Accounts receivable....................................................... (180,531) 24,349 (196,074)
Inventories............................................................... (190,789) (181,596) 285,857
Prepaid expenses and other current assets................................. 5,576 (3,399) (79,564)
Other assets.............................................................. 52,399 (17,990) --
Short-term investment..................................................... -- -- 20,000
Accounts payable, accrued expenses and other liabilities.................. 481,194 (67,601) (98,147)
------------ ---------- ----------
Total adjustments....................................................... 272,087 202,713 278,980
------------ ---------- ----------
Net cash provided (used) by operating activities........................ 691,999 477,022 (147,903)
------------ ---------- ----------
Cash flows from investing activities:
Additions to fixtures and equipment........................................... (15,315) (206,767) (835,810)
------------ ---------- ----------
Cash flows from financing activities:
Increase (decrease) in bank overdraft......................................... (44,172) (209,403) 251,497
Proceeds from long-term debt.................................................. -- -- 732,216
Reduction in long-term debt and other notes payable........................... (452,403) (60,852) --
------------ ---------- ----------
Net cash provided (used) by financing activities........................ (496,575) (270,255) 983,713
------------ ---------- ----------
Net increase in cash and cash equivalents............................... 180,109 -- --
Cash balance at beginning of year............................................... -- -- --
------------ ---------- ----------
Cash balance at end of year..................................................... $180,109 $ -- $ --
------------ ---------- ----------
------------ ---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest........................................ $284,261 $ 180,999 $ 269,393
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
AMERICOM PAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) DESCRIPTION OF BUSINESS
Americom Paging Corporation (the Company) sells paging equipment and
operates paging systems in various locations throughout the State of Texas. The
Company receives income from leasing activities of pagers and the related radio
transmission services.
(B) REVENUE RECOGNITION
Leasing revenue is billed on the first day of the month for services in
advance and is recognized as it is earned. The Company also sells pagers for
which the revenue is recognized at the point of sale.
(C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of reporting cash flows includes
cash on hand, amounts due on demand from banks and amounts due from banks
maturing within 90 days of purchase.
(D) CREDIT CONCENTRATIONS
The Company's customers are not concentrated in the state of Texas. No
single customer accounted for a significant amount of the Company's sales, and
there were no significant accounts receivable from a single customer. The
Company reviews a customer's credit history before extending credit. The Company
establishes an allowance for doubtful accounts based upon historical trends and
other information.
(E) INVENTORIES
Inventories consists of pagers which are held specifically for resale.
Inventories are stated at the lower of cost or market, with cost being
determined using the average cost method.
(F) FIXTURES AND EQUIPMENT
Fixtures and equipment are stated at cost. The cost of maintenance and
repairs is charged to expense as incurred; significant renewals and betterments
which extend the useful life of equipment are capitalized. When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation
are removed from the books, and any resulting gain or loss is reflected in
income for the period. Depreciation of fixtures and equipment is provided using
the straight-line method over the estimated useful lives as follows:
<TABLE>
<CAPTION>
CLASSIFICATION USEFUL LIFE
- -------------------------------------------------------------- ---------------
<S> <C>
Pagers........................................................ 5
Office equipment.............................................. 5
Furniture and fixtures........................................ 7
Tower site equipment.......................................... 5
Paging systems................................................ 10
</TABLE>
(G) INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting for
income taxes by adopting Statement of Financial Accounting Standards (SFAS) No.
109, ACCOUNTING FOR INCOME TAXES. This pronouncement requires that deferred
taxes related to temporary differences between balances recorded for financial
reporting purposes and tax reporting purposes be reflected at the enacted tax
rate. The effect of this change was not significant. The Company had net
operating loss carryforwards of approximately $700,000 at December 31, 1993
against which a valuation allowance was established.
16
<PAGE>
AMERICOM PAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994 AND 1993
NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to deferred taxes at December
31, 1993 related to the following:
<TABLE>
<S> <C>
Deferred tax assets:
Allowance for doubtful accounts not deductible for tax
purposes until paid.......................................... $ 49,768
Net operating loss carryforwards.............................. 246,500
---------
296,268
Valuation allowance........................................... (139,768)
---------
156,500
Deferred tax liabilities -- fixtures and equipment, principally
due to differences in depreciation methods..................... 156,500
---------
Net deferred taxes.......................................... $ --
---------
---------
</TABLE>
Effective January 1, 1994 the Company elected to be taxed under the
provisions of Subchapter S of the Internal Revenue Code. Under these provisions,
the stockholders of the Company are individually liable for federal income
taxes. Additionally, the availability of the net operating loss carryforwards of
the Company is suspended. The deferred taxes previously provided for were
eliminated upon this election.
NOTE 2 -- LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Notes payable to equipment supplier due in combined monthly
installments of $72,791 including interest with final payment
due January 1998. Borrowings bear interest at 13.5%; secured by
all pagers and paging equipment................................ $ 2,144,985 $ 2,247,653
------------- -------------
------------- -------------
</TABLE>
These notes have maturity dates extending through 1997. However, as of
December 31, 1994, the Company was not in compliance with certain terms of its
note agreements with the Company's primary equipment supplier. As a result of
these violations, the holders of such debt may, after notice and expiration of
certain grace periods, declare the entire amount of such indebtedness due and
payable immediately. Consequently, the long-term portions of the debt are shown
as current on the balance sheet as of December 31, 1994. The balance is in
dispute and the Company has filed suit against this equipment supplier
subsequent to December 31, 1994.
17
<PAGE>
AMERICOM PAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994 AND 1993
NOTE 3 -- LEASE COMMITMENTS
The Company leases its corporate offices, equipment and certain tower and
antenna sites under noncancelable long-term operating lease agreements.
Following is a schedule of future minimum lease payments for the operating
leases (with initial or remaining noncancelable terms in excess of one year) as
of December 31, 1994:
<TABLE>
<S> <C>
1995........................................................ $ 326,963
1996........................................................ 314,671
1997........................................................ 313,479
1998........................................................ 318,942
1999........................................................ 319,590
----------
Total minimum payments.................................. $1,593,645
----------
----------
</TABLE>
Rental expense under operating leases for the years ended December 31, 1994
and 1993 was approximately $124,000 and $245,000.
NOTE 4 -- FIXTURES AND EQUIPMENT
Fixtures and equipment at December 31, 1994 and 1993 are summarized as
follows:
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Office equipment, furniture and fixtures.................................. $ 68,690 $ 43,476
Automobiles............................................................... 55,383 19,834
Pagers, paging systems and tower site equipment........................... 2,400,835 2,226,793
------------- -------------
$ 2,524,908 $ 2,290,103
------------- -------------
------------- -------------
</TABLE>
NOTE 5 -- LIQUIDITY
The Company has suffered losses from operations and has a net capital
deficiency that raise substantial doubt about its ability to continue as a going
concern. Management believes that additional capital will be required to fund
the operations and expand the business. Accordingly, during January 1995, the
Company entered into a letter of intent to sell substantially all of the assets
of the Company. No alternative plans have been identified at this time should
the sale of assets not be consummated.
18
<PAGE>
EXHIBIT 10.1
EXHIBIT INDEX
ASSET PURCHASE AGREEMENT
AMONG AMERICOM PAGING CORPORATION,
GREGORY W. HADLEY, MO SHEBACLO
AND
CONTACT COMMUNICATIONS INC.
May 24, 1995
<PAGE>
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
AMONG AMERICOM PAGING CORPORATION,
GREGORY W. HADLEY, MO SHEBACLO
AND
CONTACT COMMUNICATIONS INC.
May 24, 1995
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Acquired . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . 1
1.4 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Financing Commitment - Escrow Deposit . . . . . . . . . . . . . . . . . 6
1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
2.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Purchaser Information . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SHAREHOLDERS
3.1 Due Organization; Ownership . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Conduct of Business; Certain Actions. . . . . . . . . . . . . . . . . .10
3.7 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.8 Pagers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.9 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . . .12
3.10 Intellectual Rights . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . .13
3.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.13 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.14 Contracts and Agreements. . . . . . . . . . . . . . . . . . . . . . . .14
3.15 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .14
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.17 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.18 Business Relations. . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.20 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.21 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.22 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . .17
3.23 Interest in Competitors, Suppliers, and Customers . . . . . . . . . . .17
3.24 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
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3.25 Commission Sales Contracts. . . . . . . . . . . . . . . . . . . . . . .18
3.26 Regulatory Certificates . . . . . . . . . . . . . . . . . . . . . . . .18
3.27 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.28 Sophisticated Investor Status . . . . . . . . . . . . . . . . . . . . .18
3.29 Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.30 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.31 Purchaser Information . . . . . . . . . . . . . . . . . . . . . . . . .19
3.32 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 4
COVENANTS OF THE SELLER AND THE SHAREHOLDERS
4.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
4.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.3 Satisfaction of All Conditions Precedent. . . . . . . . . . . . . . . .20
4.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . .21
4.6 Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.7 Notice of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .21
4.8 Continuation of Insurance Coverage. . . . . . . . . . . . . . . . . . .21
4.9 Maintenance of Credit Terms . . . . . . . . . . . . . . . . . . . . . .21
4.10 Updating Information. . . . . . . . . . . . . . . . . . . . . . . . . .22
4.11 Interim Operations of the Seller. . . . . . . . . . . . . . . . . . . .22
4.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . .23
4.13 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.14 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE 5
REGULATORY APPROVALS
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Purchaser. . . . . . . . . . . . . . .24
6.2 Conditions to Obligations of the Seller . . . . . . . . . . . . . . . .27
ARTICLE 7
TERMINATION
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . .28
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ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of the Purchaser. . . . . . . . . . . . . . . . . . . .28
8.2 Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . .29
8.3 Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
8.4 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
8.5 Indemnification from Lawsuit. . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 9
MISCELLANEOUS
9.1 Collateral Agreements, Amendments, and Waivers. . . . . . . . . . . . .31
9.2 Bulk Sales Compliance . . . . . . . . . . . . . . . . . . . . . . . . .32
9.3 Risk of Loss - Damage to Transferred Assets . . . . . . . . . . . . . .32
9.4 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.5 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . . .32
9.6 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
9.7 Seller's Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . .33
9.8 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . .33
9.9 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.10 Sales Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.11 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.12 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
9.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
9.14 Survival of Representations, Warranties, and Covenants. . . . . . . . .35
9.15 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . .36
9.16 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . .36
9.17 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . .36
9.18 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
9.19 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
9.20 Sections; Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . .36
9.21 Number and Gender of Words. . . . . . . . . . . . . . . . . . . . . . .36
9.22 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . .37
9.23 Alternative Dispute Resolution. . . . . . . . . . . . . . . . . . . . .37
9.24 Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
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SCHEDULES
1.1 Transferred Assets
1.2 Excluded Assets
3.1 Foreign Qualification
3.3 Conflicts
3.4 Consents
3.5(a) June Asset List
3.6 Conduct of Business
3.7 Title
3.8 Tariffs
3.9 Licenses and Permits
3.10 Intellectual Rights
3.12 Insurance
3.15 Claims and Proceedings
3.17 Personnel
3.20 Warranties
3.21 Accounts Receivable
3.22 Customers and Suppliers
3.23 Subsidiaries
3.24 Inventory
3.25 Commission Sales Contracts
EXHIBITS
A - Deposit Escrow Agreement
B - Bill of Sale
C - Assumption Agreement
D - Form of Opinion of Counsel to the Seller and the Shareholders
E - Form of Opinion of FCC Counsel to the Seller and the
Shareholders
F - Noncompetition Agreement - Seller
G - Noncompetition Agreement - Shareholder
H - License Agreement
I - Registration Rights Agreement
J - Allocation of Purchase Price
K - Guaranty Agreement
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of May 24, 1995, by and among Americom Paging Corporation formerly known as
American 900 Paging, Inc. (the "Seller"), Gregory W. Hadley and Mo Shebaclo
(collectively, the "Shareholders"), and Contact Communications Inc., a Delaware
corporation (the "Purchaser").
A. The Shareholders own all the outstanding capital stock of the Seller.
B. The Purchaser desires to purchase from the Seller, and the Seller
desires to sell to the Purchaser, upon the terms and subject to the conditions
set forth herein, substantially all of the property and assets of the Seller
that are used in the conduct of the Seller's radio paging system business (such
property, assets, and business, including all rights to affiliated networks,
being hereinafter collectively called the "System").
AGREEMENTS
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 ASSETS TO BE ACQUIRED. On the Closing Date (as hereinafter defined),
the Seller shall sell to the Purchaser, and the Purchaser shall purchase from
the Seller, on the terms and conditions set forth in this Agreement, all of the
property and assets of whatever nature of the Seller that are used in the
conduct of the System (other than as provided in Section 1.2 hereof) including,
without limitation, the assets described in Schedule 1.1 attached hereto
(collectively, the "Transferred Assets"), free and clear of all liens, security
interests, claims, rights of another, and encumbrances of any kind or character
except as disclosed in Schedule 3.7 attached hereto.
1.2 EXCLUDED ASSETS. The Seller shall not sell, assign, transfer, or
convey to the Purchaser hereunder any of the assets or property of the Seller
used in the conduct of the System listed on SCHEDULE 1.2 attached hereto (the
"Excluded Assets").
1.3 ASSUMPTION OF CERTAIN LIABILITIES. On the Closing Date,
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the Purchaser shall assume and agree to perform and discharge the liabilities
and obligations of the Seller under:
(a) All personal property leases listed on ANNEX 2 to Schedule 1. 1
(the "Personal Property Leases");
(b) All real estate leases (including any radio tower leases) listed
on ANNEX 3 to SCHEDULE 1.1 (the "Real Estate Leases"); and
(c) All contracts, agreements, arrangements, policies, and
instruments that are listed on Annex 4 to SCHEDULE 1.1 (the "Miscellaneous
Contracts" and, collectively with the Personal Property Leases and the Real
Estate Leases, the "Assumed Contracts"),
but only to the extent such liabilities and obligations relate to goods
delivered to, services performed for, or benefits received by the Purchaser
after the Closing.
In addition to the above described obligations under the Assumed Contracts,
the Purchaser shall assume and agrees to discharge the obligations of the Seller
with respect to the customer pager rental deposits in the amounts set forth on
hereto and transferred to the Purchaser at the Closing (as hereinafter defined)
(such deposits and the Assumed Contracts collectively referred to herein as the
"Assumed Liabilities").
Notwithstanding the foregoing, it is expressly understood that the
Purchaser shall not be liable for and shall not assume any of the Seller's
obligations or liabilities (whether known or unknown, matured or unmatured, or
fixed or contingent) other than obligations and liabilities expressly assumed in
this Section 1.3. Without limiting the generality of the foregoing, the
Purchaser shall not assume any of the Seller's obligations or liabilities with
respect to (a) any claims for workers compensation for occurrences prior to
closing, (b) any foreign, Federal, state, county, or local taxes on income of
the Seller whether arising before or after the Closing Date, any foreign,
Federal, state, county, or local taxes, fees, and assessments of any kind of the
Seller or for which the Seller has the obligation to collect from any other
party, including, without limitation, sales, use, gross receipts, franchise,
excise, payroll, including Social Security and unemployment, value-added,
withholding, and any other taxes, whether arising before or after the Closing
Date, or any foreign, federal, state, county, or local taxes, including, without
limitation, sales, use, gross receipts and value-added taxes, or any other fees,
arising by reason of the purchase and sale of the Transferred Assets by the
Seller to Purchaser under Section 1. 1 hereof and the assumption of liabilities
under this Section 1.3 by Purchaser, including any such taxes, fees and
assessments related
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the purchase and sale of the Transferred Assets and the assumption of
liabilities payable by, or assessed against, Purchaser, or otherwise, (c) any
liability for any violation by the Seller of any statutes, laws, regulations, or
ordinances of any federal, state, or local government, including, without
limitation, the failure to file or the improper filing of any and all tax
returns and other reports or the failure to timely pay any and all taxes, fees,
and assessments to any governmental unit, authority, or instrumentality by the
Seller, (d) any liability for any breach of contract, negligence, or misconduct
by the Seller or any of its agents, servants, or employees, (e) any liability of
the Seller arising out of or pursuant to this Agreement (including, without
limitation, any liability arising out of the Seller's employee severance
policy), (f) any liability of the Seller relating to any litigation arising from
any event, action, or omission, (g) any liability of the Seller relating to
employee benefit plans maintained by the Seller, (h) any liability arising out
of or incurred in respect of any transaction of the Seller occurring after the
Closing Date, (i) any liability of the Seller to its shareholders, whether in
connection with the transactions contemplated by this Agreement or any
subsequent liquidation and dissolution of the Seller, or otherwise, including,
but not limited to, liabilities or obligations of the Seller to make
distributions to the Shareholders or distributions in liquidation, or j) any
other liability or obligation of the Seller other than the Assumed Contracts.
Any liabilities of Seller not expressly assumed by the Purchaser pursuant to
this Section 1.3 shall be Indemnified Costs (as hereinafter defined) and, as
such, shall be subject to offset by the Purchaser pursuant to Section 8.4
hereof.
1.4 PURCHASE PRICE. The aggregate purchase price payable by the Purchaser
in consideration for the sale of the Transferred Assets shall be an amount equal
to the remainder of (a) the sum of (i) $500,000, which amount is being deposited
with the Escrow Agent (hereinafter defined) concurrently herewith as a deposit
in accordance with the terms of that certain Deposit Escrow Agreement (herein so
called) of even date herewith, by and among the Seller, the Purchaser and the
Escrow Agent, a copy of which is attached hereto as Exhibit A,(ii) $___________
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(1)* The Purchase Price will be determined by a formula which multiplies
(i) the monthly average of the Seller's EBITDA (Earnings before interest, taxes,
depreciation and amortization) for the months of February, March and April,
1995, annualized (multiplied by 12) ("EBITDA") times (ii) 8.0. The EBITDA will
be increased by the amount of salary and benefits attributable to Gregory W.
Hadley and those family members of the Shareholders (namely, Harley Buntenbach,
Mona Ghazal, and Salah Ghazal) who are not performing ongoing services for the
Seller and all other income, expenses, interest and penalties not related to the
months of February, March
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(1)payable in cash on the Closing Date, (iii) $ ____________ * million, to be
paid at any time on or before the first anniversary of the Closing Date (such
date being referred to herein as the "Deferred Payment Date"), and payable, in
the Purchaser's sole discretion, either in (A) shares of common stock, par value
$.01 per share ("Common Stock"), of ProNet Inc., a Delaware corporation and the
parent corporation of the Purchaser ("ProNet"), provided that the Common Stock
is then registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and quoted on the National Association of
Securities Dealers Automated Quotation System (or other quotation system or
securities exchange), valued at the Average Closing Price (hereinafter defined)
as of the Deferred Payment Date or (B) cash, (iv) increased by the overage
amount for pagers in excess of 90,000, valued on the basis set forth in Appendix
A, (the foregoing calculation of numbers shall not in any event include reseller
numbers placed on the system by ProNet during the interim),(v) an amount,
payable in cash on the Closing Date, equal to the amount of the Seller's
accounts receivable in respect of services or merchandise provided by the Seller
prior to the Closing Date as of 11:59 p.m. on the day immediately preceding the
Closing Date, minus (b) the amount of any revenues collected by the Seller prior
to the Closing Date in respect of services or merchandise to be provided to
customers of the System after the Closing Date, (vi) an amount to acquire all
inventory of Seller over $75,000.00 and calculated at book value (collectively,
the "Purchase Price"). Notwithstanding the foregoing, to the extent that any
accounts receivable of any Seller are in dispute with the obligor or are known
by any Seller or the Shareholder to be noncollectible at the time of Closing, no
value shall be assigned to any such disputed or noncollectible accounts
receivable and such accounts receivable shall not be assigned to Purchaser. In
addition, the parties hereto acknowledge and agree that no amount shall be paid
by the Purchaser for accounts receivable relating to services to be performed,
or goods sold, by the Purchaser after the Closing Date. For purposes of
calculating the Purchase Price, the Seller's accounts receivable shall be valued
as follows:
The following formula will be used to determine the payoff on each customer
account on the Seller accounts receivable aging at Closing. Seller will
give Purchaser a list of every
- ----------------
and April 1995 or any other income or expense that are a one-time or a non-
recurring event. All undisputed expenses for February, March, and April 1995
must be paid by not later than June 30, 1995. The Purchase Price shall be paid
as follows: (a) 50% in cash at Closing (including the Deposit as defined in
Section 1.5 hereof) and (b) the balance payable in shares of common stock of
ProNet Inc. or cash (the "Deferred Amount"), in Buyer's sole discretion, within
12 months after Closing.
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account written off between May 1, 1995 and Closing. The accounts
receivable balance at Closing should not include the current month's
billing (e.g. if the transaction anticipated hereby closes August 1, the
accounts receivable aging should be run before the August billing.)
1. If more than 5% of total customer account balance outstanding at
Closing is greater than 90 days, Purchaser will pay 10% of total
customer account balance.
2. If the greater than 90 day balance is less than 5% of total balance,
but the greater than 60 day plus the greater than 90 day balance is
more than 5% of total customer account balance at Closing, Purchaser
will pay 50% of total customer account balance.
3. If the greater than 90 plus the greater than 60 day balance is less
than 5% of total balance, but the greater than 30 plus the greater
than 60 plus the greater than 90 day balance is more than 5% of total
customer account balance at Closing, Purchaser will pay 85% of total
customer account balance.
4. If the greater than 90 day plus the greater than 60 day plus the
greater than 30 day balance is less than 5% of total customer account
balance at Closing, Purchaser will pay 98% of customer account
balance.
5. Seller is allowed to list up to 10 accounts which pay an amount equal
to a normal monthly balance every month, but carry a balance in two or
more of the aging classifications and those accounts will be treated
as though they pay within 30 days for purposes of the above
classification and for purposes of payment.
As used herein, "Average Closing Price" means the average closing price of the
Common Stock on the National Market System of the National Association of
Securities Dealers Automated Quotation System (or such other quotation system or
securities exchange on which the Common Stock is then quoted or listed) as
reported by the Wall Street Journal for the 20 consecutive trading days
beginning 25 trading days prior to the Deferred Payment Date. The Purchase
Price shall be paid by certified bank check or wire transfer of immediately
available funds. As additional consideration for the sale of the Transferred
Assets, the Purchaser shall assume certain of the Seller's obligations under or
with respect to the Assumed Contracts in accordance with Section 1.3 hereof.
The Purchaser shall pay quarterly in cash to the Seller interest at the rate of
six percent (6%) per annum on any portion of the Deferred Amount, calculated
from the Closing Date (hereinafter defined) until paid.
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1.5 FINANCING COMMITMENT - ESCROW DEPOSIT. Pursuant to the Deposit Escrow
Agreement and concurrently with the execution hereof, the Purchaser has
delivered to the Escrow Agent $500,000 in cash (the "Deposit"). If the Closing
is held as provided herein, at the Closing, the Escrow Agent shall deliver the
Deposit to the Seller and the interest accrued thereon to the Purchaser. If
this Agreement is terminated as provided in clause (b) of Section 7.1 hereof,
upon such termination, $250,000 of the Deposit shall be paid to the Seller as
liquidated damages and in complete satisfaction of and as a full remedy for any
claims of the Seller and the Shareholders against the Purchaser, while the
remainder of the Deposit (including all interest accrued thereon) shall be paid
to the Purchaser, and the Purchaser and the Seller shall so instruct the Escrow
Agent. If the sale is not consummated other than as a result of a termination
of this Agreement as provided in the preceding sentence, the Seller and the
Purchaser shall instruct the Escrow Agent to distribute the Deposit and the
interest accrued thereon in accordance with the provisions of Section 7.2 hereof
and the Deposit Escrow Agreement.
1.6 CLOSING.
(a) CLOSING DATE. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of the Purchaser located
at 600 Data Drive, Suite 100, Plano, Texas 75075 at 9:00 a.m., local time, on
the last day of the month in which all Federal, state, and local regulatory
approvals for the transactions contemplated hereby are received by Final Order
(as hereinafter defined). The date on which the Closing actually occurs is
referred to herein as the "Closing Date".
(b) DELIVERY AND PAYMENT. At the Closing, (i) the Seller shall
execute and deliver to the Purchaser a bill of sale and assignment with respect
to the Transferred Assets substantially in the form attached hereto as EXHIBIT B
(the "Bill of Sale"), and such other bills of sale, assignments, certificates of
title, endorsements, and other instruments of conveyance as may be necessary to
transfer the Transferred Assets to the Purchaser, (ii) the Purchaser shall (aa)
execute and deliver to the Seller an assumption agreement with respect to the
Assumed Liabilities substantially in the form attached hereto as EXHIBIT C (the
"Assumption Agreement"), and (bb) deliver to the Seller a certified bank check
or wire transfer for the amount of the cash portion of the Purchase Price to be
paid on the Closing Date as provided in Section 1.4 hereof (less the amounts
deposited pursuant to the Deposit Escrow Agreement), and (iii) the Escrow Agent
shall deliver the Deposit to the Seller and the interest accrued thereon to the
Purchaser. Any cash paid in respect of the Deferred Amount shall be paid by
delivery to the Seller of a certified bank check or wire transfer in such
amount. Any Common Stock issued in respect of the Deferred Amount shall be
delivered to the Seller at its address set
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forth in Section 9.13 hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller and the
Shareholders as follows (with the understanding that the Seller and the
Shareholders are relying materially on each such representation and warranty in
entering into and performing this Agreement):
2.1 DUE ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has full corporate power and corporate authority to own or lease its
properties and to carry on its business as, and in the places where, such
properties are owned or leased and such business is conducted.
2.2 DUE AUTHORIZATION. The Purchaser has full corporate power and
corporate authority to enter into and perform its obligations under this
Agreement and each agreement, document, and instrument required to be executed
by the Purchaser in accordance herewith. This Agreement and the other
agreements, documents, and instruments required to be executed and delivered by
the Purchaser in accordance herewith have been, or by the Closing shall have
been, duly and validly executed and delivered by the Purchaser and shall
constitute, or by the Closing shall constitute, valid and binding obligations of
the Purchaser enforceable in accordance with their respective terms, except that
(a) such enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent transfer, or other laws, now or hereafter in effect, affecting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses (including commercial reasonableness, good faith, and fair dealing) and
to the discretion of the court before which any proceeding therefor may be
brought.
2.3 COMMON STOCK. The Common Stock, if any, to be issued by ProNet to the
Seller in payment of the Deferred Amount, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid, and non-assessable.
2.4 PURCHASER INFORMATION. The Purchaser has delivered to the Seller true
and correct copies of the ProNet's most recent Proxy Statement, Annual Report on
Form 10-K, and Quarterly Report on Form 10-Q (the "ProNet Filings").
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SHAREHOLDERS
The Seller and each of the Shareholders, jointly and severally, to the
extent they do so, represent and warrant to the Purchaser as follows (with the
understanding that the Purchaser is relying materially on each such
representation and warranty in entering into and performing this Agreement):
3.1 DUE ORGANIZATION; OWNERSHIP. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas and has full corporate power and corporate authority to own or lease its
properties and to carry on its businesses as, and in the places where, such
properties are owned or leased and such businesses are conducted. The Seller is
qualified to do business and is in good standing in the states set forth on
SCHEDULE 3.1 attached hereto, which states represent every jurisdiction where
such qualification is required. No other jurisdiction has asserted a claim that
the Seller is required to qualify to do business as a foreign corporation in
such jurisdiction. All of the equity securities of the Seller are owned of
record and beneficially as set forth on SCHEDULE 3.1 attached hereto. There are
no authorized or outstanding warrants, options, or rights of any kind to acquire
from the Seller or any Shareholder any equity or debt securities of the Seller
or securities convertible into or exchangeable for equity or debt securities of
the Seller. The Shareholders owns Americom VHF Paging Corporation, but that
corporation does not own or lease any license or assets used in connection with
or necessary for the operation of the system.
3.2 DUE AUTHORIZATION. The Seller has full corporate power and corporate
authority to enter into and perform its obligations under this Agreement and
each agreement, document, and instrument required to be executed by the Seller
in accordance herewith. The execution, delivery, and performance of this
Agreement and any agreements, documents, and instruments required to be executed
by the Seller have been duly authorized by the Board of Directors of the Seller
and the Shareholders. This Agreement and the agreements, documents, and
instruments required to be executed and delivered by the Seller or any of the
Shareholders in accordance herewith have been duly and validly executed and
delivered by the Seller and/or the Shareholders and constitute valid and binding
obligations of the Seller and/or the Shareholders enforceable in accordance with
their respective terms, except that (a) such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent transfer, or other laws, now or
hereafter in effect, affecting creditors' rights generally, and (b) the remedy
of specific performance and injunctive and other forms of equitable
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relief may be subject to equitable defenses (including commercial
reasonableness, good faith, and fair dealing) and to the discretion of the court
before which any proceeding therefor may brought.
3.3 CONFLICTS. Except as set forth on SCHEDULE 3.3, neither the
execution, delivery, nor performance of this Agreement or any other agreement,
document, or instrument to be executed by the Seller and/or any of the
Shareholders in connection herewith shall (a) violate any Federal, state,
county, or local law, rule, or regulation applicable to the Seller or any of the
Shareholders, or its or his properties, (b) violate or conflict with, or permit
the cancellation of, any agreement to which the Seller or any Shareholder is a
party, or by which it, he, or she or any of its, his, or her properties are
bound, or result in the creation of any lien, security interest, charge, or
encumbrance upon any of such properties, (c) result in the acceleration of the
maturity of any indebtedness of, or indebtedness secured by any property or
other assets of, the Seller or any Shareholder, or (d) violate or conflict with
any provision of the certificate of incorporation or bylaws of the Seller.
3.4 CONSENTS. Set forth on SCHEDULE 3.4 attached hereto is a complete
list of all actions, consents, or approvals of, or filings with, any
governmental authorities or third parties required in connection with the
execution, delivery, or performance of this Agreement or any agreement,
document, or other instrument to be executed in connection herewith by any of
the Shareholders or the Seller.
3.5 FINANCIAL STATEMENTS. [FINANCIAL STATEMENTS TO BE CONFIRMED] The
Seller has delivered to the Purchaser (a) a complete and correct copy of the
audited statement of financial condition of the Seller as of December 31, 1994,
(the "Audited Financial Statements"), (b) a complete and correct copy of the
statement of financial condition of the Seller as of January 31, 1995, and the
related statements of operations and retained earnings for the period then ended
(the "Interim Financial Statements and together with the Audited Financial
Statements, the "Financial Statements"), and (c) a complete and correct list of
the Transferred Assets together with the book value of each such Transferred
Asset as of January 31, 1995, which list is set forth on SCHEDULE 3.5(a)
attached hereto (the "January Asset List"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except, with respect to the
Interim Financial Statements, for the absence of footnotes, and subject to
normal year-end adjustments and accruals required to be made in the ordinary
course of business consistent with past practices) and fairly present the
financial position, results of operations, and changes in financial position of
the Seller as of the indicated dates and for the indicated periods. The January
Asset List has
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been prepared in accordance with and is otherwise consistent with the books and
records of the Seller, presents fairly and accurately the book value of each of
the Transferred Assets, and has been prepared in accordance with generally
accepted accounting principles as used in the preparation of Financial
Statements. Since December 31, 1994, there has been no material adverse change
in the financial position, assets, results of operations, business, or prospects
of the System. To the best knowledge of the Seller and the Shareholders, there
are no pending or proposed statutes, rules, or regulations, nor any current or
pending developments or circumstances, which would have a material adverse
effect on the business, properties, assets, or prospects of the System.
3.6 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth on SCHEDULE
3.6 attached hereto, since December 31, 1994, the Seller has conducted its
business and operations in the ordinary course and consistent with its past
practices and has not (a) increased the compensation of any of the directors,
officers, or key employees of the System or, except for wage and salary
increases made in the ordinary course of business and consistent with the past
practices of the Seller, substantially increased the compensation of any other
employees of the System, (b) made any capital expenditures exceeding $5,000
individually or $15,000 in the aggregate, (c) sold any asset (or any group of
related assets) used in the operation of the System in any transaction (or
series of related transactions) in which the purchase price for such asset (or
group of related assets) exceeded $3,000, (d) discharged or satisfied any lien
or encumbrance or paid any obligation or liability, absolute or contingent,
other than current liabilities incurred and paid in the ordinary course of
business, (e) made or guaranteed any loans or advances to any party whatsoever,
(f) suffered or permitted any lien, security interest, claim, charge, or other
encumbrance to arise or be granted or created against or upon any of the
Transferred Assets, (g) canceled, waived, or released any debts, rights, or
claims of the System against third parties, (h) made any change in the method
of accounting of the Seller, (i) made any investment or commitment therefor in
any person, business, corporation, limited liability company, association,
partnership, joint venture, trust, or other entity, j) made, entered into,
amended, or terminated any written employment contract or created, made,
amended, or terminated any bonus, stock option, pension, retirement, profit
sharing, or other employee benefit plan or arrangement, or withdrawn from any
"multi-employer plan" (as defined in Section 414(f) of the Internal Revenue Code
of 1986, as amended (the "Code")) so as to create any liability under Article IV
of ERISA (as hereinafter defined) to any entity, (k) amended, renewed, or
experienced a termination of any contract, agreement, lease, franchise, or
license related to the conduct of the System to which the Seller is a party,
except in the ordinary course of business, (l) entered into any other material
transactions relating to the System except in the ordinary course
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of business, (m) entered into any contract, commitment, agreement, or
understanding to do any acts described in the foregoing clauses (a)-(l) of this
Section 3.6, (o) suffered any material damage, destruction, or loss (whether or
not covered by insurance) to any of the Transferred Assets, (p) experienced any
strike, slowdown, or demand for recognition by a labor organization by or with
respect to any of the employees of the System, or (q) experienced or effected
any shutdown, slow-down, or cessation of any operations conducted by, or
constituting part of, the System.
3.7 TITLE. The Seller does not own or lease any assets or property used
in connection with or necessary for the operation of the System other than the
Transferred Assets and the Excluded Assets. Except as set forth in SCHEDULE 3.7
attached hereto, the Seller has good and indefeasible title to all of the
Transferred Assets. Except as set forth on SCHEDULE 3.7 attached hereto, the
Transferred Assets are free and clear of all liens (including any liens for
Taxes (as defined in Section 3.16 hereof), security interests, claims, rights of
another, and encumbrances. Upon consummation of the transactions contemplated
hereby, the Purchaser shall acquire good and indefeasible title to the
Transferred Assets, free and clear of all liens, security interests, claims,
rights of another, and encumbrances. The tangible Transferred Assets listed on
ANNEX 1 to SCHEDULE 1.1 are in good operating condition and repair, normal wear
and tear excepted, and are free from material defects. The operation of the
System in the manner in which it is now and has been operated does not violate
any zoning ordinances, municipal regulations, or other rules, regulations, or
laws. No covenants, easements, rights-of-way, or regulations of record impair
the uses of the Transferred Assets for the purposes for which they are now
operated. There are no other parties in possession of any portion of the
Transferred Assets. There are no pending or threatened condemnation or similar
proceedings or assessments affecting the Transferred Assets.
3.8 PAGERS. ANNEX I to SCHEDULE 1. 1 includes a true and complete list of
the number and type of pagers in service in the System as of January 31, 1995.
As of such date, to the best knowledge of Seller, all of such pagers in service
are operating pursuant to valid and binding rental and/or service agreements
with the Seller or agents or resellers, no single subscriber or related group of
subscribers accounts for more than ten percent of the paging revenues
attributable to the System, and the Seller and the Shareholders do not know of
any current subscribers who each account for ten percent or greater of the
customer base who intend to discontinue the use of such service for any reason
including, but not limited to, the consummation of the transactions contemplated
herein. As used herein, "rental" means, with respect to any pager, provision of
communications common carriage and the rental or lease of subscriber equipment
to the customer by the Seller or its agents or resellers to permit the customer
to utilize
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such service. The rates charged to subscribers for each class of service and
copies of all applicable tariffs filed with governmental agencies regulating the
rates to be charged to subscribers of the System are all contained in SCHEDULE
3.8.
3.9 LICENSES AND PERMITS. Set forth on ANNEX 7 to SCHEDULE 1.1 attached
hereto is a list of all federal, state, county, and local governmental licenses,
authorizations, certificates, permits, and orders held or applied for by the
Seller in connection with or related to the operation of the System
(collectively, the "Licenses"). Except as set forth on SCHEDULE 3.9, the Seller
has complied and is in compliance with the terms and conditions of all Licenses,
and no violation of any such Licenses or the laws or rules governing the
issuance or continued validity thereof, has occurred. Other than the consents
required to be obtained in connection with this Agreement (which consents are
set forth on SCHEDULE 3.4 hereto), no additional license, authorization,
certificate, permit, or order is required from any Federal, state, county, or
local governmental agency or body thereof in connection with the operation of
the System by the Seller or the Purchaser or the ownership by the Seller or the
Purchaser or the transfer of the Transferred Assets by the Seller to the
Purchaser to the best knowledge of Seller. No claim has been made by any
governmental authority to the effect that any license, authorization,
certificate, permit, or order in addition to those listed on ANNEX 7 to SCHEDULE
1. 1 is necessary in respect of the operation of the System.
3.10 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 3.10 is a list and
description of all patents, trademarks, service marks, trade names, and
copyrights and applications therefor related to the System and owned by or
registered in the name of the Seller or in which the Seller has any right,
license, or interest. The Seller is not a party to any license agreements
whether written or oral, either as licensor or licensee, with respect to any
patents, trademarks, service marks, trade names, or copyrights or applications
therefor. The Seller has good and marketable title to or the right to use such
patents, trademarks, service marks, trade names, and copyrights and all
inventions, processes, designs, formulae, trade secrets, and know-how necessary
for the conduct of its business, without the payment of any royalty or similar
payment. The Seller is not infringing any patent, trademark,(2) servicemark,
trade name, or copyright of others, and the Seller is not aware of any
infringement by others of any such rights owned by
- ----------------
(2) Seller was formerly named American 900 Paging, Inc., but changed that
name in order to avoid a legal controversy regarding its use and further agreed
in writing that Seller would not use American 900 Paging, Inc. as a trade name
or trademark.
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the Seller.
3.11 COMPLIANCE WITH LAWS. To its best knowledge, the Seller has complied
in all material respects, and is in compliance in all material respects, with
all federal, state, county, and local laws, regulations, and orders that are
applicable to the Seller's business including, but not limited to, the rules and
regulations of the Federal Communications Commission (the "FCC") and the Federal
Aviation Administration (the "FAA") and the states and municipalities in which
the System is located, and has filed with the proper authorities all statements
and reports required by the laws, regulations, and orders to which the Seller or
its properties or operations are subject. The Seller represents and warrants
that it has complied in all material respects and, prior to the Closing, will
comply in all material respects with, all rules, regulations, policies,
precedents, and orders of the FCC and the FAA with respect to marking, lighting,
notification, and approval of each and every tower used in the Seller's
business. To the knowledge of the Seller, none of the owners of any of the
towers on which the Seller leases tower space has failed to comply in any
material respect with any of the aforesaid rules, regulations, policies,
precedents, and orders of the FCC or the FAA applicable to such owner in its
capacity as a tower owner. No claim has been made by any governmental authority
(and, to the best knowledge of the Seller, no such claim is anticipated) to the
effect that the business conducted by the Seller fails to comply, in any
material respect, with any law, rule, regulation, or ordinance. Without
limiting the foregoing, the Seller has complied with all judicial and
governmental requirements relating to pollution and environmental control and
regulation and employee health and safety including, but not limited to, laws,
rules, regulations, ordinances, and orders related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
handling, presence, emission, discharge, release, or threatened release into or
on the air, land, surface, water, groundwater, personal property, or structures,
wherever located, of any contaminants, hazardous materials, hazardous or toxic
substances, or wastes as defined under any federal, state, or local laws,
regulations, or ordinances.
3.12 INSURANCE. No insurance passes with this sale. Attached hereto as
SCHEDULE 3.12 is a list of all policies of fire, liability, business
interruption, and other forms of insurance and all fidelity bonds held by or
applicable to the Seller at any time within the past two years, which schedule
sets forth in respect of each such policy the policy name, policy number,
carrier, term, type of coverage, deductible amount or self-insured retention
amount, limits of coverage, and annual premium. No event relating to the Seller
has occurred which is likely to result in any prospective upward adjustment in
such premiums except as set forth on SCHEDULE 3.12. To the best knowledge of
Seller, the insurance
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currently held by the Seller is in such amounts and is of such types and scope
as is customary in the industry in which the Seller is engaged. Excluding
insurance policies which have expired and been replaced, no insurance policy of
the Seller has been canceled within the last two years, and no threat has been
made to cancel any insurance policy of the Seller within such period except as
set forth on SCHEDULE 3.12.
3.13 ERISA PLANS. The Seller has no employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
3.14 CONTRACTS AND AGREEMENTS. The contracts and agreements listed and
described in SCHEDULE 1.1 and SCHEDULE 1.2 attached hereto constitute all of the
written or oral contracts, commitments, leases, and other agreements (including,
without limitation, promissory notes, loan agreements, and other evidences of
indebtedness but excluding rental agreements and agreements with resellers) to
which the Seller is a party or by which the Seller or its properties are bound
with respect to which the obligations of or the benefits to be received by the
Seller could reasonably be expected to have a value in excess of $5,000 in any
consecutive 12 month period (each a "Material Agreement"). The Seller has also
furnished to the Purchaser the Seller's standard form rental agreement and
agreement with resellers used in the ordinary course of the Seller's business.
The Seller is not a lessor under any rental agreement or reseller agreement that
varies from such standard form agreement in any material respect. The Seller
and the Shareholders to their best knowledge have afforded to the Purchaser and
the Purchaser's officers, Attorneys, and other representatives the opportunity
to review complete and correct copies of all of the Material Agreements. The
Seller is not and, to the best knowledge of the Seller, no other party thereto
is in default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default) under any Material
Agreements, and the Seller has not waived any right under any Material
Agreements. Except as set forth on SCHEDULE 3.15, neither the Seller nor any
Shareholder has received any notice of default or termination under any Material
Agreements and, except for the assignment of the Assumed Contracts to the
Purchaser pursuant to this Agreement, the Seller has not assigned or otherwise
transferred any rights under any Material Agreements. None of the Material
Agreements are leases in connection with which an election was made under
Section 168(f)(8) of the Code.
3.15 CLAIMS AND PROCEEDINGS. Attached hereto as SCHEDULE 3.15 is a list and
description of all claims, actions, suits, proceedings, and investigations
pending or, to the best knowledge of the Seller and the Shareholders, threatened
against or affecting the Seller or any of its properties or assets, at law or in
equity, or before or by any court, municipal or other governmental
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department, commission, board, agency, or instrumentality. Except as set forth
on SCHEDULE 3.15 attached hereto, none of such claims, actions, suits,
proceedings, or investigations will result in any liability or loss to the
Seller which (individually or in the aggregate) is material to the Seller, and
the Seller has not been, and the Seller is not now, subject to any order,
judgment, decree, stipulation, or consent of any court, governmental body, or
agency. No inquiry, action, or proceeding has been asserted, instituted, or, to
the best knowledge of the Seller and the Shareholders, threatened to restrain or
prohibit the carrying out of the transactions contemplated by this Agreement or
to challenge the validity of such transactions or any part thereof or seeking
damages on account thereof. To the best knowledge of the Seller, there is no
basis for any such claim or action or any other claims or actions which would,
or could reasonably be expected to (individually or in the aggregate), have a
material adverse effect on the business, operations, or financial condition or
prospects of the Seller or the System or result in a material liability of the
Seller.
3.16 TAXES. All Federal, foreign, state, county, and local income, gross
receipts, excise, property, ad valorem, transfer, franchise, capital stock,
business and occupation, license, sales, use, value-added, transfer, profits,
gains, mortgage recording, disability, employment, payroll, withholding, custom,
estimated, and other taxes, fees and assessments imposed by any governmental
entity, agency, or instrumentality (individually, a "Tax" and collectively,
"Taxes") returns, reports, statements, invoices, and declarations of estimated
tax (collectively, "Returns") which were required to be filed by the Seller on
or before the date hereof have been filed within the time and in the manner
provided by law, and all such Returns are true, correct, and complete and
accurately reflect the liabilities for Tax of the Seller. All Taxes, penalties,
interest, and other additions to Taxes which have become due pursuant to such
Returns have been adequately accrued in the Financial Statements of the Seller
and, to the extent the due date for payment of such Taxes has occurred prior to
the Closing date hereof, have been timely paid by the Seller. An annual or
other FCC regulatory fees arising from the operations of the Seller have been
paid. The Seller has not executed any presently effective waiver or extension
of any statute of limitations against assessments and collections of Taxes,
interest, penalties, or additions to Taxes or any extension of time to file any
Return. There are no pending or threatened claims, assessments, notices,
proposals to assess, deficiencies, or audits (collectively, "Seller Tax
Actions") with respect to any Taxes, penalties, interest, or additions to Taxes
owed or allegedly owed by the Seller. To the best knowledge of the Seller,
there is no basis for any Seller Tax Actions except as disclosed to Purchaser in
Schedule 3.15. There are no liens for Taxes, penalties, interest, or additions
to Taxes on any of the assets of the Seller. Proper and accurate amounts of
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any and all payroll and employment Taxes that are required to be withheld have
been withheld and remitted by the Seller from and in respect of its directors,
officers, shareholders, and employees for all periods in full and complete
compliance with the tax withholding provisions of all applicable laws and
regulations.
3.17 PERSONNEL. Attached hereto as SCHEDULE 3.17 is a list of the names
and annual rates of compensation of the employees of the System whose
annual rates of compensation during the fiscal year ending December 31,
1994 (including base salary, bonuses, commissions, and incentive pay),
exceeded or are expected to exceed $20,000. SCHEDULE 3.17 attached hereto also
summarizes the bonus, profit sharing, percentage compensation, company
automobile, club membership, and other like benefits, if any, paid or payable to
such employees during such fiscal year and to the date hereof. SCHEDULE 3.17
attached hereto also contains a brief description of all material terms of all
employment agreements and confidentiality agreements to which the Seller is a
party and all severance benefits which any director, officer, or employee of the
Seller is or may be entitled to receive. The Seller has delivered to the
Purchaser accurate and complete copies of all such employment agreements,
confidentiality agreements, and all other agreements, plans, and other
instruments relating to the System to which the Seller is a party and under
which any of its employees are entitled to receive benefits of any nature. The
employee relations of the Seller are good and there is no pending or, to the
best knowledge of the Seller, threatened labor dispute or union organization
campaign involving the Seller. None of the employees of the Seller is
represented by any labor union or organization. The Seller is in compliance
with all federal and state laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours and is not engaged in
any unfair labor practices. There is no unfair labor practice claim against the
Seller before the National Labor Relations Board or any strike, labor dispute,
work slowdown, or work stoppage pending or, to the best knowledge of the Seller
and the Shareholders, threatened against or involving the Seller.
3.18 BUSINESS RELATIONS. The Seller does not know or has any reason to
believe that any customer or supplier of the System will cease or otherwise
refuse to do business with the Purchaser after the Closing in the same manner as
such business was previously conducted with the Seller. The Seller has not
received any notice of any disruption (including delayed deliveries or
allocations by suppliers) in the availability of the materials or products used
by the Seller in the operation of the System nor are the Seller or the
Shareholders aware of any facts which could lead any of them to believe that the
operation of the System will be subject to any such material disruption.
3.19 BROKERS. Except for a fee to Daniels & Associates, the
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obligation for payment of which is and shall remain the sole responsibility of
the Seller, neither the Seller nor any Shareholder has caused any liability to
be incurred to any finder, broker, or sales agent in connection with the
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby.
3.20 WARRANTIES. Attached hereto as SCHEDULE 3.20 is a list and brief
description of all warranties and guarantees made by the Seller to third parties
with respect to any products sold or leased or services rendered by the Seller
in connection with the operation of the System. Except as set forth on SCHEDULE
3.20 attached hereto, no claims for breach of product or service warranties to
customers have been made against the Seller since January 1, 1992. To the best
knowledge of the Seller, no state of facts exists, or event has occurred, which
may form the basis of any claim against the Seller for liability on account of
any express or implied warranty to any third party related to the operation of
the System.
3.21 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 3.21 attached
hereto, all of the accounts, notes, and loans receivable that have been recorded
on the books of the Seller are bona fide and represent amounts validly due. All
of such accounts, notes, and loans receivable are free and clear of any security
interests, liens, encumbrances, or other charges; none of such accounts, notes,
or loans receivable are subject to any offsets or claims of offset; and none of
the obligors of such accounts, notes, or loans receivable have given notice that
they will or may refuse to pay the full amount thereof or any portion thereof.
The Seller hereby guarantees the collection 98% of the face value by the
Purchaser of any accounts receivable in respect of any customers that opened new
accounts with the Seller within the 30 days prior to the Closing Date. Any
amounts not collected by the Purchaser in respect of any such accounts
receivable shall be Indemnified Costs and, as such, shall be subject to offset
by the Purchaser pursuant to Section 8.4 hereof.
3.22 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.22 attached hereto contains a
true, correct, and complete list of (a) the ten largest customers (measured in
dollar volume of revenue) of the System during the years ended December 31,
1993, and December 31, 1994, (b) the ten largest suppliers (measured in dollar
volume of purchases) of the System during the years ended December 31, 1993, and
December 31, 1994, and (c) with respect to each such customer and supplier, the
name and address thereof, dollar volume involved, and nature of the relationship
(including the principal categories of products bought, sold, and leased).
3.23 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except as set
forth in SCHEDULE 3.23, none of the Seller, the Shareholders, nor any officer or
director of the Seller, or
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affiliate of any of the foregoing, has any ownership interest in any competitor,
supplier, or customer of the System or any property used in the operation of the
System.
3.24 INVENTORY. Except as set forth on SCHEDULE 3.24 attached hereto, the
inventories shown on the Financial Statements and the January Asset List consist
of (and the inventories of the Seller at the Closing will consist of) items of a
quality and quantity usable and readily saleable in the ordinary course of
business by the Seller.
3.25 COMMISSION SALES CONTRACTS. Except as disclosed in SCHEDULE 3.25
attached hereto, the Seller does not employ or have any relationship with any
individual, corporation, partnership, or other entity whose compensation from
the Seller arising from the operation of the System is in whole or in part
determined on a commission basis.
3.26 REGULATORY CERTIFICATES. The Seller is not aware of any information
concerning the Seller or its operations that could cause the FCC or any other
regulatory authority not to issue to the Purchaser all regulatory certificates
and approvals necessary for the consummation of the transactions contemplated
hereunder and for the Purchaser's operation of the System and ownership of the
Transferred Assets.
3.27 INVESTMENT. The Seller is acquiring the Common Stock, if any, from
the Purchaser pursuant hereto for its own account for investment and not with a
view to, or for sale in connection with, any distribution thereof (including,
without limitation, any sale, transfer, distribution, or other conveyance to any
of the Shareholders), nor with any present intention of distributing or selling
the same; and, other than pursuant to the provisions of the Registration Rights
Agreement attached as EXHIBIT I hereto, the Seller has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness, or
commitment providing for the disposition thereof.
3.28 SOPHISTICATED INVESTOR STATUS. The Seller is an Accredited Investor,
as such term is defined in Rule 501 promulgated under the Securities Act of
1933, as amended (the "Securities Act").
3.29 INVESTMENT RISK. The Seller acknowledges and agrees that the
acquisition by the Seller of Common Stock, if any, from the Purchaser pursuant
to this Agreement carries a certain degree of risk and it has taken full
cognizance of and understands all of the risks related to the acquisition of
Common Stock.
3.30 LEGENDS. The Seller understands, acknowledges, and agrees that a
legend will be placed on all certificates evidencing
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the Common Stock in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE STATE SECURITIES LAWS OF ANY STATE. WITHOUT
SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT
UPON DELIVERY TO PRONET INC., A DELAWARE CORPORATION (THE "COMPANY"),
OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED FOR SUCH TRANSFER AND/OR THE SUBMISSION TO THE COMPANY
OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY THAT ANY
SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND/OR APPLICABLE STATE SECURITIES LAWS, AND/OR ANY RULE
OR REGULATION PROMULGATED THEREUNDER.
3.31 PURCHASER INFORMATION. The Seller has received from the Purchaser
true and correct copies of the ProNet Filings. The Seller has carefully read or
reviewed and is familiar with the ProNet Filings. The Seller and the Seller's
representatives all have had an opportunity to ask questions of persons acting
on behalf of the Purchaser and ProNet regarding ProNet and the Common Stock, and
answers have been provided to all such questions to the Seller's satisfaction.
3.32 INFORMATION FURNISHED. The Seller and the Shareholders (as to the
Shareholders, to the extent the Shareholders have them in their personal
possession) have made available to the Purchaser and its officers, Attorneys,
accountants, lenders, and representatives true and correct copies of all
agreements, documents, and other items listed on the schedules to this Agreement
and all books and records of the Seller, and neither this Agreement, the
schedules hereto, nor any information, agreements, or documents delivered to or
made available to the Purchaser or its officers, Attorneys, accountants,
lenders, and representatives pursuant to this Agreement or otherwise contain any
untrue statement of a material fact or omit any material fact necessary to make
the statements herein or therein, as the case may be, not misleading.
ARTICLE 4
COVENANTS OF THE SELLER AND THE SHAREHOLDERS
4.1 INSPECTION. From the date hereof to the Closing, the Seller and the
Shareholders shall provide the Purchaser and the Purchaser's officers,
Attorneys, accountants, representatives, and lenders free, full, and complete
access during business hours to all books, records, tax returns, files,
correspondence, personnel,
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facilities, and properties of the Seller, provide the Purchaser and its
officers, attorneys, accountants, representatives, and lenders all information
and material pertaining to the business and affairs of the Seller as the
Purchaser may deem necessary or appropriate; and use their best efforts to
afford the Purchaser and its officers, Attorneys, accountants, and
representatives the opportunity to meet with the customers and suppliers of the
Seller to discuss the business, condition (financial or otherwise), operations,
and prospects of the Seller. Any investigation by the Purchaser or its
officers, Attorneys, accountants, representatives, or lenders shall not in any
manner affect the representations and warranties of the Seller and the
Shareholders, to the extent given by the Shareholders, contained herein.
4.2 COMPLIANCE. From the date hereof to the Closing, neither the Seller
nor the Shareholders shall take or fail to take any action which action or
failure to take such action shall cause the representations and warranties made
by the Seller or the Shareholders (as to the Shareholders, to the extent given
by the Shareholders) herein to be untrue or incorrect as of the Closing.
4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, the Seller and the Shareholders shall use their best efforts to cause
all conditions precedent to the obligations of the Purchaser hereunder to be
satisfied by the Closing.
4.4 NO SOLICITATION. So long as the Purchaser performs all of its
obligations under this Agreement, from the date hereof until 11:59 p.m., on
September 30, 1995, the Seller and the Shareholders shall not, and shall use
their best efforts to cause the officers, directors, employees, and agents of
the Seller not to, (a) solicit, initiate or encourage the submission of
proposals or offer from any person or entity for, or enter into any agreement or
arrangement relating to, any acquisition or purchase of any or all of the
Transferred Assets, or securities of the Seller, or any merger, consolidation,
or business combination with the Seller or (b) participate in any negotiations
regarding, or, except as required by legal process, furnish to any other person
or entity any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate, or encourage, any effort or
attempt by any other person or entity to do or seek any of the foregoing. In
addition, until 11:59 p.m. on September 30, 1995, the Seller and the
Shareholders agree that neither the Seller nor any Shareholder will enter into
any agreement or consummate any transaction that would interfere with the
consummation of the transactions contemplated by this Agreement. The Seller and
the Shareholders shall promptly notify the Purchaser if any such proposal or
offer described in this Section 4.4, or any inquiry or contact with any person
or entity with respect thereto, is made. The notification under this Section
4.4 shall include the identity
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of the person or entity making such acquisition, offer or other proposal, the
terms thereof, and any other information with respect thereto as the Purchaser
may reasonably request.
4.5 NOTICE OF DEVELOPMENTS. From the date hereof to the Closing, the
Seller and the Shareholders (as to the Shareholders, to the extent that the
Shareholders have personal knowledge) shall, immediately upon the Seller or any
Shareholder becoming aware thereof, notify the Purchaser of any material
problems or developments with respect to the business, operations, assets, or
prospects of the Seller.
4.6 NOTICE OF BREACH. From the date hereof to the Closing, the Sellers
and each Shareholder (as to the Shareholders, to the extent that the
Shareholders have personal knowledge) shall, immediately upon the Seller or any
Shareholder becoming aware thereof, give detailed written notice to the
Purchaser of the occurrence of, or the impending or threatened occurrence of,
any event that would cause or constitute a breach, or would have caused or
constituted a breach had such event occurred or been known to the Seller or the
Shareholders prior to the date of this Agreement, of any of their respective
covenants, agreements, representations, or warranties contained or referred to
herein or in any document delivered in accordance with the terms hereof.
4.7 NOTICE OF LITIGATION. From the date hereof to the Closing, the Seller
and the Shareholders (as to the Shareholders, to the extent the Shareholders
have personal knowledge) shall, immediately upon the Seller or any Shareholder
becoming aware thereof, notify the Purchaser of (a) any suit, action, or
proceeding (including, without limitation, any Tax Action or proceeding
involving a labor dispute or grievance or union recognition) to which the Seller
becomes a party or which is threatened against the Seller, (b) any order or
decree or any complaint praying for an order or decree restraining or enjoining
the consummation of this Agreement or the transactions contemplated hereby, or
(c) any notice from any tribunal of its intention to institute an investigation
into, or to institute a suit or proceeding to restrain or enjoin the
consummation of, this Agreement or the transactions contemplated hereby or to
nullify or render ineffective this Agreement or such transactions if
consummated.
4.8 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, the Seller shall keep (and the Shareholders shall cause the Seller to
keep) in full force and effect insurance coverage for the Seller and its assets
and operations comparable in amount and scope to the coverage now maintained
covering the Seller and its assets and operations.
4.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the
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Closing, the Seller shall continue (and the Shareholders shall make best efforts
to cause the Seller to continue subject only to market change of conditions) to
effect sales and leases of its products only on the terms that have historically
been offered by the Seller or on such other terms which are no less favorable to
the Seller.
4.10 UPDATING INFORMATION. As of the Closing, the Seller and the
Shareholders shall update all information set forth in the schedules to this
Agreement.
4.11 INTERIM OPERATIONS OF THE SELLER.
(a) From the date hereof to the Closing, the Seller shall conduct
(and the Shareholders shall make best efforts to cause the Seller to
conduct) its business only in the ordinary course consistent with past
practice, and the Seller shall not, unless the Purchaser gives its prior
written approval, (i) issue or sell, or authorize for issuance or sale,
additional shares of any class of capital stock, or issue, grant, or enter
into any subscription, option, warrant, right, convertible security, or
other agreement or commitment of any character obligating the Seller to
issue securities, (ii) declare, set aside, make, or pay any dividend or
other distribution with respect to its capital stock, (iii) redeem,
purchase, or otherwise acquire, directly or indirectly, any of its capital
stock, (iv) except in the ordinary course of business, sell, pledge,
dispose of, or encumber, or agree to sell, pledge, dispose of, or encumber,
any of the Transferred Assets, or authorize any capital expenditure in
excess of $5,000, (v) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership, or other business
organization or division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing, (vi) incur
any indebtedness for borrowed money, issue any debt securities, or enter
into or modify any contract, agreement, commitment, or arrangement with
respect thereto, (vii) enter into, amend, or terminate any employment or
consulting agreement with any director, officer, consultant, or key
employee of the System, enter into, amend, or terminate any employment or
consulting agreement with any other person that relates to the operation of
the System otherwise than in the ordinary course of business, take any
action intended to increase or decrease the number of persons employed by
the System, or take any action with respect to the grant or payment of any
severance or termination pay other than pursuant to policies or agreements
of the Seller in effect on the date hereof, (viii) enter into, extend, or
renew any lease for office space used in connection with the operation of
the System, or (ix) except as required by law, adopt, amend, or terminate
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred
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compensation, employment, or other employee benefit plan, agreement, trust,
fund, or arrangement for the benefit or welfare of any officer, employee,
or sales representative of the Seller, so as to create any liability under
Article IV of ERISA to any entity, (x) grant any increase in compensation
to any director, officer, consultant, or key employee of the System, or
(xi) grant any increase in compensation to any other employee or consultant
of the System except in the ordinary course of business consistent with
past practice.
(b) From the date hereof to the Closing, the Seller shall use (and
the Shareholders shall make best efforts to cause the Seller to use) their
best efforts to preserve intact the business organization of the System, to
keep available in all material respects the services of its present
officers and key employees, to preserve intact the System's banking
relationships and credit facilities, to preserve the goodwill of those
having business relationships with the System, and to comply with all
applicable laws.
4.12 FINANCIAL STATEMENTS. From the date hereof until the Closing, as soon
as available, and in any event within 30 days after the end of each calendar
month beginning with January 1995, the Seller shall furnish to the Purchaser a
balance sheet, statement of income and retained earnings, and statement of
changes in financial position of the System for such month prepared by the
Seller as an internal management control in accordance with the generally
accepted accounting principles applied in the preparation of the Financial
Statements (except for the absence of notes to such monthly financial statements
and subject to normal year-end adjustments and accruals required to be made in
the ordinary course of business that are not materially adverse and are
consistent with past practices). Such monthly financial statements shall fairly
present the financial position, results of operations, and changes in financial
position as of the indicated dates and for the indicated periods.
4.13 ASSIGNMENTS. From the date hereof until the Closing, the Seller and
the Shareholders shall use their best efforts to obtain all necessary consents
to the assignment by the Seller to the Purchaser of the Assumed Contracts, all
of which consents are described on SCHEDULE 3.4 hereto.
4.14 LICENSES. From the date hereof until the Closing, the Seller and the
Shareholders shall cooperate and assist fully in connection with Purchaser's
efforts to obtain, prior to the Closing Date, all consents and authorizations
that may be required in connection with the transfer of each of the Licenses
listed on Annex 7 to SCHEDULE 1. 1 hereto.
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ARTICLE 5
REGULATORY APPROVALS
With the full cooperation and assistance of the Seller and the Shareholders
as contemplated in Section 4.14 hereof, the Purchaser shall file with the FCC,
the FAA, and with all state regulatory agencies, commissions, or other entities
having jurisdiction over the System, applications for consent to transfer to the
Purchaser of the Licenses, or any similar state authorizations, currently held
by the Seller. The Purchaser shall use all commercially reasonable efforts to
file and prosecute such applications so as to permit the Closing to occur.
Approval of the aforementioned applications by the FCC, the FAA, and by any
applicable state agencies, commissions, or other entities shall be by Final
Order (and such approvals shall hereinafter collectively be referred to as the
"Final Order"). As used in this Agreement, any such approval shall only be a
Final Order if (a) the action of the subject governmental agency approving the
application has not been reversed, stayed, enjoined, set aside, annulled, or
suspended, (b) with respect to such approval, no timely request for stay,
motion, or petition for reconsideration or rehearing, application, or request
for review, or notice of appeal or other judicial petition for review is
pending, and (c) the time for filing any such request, motion, petition,
application, appeal, or notice, and for the entry of orders staying,
reconsidering, or reviewing the subject governmental agency's own motion, shall
have expired. Any action by a governmental authority approving the applications
subject to conditions (other than conditions concerning notification of the
consummation of this Agreement and other conditions that the FCC routinely
attaches to grants of this type) shall not be deemed a Final Order until such
time as the Purchaser notifies the Seller in writing of its willingness to
accept such conditions. In addition, if prior to the date on which any such
action would become a Final Order, the Purchaser does not elect to accept any
such conditions, the Purchaser shall have the right to terminate this Agreement
upon written notice to the Seller and the Shareholders and shall be relieved of
all obligations hereunder as provided in Article 7 hereof.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the transactions contemplated hereby are subject to the
fulfillment of each of the following conditions:
(a) The representations and warranties of the Seller and the
Shareholders (as to the Shareholders, to the extent they
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have been given by the Shareholders) contained in this Agreement shall be
true and correct in all material respects at and as of the Closing with the
same effect as though such representations and warranties had been made on
and as of the Closing; the Seller and the Shareholders shall have performed
and complied in all material respects with all agreements required by this
Agreement to be performed or complied with by the Seller and the
Shareholders at or prior to the Closing; and the Purchaser shall have
received a certificate, dated as of the Closing Date, signed by the
President of the Seller and by each Shareholder to the foregoing effects.
(b) No action or proceeding shall have been instituted or threatened
for the purpose or with the possible effect of enjoining or preventing the
consummation of this Agreement or seeking damages on account thereof.
(c) The Purchaser shall have received an opinion of James H.
Shoemake, counsel for the Seller, dated as of the Closing Date, in the form
attached hereto as EXHIBIT D.
(d) The Purchaser shall have received an opinion of FCC counsel for
the Seller and the Shareholders, dated as of the Closing Date, in the form
attached hereto as Exhibit E.
(e) Prior to the Closing, there shall not have occurred any material
casualty or damage (whether or not insured) to any facility, property,
asset, or equipment used in connection with the operation of the System;
there shall have been no material adverse change in the financial
condition, business, properties, operations, or prospects of the System
since January 31, 1995; and the operation of the System shall have been
conducted only in the ordinary course consistent with past practices.
(f) The FCC and all applicable state regulatory agencies,
commissions, or other entities, by Final Order, shall have granted any
required consent to the sale, transfer, and assignment of the Transferred
Assets to the Purchaser and to the Purchaser's ownership and operation of
the Transferred Assets.
(g) As of the Closing Date, the Seller shall have at least
80,000 pagers in service in the System and the Purchaser shall have
received a certificate, dated as of the Closing Date, signed by the
President of the Seller setting forth the number and type (as provided in
Appendix A hereto) of pagers in service in the System.
(h) As of the Closing Date, the Seller's inventory shall include
useable, current-model pagers as set forth in
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Schedule 1.1 and the Purchaser shall have received a certificate, dated as
of the Closing Date, signed by the President of the Seller to the foregoing
effect.
(i) All consents and approvals (i) listed on SCHEDULE 3.4 hereto and
(ii) otherwise required in connection with the execution, delivery, and
performance of Agreement shall have been obtained or waived and all such
consents and approvals shall be in form and content reasonably satisfactory
to the Purchaser.
(j) All necessary action (corporate or otherwise) shall have been
taken by the Seller to authorize, approve, and adopt this Agreement and the
consummation and performance of the transactions contemplated hereby, and
the Purchaser shall have received a certificate, dated as of the Closing
Date, signed by the President of the Seller to the foregoing effect.
(k) The Purchaser shall have received from the Seller a duly executed
Bill of Sale and all such other instruments as shall be necessary or
desirable in the reasonable opinion of the Purchaser's counsel to vest in
or confirm in the Purchaser good and indefeasible title to the Transferred
Assets in accordance herewith.
(1) Each of the Shareholders and the Seller shall have entered into a
Noncompetition Agreement (a "Noncompetition Agreement") with the Purchaser
substantially in the forms attached hereto as EXHIBITS F and G.
respectively.
(m) The Seller shall have duly executed and delivered to the
Purchaser the, License Agreement substantially in the form attached hereto
as EXHIBIT H granting the Purchaser the right to the use of the name
"Americom Paging Corporation" in the area presently served by the System.
(n) The Seller and Purchaser shall have entered into a Registration
Rights Agreement substantially in the form of Exhibit I hereto providing
that Purchaser shall prepare and file with the Securities and Exchange
Commission (the "SEC") a Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415 (or any appropriate similar rule
that may be adopted by the SEC) under the Securities Act (the "Shelf
Registration") covering all of the Common Stock issued to the Seller
pursuant to this Agreement, if any.
(o) The Seller shall have delivered to the Purchaser assignments of
the Real Estate Leases.
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(p) The Seller shall have instructed the Escrow Agent to pay the
Deposit and the interest accrued thereon to the Seller pursuant to the
Deposit Escrow Agreement.
(q) The Seller and the Shareholders shall have delivered such good
standing certificates, officer's certificates, and similar documents and
certificates as counsel for the Purchaser shall have reasonably requested
prior to the Closing Date.
The decision of the Purchaser to consummate the transactions contemplated hereby
without the satisfaction of any of the preceding conditions shall not constitute
a waiver of any of the Seller's or any Shareholder's respective representations,
warranties, covenants, or indemnities, to the extent applicable herein.
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the
Seller to consummate the transactions contemplated hereby are subject to the
fulfillment of the following conditions:
(a) The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects at and as
of the Closing with the same effect as though such representations and
warranties had been made as of the Closing; all agreements to be performed
hereunder by the Purchaser at or prior to the Closing shall have been
performed in all material respects; and the Seller and both of the
Shareholders shall have received a certificate, dated as of the Closing
Date, signed by the President of the Purchaser to the foregoing effects.
(b) The Purchaser shall have delivered to the Seller a certified bank
check or wire transfer in the amount of the cash portion of the Purchase
Price to be paid on the Closing Date (less the amount deposited with Escrow
Agent pursuant to the Deposit Escrow Agreement) in accordance with and as
specified in Section 1.4 hereof.
(c) The Purchaser shall have delivered to the Seller an Assumption
Agreement substantially in the form attached hereto as Exhibit C with
respect to the Assumed Liabilities.
(d) The Purchaser shall have entered into the Noncompetition
Agreements with the Seller and each of the Shareholders.
(e) The Purchaser shall have instructed the Escrow Agent to pay the
Deposit to the Seller and the interest accrued thereon to the Buyer
pursuant to the Deposit Escrow Agreement.
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(f) The Seller and ProNet shall have entered into the Registration
Rights Agreement.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated prior to the Closing by
(a) the mutual consent of the Purchaser and the Seller, (b) the Seller upon the
failure of the Purchaser to perform or comply in all material respects with each
of its covenants or agreements contained herein prior to the Closing or if each
representation or warranty of the Purchaser hereunder shall not have been true
and correct as of the time at which such representation or warranty was made,
(c) the Purchaser upon the failure of the Seller or any Shareholder to perform
or comply in all material respects with each of its or his covenants or
agreements contained herein prior to the Closing or if each representation or
warranty of the Seller or the Shareholders hereunder shall not have been true
and correct as of the time at which such representation or warranty was made,
(d) the Purchaser in accordance with the provisions of Article 5 hereof, and (e)
the Seller or the Purchaser if the Closing does not occur by September 30, 1995;
provided, that no party may terminate this Agreement pursuant to (b), (c), or
(d) above if such party is, at the time of any such attempted termination, in
breach of any term hereof.
7.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided in
clause (b) of Section 7.1 hereof, upon such termination, the Seller and the
Purchaser shall instruct the Escrow Agent to deliver $250,000 of the Deposit to
the Seller and the remainder of the Deposit, including any interest accrued
thereon, to the Purchaser. If this Agreement is terminated pursuant to clause
(c) or (d) of Section 7.1 hereof, the Seller and the Purchaser shall instruct
the Escrow Agent to pay the Deposit and the interest accrued thereon to the
Purchaser. If this Agreement is terminated pursuant to clause (a) or (e) of
Section 7.1 hereof, the Seller and the Purchaser shall instruct the Escrow Agent
to distribute the Deposit and the interest accrued thereon in such manner as
they may mutually agree or as instructed by a court of law.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER. The Seller and the Shareholders
jointly and severally agree to indemnity and hold harmless the Purchaser and
each officer, director, employee, consultant, stockholder, and affiliate of the
Purchaser (collectively, the "Indemnified Parties") from and against any and
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all damages, losses, claims, liabilities (including, without limitation, those
liabilities not expressly assumed by the Purchaser as provided in Sections 1.3
and 9.2 hereof), demands, charges, suits, penalties, costs, and expenses
(including court costs and attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively,
"Indemnified Costs") which any of the Indemnified Parties may sustain, or to
which any of the Indemnified Parties may be subjected, arising out of any breach
or default by the Seller or any Shareholder of or under any of the
representations, warranties, covenants, agreements, or other provisions of this
Agreement or any agreement or document executed in connection herewith.
8.2 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall give prompt
written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it or he may have to such Indemnified Party under this Article 8 unless the
failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Parties shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at his, her, or its own
expense, to participate in the defense of such third-party action
(provided, however, that the Indemnifying Parties shall pay the attorneys'
fees of the Indemnified Party if (i) the employment of separate counsel
shall have been authorized in writing by any such Indemnifying Party in
connection with the defense of such third-party action,(ii) the Indemnified
Party shall have reasonably concluded that there may be defenses available
to such Indemnified Party that are different from or additional to those
available to the Indemnifying Parties and the Indemnifying Party refuses to
assert them, or (iii) the Indemnified Party's counsel shall have advised
the Indemnified Party in writing, with a copy to the Indemnifying Parties,
that there is a conflict of interest that could make it inappropriate under
applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Parties shall obtain the prior written approval
of the Indemnified Party before entering into or making any settlement,
compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or
as a result of such settlement, compromise, admission, or
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acknowledgment, injunctive or other equitable relief would be imposed
against the Indemnified Party or if, in the opinion of the Indemnified
Party, such settlement, compromise, admission, or acknowledgment could have
a material adverse effect on its business or, in the case of an Indemnified
Party who is a natural person, on his or her assets or interests. In such
case, Indemnified Party may select its own counsel and proceed at its own
cost and risk without any further monetary indemnification over and above
the amount authorized for settlement hereinabove;
(c) No Indemnifying Party shall consent to the entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof the giving by each claimant or plaintiff to each Indemnified Party
of a release from all liability in respect of such third-party action; and
(d) The Indemnifying Parties shall not be entitled to control (but
shall be entitled to participate at their own expense in the defense of),
and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Parties fail to assume
the defense within a reasonable length of time or (ii) to the extent the
third-party action seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, would materially
adversely affect the business, operations, assets, or financial condition
of the Indemnified Party; PROVIDED, HOWEVER, that the Indemnified Party
shall make no settlement, compromise, admission, or acknowledgment that
would give rise to liability on the part of any Indemnifying Party without
the prior written consent of such Indemnifying Party. In such case,
Indemnifying Party may elect to proceed with its own counsel at its own
cost and risk without any further monetary indemnification over and above
the amount authorized for settlement hereinabove.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article 8 and, in connection
therewith, shall furnish such records, information, and testimony and attend
such conferences, discovery proceedings, hearings, trials, and appeals as may be
reasonably requested.
8.3 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 8.2 hereof because no
third-party action is involved, the, Indemnified Party shall notify the
Indemnifying Parties in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The failure
of the Indemnified Party to exercise promptness in such notification shall
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not amount to a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Parties with respect to such claim.
8.4 RIGHT OF OFFSET. The Seller and the Purchaser agree that the
Purchaser shall have the right to offset the amounts of the Indemnified Costs
resulting from the dispute resolution process or court action by reducing the
Deferred Amount in an amount equal to the amount of any such Indemnified Costs;
provided, however, that the Purchaser's right to offset against the Deferred
Amount shall not exceed twenty-five percent (25%) of the Purchase Price.
Notwithstanding the foregoing, Purchaser shall be responsible for the first
$50,000.00 of Indemnified Costs. In order to be able to offset as herein
described, Purchaser shall first give 21 days notice to Seller of intent to
offset, and Seller shall have the opportunity to cure and intervene to cure such
Indemnified Cost.
8.5 INDEMNIFICATION FROM LAWSUIT. Notwithstanding any other term or
provision hereof, Seller and Shareholders jointly and severally agree to
indemnify, defend and hold harmless ProNet, Buyer, and their affiliates,
directors, officers, agents and representatives from all Indemnified Costs
resulting from or arising out of that certain lawsuit styled AMERICOM PAGING
CORPORATION V. MOTOROLA, INC., Cause No. 95-002072, in the 269th Judicial
District Court in Harris County, Texas (the "Motorola Lawsuit"), and any appeal,
lawsuit, claim, arbitration or other judicial, arbitral or other proceeding
related to the matters which are the subject of the Motorola Lawsuit, including
without limitation any Indemnified Costs resulting from or arising out of such
allegations that may be made in any subsequent lawsuit file after any nonsuit or
dismissal of the Motorola Lawsuit.
ARTICLE 9
MISCELLANEOUS
9.1 COLLATERAL AGREEMENTS, AMENDMENTS, AND WAIVERS. This Agreement
(together with the documents delivered in connection herewith) supersedes all
prior documents, understandings, and agreements, oral or written, relating to
this transaction other than (a) that certain letter of intent dated February 7,
1995, among the parties hereto and (b) that certain Escrow Agreement of even
date herewith, among the Purchaser, the Seller, and the Escrow Agent, and
constitutes the entire understanding among the parties hereto with respect to
the subject matter hereof. Any modification or amendment to, or waiver of, any
provision of this Agreement (or any document delivered in connection herewith
unless otherwise expressly provided therein) may be made only by an instrument
in writing executed by the party against whom enforcement thereof is sought.
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9.2 BULK SALES COMPLIANCE. The Purchaser hereby waives compliance by the
Seller with any laws governing bulk sales (to the extent such laws are
applicable to the transactions contemplated by this Agreement). The Seller and
the Shareholders hereby jointly and severally agree to indemnify the Purchaser
for any liabilities incurred by the Purchaser as a result of such non-compliance
or claims asserted against the Purchaser or any of the Transferred Assets in
respect of debts, obligations, or liabilities of the Seller which were not
assumed by the Purchaser pursuant to the Assumption Agreements. Any such
liabilities shall be Indemnified Costs and, as such, shall be treated as such
costs are provided in Section 8.3 and 8.4 hereof.
9.3 RISK OF LOSS - DAMAGE TO TRANSFERRED ASSETS. The parties hereto hereby
agree that the risk of loss or damage to any of the Transferred Assets shall be
upon the Seller prior to the Closing and upon the Purchaser thereafter.
9.4 PRORATIONS. All annual or periodic ad valorem fees, taxes, and
assessments and similar charges imposed by taxing authorities on the Transferred
Assets (collectively, "Property Taxes") shall be borne and paid (a) by the
Seller for all full tax years or periods ending before the Closing Date and for
that portion of any tax year or period ending on or after the Closing Date from
the date of commencement of such year or period to the date immediately
preceding the Closing Date and (b) by the Purchaser for all full tax years or
periods beginning on or after the Closing Date and for that portion of any tax
year or period ending on or after the Closing Date from and including the
Closing Date to the final date of such year or period, regardless of when or by
which party such Property Taxes are actually paid to the applicable taxing
authority. In addition, all rents and other lease charges, power and utility
charges, license or other fees, wages, salaries, and commissions, all Assumed
Contracts, prepaid items and expenses, and similar items to be allocated between
the Purchaser and the Seller shall be allocated between the Purchaser and the
Seller effective as of 12:01 a.m. on the Closing Date. Such allocations shall
be determined and payment accordingly made from one party to the other, as the
case may be, on the Closing Date to the extent they are known and agreed to by
the Purchaser and the Seller, otherwise such allocations shall be determined and
payment made (effective as of 12:01 a.m. on the Closing Date) on the date 30
days thereafter. If there shall be any dispute in regard to the amounts due
under this Section 9.4, the same shall be determined by a nationally recognized
accounting firm selected by the Purchaser in its sole and absolute discretion
and any such determination shall be binding and conclusive on the parties
hereto. The charges of such firm shall be shared equally by the Purchaser and
the Seller.
9.5 ALLOCATION OF PURCHASE PRICE. The parties hereto
32
<PAGE>
acknowledge that the transactions contemplated hereby must be reported in
accordance with Section 1060 of the Code. Accordingly, the parties shall report
such transactions for all purposes in accordance with the Purchase Price
allocation set forth on EXHIBIT J hereto.
9.6 RECORDS. (a) At the Closing, the Seller and each of the Shareholders
will turn over and deliver to the Purchaser all files of the Seller and each of
the Shareholders relating to the Transferred Assets and/or the System,
including, without limitation, all copies and originals of all Assumed
Contracts, any and all operating manuals, third party warranties, and like
materials and data in the Seller's or any Shareholder's possession relating to
the design, construction, maintenance, and operation of facilities,
improvements, and equipment included in the Transferred Assets and/or the
System, and all appropriate books and records, accounting information, and
operating information and data, current and historical, reasonably related to
the Transferred Assets and/or the System.
(b) After Closing, Purchaser shall maintain the files of the Transferred
Assets and/or the System, including all copies and originals of Assumed
Contracts, etc. as above set forth and make said records available to Seller
upon 48 hours request for examination on Purchaser's premises in a space to be
allocated by Purchaser depending upon the requirements of the number of records
being requested. Such access shall be given as is reasonably necessary to
accomplish the purpose of Seller and in the event Seller determines that records
need to be copied, Purchaser shall cooperate with Seller, at Seller's sole
expense, for a professional copying service to accomplish any extensive copying
or for Seller to copy small copying volumes at Seller's premises, again, at
Seller's sole expense. This access to records shall include records that become
stored, at Purchaser's election, at a remote storage facility or dead file
storage service.
9.7 SELLER'S LIABILITIES. The Seller agrees to satisfy, pay and
extinguish all of the liabilities of the Seller outstanding as of the Closing
Date within 30 days following the Closing Date.
9.8 SUCCESSORS AND ASSIGNS. No rights or obligations of any party hereto
under this Agreement may be assigned (except that the Purchaser may assign its
rights and obligations to any affiliate (as that term is defined in Rule 144
under the Securities Act) of the Purchaser or to any successor entity to the
Purchaser whether pursuant to a sale of all or substantially all of the
Purchaser's assets, the merger, consolidation, liquidation, or dissolution of
the Purchaser, or otherwise PROVIDED, HOWEVER, that the Purchaser shall be
permitted to assign its right to pay the deferred portion of the Purchase Price
in shares of Common Stock as provided in Section 1.4 hereof only to an entity,
the common stock (if a
33
<PAGE>
corporation) or other equity securities (if not a corporation) of which are
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended), in which case references herein to "Common Stock" shall be deemed to
refer to the securities to be issued to the holders of the Purchaser's Common
Stock by such entity in any such sale of assets, merger, consolidation,
liquidation, dissolution or other transaction. Any assignment, dissolution, or
liquidation in violation of the foregoing shall be null and void. Subject to
the preceding sentences of this Section 9.8, the provisions of this Agreement
(and, unless otherwise expressly provided therein, of any document delivered
pursuant to this Agreement) shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors, and permitted assigns. Notwithstanding the foregoing, Purchaser
shall be fully responsible and liable for the payment of the balance of the
Purchase Price in the event such assignee does not so pay when due.
9.9 EXPENSES. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement. The
Seller and the Purchaser shall each pay one-half of any administrative,
application, and filing costs incurred in connection with regulatory approvals
described in Article 5 hereof.
9.10 SALES TAXES. The parties hereto expressly agree that the Seller shall
be responsible for and shall pay all federal, state, county, or local taxes of
the Seller and the Purchaser arising by reason of, or resulting from, the sale
of the Transferred Assets and the assumption of liabilities contemplated hereby.
9.11 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable from this Agreement, 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 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 may be possible and be legal, valid, and enforceable.
9.12 WAIVER. No failure or delay on the part of any party in exercising
any right, power, or privilege hereunder or under any of the documents delivered
in connection with this Agreement shall operate as a waiver of such right,
power, or privilege; nor shall any single or partial exercise of any such right,
power, or privilege preclude any other or future exercise thereof or the
34
<PAGE>
exercise of any other right, power, or privilege.
9.13 NOTICES. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under any document
delivered in connection with this Agreement) shall be given in writing and shall
be deemed received (a) when personally delivered to the relevant party at such
party's address as set forth below, (b) when confirmed if delivered by
telefacsimile or similar device, or (c) if sent by mail, on the third day
following the date when deposited in the United States mail, certified or
registered mail, postage prepaid, to the relevant party at its or his address
indicated below:
If to the Purchaser: Contact Communications Inc.
600 Data Drive, Suite 100
Plano, Texas 75075
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 964-9570
With a copy to: ProNet Inc.
600 Data Drive, Suite 100
Plano, Texas 75075
Attn: Mark A. Solls
Fax No: (214) 977-9570
If to the Seller Gregory W. Hadley
or the Shareholders: 1806 Cottonwood Valley Circle
Irving, Texas 75038
(214) 252-8700
Mo N. Shebaclo
5312 Community Boulevard
Houston, Texas 77005
(713) 664-3388
With a copy to: James H. Shoemake
Pope, Shoemake, Selwyn, Kerr & Hendershot
1800 Bering Drive, Suite 600
Houston, Texas 77057
(713) 783-3110
(713) 783-2809 - Facsimile
Each party may change its or his address for purposes of this Section 9.13 by
proper notice to the other parties.
9.14 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. Regardless of
any investigation at any time made by or on behalf of any party hereto or of any
information any party may have in
35
<PAGE>
respect thereof, all covenants, agreements, representations, and warranties made
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the Closing.
9.15 PUBLIC ANNOUNCEMENT. No public announcement shall be made by any
party with respect to the transactions contemplated hereby without the approval
of the Purchaser unless otherwise required by law.
9.16 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of the Purchaser, but without further consideration, the Seller and the
Shareholders shall execute and deliver such other instruments of conveyance,
assignment, transfer, and delivery and take such other action as the Purchaser
may reasonably request in order more effectively to consummate the transactions
contemplated hereby, and (b) at the request of the Seller or the Shareholders,
but without further consideration, the Purchaser shall execute and deliver such
other certificates, statements, and documents, and take such other action as the
Seller or the Shareholders may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
9.17 NO THIRD-PARTY BENEFICIARIES. Except for the Indemnified Parties not
a party to this Agreement, no person or entity not a party to this Agreement
shall be deemed to be a third party beneficiary hereunder or entitled to any
rights hereunder.
9.18 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
9.19 HEADINGS. The headings, captions, and arrangements used in this
Agreement are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify, or modify the terms of this Agreement or affect the
meaning hereof.
9.20 SECTIONS; EXHIBITS. All references to "Sections", "Subsections",
"Schedules", "Annexes", and "Exhibits" herein are, unless specifically indicated
otherwise, references to sections, subsections, schedules, annexes, and exhibits
of and to this Agreement. All schedules and exhibits attached hereto are made a
part hereof for all purposes, the same as set forth herein verbatim, it being
understood that if any exhibit attached hereto which is to be executed and
delivered contains blanks, the same shall be completed correctly and in
accordance with the terms and provisions contained and as contemplated herein
prior to or at the time of the execution and delivery thereof.
9.21 NUMBER AND GENDER OF WORDS. Whenever herein the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
36
<PAGE>
9.22 SPECIFIC PERFORMANCE. The parties hereto acknowledge and agree
that, without limiting any other remedy available to the Purchaser at law or in
equity, the Purchaser shall be able to specifically enforce the terms of this
Agreement.
9.23 ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
9.24 VENUE. Venue for the institution of any lawsuit concerning provision
of this agreement or any of the exhibits, appendices, schedules, or the like
that are attachments hereto, shall be in Houston, Harris County, Texas, by
agreement of the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
one or more counterparts (all of which shall constitute one and the same
agreement) as of the day and year first above written.
CONTACT COMMUNICATIONS INC.
By: /S/ JACKIE R. KIMZEY
---------------------------------------
Jackie R. Kimzey,
Chief Executive Officer
AMERICOM PAGING CORPORATION
By: /S/ GREGORY W. HADLEY
---------------------------------------
Gregory W. Hadley, President
/S/ GREGORY W. HADLEY
------------------------------------------
Gregory W. Hadley
/S/ MO N. SHEBACLO
------------------------------------------
Mo N. Shebaclo
37
<PAGE>
APPENDIX A
PAGER ADJUSTMENT AMOUNT
Buyer will compensate the Shareholders for the increase in the number of
pagers in service on the day of Closing for all pagers over 90,000 excluding
only reseller numbers of ProNet and its affiliated entities ("Closing Date
Amount"). The amount of compensation will be determined as follows:
(a) $225 for each leased alpha pager added
(b) $127 for each leased digital pager added
(c) $19 for each reseller pager added
(d) $50 for COAM (nonreseller) pager sold (digital or alpha)
"Closing Date Amount" shall mean the number of such pagers in service in
the System as of 5:00 p.m. on the day immediately preceding the Closing Date as
set forth in the officer's certificate to be delivered at Closing pursuant to
Section 6.1(h) hereof.
<PAGE>
SCHEDULE 1.1
TRANSFERRED ASSETS
1. All supplies, furniture, fixtures, equipment, and other tangible
assets of the Seller used in the conduct of the Seller's radio paging system,
including but not limited to (a) the tangible assets itemized on Annex I to this
Schedule 1. 1 and (b) (i) all of the Seller's pagers in the field and (ii) all
of Seller's receivers, transmitters, base station equipment, and $75,000 of
inventory at Seller's cost of useable, current-model pagers.
2. All outstanding licenses, authorizations, permits, and certificates
issued to the Seller by the FCC, the FAA, or other governmental authority and
all pending applications with respect to the same used in connection with or
necessary for the System, all of which are itemized on Annex 7 to this SCHEDULE
1. 1.
3. All rights of the Seller in, to, and under the Personal Property
Leases, Real Estate Leases, and Miscellaneous Contracts listed on Annex 2, Annex
3, and Annex 4, respectively, to this SCHEDULE 1. 1.
4. All of the accounts receivable of Seller, an aged schedule of which is
set forth on ANNEX 5 to this Schedule 1.1 and an updated and certified aged
schedule of which will be delivered by the Seller to the Purchaser at Closing.
5. All business records of the Seller relating to the Transferred Assets.
6. All know-how, trade secrets, equipment warranties, systems, processes,
and other intangible assets and proprietary information of the Seller related to
the Transferred Assets or the Seller's business itemized on ANNEX 6 to this
SCHEDULE 1. 1.
7. Cash in respect of the customer pager rental deposits set forth on
ANNEX 8 to SCHEDULE 1. 1.
<PAGE>
SCHEDULE 1.2
EXCLUDED ASSETS
1) Greg Hadley's pager numbers (214) 451-9400 (Dallas), (713) 846-1010
(Houston), and (800) 880-5777 with pin number 24983 (nationwide) and pager
number for wife, Linda Hadley (214) 457-9400 (Dallas), and the right for
those numbers to be serviced charge-free as long as it is on the system.
2) Mo Shebaclo's pager numbers (214) 451-9999 (Dallas), (713) 846-9999
(Houston), and (713) 846-0008 (Houston) and pager number (713) 846-2700 for
wife, Mona Shebaclo and the right for those numbers to be service charge
free as long as it is on the system.
3) Art pieces belonging to Mo Shebaclo (Indian Shepard print-G. Harvey,
artist, and three art pieces by N. Rose which hang together)
4) Furniture belonging to Greg Hadley
5) All lawsuits currently filed against Americom, including but not limited to
those for payment of franchise tax, personal property tax or any such
similar lawsuit.
6) All right, title and interest in and to the lawsuit against Motorola by
Americom for loss of business value or other damages resulting from actions
taken by Motorola concerning the financing of certain inventory of
equipment or providing inventory of equipment for growth of the company.
<PAGE>
EXHIBIT A
[DEPOSIT ESCROW AGREEMENT]
<PAGE>
EXHIBIT B
BILL OF SALE AND ASSIGNMENT
STATE OF TEXAS Section
Section KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS Section
THAT Americom Paging Corporation formerly known as American 900 Paging,
Inc., a Texas corporation ("Grantor"), in consideration of the payment by
Contact Communications Inc., a Delaware corporation ("Grantee"), of the
consideration specified in the Purchase Agreement (as hereinafter defined), the
receipt and sufficiency of which are hereby acknowledged, does hereby sell,
convey, transfer, assign, and deliver unto Grantee, pursuant to that certain
Asset Purchase Agreement (the "Purchase Agreement") dated as of ____________,
1995, by and among Grantor, Gregory W. Hadley, Mo Shebaclo, and Grantee, all of
Grantor's rights, titles, and interests in and to all of the assets, properties,
contracts, leases (including, but not limited to, all of Grantor's interests as
"tenant" or "lessee" under all real property leases), and agreements which are
used in operation of the System (as defined in the Purchase Agreement),
including, without limitation, the assets described on Schedule I attached
hereto but excluding the assets listed on SCHEDULE 2 hereto (collectively, the
"Transferred Assets").
TO HAVE AND TO HOLD the Transferred Assets unto Grantee and its successors
and assigns forever, and Grantor does hereby bind itself and its successors to
warrant and forever defend the title to the Transferred Assets unto Grantee, its
successors and assigns, against the claims and demands of all persons. The
Grantor hereby further warrants to Grantee that it is conveying to Grantee good
and indefeasible title to the Transferred Assets, free and clear of all liens,
mortgages, security interests, charges, or encumbrances of any kind or
character.
Grantor covenants and agrees, for the benefit of Grantee and its successors
and assigns, without further consideration, and whenever and as often as
required so to do by Grantee and its successors and assigns, to execute and
deliver to Grantee such other instruments of conveyance, transfer, and
assignment and take such other action as Grantee may require more fully and
effectively to transfer, assign, and convey to and vest in Grantee and its
successors and assigns, and to put Grantee and its successors and assigns in
actual possession and operating control of, the Transferred Assets.
Nothing in this Bill of Sale and Assignment, express or
<PAGE>
implied, is intended or shall be construed to confer upon, or to give to, any
person, firm, corporation, or other entity other than the Grantor, the Grantee,
and their respective successors and assigns, any light or remedy under or by
reason of this Bill of Sale and Assignment or any term, covenant, or condition
hereof, and all the terms, covenants, conditions, promises, and agreements
contained in this Bill of Sale and Assignment shall be for the sole and
exclusive benefit of the Grantor, the Grantee, and their respective successors
and assigns.
The terms and conditions of this Bill of Sale and Assignment shall be
governed and construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned, has executed this Bill of Sale as of
this ______ day of 1995.
AMERICOM PAGING CORPORATION
formerly known as
AMERICAN 900 PAGING, INC.
By:
------------------------------------
Gregory W. Hadley, President
B-2
<PAGE>
EXHIBIT C
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (the "Agreement") is made and entered into as of
this _____ day of ____________, 1995, by and between Contact Communications
Inc., a Delaware corporation (the "Purchaser"), and Americom Paging Corporation
formerly known as American 900 Paging, Inc., a Texas corporation (the "Seller").
WITNESSETH
WHEREAS, concurrently with the execution and delivery hereof, the Seller
has sold to the Purchaser substantially all of the assets and properties of the
Seller that are used in the operation of the Seller's Texas area radio paging
system pursuant to that certain Asset Purchase Agreement dated as of
_____________, 1995, by and among the Purchaser, the Seller, Gregory W. Hadley,
Mo Shebaclo (the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, the Purchaser has agreed to
assume certain liabilities and obligations of the Seller.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Purchaser hereby covenants and
agrees with the Seller as follows:
1. Effective as of the date hereof, the Purchaser hereby agrees to assume
and be solely responsible for the payment, performance, and discharge of all of
the Seller's obligations and liabilities under the contracts, agreements,
arrangements, leases, licenses, permits, and instruments listed on SCHEDULE 1
hereto , subject, however, to the terms and conditions of the Purchase
Agreement.
2. Except as specifically provided in this Agreement, the Purchaser shall
not be able for and shall not assume any obligations or liabilities of the
Seller (whether known or unknown, matured or unmatured, or fixed or contingent)
not included within the Assumed Contracts, including, without limitation, (a)
any claims for workers compensation, (b) any foreign, federal, state, county,
or local taxes on income of the Seller whether arising before or after the date
hereof, any foreign, federal, state, county, or local taxes, fees, and
assessments of any kind of the Seller or for which the Seller has the
obligation to collect from any other party, including, without limitation,
sales, use, gross receipts, franchise, excise, payroll, including Social
Security and unemployment, value-added, withholding, and any other taxes,
whether arising before or after the date hereof, or any foreign, federal,
<PAGE>
state, county, or local taxes, including, without limitation, sales, use, gross
receipts and value-added taxes, or any other fees, arising by reason of the
purchase and sale of the Transferred Assets (as defined in the Purchase
Agreement) by the Seller to Purchaser and the assumption of liabilities pursuant
hereto, including any such taxes, fees, and assessments related the purchase and
sale of the Transferred Assets and the assumption of liabilities payable by, or
assessed against, Purchaser, or otherwise, (c) any liability for any violation
by the Seller of any statutes, laws, regulations, or ordinances of any federal,
state, or local government, including, without limitation, the failure to file
or the improper filing of any and all tax returns and other reports or the
failure to timely pay any and all taxes, fees, and assessments to any
governmental unit, authority, or instrumentality by the Seller, (d) any
liability for any breach of contract, negligence, or misconduct by the Seller or
any of its agents, servants, or employees, (e) any liability of the Seller
arising out of or pursuant to the Purchase Agreement (including, without
limitation, any liability arising out of the Seller's employee severance
policy), (f) any liability of the Seller relating to any litigation arising from
any event, action, or omission, (g) any liability of the Seller relating to
employee benefit plans maintained by the Seller, (h) any liability arising out
of or incurred in respect of any transaction of the Seller, (i) any liability of
the Seller to its shareholders, whether in connection with the transactions
contemplated by the Purchase Agreement or any subsequent liquidation and
dissolution of the Seller, or otherwise, including, but not limited to,
liabilities or obligations of the Seller to make distributions to the
Shareholders or distributions in liquidation.
3. The Purchaser and the Seller hereby agree to execute and
deliver any and all additional documents that the other may
reasonably request in order to more fully effect the agreements set
forth in this Agreement.
4. The undertakings, covenants, and agreements set forth herein shall be
binding upon and inure to the benefit of the Purchaser and the Seller
and their respective successors and assigns.
5. ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller have executed this
Agreement as of the date first written above.
CONTACT COMMUNICATIONS INC.
By:
-------------------------------------
Jackie R. Kimzey
Chief Executive Officer
AMERICOM PAGING CORPORATION
formerly known as
AMERICAN 900 PAGING, INC.
By:
-------------------------------------
Gregory W. Hadley, President
<PAGE>
EXHIBIT D
FORM OF
OPINION OF
--------------------------------------------
1. The Seller is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of Texas.
2. The Seller has full corporate power and corporate authority to execute
and deliver the Purchase Agreement, the Seller Non-Competition Agreement, the
Bill of Sale and the License Agreement (collectively, the "Seller Transaction
Documents") and to perform the obligations contemplated thereby. The execution
and delivery by the Seller of each of the Seller Transaction Documents has been
duly authorized by all necessary corporate action on the part of the Seller.
Each of the Seller Transaction Documents has been duly executed and delivered by
the Seller.
3. The Shareholders have duly executed and delivered the Purchase
Agreement and their respective Noncompetition Agreements.
4. Neither the execution and delivery by the Seller of the Seller
Transaction Documents, nor the performance by the Seller of its obligations
thereunder violates or conflicts with, results in a breach of, or constitutes a
default under the Seller's Certificate of Incorporation or Bylaws, any law, any
judgment, decree, or order of any court or any other agency of government known
to this firm that is applicable to the Seller or the Seller's property, or any
material agreement known to this firm to which the Seller is a party or by which
the Seller's property is bound.
5. Neither the execution and delivery by the Shareholders of the Purchase
Agreement and the Noncompetition Agreements, nor the performance by the
Shareholders of their respective obligations thereunder, violates or conflicts
with, results in a breach of, or constitutes a default under any law, any
judgment, decree, or order of any court or any other agency of government known
to this firm that is applicable to any Shareholder or the Seller or his or its
property, or any material agreement known to this firm to which any Shareholder
or the Seller is a party, or by which his or its properties is bound.
6. This firm knows of no approvals or authorizations by, or filings or
qualifications with, any state, federal, or local agency, authority, or body
which are required in connection with the execution, delivery, and performance
of the Purchase Agreement or any other agreements or documents executed and
delivered pursuant thereto by the Seller and/or any Shareholder, except such as
have been duly obtained or made.
<PAGE>
7. To our knowledge, there is no action, suit, investigation, or
proceeding that is pending or threatened against or affecting the Seller or any
Shareholder in any court or before any governmental authority, arbitration
board, or tribunal that (a) involves any of the transactions contemplated by the
Purchase Agreement or (b) if decided adversely to the Seller or such
Shareholder, would involve the possibility of materially and adversely affecting
the Transferred Assets.
8. To our knowledge, there are no pending or threatened condemnation or
similar proceedings or assessments affecting the Transferred Assets or any part
thereof and there are no such proceedings or assessments contemplated by any
governmental authority.
9. To our knowledge, neither the Seller nor any Shareholder has entered
into any agreement pursuant to which any other individual or entity has obtained
the right to acquire any or all of the Transferred Assets.
10. To this firm's knowledge, upon the consummation by the Seller of the
transactions contemplated by the Purchase Agreement, the Purchaser shall have
duly and validly acquired all of the right, title, and interest in and to the
Transferred Assets and the Transferred Assets will have been conveyed by proper
instruments of conveyance, and, to our knowledge, all consents of third parties
necessary for such conveyance will have been obtained.
11. To our knowledge, the Seller does not currently sponsor or contribute
to, or have any contract or other obligation to sponsor or contribute to, any
employee benefit plan subject to ERISA.
D-2
<PAGE>
EXHIBIT E
FORM OF
OPINION OF SELLER'S FCC COUNSEL
1. The Seller and the Shareholders have complied in all respects with,
and are not in violation in any respect of, the Communications Act of 1934, as
amended, and the rules, regulations, policies, precedents and orders promulgated
thereunder (collectively, the "Act"), by virtue of the licenses and
authorizations issued or granted to the Seller by the FCC, as listed in Annex 7
to Schedule 1. 1 of the Agreement (the "Licenses"), except as listed in SCHEDULE
3.8 to the Agreement.
2. The Licenses, which constitute all licenses, orders and other
authorizations from the FCC which are necessary for the Seller's operation of
the System, were duly issued by the FCC to the Seller and have not been sold,
conveyed, pledged, assigned or transferred to any other party. There are no
liens, charges, encumbrances or adverse claims with respect to the Licenses.
All of the Licenses are in full force and effect and their grant to the Seller
is "final," I.E., no longer subject to administrative reconsideration or review
or to judicial review, whether on motion of the reviewing agency or otherwise.
No License is subject to any condition or requirement not generally imposed by
the FCC upon holders of authorizations in the same service. The Licenses were
properly and validly obtained by the Seller in compliance with the Act. No
party has valid grounds to contest the assignment of the Licenses as
contemplated by the Agreement. No event has occurred with respect to any of the
Licenses which permits, or after notice or lapse of time or both would permit,
revocation or termination thereof or would result in any impairment of the
rights of the holder of any License or the imposition of a forfeiture against
the Seller or the Shareholders or any subsequent holder with respect to their
operation of the System. The Seller and the Shareholders have received no
pending notice of violation with respect to any of the Licenses. All Licenses
are renewable by their terms, and the Licenses can be renewed without the need
to pay any amounts other than routine FCC fees. No state regulatory agencies
exercise any jurisdiction over the operation of the System.
3. The execution, delivery and performance of the Agreement by the
Purchaser, the Seller and the Shareholders will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other party to, any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority which is applicable to the Seller or the Shareholders or any of their
assets by virtue of the Licenses. All authorizations, approvals and consents
of, and registrations and filings with and notices to, the FCC required in
connection with the execution,
<PAGE>
delivery and performance of the Agreement (including the assignment of the
Licenses from Seller to Purchaser) by the Seller and the Shareholders by virtue
of the Licenses are in full force and effect and their grant is "final," other
than certain post-closing informational filings that may be required by the Act
(I.E., written notification to the FCC that the assignment has, in fact, been
completed).
4. The Seller has obtained all necessary clearances from the Federal
Aviation Administration ("FAA") for the construction of all radio towers
associated with the System. The Seller and the Shareholders have complied in
all respects with, and are not in violation in any respect of, all rules,
regulations, policies, precedents or orders of the FAA with respect to such
towers.
5. No judgments, decrees or orders have been issued by the FCC against
the Seller or the Shareholders in connection with the Licenses or the System.
No action, proceeding, inquiry, investigation, notice of apparent liability,
order of forfeiture, show cause order, license revocation proceeding, formal
complaint or informal complaint is currently pending or threatened by or before
the FCC regarding the Licenses or the Systems, or (insofar as it relates to the
Licenses or the Systems) regarding the Seller or the Shareholders, other than
rule-making proceedings of general applicability pertaining to the paging
industry. All reports and other filings required under the Act with respect to
the Licenses, the System, or (insofar as they relate to the Licenses or the
System) the Seller have been made in a timely manner.
E-2
<PAGE>
EXHIBIT F
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
____________, 1995, between Contact Communications Inc., a Delaware
corporation (the "Company"), and __________________ (the "Shareholder").
WITNESSETH
WHEREAS, concurrently herewith, Americom Paging Corporation, a Texas
corporation ("Americom"), is selling, transferring, and conveying to the
Company, pursuant to that certain Asset Purchase Agreement (the "Purchase
Agreement") dated as of ____________, 1995, by and among the Company, Americom,
__________________, and the Shareholder, substantially all of the property
and assets of Americom that are used in the conduct of Americom's radio paging
system business (such property, assets, and business, including all affiliated
networks, being hereinafter collectively called the "System");
WHEREAS, the Shareholder has been affiliated with Americom for a number of
years and, as a principal shareholder and officer of Americom, possesses
valuable knowledge about the business and operations of Americom; and
WHEREAS, the Company has requested that the Shareholder enter into this
Agreement as an inducement to the Company to enter into and consummate the
transactions contemplated by the Purchase Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. CONSIDERATION. The Shareholder has entered into this Agreement and
made the covenants hereinafter set forth in order to induce the Company to
consummate the transactions contemplated by the Purchase Agreement.
2. CONFIDENTIAL INFORMATION. The Shareholder acknowledges that the
information, observations, and data obtained or possessed by him concerning the
business affairs of the System will be the property of the Company and not the
Shareholder. Therefore, the Shareholder agrees that he will not disclose to any
person or use for his own account any of such information, observations, or data
unless and to the extent that such information, observations, or data become
generally known to and available for use by the public otherwise than as a
result of the Shareholder's act or omission to
<PAGE>
act. The Shareholder agrees to deliver to the Company, at any time the Company
may request, all memoranda, notes, plans, records, reports, and other documents
(and copies thereof) relating to the conduct of the System of which he may then
possess or have under his control.
3. NONCOMPETITION. The Shareholder agrees that he shall not, until 11:59
p.m. on the second anniversary of the date hereof:
a. directly or indirectly own, engage in, manage, operate, join,
control, or participate in the ownership, management, operation,
or control of, or be connected as a stockholder, director,
officer, employee, agent, partner, joint venturer, member,
beneficiary, or otherwise with, any corporation, limited
liability company, partnership, sole proprietorship, association,
business, trust, or other organization, entity or individual
which in any way competes with the Company in the sale or leasing
of pagers or paging services in the Texas Area (as hereinafter
defined); PROVIDED, HOWEVER, that the Shareholder may own,
directly or indirectly, securities of any entity traded on any
national securities exchange or listed on the National
Association of Securities Dealers Automated Quotation System if
the Shareholder does not, directly or indirectly, own 1% or more
of any class of equity securities, or securities convertible into
or exercisable or exchangeable for 1% or more of any class of
equity securities, of such entity;
b. aid, abet, or otherwise assist any individual, business or other
organization or entity in canvassing, soliciting, or accepting
any contracts for the sale or lease of pagers or paging services
in the Texas Area;
c. directly or indirectly request or advise any present or future
customers of the Company to cancel any contracts with the Company
or curtail their dealings with the Company;
d. directly or indirectly request or advise any present or future
service provider or financial resource of the System or the
Company to withdraw, curtail, or cancel the furnishing of such
service or resource to the Company;
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation in competition with the Company:
<PAGE>
(1) the names of past, present, or future customers of the
Company: or
(2) any names of past, present, or future employees or
other knowledge of or relating to the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment;
g. the above prohibitions deal only with the business carried on by
the Company on or before the date of closing.
As used herein, the "Texas Area" means that area described in the map attached
hereto as Schedule 1.
4. AMENDMENTS. This Agreement may be amended or modified from time to
time, but only by a written instrument executed by both parties hereto.
5. NOTICES. Any notices required or permitted hereunder shall be in
writing and shall be deemed given (a) when personally delivered, (b) when
confirmed if delivered by telefacsimile or similar device, or (c) when sent by
registered or certified mail, return receipt requested, addressed to the other
party at its or his address set forth below its or his signature to this
Agreement, or at such other address as it or he may specify in writing in
accordance with this Section 5.
6. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
parties hereto respecting the subject matter hereof and supersedes all prior
discussions and understandings.
7. ASSIGNMENT; PARTIES BOUND. The Company may assign its rights and
obligations hereunder to any party. The Shareholder may not assign any of his
obligations hereunder. Any assignment in violation of the foregoing shall be
null and void. Subject to the foregoing, this Agreement shall be binding upon
the parties hereto and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives,
successors, and permitted assigns.
8. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Texas (regardless of the laws that might otherwise govern under
applicable Texas principles of conflicts of law) as to all matters, including
but not limited to, matters of validity, construction, effect, performance, and
remedies.
9. NON-WAIVER OF BREACH. A waiver by any party hereto of a particular
breach or default in connection with any provision of
<PAGE>
this Agreement shall not be deemed a waiver of any subsequent default or breach
of the same or any other provision of this Agreement.
10. INVALID PROVISION. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be severable, and 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 such illegal, invalid, or
unenforceable provision or by its severance here from. Furthermore, in lieu of
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 may be possible and be
legal, valid, and enforceable.
11. HEADINGS. The headings in this Agreement are for purposes of
reference only and shall not be considered in construing this Agreement.
12. ATTORNEYS' FEES. If either party hereto brings any action, at law or
in equity, to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover from the other party hereto reasonable
attorneys' fees in addition to any other relief to which such party may be
entitled.
13. ENFORCEMENT OF COVENANTS. The Shareholder agrees that a violation on
his part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, the Shareholder further agrees that the Company shall
be entitled, as a matter of right, to an injunction restraining any further
violation of such covenant by the Shareholder. Such right to an injunction
shall be cumulative and in addition to all other remedies the Company may have,
including, but not limited to, recovery of damages.
14. ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
<PAGE>
CONTACT COMMUNICATIONS INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address: 600 Data Drive
Plano, Texas 75075
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 964-9570
----------------------------------------
----------------------------------------
Address:
--------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE>
EXHIBIT G
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
____________, 1994, between Contact Communications Inc., a Delaware corporation
(the "Company"), and Americom Paging Corporation, a Texas corporation
("Americom").
WITNESSETH
WHEREAS, concurrently herewith Americom is selling, transferring, and
conveying to the Company, pursuant to that certain Asset Purchase Agreement (the
"Purchase Agreement") dated as of ____________, 1995, by and among the Company,
Americom, Gregory W. Hadley and Mo Shebaclo, substantially all of the property
and assets that are used in the conduct of Americom's radio paging system
business (such property, assets, and business, including all affiliated
networks, being hereinafter collectively called the "System");
WHEREAS, the Company has requested that Americom enter into this Agreement
as an inducement to the Company to enter into and consummate the transactions
contemplated by the Purchase Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. CONSIDERATION. Americom has entered into this Agreement and made the
covenants hereinafter set forth in order to induce the Company to consummate the
transactions contemplated by the Purchase Agreement.
2. CONFIDENTIAL INFORMATION. Americom acknowledges that the information,
observations, and data obtained or possessed by it concerning the business
affairs of the System (the "Confidential Information") will be the property of
the Company and not Americom. Therefore, Americom agrees that it will not
disclose to any person (other than the Company or any other person to whom such
disclosure has been specifically authorized by the Company in writing) or use
for its own account any of such Confidential Information unless and to the
extent that any such Confidential Information is or becomes generally known to
and available for use by the public otherwise than as a result of Americom's act
or omission to act and except as specifically permitted by the terms of this
Agreement or as otherwise required by law. In the event that Americom becomes
legally compelled to disclose any of the Confidential Information, Americom
shall provide the Company with prompt prior notice so that the Company may seek
a protective order or other appropriate remedy. In the event that such
protective order or other remedy is not
<PAGE>
obtained, Americom will furnish only that portion of the Confidential
Information which it is legally required to disclose. Americom agrees to
deliver to the Company, at any time the Company may request, all memoranda,
notes, plans, records, reports, and other documents (and copies thereof)
relating to the conduct of the System which it may then possess or have under
its control.
3. NONCOMPETITION. Americom agrees that it shall not, until 11:59
p.m. on the second anniversary of the date hereof:
a. directly or indirectly own, engage in, manage, operate, join,
control, or participate in the ownership, management, operation,
or control of, or be connected as a stockholder, director,
officer, employee, agent, partner, joint venturer, member,
beneficiary, or otherwise with, any corporation, limited
liability company, partnership, sole proprietorship, association,
business, trust, or other organization, entity or individual
which in any way competes with the Company in the sale or leasing
of pagers or paging services in the Texas Area (as hereinafter
defined); PROVIDED, however, that Americom may own, directly or
indirectly, securities of any entity traded on any national
securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System if Americom does
not, directly or indirectly, own 1% or more of any class of
equity securities, or securities convertible into or exercisable
or exchangeable for 1% or more of any class of equity securities,
of such entity;
b. aid, abet, or otherwise assist any individual, business or other
organization or entity in canvassing, soliciting, or accepting
any contracts for the sale or leasing of pagers or paging
services in the Texas Area;
c. directly or indirectly request or advise any present or future
customers of the Company to cancel any contracts with the Company
or curtail their dealings with the Company;
d. directly or indirectly request or advise any present or future
service provider or financial resource of the System or the
Company to withdraw, curtail, or cancel the furnishing of such
service or resource to the Company;
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation in
<PAGE>
competition with the Company:
(1) the names of past, present, or future customers of the
Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment;
g. the prohibitions above pertain only to the business carried on by
the Company on or before the date of closing.
As used herein, the "Texas Area" means that area described in the map attached
hereto as Schedule 1.
4. AMENDMENTS. This Agreement may be amended or modified from time to
time, but only by a written instrument executed by both parties hereto.
5. NOTICES. Any notices required or permitted hereunder shall be in
writing and shall be deemed given (a) when personally delivered, or (b) when
confirmed if delivered by telefacsimile or similar device, or (c) when sent by
registered or certified mail, return receipt requested, addressed to the other
party at its address set forth below its signature to this Agreement, or at such
other address as it may specify in writing in accordance with this Section 5.
6. ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto respecting the subject matter hereof and supersedes all prior
discussions and understandings.
7. ASSIGNMENT; PARTIES Bound. The Company may assign its rights and
obligations hereunder to any party. Americom may not assign any of its
obligations hereunder. Any assignment in violation of the foregoing shall be
null and void. Subject to the foregoing, this Agreement shall be binding upon
the parties hereto and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives,
successors, and permitted assigns.
8. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Texas (regardless of the laws that might otherwise govern under
applicable Texas principles of conflicts of law) as to all matters, including
but not limited to, matters of validity, construction, effect, performance, and
remedies.
<PAGE>
9. NON-WAIVER OF BREACH. A waiver by any party hereto of a particular
breach or default in connection with any provision of this Agreement shall not
be deemed a waiver of any subsequent default or breach of the same or any other
provision of this Agreement.
10. INVALID PROVISION. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be severable, and 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 such illegal, invalid, or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
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 may be possible and be
legal, valid, and enforceable.
11. HEADINGS. The headings in this Agreement are for purposes of
reference only and shall not be considered in construing this Agreement.
12. ATTORNEYS' FEES. If either party hereto brings any action, at law or
in equity, to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover from the other party hereto reasonable
attorneys' fees in addition to any other relief to which such party may be
entitled.
13. ENFORCEMENT OF COVENANTS. Americom agrees that a violation on its
part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, Americom further agrees that the Company shall be
entitled, as a matter of right, to an injunction restraining any further
violation of such covenant by Americom. Such right to an injunction shall be
cumulative with any and all other remedies the Company may have, including, but
not limited to, recovery of damages.
14. ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CONTACT COMMUNICATIONS INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address: 600 Data Drive
Plano, Texas 75075
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 964-9570
AMERICOM PAGING CORPORATION
formerly known as
AMERICAN 900 PAGING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address:
--------------------------------
----------------------------------------
Attn:
-----------------------------------
Fax No.
---------------------------------
<PAGE>
EXHIBIT H
LICENSE AGREEMENT
This License agreement ("License Agreement") is made on the ______ day of
____________, 1995, by and between Americom Paging Corporation formerly
known as American 900 Paging, Inc., a Texas corporation ("Licensor"), and
Contact Communications Inc., a Delaware corporation ("Licensee").
RECITALS:
A. Licensor and Licensee are parties to that certain Asset Purchase
Agreement (the "Purchase Agreement"), dated as of ____________, 1995, with
respect to the sale by Licensor to Licensee of substantially all of the
property and assets of Licensor used in the conduct of Licensor's radio paging
system business (the "System").
B. Licensor owns and uses certain trademarks and service marks as defined
herein (the "Marks").
C. Licensee desires to obtain a license to use the Marks.
AGREEMENTS:
NOW, THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained and promises herein expressed, and for other good
and valuable consideration acknowledged by each of them to be satisfactory and
adequate, do hereby agree as follows:
1. As used herein, "Marks" shall mean the trademark and service mark
"Americom Paging Corporation."
2. "Licensed Territory" shall mean the Texas Area, as set forth in
Schedule 1 hereto.
3. Licensor hereby grants to Licensee a paid-up, royalty-free,
non-exclusive license to use the Marks in connection with the operation of the
System and on or in connection with the goods and/or services sold by or under
the System in the Licensed Territory for a period of two (2) years
beginning on, and including, the date of the execution of this License.
4. Licensee shall have unlimited use of the Marks in the Licensed
Territory and may use the Marks as fully as if Licensee were the owner of the
Marks, and Licensee's right to use the Marks shall include, without limitation,
use in packaging, labels, advertising and related materials, business cards,
stationery, price lists, product catalogues and brochures, and the right to use
the
<PAGE>
licensed Marks as part of a corporate name, partnership name or name of any
other person; provided, however, that the nature and quality of all services
rendered and goods sold by Licensee in connection with the Marks shall conform
to the reasonable standards set by and under the control of Licensor. Licensee
agrees to permit reasonable inspection of Licensee's operations by Licensor, and
to supply Licensor with specimens of use of the Marks upon request, to permit
Licensor to verify Licensee's compliance with the terms of the immediately
preceding sentence.
5. Licensor hereby represents and warrants to Licensee that Licensor has
the full corporate power and authority to grant the license set forth in
paragraph 3 hereof and that Licensor has not granted or suffered any liens,
restrictions, security interests, encumbrances, or licenses with respect to the
Marks. Licensor expressly disclaims any representation or warranty as to the
exclusivity of its rights to the use of the mark "Americom Paging Corporation."
6. Licensee shall, in order to preserve and retain its rights hereunder,
at its sole expense, take whatever action necessary or advisable to protect the
right to use the Marks in the Licensed Territory. Such action may include,
without limitation, assuming responsibility at its own expense for the defense
of any lawsuit challenging or affecting rights to the Marks, and/or instituting
litigation at its own expense to protect its rights to the Marks. Should
Licensee choose to take any action with respect to the Marks, Licensor shall
comply with all reasonable requests for assistance in connection therewith. Any
recovery as a result of such action shall belong solely to Licensee.
7. In the event Licensee decides not to take any action necessary to
maintain, protect, preserve or renew registration for the Marks, Licensee shall
lose its rights hereunder and the same shall revert to Licensor and their
agreement shall be of no further force or effect.
8. Licensee may not assign or transfer its rights or obligations under
this License Agreement, whether by operation of law or otherwise, without the
consent of Licensor, which shall not be unreasonably withheld, and Licensee
shall have the right to assign to an affiliate or a successor in interest.
Licensee shall also not have the right to sublicense its right to use the Marks
without the prior written consent of Licensor.
9. This License Agreement sets forth the entire agreement between the
parties, and supersedes any and all prior agreements or understandings between
the parties, pertaining to the subject matter hereof. This License Agreement
may not be amended, modified or terminated, in whole or in part, except by an
instrument in writing duly executed by the parties.
<PAGE>
10. Licensor shall at all times do, execute, acknowledge and/or deliver or
cause to be done, executed, acknowledged, or delivered such further acts,
agreements, and assurances as the Licensee reasonably may require for the
purposes of this License Agreement.
11. This License Agreement may be executed in any number of counterparts;
and each of which, when so executed and delivered, shall be deemed an original,
but such counterparts together shall constitute one and the same instrument.
12. This License Agreement shall inure to the benefit of and be binding
upon Licensor, Licensee and their respective permitted successors and assigns.
13. ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this License
Agreement on the date first above written.
AMERICOM PAGING CORPORATION
formerly known as
AMERICAN 900 PAGING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CONTACT COMMUNICATIONS INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT I
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
____________, 1995, by and among ProNet Inc., a Delaware corporation (the
"Company"), and Americom Paging Corporation formerly known as American 900
Paging, Inc., a Texas corporation ("Americom").
RECITALS:
A. Contact Communications Inc., a wholly owned subsidiary of the Company
("Contact"), Americom, and the shareholders of Americom have entered into that
certain Asset Purchase Agreement dated as of ____________, 1994 (the
"Purchase Agreement"), pursuant to which Contact is to acquire substantially
all of Americom's radio paging business (the "System").
B. Pursuant to the terms of the Purchase Agreement, Contact may elect to
pay a portion of the purchase price for the System in shares of the Company's
common stock, par value $.01 per share ("Common Stock").
C. Pursuant to the terms of the Purchase Agreement, the Company has
agreed to register the shares of Common Stock received by Americom thereunder
pursuant to the terms and conditions set forth herein.
AGREEMENTS:
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated.
"COMMISSION" means the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"REGISTRABLE SECURITIES" means the shares of Common Stock received by
Americom pursuant to the Purchase Agreement and held of record by Americom. Any
Registrable Security will cease to bo a Registrable Security when a registration
statement under the Securities Act covering such Registrable Security has been
declared effective by the Commission or when such Registrable Security is no
longer held of record by Americom.
<PAGE>
"SECURITIES Act" means the Securities Act of 1933, as amended.
2. REGISTRATION STATEMENT. Prior to the issuance of Common Stock by the
Company to Americom, if any, pursuant to the terms of the Purchase Agreement,
the Company shall file a "shelf' registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act, or any similar rule that may be
adopted by the Commission (the "Registration Statement"), with respect to the
sale of all of the Registrable Securities and any other shares of Common Stock
or other securities of the Company that the Company, in its sole discretion,
elects to include therein. The Company shall use all commercially reasonable
efforts to have the Registration Statement declared effective by the Commission
under the Securities Act concurrently with the delivery of any such shares of
Common Stock and to keep the Registration Statement effective for a period of
180 days following the date on which the Registration Statement is declared
effective. The Company further agrees, if necessary, to supplement or make
amendments to the Registration Statement, if required by the registration form
used by the Company for the Registration Statement or by the instructions
applicable to such registration form or by the Securities Act or the rules and
regulations thereunder.
3. REGISTRATION PROCEDURES.
Following the issuance of Common Stock by the Company to Americom pursuant
to the terms of the Purchase Agreement, the Company will as expeditiously as
reasonably possible:
(a) furnish to Americom, prior to fifing the Registration Statement,
if requested in writing, copies of the Registration Statement as proposed to be
filed, and thereafter furnish to Americom such number of copies of the
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in the Registration
Statement (including each preliminary prospectus) and such other documents as
Americom may reasonably request in writing in order to facilitate the
disposition of the Registrable Securities owned by Americom;
(b) use all commercially reasonable efforts to register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions as Americom may reasonably request and do any and all other acts
and things which may be reasonably necessary to enable Americom to consummate
the disposition in such jurisdictions of the Registrable Securities; PROVIDED
that the Company will 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 subsection, (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction;
<PAGE>
(c) notify Americom, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of an
event requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and promptly make
available to Americom any such supplement or amendment; and
(d) make available for inspection by Americom and any attorney,
accountant or other professional retained thereby (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspectors in connection
with the Registration Statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) in the judgment of counsel
to the Company the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Americom agrees that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the Company
unless and until such is made generally available to the public. Americom
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
The Company may require Americom to promptly furnish in writing to the
Company such information regarding the distribution of the Registrable
Securities as it may from time to rime reasonably request and such other
information as may be legally required in connection with such registration.
Americom agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection 3(c) hereof, Americom
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement until Americom's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection 3(c) hereof, and,
if so directed by the Company, Americom will deliver to the Company all copies,
other than permanent file copies then in Americom's possession, of the most
recent prospectus covering such Registrable
<PAGE>
Securities at the time of receipt of such notice. If the Company shall give
such notice, the Company shall extend the period during which the Registration
Statement shall be maintained effective by the number of days during the period
from and including the date of the giving of notice pursuant to subsection 3(c)
hereof to the date when the Company shall make available to Americom a
prospectus supplemented or amended to conform with the requirements of
subsection 3(c) hereof.
4. REGISTRATION EXPENSES.
In connection with the Registration Statement required to be filed
hereunder, the Company shall pay the following registration expenses: (a) all
registration and filing fees; (b) the fees and expenses of the Company's
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (c) printing expenses; (d) the reasonable fees and
disbursements of counsel for the Company and the customary fees and expenses for
independent certified public accountants retained by the Company; and (e) the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration. The Company shall not have any obligation to
pay any legal fees of Americom, any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities or any out-of-pocket expenses
of Americom (or its agents).
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnity
and hold harmless Americom from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or prospectus contained
therein or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon 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 arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by Americom or on Americom's behalf
expressly for use therein and; PROVIDED, FURTHER, that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this subsection
shall not apply to the extent that any such loss, claim, damage, liability or
expense results from the fact that a current copy of the prospectus was not sent
or given to the person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of the Registrable
Securities to such person if it is
<PAGE>
determined that it was the responsibility of Americom to provide such person
with a current copy of the prospectus and such current copy of the prospectus
would have cured the defect giving rise to such loss, claim, damage, liability
or expense.
(b) INDEMNIFICATION BY AMERICOM. Americom agrees to indemnity and
hold harmless, on a joint and several basis, the Company, its directors and
officers and each person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to Americom, but only
with respect to information furnished in writing by Americom or on Americom's
behalf expressly for use in the Registration Statement or prospectus relating to
the Registrable Securities, any amendment or supplement thereto or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers, or any such controlling
person, in respect of which indemnity may be sought against Americom, Americom
shall have the rights and duties given to the Company, and the Company or its
directors or officers or such controlling person shall have the rights and
duties given to Americom, by the preceding subsection hereof
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any person entitled to indemnification under subsections (a) or
(b) above (an "Indemnified Party") in respect of which indemnity may be sought
from any party who has agreed to provide such indemnification (an "Indemnifying
Party"), the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all expenses. Such Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party has agreed
to pay such fees and expenses or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that there is a conflict of interest on the part of counsel employed
by the Indemnifying Party to represent such Indemnified Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together
<PAGE>
with appropriate local counsel) at any time for all such Indemnified Parties,
which firm shall be designated in writing by such Indemnified Parties). The
Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnity and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 5 is unavailable to the Indemnified Parties in respect of any losses,
claims, damages, liabilities or judgments referred to herein, then each
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 and judgments in the following
manner: as between the Company on the one hand and each Selling Holder on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each Selling Holder on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of
Americom 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 such party, and the party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of
subsection 11(f) of the Securities Act) shall, be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Survival. The indemnity and contribution agreements contained in
this Section 5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Indemnified Party or by or on behalf of the Company and (iii) the
consummation of the sale or successive resale of the Registrable Securities.
6. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given other than as initially agreed upon
in writing by the Company and Americom.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier or air
<PAGE>
courier guaranteeing overnight delivery:
(i) if to Americom, at the most current address given by
Americom to the Company, in accordance with the provisions of this subsection,
which address initially is 1806 Cottonwood Valley Circle, Irving, Texas 75038
attention Gregory W. Hadley; 5312 Community Boulevard, Houston, Texas 77005,
attention Mo N. Shebaclo; with a copy to James H. Shoemake, 1800 Bering Drive,
Suite 600, Houston, Texas 77057.
(ii) if to the Company, initially at 600 Data Drive, Suite 100,
Plano, Texas 75075, attention: Jackie R. Kimzey; Mark A. Solls, and thereafter
at such other address as may be designated from time to time by notice given in
accordance with the provisions of this Section.
(c) SUCCESSORS AND ASSIGNS. Americom shall not assign any rights or
benefits under this Agreement without the prior written consent of the Company.
In the event of an assignment by the Company of its obligations under this
Agreement in connection with an assignment of its right to pay the deferred
portion of the Purchase Price (as defined in the Purchase Agreement) as provided
in Section 9.8 of the Purchase Agreement, any references to "Common Stock"
contained herein shall be deemed to be references to the "Common Stock" of such
assignee as provided in Section 9.8 of the Purchase Agreement. This Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of the Company and Americom.
(d) COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for the Company and
Americom to execute each of such counterparts, but when each has 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 in accordance with its terms. In making proof of this Agreement,
it shag not be necessary to produce or account for more than one such
counterpart executed by the party against whom enforcement of this Agreement is
sought.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OR CHOICE OF LAW.
(g) SEVERABILITY. 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 severable; this
Agreement shall be
<PAGE>
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 may be possible and be legal, valid and enforceable.
(h) ENTIRE AGREEMENT. This Agreement is intended by the Company and
Americom as a final expression of their agreement and is intended to be a
complete and exclusive statement of their agreement and understanding in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the Company and Americom with respect to
such subject matter.
(i) THIRD PARTY BENEFICIARIES. Other than Indemnified Parties not a
party hereto, this Agreement is intended for the benefit of the Company and
Americom and their respective successors and assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other person or entity.
(j) EFFECTIVENESS. This Agreement shall have no force or effect
unless and until the Company issues Common Stock to Americom pursuant
to terms of the Purchase Agreement.
7. ALTERNATIVE DISPUTE RESOLUTION. If one or more disputes arise with
regard to the interpretation and/or performance of this agreement or any of its
provisions, the parties agree to first attempt to resolve same by mediation. If
a party refuses to mediate, then that party may not recover attorneys fees or
costs in any litigation or other proceeding brought to construe or enforce this
agreement. Otherwise, if mediation is unsuccessful, then the prevailing party
or parties shall be entitled to recover reasonable attorneys fees and expenses,
including the cost of the unsuccessful mediation. Mediation will occur within
sixty (60) days of notification of matter to be mediated unless a longer time
period is agreed in writing by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PRONET INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
AMERICOM PAGING CORPORATION
formerly known as
AMERICAN 900 PAGING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
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<PAGE>
EXHIBIT J
ALLOCATION OF PURCHASE PRICE
CLASS I ASSETS (Cash and similar items) $
CLASS II ASSETS (CD's and readily marketable $
securities)
CLASS III ASSETS (Furniture and fixtures; land; $
buildings; accounts receivable; other tangible
assets)
inventory
fixed assets
prepaid expenses
CLASS IV ASSETS (Section 197 assets,
including goodwill and going-
concern value)
TOTAL PURCHASE PRICE
* plus any amounts to be paid to the Purchaser due to an increase in the
number of pagers, pursuant to APPENDIX A of the Purchase Agreement.
<PAGE>
EXHIBIT K
GUARANTY AGREEMENT
(PRO NET GUARANTEES THE PERFORMANCE OF ALL OF THE OBLIGATIONS OF CONTACT
COMMUNICATIONS, WHO IS THE SIGNATORY AUTHORITY ON THE CONTRACT)
