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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): January 1, 1996
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PRONET INC.
(Exact name of issuer as specified in its charter)
DELAWARE 0-16029 75-1832168
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
6340 LBJ FREEWAY 75240
DALLAS, TEXAS (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code: (214) 687-2000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
In October 1995, December 1995 and January 1996, Contact Communications
Inc., a Delaware corporation ("CCI") and subsidiary of ProNet Inc. (the
"Company"), completed a total of five acquisitions. The first acquisition on
October 2, 1995, involved the purchase of substantially all of the paging
assets of Paging and Cellular of Texas, a Sole Proprietorship ("Paging &
Cellular"), for approximately $9.5 million paid in cash at closing, pursuant to
an Asset Purchase Agreement dated as of September 30, 1995, by and among Daniel
L. Sheppard dba Paging and Cellular of Texas (the "Paging & Cellular Seller")
and CCI. Concurrently with the closing of the Paging & Cellular acquisition,
CCI entered into a noncompetition agreement with the Paging & Cellular Seller.
The acquisition was effective September 30, 1995.
Paging & Cellular is a reseller of paging services, and their subscribers
have previously been included in the Company's reseller subscriber base. The
assets acquired include accounts receivable and pager inventory. CCI intends to
continue to use the assets acquired from Paging & Cellular to provide paging
services and does not intend to devote such assets to other purposes.
On December 1, 1995, CCI completed the acquisition of all of the
outstanding capital stock of Apple Communication, Inc., an Illinois
corporation ("Apple"), for approximately $13.0 million, comprised of
approximately $8.5 million paid in cash and approximately $4.5 million in stock
at closing, pursuant to a Stock Purchase Agreement dated as of October 6, 1995,
by and among Apple, Salvatore Zarcone ("Zarcone") and Jill DiFoggio ("DiFoggio"
and together with Zarcone, the "Apple Sellers"), and CCI. Concurrently with the
closing of the Apple acquisition, CCI entered into noncompetition agreements
with the Apple Sellers.
Apple is a provider of commercial paging services and serves approximately
41,500 subscribers. The assets acquired include accounts receivable, pager
inventory, and certain fixed assets associated with the operation of the paging
system. CCI intends to continue to use the assets acquired from Apple to
provide paging services and does not intend to devote such assets to other
purposes.
The Company funded the Paging & Cellular and Apple acquisitions with
proceeds from its issuance of its 11 7/8% senior subordinated debentures due
2005. The consideration paid for the assets of Paging & Cellular and the
outstanding capital stock of Apple was determined through arm's length
negotiations between CCI and the Paging & Cellular Seller and the Apple Sellers.
A Form 8-K was not previously filed for the above acquisitions as they did
not qualify as significant acquisitions by the Company in accordance with the
definition of a significant acquisition in Rule 3.05 of Regulation S-X.
However, since the aggregate impact of the above individually insignificant
businesses acquired exceeded the reporting requirements of Rule 3.05 when
combined with the following acquisitions, Paging & Cellular and Apple are
included on this Form 8-K.
Effective January 1, 1996, CCI completed three acquisitions. The first
acquisition involved the purchase of substantially all of the paging assets of
Sun Paging Communications, a Florida general partnership ("Sun"), for
approximately $2.3 million paid in cash at closing, pursuant to an Asset
Purchase Agreement dated as of November 10, 1995, by and among Sun (the "Sun
Seller"), Palmer Communications Incorporated ("Palmer"), American Mobilphone,
Inc. ("American", collectively with Palmer, the "Sun Partners"), CCI and the
Company. Concurrently with the closing of the Sun acquisition, CCI entered into
a noncompetition agreement with the Sun Seller and the Sun Partners. This
acquisition was completed on January 2, 1996.
Effective January 1, 1996, CCI acquired substantially all of the paging
assets of SigNet Paging of Raleigh, Inc., a North Carolina corporation ("Signet
Raleigh"), for approximately $8.7 million comprised of approximately $4.7
million paid in cash and $3.2 million in common stock of the Company at closing
and an $800,000 deferred payment which is due and payable on or before January
3, 1997, 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 September 27, 1995, by and among Signet Raleigh (the "Signet Raleigh
Seller"), W. David Sweatt (the "Signet Raleigh Shareholder") and CCI.
Concurrently with the closing of the Signet Raleigh acquisition, CCI entered
into noncompetition agreements with the Signet Raleigh Shareholder, Sam A.
Miles, Lee Miles and the Signet Raleigh Seller. The acquisition was completed
January 3, 1996.
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Also effective January 1, 1996, CCI acquired all of the outstanding capital
stock of Cobbwells, Inc. d/b/a Page One, a Georgia business corporation ("Page
One") for approximately $19.7 million comprised of approximately $14.8 million
paid in cash at closing and a $4.9 million deferred payment which is due and
payable on or before January 5, 1997, and is payable, at the Company's
discretion, either in shares of common stock of the Company, or cash, pursuant
to a Stock Purchase Agreement dated as of November 22, 1995, by and among Page
One, James H. Cobb, III ("Cobb") and Warren K. Wells ("Wells" and together with
Cobb, the "Page One Sellers"), CCI and the Company. Concurrently with the
closing of the Page One acquisition, CCI entered into noncompetition agreements
with the Page One Sellers. The acquisition was completed on January 5, 1996.
Sun, Signet Raleigh and Page One are all providers of commercial paging
services. Sun serves more than 12,000 subscribers in Florida. Signet Raleigh
provides paging services to over 13,000 subscribers in the Raleigh area. Page
One's Georgia paging system serves over 30,000 subscribers. The assets acquired
include accounts receivable, pager inventories and certain fixed assets
associated with the operation of the paging systems. CCI intends to continue to
use the assets acquired from Sun, Signet Raleigh and Page One to provide paging
services and does not intend to devote such assets to other purposes.
The Company funded $7.3 million of cash for the acquisitions of Sun, Signet
Raleigh and Page One with proceeds from its issuance of its 11 7/8% senior
subordinated debentures due 2005. The remaining $14.5 million was funded from
borrowings under the Amended and Restated Credit Agreement dated as of February
9, 1995, by and between The First National Bank of Chicago, as Agent and the
Company. The consideration paid for the assets of Sun and Signet Raleigh and
the outstanding capital stock of Page One was determined through arm's length
negotiations between CCI and the Sun Partners, the Signet Raleigh Shareholder
and the Page One 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.
Paging & Cellular
- Audited Statement of Net Liabilities as of December 31, 1994 and
Audited Statement of Revenues and Expenses for the year ended December
31, 1994 (filed as an Exhibit to the Registrant's Current Report on
Form 8-K, dated September 14, 1995, and incorporated herein by
reference).
- Unaudited Balance Sheet as of September 30, 1995, Unaudited Statement
of Income and Owner's Equity for the nine months ended September 30,
1995 and Unaudited Statement of Cash Flows for the nine months ended
September 30, 1995. Attached hereto as Exhibit 99.1 are unaudited
financial statements as of and for the nine months ended September 30,
1995.
Apple
- Audited Balance Sheet as of December 31, 1994, Audited Statement of
Income and Retained Earnings for the year ended December 31, 1994 and
Audited Statement of Cash Flows for the year ended December 31, 1994
(filed as an Exhibit to the Registrant's Current Report on Form 8-K,
dated September 14, 1995, and incorporated herein by reference).
- Unaudited Balance Sheet as of September 30, 1995, Unaudited Statement
of Income and Retained Earnings for the nine months ended September
30, 1995 and Unaudited Statement of Cash Flows for the nine months
ended September 30, 1995. Attached hereto as Exhibit 99.2 are
unaudited financial statements as of and for the nine months ended
September 30, 1995.
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Sun
- Audited Balance Sheets as of December 31, 1994 and 1993, and Audited
Statements of Operations, Partners' Equity and Cash Flows for
the year ended December 31, 1994 and the period from August 6, 1993
(inception) to December 31, 1993. Attached hereto as Exhibit 99.3 are
audited financial statements as of December 31, 1994 and 1993, for the
year ended December 31, 1994, and for the period from August 6, 1993
to December 31, 1993.
- Unaudited Balance Sheet as of September 30, 1995, and Unaudited
Statements of Operations, Partners' Equity and Cash Flows for
the nine months ended September 30, 1995. Attached hereto as Exhibit
99.3 are unaudited financial statements as of and for the nine months
ended September 30, 1995.
Signet Raleigh
- Audited Balance Sheet as of December 31, 1994, and Audited Statements
of Operations, Stockholders' Equity and Cash Flows for the year ended
December 31, 1994 (filed as an Exhibit to the Registrant's Current
Report on Form 8-K, dated September 14, 1995, and incorporated herein
by reference).
- Unaudited Balance Sheet as of September 30, 1995, and Unaudited
Statement of Operations and Stockholders' Equity and Unaudited
Statement of Cash Flows for the nine months ended September 30, 1995.
Attached hereto as Exhibit 99.4 are unaudited financial statements as
of and for the nine months ended September 30, 1995.
Page One
- Audited Balance Sheet as of December 31, 1994, Audited Statement of
Operations and Accumulated Deficit and Audited Statement of Cash Flows
for the year ended December 31, 1994 (filed as an Exhibit to the
Registrant's Current Report on Form 8-K, dated September 14, 1995, and
incorporated herein by reference).
- Unaudited Balance Sheet as of September 30, 1995, Unaudited Statement
of Operations and Accumulated Deficit and Unaudited Statement of Cash
Flows for the nine months ended September 30, 1995. Attached hereto
as Exhibit 99.5 are unaudited financial statements as of and for the
nine months ended September 30, 1995.
(b) PRO FORMA FINANCIAL INFORMATION.
- Unaudited Pro Forma Condensed Balance Sheet for the Company as of
September 30, 1995, consolidating the assets and certain liabilities
of the Company, Paging & Cellular, Apple, Sun, Signet Raleigh and
Page One.
- Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the Company for the year ended December 31, 1994 and the nine
months ended September 30, 1995, incorporating the operating revenues
and expenses of the Company, 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 Paging Systems, Inc. ("Carrier"),
All City Communication Company, Inc. ("All City"), Metropolitan
Houston Paging Services, Inc. ("Metropolitan"), Americom Paging
Corporation ("Americom"), Gold Coast Paging, Inc. ("Gold Coast"),
Lewis Paging, Inc. ("Lewis"), Paging & Cellular, Apple, Sun, Signet
Raleigh and Page One.
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, All City, Metropolitan, Americom, Gold Coast, Lewis, Paging &
Cellular, Apple, Sun, Signet Raleigh and Page One. Operating results for the
nine 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 Paging & Cellular,
Apple, Sun, Signet Raleigh and Page One included or incorporated by reference in
this Form 8-K.
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Attached hereto as Exhibit 99.6 are pro forma condensed consolidated
financial statements and notes thereto of the Company and its completed
acquisitions.
(c) EXHIBITS.
10.1 Asset Purchase Agreement dated September 30, 1995, regarding the
acquisition of substantially all of the paging assets of Paging and
Cellular of Texas, by and among CCI, Paging and Cellular of Texas and
Daniel L. Sheppard (filed as an Exhibit to the Registrant's Form 10-Q
for the quarterly period ended September 30, 1995, and incorporated
herein by reference).
10.2 Stock Purchase Agreement dated October 6, 1995, regarding the
acquisition of all of the outstanding capital stock of Apple
Communication, Inc., by and among CCI, Apple Communication, Inc.,
Salvatore Zarcone and Jill DiFoggio.
10.3 Asset Purchase Agreement dated November 10, 1995, regarding the
acquisition of substantially all of the paging assets of Sun Paging
Communications, by and among Sun Paging Communications, Palmer
Communications Incorporated, American Mobilphone, Inc., CCI and the
Company.
10.4 Asset Purchase Agreement dated September 27, 1995, regarding the
acquisition of substantially all of the paging assets of SigNet Paging
of Raleigh, Inc., by and among CCI, SigNet Paging of Raleigh, Inc. and
W. David Sweatt.
10.5 Stock Purchase Agreement dated November 22, 1995, regarding the
acquisition of all of the outstanding capital stock of Cobbwells, Inc.
d/b/a Page One, by and among the Company, CCI, Cobbwells, Inc. d/b/a
Page One, James H. Cobb, III and Warren K. Wells.
23.1 Consent of Ernst & Young LLP, Independent Auditors
Financial information of businesses acquired:
99.1 Paging and Cellular of Texas
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Income and Owner's Equity for the nine months ended
September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.2 Apple Communication, Inc.
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Income and Retained Earnings for the nine months ended
September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.3 Sun Paging Communications
Report of Independent Auditors
Balance Sheets as of December 31, 1994, December 31, 1993 and
September 30, 1995 (unaudited)
Statements of Operations for the year ended December 31, 1994, the
period from August 6, 1993 (inception) to December 31, 1993 and the
nine months ended September 30, 1995 (unaudited)
Statements of Partners' Equity for the year ended December 31, 1994,
the period from August 6, 1993 (inception) to December 31, 1993 and
the nine months ended September 30, 1995 (unaudited)
Statements of Cash Flows for the year ended December 31, 1994, the
period from August 6, 1993 (inception) to December 31, 1993 and the
nine months ended September 30, 1995 (unaudited)
99.4 SigNet Paging of Raleigh, Inc.
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Operations and Stockholders' Equity for the nine months
ended September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.5 Cobbwells, Inc. d/b/a Page One
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Operations and Accumulated Deficit for the nine months
ended September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
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Pro Forma Condensed Consolidated Financial Statements of ProNet Inc.:
99.6 Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1994 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1995 (unaudited)
6
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SIGNATURE
Pursuant to the requirements of the Securities 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
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Jan E. Gaulding
Senior Vice President and
Chief Financial Officer
(principal financial and accounting officer)
Date: January 16, 1996
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INDEX TO EXHIBITS
10.1 Asset Purchase Agreement dated September 30, 1995, regarding the
acquisition of substantially all of the paging assets of Paging and
Cellular of Texas, by and among CCI, Paging and Cellular of Texas and
Daniel L. Sheppard (filed as an Exhibit to the Registrant's Form 10-Q
for the quarterly period ended September 30, 1995, and incorporated
herein by reference).
10.2 Stock Purchase Agreement dated October 6, 1995, regarding the
acquisition of all of the outstanding capital stock of Apple
Communication, Inc., by and among CCI, Apple Communication, Inc.,
Salvatore Zarcone and Jill DiFoggio.
10.3 Asset Purchase Agreement dated November 10, 1995, regarding the
acquisition of substantially all of the paging assets of Sun Paging
Communications, by and among Sun Paging Communications, Palmer
Communications Incorporated, American Mobilphone, Inc., CCI and the
Company.
10.4 Asset Purchase Agreement dated September 27, 1995, regarding the
acquisition of substantially all of the paging assets of SigNet Paging
of Raleigh, Inc., by and among CCI, SigNet Paging of Raleigh, Inc. and
W. David Sweatt.
10.5 Stock Purchase Agreement dated November 22, 1995, regarding the
acquisition of all of the outstanding capital stock of Cobbwells, Inc.
d/b/a Page One, by and among the Company, CCI, Cobbwells, Inc. d/b/a
Page One, James H. Cobb, III and Warren K. Wells.
23.1 Consent of Ernst & Young LLP, Independent Auditors
Financial information of businesses acquired:
99.1 Paging and Cellular of Texas
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Income and Owner's Equity for the nine months ended
September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.2 Apple Communication, Inc.
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Income and Retained Earnings for the nine months ended
September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.3 Sun Paging Communications
Report of Independent Auditors
Balance Sheets as of December 31, 1994, December 31, 1993 and
September 30, 1995 (unaudited)
Statements of Operations for the year ended December 31, 1994, the
period from August 6, 1993 (inception) to December 31, 1993 and the
nine months ended September 30, 1995 (unaudited)
Statements of Partners' Equity for the year ended December 31, 1994,
the period from August 6, 1993 (inception) to December 31, 1993 and
the nine months ended September 30, 1995 (unaudited)
Statements of Cash Flows for the year ended December 31, 1994, the
period from August 6, 1993 (inception) to December 31, 1993 and the
nine months ended September 30, 1995 (unaudited)
99.4 SigNet Paging of Raleigh, Inc.
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Operations and Stockholders' Equity for the nine months
ended September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
99.5 Cobbwells, Inc. d/b/a Page One
Balance Sheet as of September 30, 1995 (unaudited)
Statement of Operations and Accumulated Deficit for the nine months
ended September 30, 1995 (unaudited)
Statement of Cash Flows for the nine months ended September 30, 1995
(unaudited)
Pro Forma Condensed Consolidated Financial Statements of ProNet Inc.:
99.6 Pro Forma Condensed Consolidated Balance Sheet as of September 30,
1995 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1994 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1995 (unaudited)
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STOCK PURCHASE AGREEMENT
AMONG APPLE COMMUNICATION, INC.,
SALVATORE ZARCONE, JILL DIFOGGIO
AND
CONTACT COMMUNICATIONS INC.
October 6, 1995
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TABLE OF CONTENTS
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ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
2.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Purchaser Information. . . . . . . . . . . . . . . . . . . . . . 3
2.5 Regulatory Certificates. . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
APPLE AND THE SELLERS
3.1 Due Organization; Ownership; Subsidiaries. . . . . . . . . . . . 4
3.2 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Title to Shares. . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 5
3.8 Conduct of Business; Certain Actions . . . . . . . . . . . . . . 6
3.9 Properties.. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Pagers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.11 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Intellectual Rights. . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.15 ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . 9
3.17 Claims and Proceedings . . . . . . . . . . . . . . . . . . . . . 10
3.18 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.19 Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.20 Business Relations . . . . . . . . . . . . . . . . . . . . . . . 11
(i)
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3.21 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.22 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.23 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . 12
3.24 Customers and Suppliers. . . . . . . . . . . . . . . . . . . . . 12
3.25 Interest in Competitors, Suppliers, and Customers. . . . . . . . 12
3.26 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.27 Commission Sales Contracts . . . . . . . . . . . . . . . . . . . 12
3.28 Regulatory Certificates. . . . . . . . . . . . . . . . . . . . . 12
3.29 Investment.. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.30 Sophisticated Investor Status. . . . . . . . . . . . . . . . . . 13
3.31 Investment Risk. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.32 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.33 Purchaser Information. . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4
COVENANTS
4.1 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Satisfaction of All Conditions Precedent . . . . . . . . . . . . 14
4.4 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Notice of Developments . . . . . . . . . . . . . . . . . . . . . 15
4.6 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . 15
4.8 Continuation of Insurance Coverage . . . . . . . . . . . . . . . 16
4.9 Maintenance of Credit Terms. . . . . . . . . . . . . . . . . . . 16
4.10 Updating Information . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Interim Operations of Apple. . . . . . . . . . . . . . . . . . . 16
4.12 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 17
4.13 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14 Resignations of Directors and Officers . . . . . . . . . . . . . 17
4.15 Best Page Assets . . . . . . . . . . . . . . . . . . . . . . . . 17
4.16 Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5
REGULATORY APPROVALS
(ii)
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ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Purchaser . . . . . . . . . . . 18
6.2 Conditions to Obligations of the Sellers . . . . . . . . . . . . 21
ARTICLE 7
TERMINATION
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of the Purchaser . . . . . . . . . . . . . . . . 22
8.2 Indemnification of the Sellers . . . . . . . . . . . . . . . . . 23
8.3 Defense of Third-Party Claims. . . . . . . . . . . . . . . . . . 23
8.4 Direct Claims. . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 No Contribution. . . . . . . . . . . . . . . . . . . . . . . . . 25
8.6 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 9
MISCELLANEOUS
9.1 Collateral Agreements, Amendments, and Waivers . . . . . . . . . 25
9.2 Restriction on Transfer of ProNet Common Stock . . . . . . . . . 25
9.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 25
9.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.5 Surplus Working Capital. . . . . . . . . . . . . . . . . . . . . 26
9.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . 26
9.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Survival of Representations, Warranties, and Covenants . . . . . 27
9.10 Public Announcement. . . . . . . . . . . . . . . . . . . . . . . 27
9.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 27
9.12 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 28
9.13 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.15 Sections; Exhibits . . . . . . . . . . . . . . . . . . . . . . . 28
(iii)
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PAGE
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9.16 Number and Gender of Words . . . . . . . . . . . . . . . . . . . 28
9.17 Specific Performance . . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULES
1.3 Allocation of the Purchase Price
3.1 Foreign Qualification
3.5 Conflicts
3.6 Consents
3.7(a) June Asset List
3.8 Conduct of Business
3.9 Properties
3.10 Tariffs
3.11 Licenses and Permits
3.12 Intellectual Rights
3.13 Insurance
3.16 Material Contracts
3.17 Claims and Proceedings
3.19 Personnel
3.22 Warranties
3.23 Accounts Receivable
3.24 Customers and Suppliers
3.25 Subsidiaries
3.26 Inventory
3.27 Commission Sales Contracts
EXHIBITS
A - Indemnification Escrow Agreement
B - Form of Opinion of Counsel to Apple and the Sellers
C - Form of Opinion of FCC Counsel to Apple
D - Noncompetition Agreement - Seller
E - Registration Rights Agreement
F - Form of Opinion of Vinson & Elkins L.L.P.
G - Form of Assignment of Bill of Sale
H - Form of Indemnification Agreement
(iv)
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of October 6, 1995, by and among Apple Communication, Inc., an Illinois
corporation ("Apple"), Salvatore Zarcone ("Zarcone") and Jill DiFoggio
("DiFoggio" and, together with Zarcone, the "Sellers"), and Contact
Communications Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
A. The Sellers collectively own four shares (the "Shares") of the Common
Stock, no par value ("Apple Common Stock"), of Apple, which Shares constitute
all of the authorized, issued, and outstanding capital stock of Apple.
B. The Purchaser desires to purchase from the Sellers, and the Sellers
desire to sell to the Purchaser, the Shares in consideration of the Purchase
Price (hereinafter defined), upon the terms and subject to the conditions set
forth herein.
A G R E E M E N T S
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 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE. On the Closing Date (as hereinafter defined), the
Sellers shall sell to the Purchaser, and the Purchaser shall purchase from the
Sellers, on the terms and conditions set forth in this Agreement, the Shares,
free and clear of all liens, security interests, claims, rights of another, and
encumbrances of any kind or character.
1.2 PURCHASE PRICE. The aggregate purchase price payable by the Purchaser
to the Sellers in consideration for the sale of the Shares shall be an amount
equal to the sum of (a) $404,000, which amount shall be deposited with the
Escrow Agent (hereinafter defined) by the Purchaser in accordance with the terms
of an Indemnification Escrow Agreement (herein so called), by and among the
Sellers, the Purchaser, Best Page, Inc., an Illinois corporation ("Best Page"),
and the Escrow Agent, substantially in the form attached hereto as EXHIBIT A,
(b) $4,096,000 payable in cash on the Closing Date, and (c) $4,500,000 payable
on the Closing Date in shares of common stock, par value $.01 per share ("ProNet
Common Stock"), of ProNet Inc., a Delaware corporation and the parent
corporation of the Purchaser ("ProNet"), if the ProNet 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 Closing Date, and payable in cash if the ProNet Common Stock is not
then so
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registered. The timing of any Dispositions (hereinafter defined) of
such shares of ProNet Common Stock by the Sellers will be subject to certain
restrictions as provided in Section 9.2. As used herein, "Average Closing
Price" means the average closing price of the ProNet 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 Closing Date.
If the Purchaser fails to file a "shelf" registration statement or
amendment to an existing "shelf" registration statement registering the resale
by the Sellers of the shares of ProNet Common Stock delivered to them hereunder
within 14 days after the Closing in accordance with the provisions of the
Registration Rights Agreement attached hereto as EXHIBIT E or, after such
filing, the Securities and Exchange Commission has not declared such
registration statement effective within 45 days after the Closing, the Sellers
shall have the option, in their sole discretion, to require the Purchaser to
repurchase all of the ProNet Common Stock delivered to the Sellers pursuant
hereto for $4,500,000 in cash. If the Sellers elect to require such repurchase,
then (a) such repurchase shall be closed on the 25th business day following the
Closing at the Purchaser's address as set forth in Section 9.8 hereof, (b) at
such closing, (i) the Purchaser shall deliver to each Seller by certified bank
check or wire transfer the portion of the $4,500,000 to be paid to such Seller
and (ii) the Sellers shall deliver to the Purchaser the certificates
representing all such shares of ProNet Common Stock, accompanied by stock powers
duly executed by the Sellers in blank, and (c) such shares shall be delivered to
the Purchaser free and clear of all liens, security interests, claims, rights of
another, and encumbrances of any kind or character (and each Seller shall
certify to such effect at such closing).
1.3 CLOSING.
(a) CLOSING DATE. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Vinson & Elkins
L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201 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) or at such other time as may be agreed upon
by the parties hereto.
(b) DELIVERY AND PAYMENT. At the Closing, (i) each Seller shall
deliver to the Purchaser stock certificates evidencing all of the Shares owned
by such Seller duly endorsed or accompanied by a duly executed stock power
assigning such Shares to the Purchaser and otherwise in good form for transfer
and (ii) the Purchaser shall deliver to (A) each Seller (1) a certified bank
check or wire transfer for the amount of the cash portion of the Purchase Price
to be paid to such Seller on the Closing Date as provided in SCHEDULE 1.3,
(2) certificates evidencing the shares of ProNet Common Stock payable to such
Seller as provided in SCHEDULE 1.3, and (3) a certified bank check or wire
transfer in the amount of the consideration to be paid to such Seller as
provided in the
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Noncompetition Agreements, and (B) the Escrow Agent the sum of $404,000
pursuant to the terms of the Indemnification Escrow Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants Apple and to the Sellers as
follows (with the understanding that Apple and the Sellers are relying
materially on each such representation and warranty in entering into and
performing this Agreement):
2.1 DUE ORGANIZATION. The Purchaser and ProNet are each corporations duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and have full corporate power and corporate authority to own or lease
their respective properties and to carry on their respective businesses as, and
in the places where, such properties are owned or leased and such business is
conducted. The Purchaser is a wholly owned subsidiary of ProNet.
2.2 DUE AUTHORIZATION. The Purchaser and ProNet each have full corporate
power and corporate authority to enter into and perform their respective
obligations under this Agreement, and each agreement, document, and instrument
required to be executed by either of them in accordance herewith. This
Agreement and any other agreements, documents, and instruments required to be
executed and delivered by the Purchaser or ProNet in accordance herewith have
been, or by the Closing shall have been, duly and validly executed and delivered
by the Purchaser or ProNet, as applicable, and shall, upon their execution,
constitute valid and binding obligations of the Purchaser or ProNet, as
applicable, enforceable in accordance with their respective terms.
2.3 COMMON STOCK. The ProNet Common Stock to be issued by ProNet to the
Sellers in payment of a portion of the Purchase Price, when issued and delivered
in accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid, and non-assessable and will be delivered to the Sellers free
and clear of all liens, security interests, pledges, and other encumbrances.
2.4 PURCHASER INFORMATION. The Purchaser has delivered to the Sellers
true and correct copies of the ProNet's most recent Proxy Statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and certain current reports
on Form 8-K (collectively, the "ProNet Filings") and, as of the date hereof,
none of such documents taken as a whole contain any untrue statement of a
material fact or omits any material fact necessary to make the statements
therein not misleading.
2.5 REGULATORY CERTIFICATES. Neither the Purchaser nor ProNet is aware of
any information concerning the Purchaser or ProNet or either of their 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 operation of
the System subsequent thereto.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
APPLE AND THE SELLERS
Apple and each of the Sellers hereby jointly and severally 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; SUBSIDIARIES. Apple is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Illinois 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. Apple 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
Apple is required to qualify to do business as a foreign corporation in such
jurisdiction. Apple does not have any subsidiaries, or any equity investment in
any other corporation, partnership, joint venture, or other business enterprise.
3.2 CAPITAL STOCK. The authorized capital stock of Apple consists solely
of 100 shares of Apple Common Stock, four of which 100 shares are issued and
outstanding. All of the Shares are duly authorized and validly issued, fully
paid, and nonassessable. None of the Shares was issued in violation of any
preemptive or preferential right. There are no other equity securities of Apple
outstanding. There are outstanding no securities or indebtedness convertible
into, exchangeable for, or carrying the right to acquire, Apple Common Stock or
other equity securities of Apple, or subscriptions, warrants, options, rights,
or other arrangements or commitments obligating Apple to issue or dispose of any
Apple Common Stock or other equity securities or any ownership therein.
3.3 TITLE TO SHARES. Zarcone is the true and lawful owner, of record and
beneficially, of three of the Shares and DiFoggio is the true and lawful owner,
of record and beneficially, of one of the Shares. The Shares are, and on the
Closing Date will be, owned by the Sellers free and clear of all liens, security
interests, pledges, assessments, charges, adverse claims, leases, licenses,
restrictions, or other encumbrances (collectively, "Liens"). Other than the
rights and obligations arising under this Agreement and that certain Buy-Sell
Agreement among the Sellers and Apple, none of the Shares is subject to any
rights of any other person to acquire the same. None of the Shares is subject
to any Liens or restrictions on transfer thereof, except for restrictions
imposed by applicable federal and state securities laws.
3.4 DUE AUTHORIZATION. Apple 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 Apple in
accordance herewith. The execution, delivery, and performance of this Agreement
and any agreements, documents,
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and instruments required to be executed by Apple have been duly authorized by
the Board of Directors of Apple. This Agreement and the agreements,
documents, and instruments required to be executed and delivered by Apple or
either of the Sellers in accordance herewith have been duly and validly
executed and delivered by Apple or the Sellers and constitute valid and
binding obligations of Apple and/or the Sellers 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.
3.5 CONFLICTS. Except as set forth on SCHEDULE 3.5, neither the
execution, delivery, nor performance of this Agreement or any other agreement,
document, or instrument to be executed by Apple and/or either of the Sellers in
connection herewith shall (a) violate any Federal, state, county, or local law,
rule, or regulation applicable to Apple or any of the Sellers, or its or his
properties, (b) violate or conflict with, or permit the cancellation of, any
agreement to which Apple or either Seller 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, Apple, or (d) violate
or conflict with any provision of the certificate of incorporation or by-laws of
Apple.
3.6 CONSENTS. Set forth on SCHEDULE 3.6 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 either of
the Sellers or Apple.
3.7 FINANCIAL STATEMENTS. Apple has delivered to the Purchaser (a) a
complete and correct copy of the audited statement of financial condition of
Apple as of December 31, 1994 and the related statements of operations and
retained earnings for the period then ended (the "Audited Financial
Statements"), (b) a complete and correct copy of the statement of financial
condition of Apple as of June 30, 1995, and the related statements of
operations and retained earnings for the period then ended, each of which
have been prepared by Ernst & Young (the "Interim Financial Statements" and,
together with the Audited Financial Statements, the "Financial Statements"),
and (c) a complete and correct list of the tangible assets of Apple (the
"Tangible Assets") together with the book value of each such Tangible Asset
as of June 30, 1995, which list is set forth on SCHEDULE 3.7(a) attached
hereto (the "June 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
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changes in financial position of Apple as of the indicated dates and for the
indicated periods. The June Asset List has been prepared in accordance with
and is otherwise consistent with the books and records of Apple, presents
fairly and accurately the book value of each of the Tangible Assets. Since
June 30, 1995, 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 Apple and the Sellers, 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.
3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth on SCHEDULE
3.8 attached hereto, since June 30, 1995, Apple 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 its directors, officers, or key
employees or, except for wage and salary increases made in the ordinary course
of business and consistent with the past practices of Apple, increased the
compensation of any other Apple employees, (b) made any capital expenditures
exceeding $5,000 individually or $15,000 in the aggregate (other than purchases
of pagers for inventory in the ordinary course of business and capital
expenditures in connection with the construction of transmitting sites in the
ordinary course of business), (c) sold any asset (or any group of related
assets) 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 its assets, (g) cancelled, waived, or released any debts,
rights, or claims against third parties, (h) made any change in the method of
accounting of Apple, (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 to which Apple is a party, except in the ordinary course of business,
(l) entered into any other material transactions except in the ordinary course
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 3.8, (n) suffered any material damage, destruction, or loss (whether or
not covered by insurance) to any of the its assets, (o) experienced any strike,
slowdown, or demand for recognition by a labor organization by or with respect
to any of its employees, or (p) experienced or effected any shutdown, slow-down,
or cessation of its operations.
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3.9 PROPERTIES.
(a) REAL PROPERTY. SCHEDULE 3.9 hereto lists all real property owned
by Apple (the "Real Property"). Apple does not own any interest in any other
real property. Apple has good title to the Real Property free and clear of any
Liens, except for (i) statutory liens for current Taxes (hereinafter defined)
not yet due and payable, (ii) agreements with, and/or conditions imposed on the
issuance of land use permits, zoning, business licenses, use permits or other
entitlements of various types issued by city, county, state, and Federal
governmental bodies or agencies necessary or beneficial to the continued use and
occupancy of Apple's assets or the continuation of Apple's operations, and
(iii) mechanics', carriers', workers', repairers', and other similar liens
imposed by law arising or incurred in the ordinary course of business for
obligations not yet due and payable. All of such properties are in good
operating condition and repair, subject to ordinary wear and tear. Apple and
the Sellers have delivered to the Purchaser true and complete copies of all
surveys, appraisals, and title insurance policies relating to the Real Property
in its or their possession.
(b) PERSONAL PROPERTY. Except for inventory and supplies disposed of
or consumed in the ordinary course of business, consistent with past practice,
Apple owns all of its inventory, equipment, and other personal property (both
tangible and intangible) reflected on the latest balance sheet included in the
Financial Statements, and any notes and schedules thereto, free and clear of any
Liens, except for statutory liens for current Taxes not yet due and payable.
(c) LEASEHOLDS. SCHEDULE 3.9 hereto lists all leases of real
property, all leases of vehicles and rolling stock and all other leases of
personal property with annual lease payments over $5,000, to which Apple is a
party or to which any of the assets of Apple is subject. Apple owns the
leasehold estates created by all such leases free and clear of any Liens, except
for (i) statutory liens for current Taxes not yet due and payable, (ii) in the
case of leases of real property, agreements with, and/or conditions imposed on
the issuance of land use permits, zoning, business licenses, use permits or
other entitlements of various types issued by city, county, state, and federal
governmental bodies or agencies, necessary or beneficial to the continued use
and occupancy of Apple's assets or the continuation of Apple's operations,
(iii) mechanics', carriers', workers', repairers', and other similar liens
imposed by law arising or incurred in the ordinary course of business for
obligations not yet due, and (iv) in the case of leases of vehicles, rolling
stock, and other personal property, encumbrances, which do not, individually or
in the aggregate, materially impair the operation of the business at the
facility at which such leased equipment or other personal property is located.
3.10 PAGERS. SCHEDULE 3.10 includes a true and complete list of the number
and type of pagers in service in Apple's radio paging system (the "System") as
of August 31, 1995. All of such pagers in service are operating pursuant to
valid and binding rental and/or service agreements with Apple or agents or
resellers, no single subscriber or related group of subscribers accounts for
more than five percent of the paging revenues attributable to the System, and
Apple and the Sellers do not know of any current subscribers who intend to
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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 private
carriage pursuant to Part 90 of the Communications Act of 1934, as amended, and
the rental or lease of subscriber equipment to the customer by Apple or its
agents or resellers to permit the customer to utilize 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 3.10.
3.11 LICENSES AND PERMITS. Set forth on SCHEDULE 3.11 is a list of all
federal, state, county, and local governmental licenses, authorizations,
certificates, permits, and orders (collectively, the "Licenses") held or applied
for by Apple. Except as set forth on SCHEDULE 3.11, Apple 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 3.6
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 Apple or the Purchaser
or the ownership by Apple or the Purchaser or the transfer of the Transferred
Assets by Apple to the Purchaser. 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 SCHEDULE 3.11 is necessary for the conduct
of Apple's business.
3.12 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 3.12 is a list and
description of all patents, trademarks, servicemarks, tradenames, and copyrights
and applications therefor owned by or registered in the name of Apple or in
which Apple has any right, license, or interest. Apple has good and marketable
title to or the right to use such patents, trademarks, service marks,
tradenames, 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. Apple is not a party to any
license agreements whether written or oral, either as licensor or licensee, with
respect to any patents, trademarks, servicemarks, tradenames, or copyrights or
applications therefor. To the best knowledge of Apple and each of the Sellers,
Apple is not infringing any patent, trademark, servicemark, tradename, or
copyright of others, and neither Apple nor the Sellers are aware of any
infringement by others of any such rights owned by Apple.
3.13 COMPLIANCE WITH LAWS. Apple 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 Apple'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 Apple or its properties or operations
are subject. Apple and the Sellers represent and warrant that they have
complied in all material respects and, prior to the Closing, will comply in all
material respects with, all
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rules, regulations, policies, precedents, and orders of the FCC and the FAA
applicable to them with respect to marking, lighting, notification, and
approval of each and every tower used in Apple's business. To the knowledge
of Apple and the Sellers, none of the owners of any of the towers on which
Apple 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 Apple and the Sellers, no such claim is anticipated) to the
effect that the business conducted by Apple fails to comply, in any material
respect, with any law, rule, regulation, or ordinance. As used in this
Section 3.13, "complied in all material respects" means that no action has
been taken and no failure to act has occurred that individually or in the
aggregate could reasonably be expected to result in the suspension or
revocation of any License. Without limiting the foregoing, Apple 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.
3.14 INSURANCE. Attached hereto as SCHEDULE 3.14 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 Apple at any time since December 31,
1993, 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 Apple has occurred which is likely to result in any prospective
upward adjustment in such premiums. Excluding insurance policies which have
expired and been replaced, no insurance policy of Apple has been cancelled
within the last three years, and no threat has been made to cancel any insurance
policy of Apple within such period.
3.15 ERISA PLANS. Apple has no employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
3.16 CONTRACTS AND AGREEMENTS. The contracts and agreements listed and
described in SCHEDULE 3.16 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 Apple is a
party or by which Apple or its properties are bound with respect to which the
obligations of or the benefits to be received by Apple could reasonably be
expected to have a value in excess of $5,000 in any consecutive 12 month period
(each a "Material Agreement"). Apple has also furnished to the Purchaser
Apple's standard form rental agreement and agreement with resellers used in the
ordinary course of Apple's business. Apple is not a lessor under any rental
agreement or reseller agreement that varies from such standard form agreement in
any material respect. Apple and the
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Sellers 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. Apple is not and, to the
best knowledge of Apple and the Sellers, 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 Apple has not waived any right under any Material Agreements. Neither
Apple nor either Sellers has received any notice of default or termination
under any Material Agreements and Apple 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.
3.17 CLAIMS AND PROCEEDINGS. Attached hereto as SCHEDULE 3.17 is a list
and description of all claims, actions, suits, proceedings, and investigations
pending or, to the best knowledge of Apple and the Sellers, threatened against
or affecting Apple or any of its properties or assets, at law or in equity, or
before or by any court, municipal or other governmental department, commission,
board, agency, or instrumentality. Except as set forth on SCHEDULE 3.17
attached hereto, none of such claims, actions, suits, proceedings, or
investigations will result in any liability or loss to Apple which (individually
or in the aggregate) is material to Apple, and Apple has not been, and Apple 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 Apple and the Sellers,
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 Apple and the Sellers, 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 Apple or the
System or result in a material liability of Apple.
3.18 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 Apple 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 Apple. 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 Apple 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 Apple. All annual or other FCC
regulatory fees arising from the operations of Apple have been paid. Apple 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
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to assess, deficiencies, or audits (collectively, "Apple Tax Actions") with
respect to any Taxes, penalties, interest, or additions to Taxes owed or
allegedly owed by Apple. To the best knowledge of Apple and the Sellers,
there is no basis for any Apple Tax Actions. There are no liens for Taxes
(other than any Liens for Taxes that are not yet due), penalties, interest,
or additions to Taxes on any of the assets of Apple. Proper and accurate
amounts of any and all payroll and employment Taxes that are required to be
withheld have been withheld and remitted by Apple 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.
3.19 PERSONNEL. Attached hereto as SCHEDULE 3.19 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 $30,000. SCHEDULE 3.19 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 3.19 also contains a brief description of all
material terms of all employment agreements and confidentiality agreements to
which Apple is a party and all severance benefits which any director, officer,
or employee of Apple is or may be entitled to receive. Apple has delivered to
the Purchaser accurate and complete copies of all such employment agreements,
confidentiality agreements, and all other agreements, plans, and other
instruments to which Apple is a party and under which any of its employees are
entitled to receive benefits of any nature. The employee relations of Apple
have historically been good and there is no pending or, to the best knowledge of
Apple and the Sellers, threatened labor dispute or union organization campaign
involving Apple. None of the employees of Apple is represented by any labor
union or organization. Apple 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 Apple before the
National Labor Relations Board or any strike, labor dispute, work slowdown, or
work stoppage pending or, to the best knowledge of Apple and the Sellers,
threatened against or involving Apple.
3.20 BUSINESS RELATIONS. Neither Apple nor either Seller knows or has any
reason to believe that any customer or supplier of the System will cease or
otherwise refuse to do business after the Closing in the same manner as such
business was previously conducted with Apple. Apple 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 Apple nor are Apple or the
Sellers aware of any facts which could lead any of them to believe that the
operations of Apple will be subject to any such material disruption.
3.21 BROKERS. Other than an agreement with Communications Equity
Associates, Inc., which obligation is and shall remain the sole obligation of
the Sellers, neither Apple nor either Seller 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.
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3.22 WARRANTIES. Attached hereto as SCHEDULE 3.22 is a list and brief
description of all warranties and guarantees made by Apple to third parties with
respect to any products sold or leased or services rendered by Apple. Except as
set forth on SCHEDULE 3.22, no claims for breach of product or service
warranties to customers have been made against Apple since January 1, 1992. To
the best knowledge of Apple and the Sellers, no state of facts exists, or event
has occurred, which may form the basis of any claim against Apple for liability
on account of any express or implied warranty to any third party.
3.23 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 3.23, all of the
accounts, notes, and loans receivable that have been recorded on the books of
Apple are bona fide and represent amounts validly due and, assuming collection
efforts consistent with past practices, all such accounts receivable (net of
reserves set forth on Apple's balance sheet as of June 30, 1995) should be
collectable within 120 days after the Closing Date consistent with Apple's
historical collection results. 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.
3.24 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.24 contains a true, correct, and
complete list of (a) Apple's ten largest customers (measured in dollar volume of
revenue) during the year ended December 31, 1994, (b) Apple's ten largest
suppliers (measured in dollar volume of purchases) during the year ended
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).
3.25 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except as set
forth in SCHEDULE 3.25, none of Apple, the Sellers, nor any officer or director
of Apple, or 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.
3.26 INVENTORY. Except as set forth on SCHEDULE 3.26, the inventories
shown on the Financial Statements and the June Asset List consist of (and the
inventories of Apple at the Closing will consist of) items of a quality usable
and readily saleable in the ordinary course of business by Apple.
3.27 COMMISSION SALES CONTRACTS. Except as disclosed in SCHEDULE 3.27,
Apple does not employ or have any relationship with any individual, corporation,
partnership, or other entity whose compensation from Apple arising from the
operation of the System is in whole or in part determined on a commission basis.
3.28 REGULATORY CERTIFICATES. Neither Apple nor either Seller is aware of
any information concerning Apple or its operations that could cause the FCC or
any other regulatory authority not to issue to the Purchaser all regulatory
certificates and approvals
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necessary for the consummation of the transactions contemplated hereunder and
for the operation of the System subsequent thereto.
3.29 INVESTMENT. Each Seller is acquiring the ProNet Common Stock from the
Purchaser pursuant hereto for its own account and not with a view to, or for
offer or resale in connection with any distribution thereof (within the meaning
of Section 2(11) of the Securities Act), 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 E hereto, Apple has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness, or commitment providing for the disposition thereof.
Notwithstanding the foregoing, subject to the restrictions contained in
Section 9.2 and applicable law, the shares of ProNet Common Stock to be received
by the Sellers hereunder shall be freely transferable.
3.30 SOPHISTICATED INVESTOR STATUS. The Sellers are each Accredited
Investors, as such term is defined in Rule 501 promulgated under the Securities
Act of 1933, as amended (the "Securities Act").
3.31 INVESTMENT RISK. Each Seller acknowledges and agrees that the
acquisition by such Seller of ProNet Common Stock from the Purchaser pursuant to
this Agreement carries a certain degree of risk and that he or she has taken
full cognizance of and understands all of the risks related to the acquisition
of ProNet Common Stock.
3.32 LEGENDS. Each Seller understands, acknowledges, and agrees that a
legend will be placed on all certificates evidencing the ProNet 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
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RULE OR REGULATION PROMULGATED THEREUNDER.
3.33 PURCHASER INFORMATION. Each Seller has received from the Purchaser
copies of the ProNet Filings. Each Seller has carefully read or reviewed and is
familiar with the ProNet Filings. Each Seller and such 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 ProNet Common Stock, and answers
have been provided to all such questions to such Seller's satisfaction.
3.34 INFORMATION FURNISHED. Apple and the Sellers 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
Apple, 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
4.1 INSPECTION. From the date hereof to the Closing, Apple and the
Sellers shall, upon reasonable notice, 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, facilities, and properties of Apple; provide the
Purchaser and its officers, attorneys, accountants, representatives, and lenders
all information and material pertaining to the business and affairs of Apple 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
Apple to discuss the business, condition (financial or otherwise), operations,
and prospects of Apple. Any investigation by the Purchaser or its officers,
attorneys, accountants, representatives, or lenders shall not in any manner
affect the representations and warranties of Apple and the Sellers contained
herein.
4.2 COMPLIANCE. From the date hereof to the Closing, neither Apple nor
the Sellers shall take or fail to take any action which action or failure to
take such action shall cause the representations and warranties made by Apple or
the Sellers herein to be untrue or incorrect as of the Closing.
4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, Apple and the Sellers shall use their best efforts to cause all
conditions precedent to the obligations of the Purchaser hereunder to be
satisfied by the Closing.
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4.4 NO SOLICITATION. From the date hereof until 5:00 p.m., Dallas time,
on January 31, 1996, Apple and the Sellers shall not, and shall use their best
efforts to cause the officers, directors, employees, and agents of Apple not to,
(a) solicit, initiate or encourage the submission of proposals or offers 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 assets or securities of
Apple, or any merger, consolidation, or business combination with Apple 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 5:00 p.m., Dallas time, on January 31,
1996, Apple and the Sellers agree that neither Apple nor either Seller will
enter into any agreement or consummate any transaction that would interfere with
the consummation of the transactions contemplated by this Agreement. Apple and
the Sellers 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 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, Apple
and the Sellers shall, as soon as practicable upon Apple or either Seller
becoming aware thereof, notify the Purchaser of any material problems or
developments with respect to the business, operations, assets, or prospects of
Apple. From the date hereof to the Closing, the Purchaser shall, as soon as
practicable upon becoming aware thereof, notify the Sellers of any material
problems or developments with respect to the business, operations, assets, or
prospects of the Purchaser or ProNet.
4.6 NOTICE OF BREACH. From the date hereof to the Closing, Apple and each
Seller shall, immediately upon Apple or either Seller 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 Apple or the Sellers 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, Apple and
the Sellers shall, immediately upon Apple or either Seller 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 Apple becomes a party or which is
threatened against Apple, (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.
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4.8 CONTINUATION OF INSURANCE COVERAGE. From the date hereof to the
Closing, Apple shall keep (and the Sellers shall cause Apple to keep) in full
force and effect insurance coverage for Apple and its assets and operations
comparable in amount and scope to the coverage now maintained covering Apple and
its assets and operations.
4.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the Closing,
Apple shall continue (and the Sellers shall cause Apple to continue) to effect
sales and leases of its products only on the terms that have historically been
offered by Apple or on such other terms which are no less favorable to Apple.
4.10 UPDATING INFORMATION. As of the Closing, Apple and the Sellers shall
update all information set forth in the schedules to this Agreement.
4.11 INTERIM OPERATIONS OF APPLE.
(a) From the date hereof to the Closing, Apple shall conduct (and the
Sellers shall cause Apple to conduct) its business only in the ordinary
course consistent with past practice, and Apple 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 Apple to issue securities, (ii) declare, set aside, make, or pay
any dividend or other distribution with respect to its capital stock (other
than dividends or distributions consistent with past practices that will
not adversely effect the operating cash flow of Apple and as expressly
permitted by SECTION 9.5 hereof), (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 (other than the assignment of that
certain Unipage 80 terminal to Best Page or another designee of Zarcone),
or encumber, any of its 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, enter into, amend, or terminate any employment or consulting
agreement with any other person otherwise than in the ordinary course of
business, take any action intended to increase or decrease the number of
persons employed by Apple, 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 Apple in effect on the date hereof, (viii) enter into,
extend, or renew any lease for office space, or (ix) except as required by
law, adopt, amend, or terminate any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment, or
other employee benefit plan, agreement, trust, fund, or arrangement for the
benefit or welfare of any officer,
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employee, or sales representative of Apple, 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, or
(xi) grant any increase in compensation to any other employee or
consultant except in the ordinary course of business consistent with
past practice.
(b) From the date hereof to the Closing, Apple shall use (and the
Sellers shall cause Apple to use) their best efforts to preserve intact the
business organization of Apple, to keep available in all material respects
the services of its present officers and key employees, to preserve intact
Apple's banking relationships and credit facilities, to preserve the
goodwill of those having business relationships with Apple, 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 July 1995, Apple shall furnish to the Purchaser a balance
sheet, statement of income and retained earnings, and statement of changes in
financial position of Apple for such month prepared by Apple as an internal
management control 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 LICENSES. From the date hereof until the Closing, Apple and the
Sellers 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
SCHEDULE 3.11.
4.14 RESIGNATIONS OF DIRECTORS AND OFFICERS. Apple and the Sellers shall
cause all directors and officers of Apple to deliver their written resignations
to the Purchaser, which resignations shall be effective at or before the Closing
and shall be in form and substance satisfactory to the Purchaser. Each such
resignation shall state that the Purchaser is not in any way indebted or
obligated to the resigning party for termination pay, loans, advances, or
otherwise. At the Closing, the Sellers shall cause nominees of the Purchaser to
be elected as the directors of each Company.
4.15 BEST PAGE ASSETS. From the date hereof until the Closing, Zarcone
agrees to cause Best Page not to sell, pledge, dispose of, or encumber or agree
to sell, pledge, dispose of, or encumber any of the Chicago-area paging assets
of Best Page.
4.16 RESTRICTIVE LEGENDS. The Purchaser agrees to cause the restrictive
legends described in Section 3.32 above to be removed from the certificates
representing shares of ProNet Common Stock delivered hereunder at such time as
such removal is permitted under applicable federal and state securities laws.
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ARTICLE 5
REGULATORY APPROVALS
With the full cooperation and assistance of Apple and the Sellers as
contemplated in Section 4.13 hereof, the Purchaser has filed with the FCC, the
FAA, and with all state regulatory agencies, commissions, or other entities
having jurisdiction over the System, applications for consent to the transfer to
the Purchaser of the Licenses or any similar state authorizations, currently
held by Apple. The Purchaser shall use all commercially reasonable efforts to
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,
other conditions that the FCC routinely attaches to grants of this type and
conditions applicable solely to Apple or the Sellers that are satisfied prior to
Closing) shall not be deemed a Final Order until such time as the Purchaser
notifies Apple 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 Apple
and the Sellers 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 Apple and the Sellers
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;
Apple and the Sellers shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by Apple and the Sellers at or prior to the Closing;
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and the Purchaser shall have received a certificate, dated as of the
Closing Date, signed by the President of Apple and by each Seller 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) Each of the Sellers shall have delivered to the Purchaser stock
certificates evidencing the Shares owned by such Seller duly endorsed or
accompanied by duly executed stock powers assigning such Shares to the
Purchaser and otherwise in good form for transfer.
(d) The Purchaser shall have received an opinion of Stephen
Fiorentino, Esq., counsel for Apple and the Sellers, dated as of the
Closing Date, substantially in the form attached hereto as EXHIBIT B.
(e) The Purchaser shall have received an opinion of Moir & Hardman,
FCC counsel for Apple, dated as of the Closing Date, substantially in the
form attached hereto as EXHIBIT C.
(f) 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 Apple's
business; there shall have been no material adverse change in the financial
condition, business, properties, operations, or prospects of Apple since
June 30, 1995; and Apple shall have conducted its operations only in the
ordinary course consistent with past practices.
(g) 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.
(h) As of the Closing Date, Apple shall have at least 41,500 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 and the Sellers setting forth the number and type of pagers in
service in the System.
(i) As of the Closing Date, Apple's inventory shall include at least
850 new, unused current-model pagers and the Purchaser shall have received
a certificate, dated as of the Closing Date, signed by the President of
Apple to the foregoing effect.
(j) As of the Closing Date, the cash and cash equivalents of Apple
(excluding accounts receivable) shall equal or exceed the amount of Apple's
accounts payable.
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(k) All consents and approvals (i) listed on SCHEDULE 3.6 and
(ii) otherwise required in connection with the execution, delivery, and
performance of this Agreement shall have been obtained or waived and all
such consents and approvals shall be in form and content reasonably
satisfactory to the Purchaser.
(l) All necessary action (corporate or otherwise) shall have been
taken by Apple 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 Apple and the Sellers to the foregoing
effect.
(m) Each of the Sellers shall have entered into a Noncompetition
Agreement (a "Noncompetition Agreement") with the Purchaser substantially
in the form attached hereto as EXHIBIT D.
(n) The Sellers and ProNet shall have entered into a Registration
Rights Agreement substantially in the form of EXHIBIT E providing that
ProNet 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 ProNet Common Stock issued to the
Sellers pursuant to this Agreement.
(o) The Sellers, Best Page, the Purchaser, and the Escrow Agent shall
have entered into an Indemnification Escrow Agreement substantially in the
form of EXHIBIT A attached hereto.
(p) The Purchaser and Best Page shall have completed the transactions
contemplated by that certain Assignment and Bill of Sale (herein so called)
by and among the Purchaser, Best Page and Zarcone substantially in the form
of EXHIBIT G attached hereto and the Purchaser, Best Page, and Zarcone
shall have entered into an Indemnification Agreement substantially in the
form of EXHIBIT H attached hereto.
(q) The Purchaser shall have received the resignations contemplated
by Section 4.14 hereof.
(r) At the Closing, the assets of Apple shall include an owner's
title policy in form and substance acceptable to the Purchaser with respect
to the real property of Apple located at 4235-37 S. Kedzie Ave.
(s) Apple and the Sellers 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.
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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 Apple's or any Sellers's respective representations,
warranties, covenants, or indemnities herein.
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers 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 Sellers shall have received a
certificate, dated as of the Closing Date, signed by the President of the
Purchaser 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 delivered to each 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 and a certificate or
certificates representing the shares of ProNet Common Stock to be delivered
to such Seller as provided in SCHEDULE 1.3 in accordance with and as
specified in Section 1.4 hereof.
(d) The Sellers shall have received an opinion of Vinson & Elkins
L.L.P., counsel for the Purchaser, dated as of the Closing Date, in the
form attached hereto as EXHIBIT F.
(e) The Purchaser shall have entered into Noncompetition Agreements
with each of the Sellers substantially in the form of EXHIBIT D attached
hereto and shall have delivered to the Sellers the amount of the
consideration specified therein by certified bank check or wire transfer.
(f) The Sellers, Best Page, the Purchaser and the Escrow Agent shall
have entered into an Indemnification Escrow Agreement substantially in the
form of EXHIBIT A attached hereto.
(g) The Sellers and ProNet shall have entered into a Registration
Rights Agreement substantially in the form of EXHIBIT E attached hereto.
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(h) The Purchaser and Best Page shall have completed the transactions
contemplated by the Assignment and Bill of Sale.
(i) All necessary action (corporate or otherwise) shall have been
taken by the Purchaser to authorize, approve, and adopt this Agreement and
the consummation and performance of the transactions contemplated hereby,
and the Sellers shall have received a certificate, dated as of the Closing
Date, signed by an officer of the Purchaser to the foregoing effect.
(j) The Purchaser shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as counsel for the Sellers shall have reasonably requested
prior to the Closing Date.
The decision of the Sellers to consummate the transactions contemplated hereby
without the satisfaction of any of the preceding conditions shall not constitute
a waiver of any of the Purchaser's representations, warranties, covenants, or
indemnities herein.
ARTICLE 7
TERMINATION
This Agreement may be terminated prior to the Closing by (a) the mutual
consent of the Purchaser and the Sellers, (b) the Sellers 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 Apple or either Seller to perform or
comply in all material respects with each of its, his or her covenants or
agreements contained herein prior to the Closing or if each representation or
warranty of Apple or the Sellers 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
Sellers or the Purchaser if the Closing does not occur by January 31, 1996;
provided, that no party may terminate this Agreement pursuant to (b), (c), or
(e) above if such party is, at the time of any such attempted termination, in
breach of any term hereof.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER. Apple and the Sellers, each jointly
and severally agree to indemnify and hold harmless the Purchaser and each
officer, director, employee, consultant, stockholder, and affiliate of the
Purchaser (collectively, the "Purchaser Indemnified Parties") from and against
any and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and attorneys'
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fees and expenses incurred in investigating and preparing for any litigation
or proceeding) (collectively, "Indemnified Costs") which any of the Purchaser
Indemnified Parties may sustain, or to which any of the Purchaser Indemnified
Parties may be subjected, arising out of any breach or default by Apple or
either Seller 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 INDEMNIFICATION OF THE SELLERS. The Purchaser agrees to indemnify and
hold harmless each of the Sellers (collectively, the "Seller Indemnified
Parties" and together with the Purchaser Indemnified Parties, the "Indemnified
Parties") from and against any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs, and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) (collectively, the "Seller
Indemnified Costs" and together with the Purchaser Indemnified Costs, the
"Indemnified Costs") which any of the Seller Indemnified Parties may sustain, or
to which any of the Seller Indemnified Parties may be subjected, arising out of
or relating to (a) any debts, claims, obligations or liabilities of Apple which
become due, are incurred or are to be performed after the Closing ("Post-Closing
Liabilities"), other than (i) any Post-Closing Liabilities arising out of or
relating to any breach or default by Apple or either Seller of any of the
representations, warranties, covenants, agreements or other provisions of this
Agreement or any agreement or document executed in connection herewith and
(ii) any Tax liability of the Sellers, Apple or Best Page relating to the period
prior to the Closing Date or resulting from the transactions contemplated
hereunder, or (b) any breach or default by the Purchaser 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.
8.3 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
Indemnifying Parties shall not have employed counsel reasonably
satisfactory to the Indemnified Party to have charge of such third-party
action, (iii) 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
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Indemnifying Parties, or (iv) 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 acknowledgement 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 acknowledgement,
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 acknowledgement 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;
(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 acknowledgement 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 acknowledgement that
would give rise to liability on the part of any Indemnifying Party without
the prior written consent of such Indemnifying Party.
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.
8.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 8.3 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 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.
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8.5 NO CONTRIBUTION. In the event the Closing occurs, the Sellers, and
not Apple, shall be fully liable for any Purchaser Indemnified Costs sustained
by the Purchaser Indemnified Parties; accordingly, the Sellers shall not be
entitled to contribution or any other payments from Apple for any Purchaser
Indemnified Costs that the Sellers are obligated to pay pursuant to this
Agreement or under applicable law.
8.6 ESCROW. On the Closing Date, the Purchaser, the Sellers, Best Page,
and the Escrow Agent will enter into the Indemnification Escrow Agreement in
accordance with which the Purchaser shall, at Closing, deposit $404,000 with the
Escrow Agent. If any claim for indemnification is made by a Purchaser
Indemnified Party pursuant to this Article 8 prior to the Release Date (as
defined in the Indemnification Escrow Agreement), such Purchaser Indemnified
Party may apply for payment of any such Purchaser Indemnified Costs up to the
amount of $404,000 in accordance with the provisions of the Indemnification
Escrow Agreement and this Agreement.
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 the provisions regarding confidentiality set forth
in paragraph 2 of that certain letter of intent dated July 10, 1995, among the
parties hereto 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.
9.2 RESTRICTION ON TRANSFER OF PRONET COMMON STOCK. In consideration of
the benefits to be received by the Sellers hereunder, each Seller hereby agrees
and acknowledges that the shares of ProNet Common Stock to be received by such
Seller on the Closing Date shall be subject to the following restrictions on
transfer. The Seller shall only be permitted to sell, assign, transfer, grant
any options for the purchase of, or otherwise dispose (a "Disposition") of that
number of shares of ProNet Common Stock equal to 8.33 percent of the total
number of shares of ProNet Common Stock to be delivered to such Seller at
Closing in each calendar month following the Closing Date, for a period of 12
calendar months beginning on the three-month anniversary of the Closing Date,
provided that Dispositions of any shares of ProNet Common Stock so released may
be made at any time and from time to time after such release. The Sellers shall
not be obligated to transfer any of the ProNet Common Stock received hereunder
and, upon the expiration of 15 months following the Closing Date, all of such
ProNet Common Stock shall be released from the foregoing restriction.
9.3 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
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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). In the event that the Purchaser's rights are
assigned to any successor entity, then that portion of the Purchase Price
that was to be paid in ProNet Common Stock shall be paid in cash. Any
assignment, dissolution, or liquidation in violation of the foregoing shall
be null and void. Subject to the preceding sentences of this Section 9.3,
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.
9.4 EXPENSES. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement. Apple
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.
9.5 SURPLUS WORKING CAPITAL. At Closing, the Sellers shall be entitled to
dividend or otherwise distribute the cash and cash equivalents of Apple
(excluding Apple's accounts receivable) in excess of the amount of Apple's
accounts payable as of such date.
9.6 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.
9.7 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
exercise of any other right, power, or privilege.
9.8 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:
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If to the Purchaser: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls, Esq.
Fax No: (214) 774-0640
With a copy to: Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attn: Jeffrey A. Chapman, Esq.
Mark Early, Esq.
Fax No: (214) 220-7716
If to Apple Apple Communication, Inc.
or the Sellers: Salvatore Zarcone
Jill DiFoggio
4235 S. Kedzie Avenue
Chicago, Illinois 60632
Fax No: (312) 927-7036
With a copy to: Stephen Fiorentino, Esq.
221 North LaSalle Street, Suite 2050
Chicago, Illinois 60601
Fax No.: (312) 853-3254
Each party may change its or his address for purposes of this Section 9.8 by
proper notice to the other parties.
9.9 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 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.
9.10 PUBLIC ANNOUNCEMENT. No public announcement shall be made by Apple or
the Sellers with respect to the transactions contemplated hereby without the
approval of the Purchaser and no public announcement shall be made by the
Purchaser with respect to the transactions contemplated hereby without the
approval of Zarcone, unless otherwise required by law.
9.11 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of the Purchaser, but without further consideration, Apple and the Sellers 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 Apple or the Sellers, but
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without further consideration, the Purchaser shall execute and deliver such
other certificates, statements, and documents, and take such other action as
Apple or the Sellers may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
9.12 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.
9.13 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
9.14 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.
9.15 SECTIONS; EXHIBITS. All references to "Sections", "Subsections",
"Schedules", "Exhibits" herein are, unless specifically indicated otherwise,
references to sections, subsections, schedules, 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.
9.16 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.
9.17 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.
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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/ MARK A. SOLLS
-------------------------------------------------
Mark A. Solls, Vice President and General Counsel
APPLE COMMUNICATION, INC.
By: /s/ SALVATORE ZARCONE
-------------------------------------------------
Salvatore Zarcone, President
/s/ SALVATORE ZARCONE
-----------------------------------------------------
Salvatore Zarcone
/s/ JILL DIFOGGIO
-----------------------------------------------------
Jill DiFoggio
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GUARANTEE
As an inducement to Apple Communication, Inc., an Illinois corporation,
Salvatore Zarcone, and Jill DiFoggio (collectively, the "Shareholders") entering
into that certain Stock Purchase Agreement (the "Agreement"), dated today, with
Contact Communications Inc., a Delaware corporation (the "Purchaser"), ProNet
Inc. ("ProNet"), a Delaware corporation and the owner of all of the issued and
outstanding capital stock of the Purchaser, hereby guarantees the full and
prompt performance by the Purchaser of all obligations of the Purchaser under
the Agreement, including the payment, when due, of all sums owing by the
Purchaser to the Shareholders under the Agreement. This Guarantee shall be
governed by the laws of the State of Illinois.
PRONET INC.
By: /s/ MARK A. SOLLS
---------------------------------------------
Name: Mark A. Solls
Title: Vice President and General Counsel
<PAGE>
EXHIBIT A
FORM OF
INDEMNIFICATION ESCROW AGREEMENT
The undersigned, Best Page, Inc., an Illinois corporation ("Best Page"),
Salvatore Zarcone ("Zarcone"), Jill DiFoggio ("DiFoggio" and, collectively with
Best Page and Zarcone, the "Sellers") and Contact Communications Inc.
("Purchaser" and, collectively with the Sellers, the "Undersigned"), in order to
designate NationsBank of Texas, National Association (the "Depository") as the
Depository for the Undersigned for the purposes and upon the terms and
conditions herein set forth, do hereby represent and warrant to, and agree with
each other and the Depository, as follows:
1. APPOINTMENT OF THE DEPOSITORY. The Depository is hereby appointed
Depository for the Undersigned with respect to the "Escrowed Sum" as that term
is herein defined.
2. THE ESCROWED SUM. At the closing (the "Closing") of the transactions
contemplated by (a) that certain Stock Purchase Agreement dated as of
October ___, 1995 (the "Apple Agreement"), by and among Zarcone, DiFoggio, Apple
Communication, Inc., an Illinois corporation ("Apple"), and the Purchaser and
(b) that certain Assignment and Bill of Sale (the "Bill of Sale") by and among
the Purchaser, Best Page, and Zarcone, the Undersigned shall deposit with the
Depository, as custodian and depository, an aggregate of $500,000, and direct
that same be held and disposed of by the Depository as herein provided.
3. THE DEPOSITORY'S DUTIES AND AUTHORITY TO ACT.
(a) Except as may be otherwise provided in paragraph 22, in which event
the special instructions in said paragraph 22 shall be controlling, the
Depository shall hold the Escrowed Sum in safekeeping and deliver the same or
any part or parcel thereof, including the interest earned from investments made
pursuant to paragraph 20 hereof, only (i) to one or more of the Undersigned in
accordance with and upon the written instructions of each of the other of the
Undersigned and/or (ii) in accordance with and upon the written instructions of
all of the Undersigned.
(b) When instructions from more than one of the Undersigned are required,
such instructions may be given by separate instruments of similar tenor. Any of
the Undersigned may hereafter act through an agent or attorney-in-fact only if
written evidence of authority in form and substance satisfactory to the
Depository is furnished to the Depository and agreed to by the Depository. Best
Page hereby authorizes the Depository to rely on instructions from Zarcone with
respect to any item as to which instructions from Best Page are required.
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(c) The Depository may act upon any written notice, request, waiver,
consent, certificate, receipt, authorization, power of attorney or other
document which it in good faith believes to be genuine.
(d) The Depository shall be deemed to have properly delivered any portion
of Escrowed Sum upon wire transfer of such amount to account designated in
writing to the Depository by the recipient thereof.
(e) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Depository shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Depository so acting or failing to so act; provided, however, the
Depository shall not be relieved from liability for damages arising out of its
proven gross negligence or willful misconduct under this Agreement. The
Depository shall in no event incur any liability with respect to (i) any action
taken or omitted to be taken in good faith upon advice of legal counsel given
with respect to any questions relating to the duties and responsibilities of the
Depository hereunder or (ii) any action taken or omitted to be taken in reliance
upon any document delivered to the Depository by the Undersigned and believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
(f) Payment of moneys hereunder shall be made by cashiers check or by wire
transfer of immediately available funds in accordance with instructions
contained in the applicable disbursement notice to the Depository.
4. OTHER AGREEMENTS. The Depository is not a party to, nor is it bound
by, nor need it give consideration to the terms or provisions of, any other
agreement or undertaking among the Undersigned or any of them, or between the
Undersigned or any of them and other persons, or any agreement or undertaking
which may be evidenced by or disclosed by the Escrowed Sum, it being the
intention of the parties hereto that the Depository assent to and be obligated
to give consideration only to the terms and provisions hereof. Unless otherwise
provided in paragraph 22, the Depository shall have no duty to determine or
inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of any of the Undersigned with respect to
arrangements or contracts with each other or with others, the Depository's sole
duty hereunder being to hold the Escrowed Sum and to dispose of and deliver the
same in accordance with instructions given to it as provided in paragraph 3.
5. STANDARD OF CARE.
(a) The Depository undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Depository.
(b) If the Depository is required by the terms hereof to determine the
occurrence of any event or contingency, the Depository shall, in making such
determination, be liable only for its proven gross negligence or willful
misconduct, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its
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business. In determining the occurrence of any such event or contingency the
Depository may request from any of the Undersigned or any other person such
reasonable additional evidence as the Depository in its sole discretion may
deem necessary to determine any fact relating to the occurrence of such event
or contingency, and may at any time inquire of and consult with others,
including without limitation, any of the Undersigned, and the Depository
shall not be liable for any damages resulting from its delay in acting
hereunder pending its receipt and examination of additional evidence
requested by it.
(c) Whenever the Depository is required by the terms hereof to take action
upon the occurrence of any event or contingency, the time prescribed for such
action shall in all cases be a reasonable time after written notice received by
the Depository for the happening of such event or contingency, provided however,
that this provision shall not be deemed to limit or reduce the time allowed the
Depository for action as provided in paragraph 5(b).
6. LIMITATION ON LIABILITY. The Depository shall not be responsible or
liable to the Undersigned or to any other person in any manner whatsoever for
the sufficiency, correctness, genuineness, effectiveness or validity of any of
the Escrowed Sum, or for the form or execution thereof, or for the identity or
authority of any person executing or depositing the same. If any of the
Undersigned are acting as agent for others, all of the Undersigned represent and
warrant that each such agent is authorized to make and enter into this
Agreement. This Agreement is a personal one between the Undersigned and the
Depository. The Depository is authorized by each of the Undersigned to rely
upon all representations, both actual and implied, of each of the Undersigned
and all other persons relating to this Agreement and/or the Escrowed Sum,
including without limitation representations as to marital status, authority to
execute and deliver this Agreement, notifications, receipts or instructions
hereunder, and relationships among persons, firms, corporations or other
entities, including those authorized to receive delivery hereunder, and the
Depository shall not be liable to any person in any manner by reason of such
reliance. The duties of the Depository hereunder shall be only to the
Undersigned, their respective successors, heirs, assigns, executors and
administrators and to no other person, firm, corporation or other entity
whatsoever.
7. TIME OF PERFORMANCE. Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not a regular
business day of the Depository, the performance thereof on the next succeeding
regular business day of the Depository shall be deemed to be in full compliance.
Whenever time is referred to in this Agreement, it shall be the time recognized
by the Depository in the ordinary conduct of its normal business transactions.
8. DEATH, DISABILITY, ETC. OF THE UNDERSIGNED. The death, disability,
bankruptcy, insolvency, reorganization or absence of any of the Undersigned
shall not affect or prevent performance by the Depository of its obligations or
its right to rely upon instructions received hereunder. However, in the event
of the death, disability, bankruptcy, insolvency, reorganization or absence of
any of the Undersigned, the Depository (without liability to any of the
Undersigned) may refrain from taking any action required or requested hereunder
until it has received such reasonable additional documentation as the Depository
may deem necessary to determine any fact relating to the occurrence of any such
event.
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9. INQUIRY AS TO THE ESCROWED SUM. The Depository shall provide prompt
confirmation to the Undersigned that the Escrowed Sum has been deposited and
invested in accordance with the terms hereof.
10. REMEDIES OF THE DEPOSITORY.
(a) As additional consideration for and as an inducement for the
Depository to act hereunder, it is understood and agreed that in the event of
any disagreement between the parties to this Agreement or in the event any other
person or entity claims an interest in the Escrowed Sum or any part thereof, and
such disagreement or claim results in adverse claims and demands being made by
them or any of them in connection with or for any part of the Escrowed Sum, the
Depository shall be entitled, at the option of the Depository, to refuse to
comply with the instructions or demands of the parties to this Agreement, or any
of such parties, so long as such disagreement or adverse claim shall continue.
In such event, the Depository shall not be required to make delivery or other
disposition of the Escrowed Sum. Anything herein to the contrary
notwithstanding, the Depository shall not be or become liable to the Undersigned
or any of them for the failure of the Depository to comply with the conflicting
or adverse demands of the Undersigned or any of such parties or of any other
persons or entities claiming an interest in the Escrowed Sum or any part
thereof. The Depository shall be entitled to refrain and refuse to deliver or
otherwise dispose of the Escrowed Sum or any part thereof or to otherwise act
hereunder, as stated above, unless and until (i) the rights of the parties and
all other persons and entities claiming an interest in the Escrowed Sum have
been duly adjudicated in a court having jurisdiction of the parties and the
Escrowed Sum or (ii) the parties to this Agreement and such other persons and
entities have reached an agreement resolving their differences and have notified
the Depository in writing of such agreement and have provided the Depository
with indemnity satisfactory to it against any liability, claims or damages
resulting from compliance by the Depository with such agreement. In addition to
the foregoing, the Depository shall have the right to tender into the registry
or custody of any court having jurisdiction, any part of or all of the Escrowed
Sum. Upon such tender, the parties hereto agree that the Depository shall be
discharged from all further duties under this Agreement; provided, however, that
the filing of any such legal proceedings shall not deprive the Depository of its
compensation hereunder earned prior to such filing and discharge of the
Depository of its duties hereunder.
(b) While any suit or legal proceeding arising out of or relating to this
Agreement or the Escrowed Sum or the Undersigned is pending, whether the same be
initiated by the Depository or by others, the Depository shall have the right at
its option to stop all further performance of this Agreement and instructions
received hereunder until all differences shall have been resolved by agreement
or until the rights of all parties shall have been fully and finally adjudicated
by the court. For purposes of any suit or legal proceeding arising out of or
relating to this Agreement to which the Depository may be a party, the
Undersigned hereby consent and submit to the jurisdiction of the appropriate
court, whether Federal or state, sitting in Dallas County, Texas. The rights of
the Depository under this paragraph are in addition to all other rights which it
may have by law or otherwise.
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11. RELIANCE ON COUNSEL. The Depository may from time to time consult
with legal counsel of its own choosing, other than Vinson & Elkins L.L.P., in
the event of any disagreement, or controversy, or question or doubt as to the
construction of any of the provisions hereof or its duties hereunder, and it
shall incur no liability and shall be fully protected in acting in good faith
in accordance with the opinion or instructions of such counsel. Any such
fees and expenses of such legal counsel shall be considered part of the fees
and expenses of the Depository described below.
12. FEES AND EXPENSES.
(a) The Undersigned hereby jointly and severally agree to pay the
Depository for its ordinary services hereunder the fees determined in
accordance with, and payable as specified in, the Schedule of Fees set forth
in Exhibit "A", attached hereto. In addition, the Undersigned hereby jointly
and severally agree to pay to the Depository its expenses incurred in
connection with this Agreement, including, but not limited to, legal fees and
expenses, in the event the Depository deems it necessary to retain counsel.
Such expenses shall be paid to the Depository within 10 days following
receipt by any of the Undersigned of a written statement setting forth such
expenses.
(b) The Undersigned jointly and severally agree that in the event any
controversy arises under or in connection with this Agreement or the Escrowed
Sum, or the Depository is made a party to or intervenes in any litigation
pertaining to this Agreement or the Escrowed Sum, to pay to the Depository
reasonable compensation for its extraordinary services and to reimburse the
Depository for all costs and expenses associated with such controversy or
litigation, including, but not limited to, legal fees and expenses.
(c) As security for all fees and expenses of the Depository hereunder
and any and all losses, claims, damages, liabilities and expenses incurred in
connection with the acceptance of appointment hereunder or with the
performance of its obligations under this Agreement and to secure the
obligation of the Undersigned to indemnify the Depository as set forth in
paragraph 21 hereof, the Depository is granted a security interest in and
lien upon the Escrowed Sum, which security interest and lien shall be prior
to all other security interests, liens or claims against the Escrowed Sum or
any part thereof. Each of the Undersigned warrant and agree with the
Depository that, unless otherwise expressly set forth in this Agreement,
there is no security interest in the Escrowed Sum or any part thereof; no
financing statement under the Uniform Commercial Code of any jurisdiction is
on file in any jurisdiction claiming a security interest in or describing,
whether specifically or generally, the Escrowed Sum or any part thereof; and
the Depository shall have no responsibility at any time to ascertain whether
or not any security interest exists in the Escrowed Sum or any part thereof
or to file any financing statement under the Uniform Commercial Code of any
jurisdiction with respect to the Escrowed Sum or any part thereof.
(d) The Depository is authorized by the Undersigned to withhold from
the Escrowed Sum, prior to distribution thereof and prior to termination of
this Agreement, all unpaid fees and expenses to which the Depository is
entitled hereunder. In addition, in the event any such fees and expenses are
not paid to the Depository on or prior to the date
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such amounts are due, the Depository is hereby authorized and directed to
pay such amounts owed to it from the Escrowed Sum.
(e) In the event fees and expenses of the Depository are to be paid
pursuant to paragraph 22 hereof, it is understood and agreed by the
Undersigned that such fees and expenses are in addition to those described
above and that such fees and expenses shall be subject to periodic review and
modification by the Depository as determined by the Depository in its sole
discretion.
13. EFFECTIVE DATE. The effective date of this Agreement shall be the
date on which it is accepted by the Depository unless otherwise provided in
paragraph 22.
14. TERMINATION AND RESIGNATION. Unless sooner terminated as
hereinafter provided, this Agreement shall terminate without action of any
party when all of the terms hereof shall have been fully performed. Either
the Depository or the Undersigned may terminate this Agreement upon thirty
(30) days written notice (i) signed by the Depository and delivered to each
of the Undersigned or (ii) signed by each of the Undersigned and delivered to
the Depository. Upon termination of this Agreement, the Depository shall
deliver the Escrowed Sum in accordance with the written instructions
delivered by the Undersigned pursuant to paragraph 3(a) hereof. All fees and
expenses owed to the Depository hereunder shall be paid in full prior to such
delivery of the Escrowed Sum, and the Depository is hereby authorized and
directed by the Undersigned to withhold release or distribution of the
Escrowed Sum until such time as the Depository has received payment in full
of such fees and expenses. The Depository is authorized and directed to
deduct such fees and expenses from the Escrowed Sum prior to release or
distribution thereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and such counterparts shall constitute
and be one and the same instrument.
16. ASSIGNMENT OF INTERESTS. None of the Undersigned shall assign or
attempt to assign or transfer his or its interest hereunder or any part
thereof. Any such assignment or attempted assignment by any one or more of
the Undersigned shall be in direct conflict with this Agreement and the
Depository shall not be bound thereby.
17. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
18. HEADINGS. The paragraph headings contained herein are for
convenience of reference only and are not intended to define, limit or
describe the scope or intent of any provision of this agreement.
19. GOVERNING LAW. This Agreement shall be deemed to have been made
and shall be construed and interpreted in accordance with the laws of the
State of Texas.
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20. INVESTMENT OF ESCROWED SUM; WITHHOLDING.
(a) The Depository shall invest cash balances each day in such money
market or other short-term investment funds as shall be specified in writing
by an Authorized Representative on Exhibit "B" [Disclosure and Direction]
attached hereto. Such money market or short-term investment funds may
include, but shall not be limited to, any open-end or closed-end management
investment trust or investment company registered under the Investment
Company Act of 1940, as amended, for which the Depository or one of its
affiliates acts as investment advisor, custodian, transfer agent, registrar,
sponsor, distributor, manager or otherwise, and any fees paid to the
Depository or its affiliate by such fund shall be in addition to the fees and
expenses owed to the Depository under this Agreement.
(b) The Depository shall not be responsible or liable for determination
or payment of any taxes assessed against the Escrowed Sum or the income
therefrom nor for the preparation or filing of any tax returns other than
withholding required by statute or treaty. Each of the Undersigned agree to
provide the Depository any information necessary to perform any such required
withholding and the Depository shall be entitled to rely on such information.
The Depository will establish the account holding the Escrowed Sum under the
TIN of _____________; if Depository is responsible for tax reporting as set
forth in paragraph 22, it will be rendered under the aforementioned TIN. A
W-9 certifying to the party's withholding status in the form set forth in
Exhibit "C" attached hereto will be completed at closing.
(c) The Depository may make any and all investments through its own
bond or investment department. The Depository shall not be held liable or
responsible for the quality or diversity of the assets constituting the
Escrowed Sum or for any loss or depreciation in the value of such assets or
any loss resulting from any investment made by the Depository in accordance
with the terms of this Agreement. If the Depository is required to sell or
otherwise redeem or liquidate any Escrowed Sum prior to its maturity, the
Undersigned agree that the Depository shall not be personally liable for any
loss to the Escrowed Sum (including either principal or income) or other
costs incurred as a result of any such early redemption or liquidation.
21. INDEMNIFICATION AND HOLD HARMLESS. The Undersigned hereby agree to
indemnify and hold the Depository and its directors, employees, officers,
agents, successors and assigns harmless from and against any and all losses,
claims, damages, liabilities and expenses, including without limitation,
reasonable costs of investigation and counsel fees and expenses which may be
imposed on the Depository or incurred by it in connection with its acceptance
of this appointment as the Depository hereunder or the performance of its
duties hereunder. Such indemnity includes, without limitation, all losses,
damages, liabilities and expenses (including counsel fees and expenses)
incurred in connection with any litigation (whether at the trial or appellate
levels) arising from this Escrow Agreement or involving the subject matter
hereof. The indemnification provisions contained in this paragraph 21 are in
addition to any other rights any of the indemnified parties may have by law
or otherwise and shall survive the termination of this Agreement or the
resignations or removal of the Depository.
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22. ADDITIONAL TERMS.
See Exhibit D attached hereto and incorporated herein by reference.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indemnification Escrow
Agreement to be executed this ___________ day of _______, 199_.
BEST PAGE, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
- ------------------------------
Salvatore Zarcone
- ------------------------------
Jill DiFoggio
CONTACT COMMUNICATION, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
The Depository hereby acknowledges receipt of the Escrowed Sum described
in Schedule A hereof and hereby accepts the same as Depository hereunder,
subject to the terms and conditions set forth above, this _____ day of
____________, 1995.
NationsBank of Texas, National Association,
DEPOSITORY
BY:
------------------------------------------
------------------------------------------
TITLE:
---------------------------------------
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ATTACHMENTS:
Schedule A - Authorized Representatives
Exhibit A - Schedule of Fees
Exhibit B - Disclosure and Direction (Investments)
Exhibit C - Withholding Form
Exhibit D - Additional Terms
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SCHEDULE A
AUTHORIZED REPRESENTATIVES
The following person(s) are designated as Authorized Representative as that
term is defined in the Agreement and specimen signatures are shown:
- ------------------------------------ --------------------------------------
Typed Name Signature
- ------------------------------------ --------------------------------------
Typed Name Signature
- ------------------------------------ --------------------------------------
Typed Name Signature
<PAGE>
EXHIBIT A
SCHEDULE OF FEES
Out of pocket expenses such as, but not limited to, postage, courier,
insurance, long distance telephone, stationery, travel, legal or accounting,
etc., will be billed at cost.
The initial and administration fee are due at closing.
These fees do not include extraordinary services which will be priced
according to time and scope of duties.
It is acknowledged that the Schedule of Fees shown above are acceptable for
the services mutually agreed upon and the Undersigned authorize the
Depository to perform said services.
----------------------------------------------------
Acknowledged and Agreed
By:
----------------------------------------------
By:
----------------------------------------------
By:
----------------------------------------------
Date:
----------------------------------------------
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EXHIBIT D
22. Additional Terms
a. CLAIMS AGAINST AND PAYMENTS FROM ESCROW.
(i) Claims against the Escrowed Sum may be made by Purchaser, on its
own behalf or on behalf of any other Purchaser Indemnified Party (as defined
in the Apple Agreement and the Indemnification Agreement), for
indemnification of any Purchaser Indemnified Cost (as defined in the Apple
Agreement and the Indemnification Agreement). Claims under the Apple
Agreement shall be limited to the amount of $404,000 and claims under the
Indemnification Agreement, shall be limited to the amount of $96,000.
(ii) Purchaser shall promptly notify the applicable Seller and the
Depository in writing of any sums which Purchaser claims are subject to
indemnification. Failure of Purchaser to exercise promptness in such
notification shall not amount to a waiver of such claim unless the resulting
delay materially prejudices the position of the applicable Seller with
respect to such claim. Such notice shall consist of a description of the
claim and specify each Purchaser Indemnified Party and the amount (which may
be estimated) of the claim in United States dollars.
(iii) The applicable Seller may contest the claims specified in
paragraph 22(a)(ii) (or any portion thereof) by giving the Depository and
Purchaser written notice of such contest within ten days after receipt by
such Seller of a notice from Purchaser under paragraph 22(a)(ii), which
notice of contest shall include a statement of the grounds of such contest
and shall state the amount of any such claim by Purchaser that the Seller
does not dispute.
(iv) Payment of any claim for indemnification (or portion thereof) to
which the Escrowed Sum is subject shall become due and payable as follows:
(x) If, at 5:00 p.m., Dallas, Texas time on the tenth business day
after receipt by any Seller and the Depository of a notice of claim for
indemnification pursuant to paragraph 22(a)(ii) above, the Depository has not
received written notice from such Seller that the Seller contests the claim
(or portion thereof) pursuant to Paragraph 22(a)(iii) above, the claim (or
the uncontested portion thereof) shall be promptly paid by the Depository to
Purchaser as promptly as practicable;
(y) If the Seller contests the claim (or portion thereof) pursuant
to paragraph 22(a)(iii) and the claim (or portion thereof) is settled by
written agreement of such Seller and Purchaser, the amount provided in such
written agreement shall, upon receipt by the Depository of a copy of such
written agreement, be promptly paid by the Depository pursuant to the terms
of such written agreement; and
(z) If the Seller contests the claim (or portion thereof) pursuant
to paragraph 22(a)(iii) hereof and a final judgment or decree is entered by a
court of
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competent jurisdiction with respect to such claim (or portion thereof) from
which no appeal has been taken within the time allowed or from which no
appeal can be taken, such amount of the final judgment or decree shall be
promptly paid by the Depository pursuant to the terms of such final judgment
or decree.
b. RELEASE OF FUNDS. On each of the 91st, 182nd, and 273rd days
following the Closing, the Depository shall release to the Sellers from the
Escrowed Sum then held in escrow the lesser of (a) $125,000 and (b) the
amount then held in escrow and not then subject to claims by Purchaser. On
the 360th day following the Closing, the Depository shall release to the
Sellers such remaining portion of the Escrowed Sum then held in escrow and
not then subject to claims by Purchaser. Any portion of the Escrowed Sum
that is subject to claims by Purchaser on the 360th day following the Closing
(the "Release Date") shall be distributed in accordance with the provisions
of paragraph 22(a)(iv) hereof.
c. NOTICES. All notices, consents, or other communications hereunder
shall be in writing and shall be sufficient if delivered personally, by a
nationally recognized courier service, or sent by registered or certified
mail, or via express mail service, postage prepaid, addressed as follows, or
to such other address as any party shall designate in a subsequent notice:
To Buyer: Contact Communications, Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Jackie R. Kimzey
Mark A. Solls
(214) 687-2000
Fax No. (214) 774-0640
With a copy to: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Mark A. Solls
Fax No. (214) 774-0640
To Sellers: Salvatore Zarcone
5235 S. Kedzie Avenue
Chicago, Illinois 60632
With a copy to: Stephen Fiorentino, Esquire
221 North LaSalle Street, Suite 2050
Chicago, Illinois 60601
Fax No. (312) 853-3254
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To Depository: NationsBank of Texas, N.A.
901 Main Street, 18th Floor
Dallas, Texas 75202-3714
Attention: Corporate Trust/Billie Collins
Fax No. (214) 508-3430
Any such notice shall be deemed sent when received at the address or fax
number so designated.
d. ALLOCATION OF DEPOSITORY'S FEES. The Undersigned, as among
themselves, agree that all fees and expenses charged by or payable to the
Depository shall be borne 50% by Purchaser and 50% by the Sellers.
e. ALLOCATION OF INDEMNIFICATION LIABILITIES. The Undersigned, as
among themselves, agree that, in the event of any dispute resulting in
litigation over entitlement to or distribution of the Escrowed Sum, the
non-prevailing party(ies) shall pay 100% of any and all losses, claims,
damages, liabilities and expenses of the Depository for which the Undersigned
may be jointly and severally liable under the terms of this Agreement.
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<PAGE>
EXHIBIT B
FORM OF
OPINION OF COUNSEL TO APPLE AND THE SELLERS
1. Apple is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Illinois.
2. Apple has full corporate power and corporate authority to execute
and deliver the Purchase Agreement and to perform the obligations
contemplated thereby. The execution and delivery by Apple of the Purchase
Agreement has been duly authorized by all necessary corporate action on the
part of Apple. The Purchase Agreement has been duly executed and delivered
by Apple and constitutes the legal, valid, and binding obligation of Apple
enforceable in accordance with its terms.
3. The Sellers have duly executed and delivered the Purchase
Agreement, their respective Noncompetition Agreement and the Registration
Rights Agreement (collectively, the "Seller Documents"). Each of the Seller
Documents constitutes the legal, valid, and binding obligation of the
applicable Seller enforceable in accordance with its terms.
4. Neither the execution and delivery by Apple of the Purchase
Agreement, nor the performance by Apple of its obligations thereunder
violates or conflicts with, results in a breach of, or constitutes a default
under Apple'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 Apple or Apple's property, or any material
agreement known to this firm to which Apple is a party or by which Apple's
property is bound.
5. Neither the execution and delivery by either Seller of any of the
Seller Documents, nor the performance by either Seller of his or her
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 either Seller or Apple or his, her, or its property, or any
material agreement known to this firm to which Sellers or Apple is a party,
or by which his, her, or its properties is bound.
6. No approvals or authorizations by, or filings or qualifications
with, any state, federal, or local agency, authority, or body 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 Apple and/or either Seller, except such as have been duly
obtained or made.
7. To our knowledge, there is no action, suit, investigation, or
proceeding that is pending or threatened against or affecting Apple or either
Seller in any court or before any governmental authority, arbitration board,
or tribunal that (a) involves any of the
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transactions contemplated by the Purchase Agreement or (b) if decided
adversely to Apple or such Sellers, would involve the possibility of
materially and adversely affecting business, operations, assets, or prospects
of Apple.
8. To our knowledge, there are no pending or threatened condemnation
or similar proceedings or assessments affecting Apple or any assets thereof
and there are no such proceedings or assessments contemplated by any
governmental authority.
9. To our knowledge, neither Apple nor either Seller has entered into
any agreement pursuant to which any other individual or entity has obtained
the right to acquire any or all of the Shares or the assets of Apple.
10. Upon the consummation by Sellers 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 Shares and the Shares
will have been conveyed by proper and enforceable instruments of conveyance,
and, to our knowledge after inquiry, all consents of third parties necessary
for such conveyance to be valid and enforceable by the Purchaser against
third parties will have been obtained.
11. To our knowledge after inquiry, Apple 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.
B-2
<PAGE>
EXHIBIT C
FORM OF
OPINION OF APPLE'S FCC COUNSEL
1. Apple and the Sellers 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 Apple by the Federal Communications
Commission (the "FCC"), as listed in SCHEDULE 3.11 of the Agreement (the
"Licenses"), except as listed therein.
2. The Licenses, which constitute all licenses, orders and other
authorizations from the FCC which are necessary for Apple's operation of the
System, were duly issued by the FCC to Apple 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 Apple 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 Apple 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 Apple or the Sellers or any subsequent
holder with respect to their operation of the System. Apple and the Sellers
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, Apple and the Sellers 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 Apple or the Sellers 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, delivery and performance of the Agreement
(including the assignment of the Licenses from Seller to Purchaser) by Apple
and the Sellers 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).
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<PAGE>
4. Apple has obtained all necessary clearances from the Federal
Aviation Administration ("FAA") for the construction of all radio towers
associated with the System. Apple and the Sellers 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
Apple or the Sellers 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 System, or regarding Apple or
the Sellers, other than rulemaking 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 Apple have been
made in a timely manner.
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<PAGE>
EXHIBIT D
FORM OF
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and ______________________ (the "Seller").
W I T N E S S E T H
WHEREAS, concurrently herewith, the Seller is selling, transferring, and
conveying all of the capital stock of Apple Communication, Inc., an Illinois
corporation ("Apple") to the Company, pursuant to that certain Stock Purchase
Agreement (the "Purchase Agreement") dated as of ______________________, 1995,
by and among the Company, Apple, the Seller, and _________________________.
WHEREAS, the Seller has been affiliated with Apple for a number of years
and, as a principal shareholder and officer of Apple, possesses valuable
knowledge about the business and operations of Apple; and
WHEREAS, the Company has requested that the Seller 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 and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. CONSIDERATION. The Seller 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. As
additional consideration for the Seller's covenants contained herein, the
Company, concurrently with the execution of this Agreement is paying the
Seller $_____________ in the form of a certified bank check or wire transfer.
2. CONFIDENTIAL INFORMATION. The Seller acknowledges that the
information and data obtained or possessed by him concerning the business
affairs of Apple will be the property of the Company and not the Seller.
Therefore, the Seller agrees that he will not disclose to any person or use for
his own account any of such information or data unless and to the extent that
such information or data become generally known to and available
_____________________
* $1,125,000 for Salvatore Zarcone's covenant not to compete.
$375,000 for Jill DiFoggio's covenant not to compete.
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for use by the public otherwise than as a result of the Sellers's act or
omission to act. The Seller 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 business and operations
of Apple which he may then possess or have under his control.
3. NONCOMPETITION. The Seller agrees that he shall not, until 11:59
p.m. on the fifth 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 Chicago Area (as hereinafter
defined); PROVIDED, HOWEVER, that the Seller 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 Seller does
not, directly or indirectly, own 3% or more of any class of
equity securities, or securities convertible into or exercisable
or exchangeable for 3% 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 Chicago Area;
c. directly or indirectly request or advise any present or future
customers of Apple or the Company to cancel any contracts with
Apple or the Company or curtail their dealings with Apple or the
Company;
d. directly or indirectly request or advise any present or future
service provider or financial resource of Apple or the Company to
withdraw, curtail, or cancel the furnishing of such service or
resource to Apple or the Company;
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation:
(1) the names of past, present, or future customers of Apple or
the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to Apple or the Company; or
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f. directly or indirectly induce or attempt to influence any
employee of Apple or the Company to terminate his or her
employment, provided that this covenant shall not apply to
members of the Seller's immediate family.
Notwithstanding the foregoing, it is acknowledged and agreed by the parties
hereto that the provision by the Seller of radio paging services, solely as a
reseller of such services and solely pursuant to an agreement to be entered
into between the Seller (or the Seller's designee) and the Company, shall not
constitute a breach of this Agreement. As used herein, the "Chicago 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 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. The Seller 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 Illinois (regardless of the laws that might otherwise govern under
applicable Illinois 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 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
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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. The Seller agrees that a violation on
his part of any covenant contained herein shall cause irreparable damage to
the Company and, consequently, the Seller 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 Seller. 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.
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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0640
------------------------------------------------
------------------------------------
Address:
---------------------------------------
---------------------------------------
---------------------------------------
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EXHIBIT E
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"), Salvatore Zarcone and Jill DiFoggio (collectively, the
"Shareholders").
RECITALS:
A. Contact Communications Inc., a wholly owned subsidiary of the
Company ("Contact"), Apple Communication, Inc., an Illinois corporation
("Apple"), and the Shareholders have entered into that certain Stock Purchase
Agreement dated as of ____________________, 1995 (the "Purchase Agreement"),
pursuant to which Contact is to acquire all of the outstanding capital stock
of Apple (the "Shares").
B. Pursuant to the terms of the Purchase Agreement, Contact may elect
to pay a portion of the purchase price for the Shares 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 the Shareholders
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 the Shareholders pursuant to the Purchase Agreement and held of record by
either Shareholder. Any Registrable Security will cease to be 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 such Shareholder.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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2. REGISTRATION STATEMENT. On or before 14 days after the date hereof,
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 15
months 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 the Shareholders
pursuant to the terms of the Purchase Agreement, the Company will as
expeditiously as reasonably possible:
(a) furnish to the Shareholders, prior to filing the Registration
Statement, if requested in writing, copies of the Registration Statement as
proposed to be filed, and thereafter furnish to Shareholders 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 Shareholders may reasonably request in writing in order to
facilitate the disposition of the Registrable Securities owned by the
Shareholders;
(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 the Shareholders may reasonably request and do any and all
other acts and things which may be reasonably necessary to enable the
Shareholders 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;
(c) notify the Shareholders, 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 the Shareholders any such supplement or amendment; and
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(d) make available for inspection by either Shareholder 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. Each Shareholder 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. Each
Shareholder 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 the Shareholders to promptly furnish in writing to
the Company such information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration.
Each Shareholder 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,
Shareholders will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement until Shareholders' receipt of the copies
of the supplemented or amended prospectus contemplated by subsection 3(c)
hereof, and, if so directed by the Company, the Shareholders will deliver to the
Company all copies, other than permanent file copies then in the Shareholders'
possession, of the most recent prospectus covering such Registrable 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 the Shareholders 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
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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 the Shareholders, any underwriting fees, discounts
or commissions attributable to the sale of Registrable Securities or any
out-of-pocket expenses of the Shareholders (or their agents).
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Shareholders 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 the Shareholders or on the Shareholders'
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 determined that it was the responsibility of
the Shareholders 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 SHAREHOLDERS. Each Shareholder agrees to
indemnify 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
the Shareholders, but only with respect to information furnished in writing by
either Shareholder or on either Shareholder'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 the Shareholders, the Shareholders 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 the
Shareholders, 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
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<PAGE>
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 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 indemnify 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 Shareholder on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each Shareholder 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 the
Shareholder 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
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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 the Shareholders.
(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 courier guaranteeing overnight delivery:
(i) if to the Shareholders, at the most current address given by
each Shareholder to the Company, in accordance with the provisions of this
subsection, which addresses initially are _________________________________
and _____________________________________________________.
(ii) if to the Company, initially at 6340 LBJ Freeway, Dallas,
Texas 75240, 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. The Shareholders shall not assign any
rights or benefits under this Agreement without the prior written consent of the
Company. This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of the Company and the Shareholders.
(d) COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for the Company and the
Shareholders 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 shall 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.
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(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 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
the Shareholders 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 the Shareholders
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 the
Shareholders 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PRONET INC.
By:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
--------------------------------------
Salvatore Zarcone
--------------------------------------
Jill DiFoggio
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EXHIBIT F
FORM OF OPINION OF VINSON & ELKINS L.L.P.
[Draft - Subject to Opinion Committee review]
__________________, 1995
Mr. Salvatore Zarcone
Ms. Jill DiFoggio
Best Page, Inc.
4235 S. Kedzie Avenue
Chicago, Illinois 60601
Ladies and Gentlemen:
This firm has acted as counsel for Contact Communications Inc. ("Contact")
and ProNet Inc. ("ProNet"), each of which is a Delaware corporation, in
connection with the acquisition by Contact of (a) all of the outstanding capital
stock of Apple Communication, Inc., an Illinois corporation ("Apple"), pursuant
to that certain Stock Purchase Agreement dated as of October__, 1995, by and
among Apple, Salvatore Zarcone ("Zarcone"), Jill Difoggio, and Contact (the
"Purchase Agreement")(the "Stock Acquisition"), and (b) certain paging assets of
Best Page, Inc., an Illinois corporation ("Best Page"), pursuant to that certain
Assignment and Bill of Sale of even date herewith, by and among Best Page,
Zarcone, and Contact (the "Bill of Sale")(the "Asset Acquisition" and, together
with the Stock Acquisition, the "Acquisitions"). This opinion is being rendered
pursuant to Section 6.2(d) of the Purchase Agreement. Unless otherwise defined
herein, each term used herein with its initial letter capitalized that is
defined in the Purchase Agreement has the meaning given such term in the
Purchase Agreement.
In connection with the opinions rendered below, we have examined the
following documents:
(i) the Purchase Agreement;
(ii) the Bill of Sale;
(iii) the Indemnification Agreement;
(iv) the Noncompetition Agreements;
(v) the Registration Rights Agreement;
(vi) the Indemnification Escrow Agreement;
(vii) the Certificate of Incorporation and bylaws of ProNet and Contact
as in effect on the date hereof; and
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Salvatore Zarcone
Jill DiFoggio
Best Page, Inc.
Page 2
______________, 1995
(viii) resolutions of the Board of Directors of each of ProNet and
Contact adopted in connection with the Acquisition.
The documents described in paragraphs (i) through (vi) are herein collectively
referred to as the "Transaction Documents."
We have also made such legal and factual examinations and inquiries as
we have deemed advisable or necessary for the purpose of rendering this opinion.
We have, except as set forth below, examined originals or copies of documents,
corporate records, and other writings which we consider relevant for the purpose
of this opinion, including, but not limited to, certificates of public
officials. We have also discussed such matters as we have deemed relevant to
this opinion with the officers of Contact and ProNet.
In rendering this opinion, we have assumed:
(i) that each natural person signing any document reviewed by this
firm had the legal capacity to do so, both at the time of
execution and as of the date hereof, and each person signing any
document reviewed by this firm in a representative capacity
(other than on behalf of ProNet or Contact) had authority to sign
in such capacity, both at the time of execution and as of the
date hereof;
(ii) the genuineness of the signatures appearing on all documents;
(iii) the authenticity of all documents submitted to us as originals;
(iv) the conformity to authentic original documents of all documents
submitted to us as certified, conformed, or photostatic copies;
(v) the due authorization, execution, and delivery of all of the
Transaction Documents by the parties thereto other than ProNet or
Contact; and
(vi) the correctness and accuracy of all facts set forth in all
certificates, reports, and discussions identified in this
opinion.
Whenever a statement or opinion herein is qualified by "known to this
firm," "to the knowledge of this firm," or similar phrase, such phrase means
that, in the course of rendering the legal services described in the
introductory paragraph of this letter, no facts
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<PAGE>
Salvatore Zarcone
Jill DiFoggio
Best Page, Inc.
Page 3
______________, 1995
or circumstances have come to the attention of those attorneys in this firm
who rendered such legal services that gave any of such attorneys reason to
believe that any such information is incorrect in any respect that would
affect the opinions of this firm expressed herein.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary action, to
execute and deliver the Transaction Documents, and we are assuming that the
representations and warranties made by you in the Purchase Agreement are true
and correct.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions, and assumptions set forth herein, and having due
regard for such legal considerations as we deem relevant, we are of the opinion
that:
1. Contact and ProNet are each corporations validly existing and in good
standing under the laws of the State of Delaware.
2. Contact and ProNet each have full corporate power and corporate
authority to execute and deliver the applicable Transaction Documents and to
perform the obligations contemplated thereby. The execution, delivery, and
performance by Contact or ProNet, as the case may be, of the applicable
Transaction Documents have been duly authorized by all necessary corporate
action on the part of Contact or ProNet. Each of the Transaction Documents has
been duly executed and delivered by Contact or ProNet, as the case may be, and
constitutes the legal, valid, and binding obligation thereof.
3. Neither the execution and delivery by Contact or ProNet of, nor the
performance by Contact or ProNet of their respective obligations under, the
applicable Transaction Documents violates or conflicts with, results in a breach
of, or constitutes a default under such entity's Certificate of Incorporation or
bylaws, any law, or any judgment, decree, or order of any court or any other
agency of government known to this firm that is applicable to such entity or
such entity's property.
4. To the knowledge of this firm, other than (a) the approval or
authorization of the Acquisition by the Federal Communications Commission, the
Federal Aviation Administration and any similar state or local regulatory
agencies, commissions or other entities, (b) the filing of the Shelf
Registration with the Securities and Exchange Commission, the filing of any
required amendments thereto and the declaration of the effectiveness thereof as
and in the manner and for the purpose contemplated by the
F-3
<PAGE>
Salvatore Zarcone
Jill DiFoggio
Best Page, Inc.
Page 4
______________, 1995
Registration Rights Agreement, and (c) any approvals, authorizations,
filings, or qualifications related to the offering contemplated by the Shelf
Registration by or with such state securities or blue sky agencies,
commissions, or other entities as are required by the Registration Rights
Agreement, no approvals or authorizations by, or filings or qualifications
with, any state, federal, or local agency, authority, or body are required to
be obtained by either Contact or ProNet in connection with the execution and
delivery by, or the performance of their respective obligations under, the
Transaction Documents except such as have been duly obtained or made.
5. To the knowledge of this firm, there is no action, suit,
investigation, or proceeding that is pending or threatened against or affecting
Contact or ProNet in any court or before any governmental authority, arbitration
board, or tribunal that involves any of the transactions contemplated by the
Transaction Documents.
The foregoing opinions are limited by and subject to the following:
(a) The opinions expressed herein with respect to the validity, binding
nature, and enforceability of the Transaction Documents are subject to (i) laws
relating to bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, rearrangement, liquidation, conservatorship, moratorium, and
other laws affecting the enforcement of creditors' rights or the collection of
debtors' obligations generally, (ii) principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law), (iii)
standards of commercial reasonableness and good faith, (iv) public policy, and
(v) other applicable laws, regulations, and procedures, provided that any
limitations imposed by such other applicable laws, regulations, and procedures
will not, in the opinion of this firm, preclude the practical realization of the
benefits intended to be conferred by such agreements (though they may result in
delays thereof and we express no opinion as to the economic consequences, if
any, of such delays).
(b) We express no opinion with respect to (i) the enforceability of
provisions in the Transaction Documents relating to delay or omission of
enforcement of rights or remedies, or waivers of defenses, waivers of jury
trials, or waivers of benefits of appraisement, valuation, stay, extension,
redemption, or other nonwaivable benefits bestowed by operation of law, (ii) the
enforceability of the indemnification and contribution provisions set forth in
the Transaction Documents to the extent they purport to relate to liabilities
resulting from or based upon negligence or any violation of federal or state
securities or blue sky laws, (iii) the right of any person or entity to
institute or maintain any
F-4
<PAGE>
Salvatore Zarcone
Jill DiFoggio
Best Page, Inc.
Page 5
______________, 1995
action in any court or upon matters respecting the jurisdiction of any court,
or (iv) the enforceability of any severability provisions set forth in the
Transaction Documents.
(c) In rendering the opinions set forth in Paragraph 1 above with respect
to the valid corporate existence and good standing of Contact and ProNet, we
have relied solely on the certificates of authorities in the State of Delaware
as of a date we deem sufficiently recent.
(d) In rendering the opinions set forth in Paragraph 3 above with respect
to conflicts of the Transaction Documents with any laws, we express no opinion
with respect to the Communications Act of 1934, as amended, and the rules and
regulations promulgated thereunder, the Federal Aviation Act of 1958, as
amended, and the rules and regulations promulgated thereunder, or the statutes,
ordinances, rules, or regulations of any state or local regulatory agencies,
commissions, or other entities having jurisdiction over the paging operations of
Apple, Best Page, Contact, or ProNet.
(e) In rendering the portions of the foregoing opinions that involve a
concept of materiality with respect to factual matters, we have relied
exclusively on the officers of Contact and ProNet in determining materiality.
(f) We are members of the Bar of the State of Texas only. The opinions
above are limited to the laws of the United States of America and the laws of
the State of Texas. We note that the Transaction Documents provide that they
are to be governed by the laws of states other than the State of Texas. While
we express no opinion with respect to the laws of such other states, we have
assumed that the internal laws of such other states are the same as the internal
laws of the State of Texas. We have made no investigation to confirm whether
such assumption is correct.
We express no opinion as to any matter other than as expressly set forth
above, and no opinion on any other matter may be inferred herefrom. This
opinion is given as of the date hereof, and we undertake no, and hereby disclaim
any, obligation to advise you of any change in any matter set forth herein.
This opinion is for the sole use and benefit of the
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<PAGE>
Salvatore Zarcone
Jill DiFoggio
Best Page, Inc.
Page 6
______________, 1995
Seller and the Shareholders, and no other person may be furnished a copy of
such opinion or may rely on such opinion without our prior written consent.
Very truly yours,
VINSON & ELKINS L.L.P.
F-6
<PAGE>
EXHIBIT G
ASSIGNMENT AND BILL OF SALE
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
THAT Best Page, Inc., an Illinois corporation ("Grantor"), in
consideration of the payment by Contact Communications Inc., a Delaware
corporation ("Grantee"), of $2,500,000.00 (the "Purchase Price"), by wire
transfer or certified bank check, the receipt and sufficiency of which are
hereby acknowledged, does hereby sell, convey, transfer, assign, and deliver
unto Grantee all of Grantor's rights, titles, and interests in and to all of
the assets, described on SCHEDULE 1 attached 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, its
successors, and assigns, without further consideration, and whenever and as
often as required so to do by Grantee, 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, its successors,
and assigns in actual possession and operating control of, the Transferred
Assets.
Grantor has complied and is in compliance with the terms and conditions
of all federal, state, county, and local governmental licenses,
authorizations, certificates, permits, and orders listed on SCHEDULE 1 hereto
(collectively, the "Licenses"), and no violation of any such Licenses or the
laws or rules governing the issuance or continued validity thereof, has
occurred. All of the Licenses are in full force and effect and their grant
to Grantee 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 Federal Communications Commission
(the "FCC") upon holders of authorizations in the same service. The Licenses
were properly and validly obtained by Grantor in compliance with the Act. To
the best knowledge of the Grantor, no party has valid grounds to contest the
assignment of the Licenses as contemplated hereby. To the best knowledge of
the Grantor, no event has
G-1
<PAGE>
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 Grantor, Grantee, or any subsequent
holder with respect to their operation of the System. 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.
Nothing in this Bill of Sale and Assignment, express or 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 right 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.
Concurrently, with the execution hereof Grantor, Grantee, Salvatore
Zarcone, Jill DiFoggio and NationsBank of Texas, N.A. (the "Escrow Agent") are
entering into that certain Indemnification Escrow Agreement (the "Escrow
Agreement"). Pursuant to the terms of the Escrow Agreement, Grantee is
depositing $96,000 of the Purchase Price with the Escrow Agent.
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 Illinois.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale as of
this __ day of _________, 1995.
BEST PAGE, INC.
By:
------------------------------------
Salvatore Zarcone
President
G-2
<PAGE>
EXHIBIT H
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made and entered into
as of ___________, 1995, by and among Best Page, Inc., an Illinois corporation
(the "Seller"), Salvatore Zarcone (the "Shareholder"), and Contact
Communications Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
A. The Shareholder owns all the outstanding capital stock of the Seller.
B. Concurrently with the execution and delivery hereof, the Seller has
sold to the Purchaser certain assets and properties of the Seller (the
"Transferred Assets") pursuant to that certain Assignment and Bill of Sale of
even date herewith, by and among the Purchaser and the Seller (the "Bill of
Sale").
C. In connection with the transactions contemplated by the Bill of Sale,
the Seller and the Shareholder have agreed to indemnify the Purchaser with
respect to certain liabilities.
A G R E E M E N T S
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:
1. INDEMNIFICATION OF THE PURCHASER. The Seller and the Shareholder
jointly and severally agree to indemnify and hold harmless the Purchaser and
each officer, director, employee, consultant, stockholder, and affiliate of the
Purchaser (collectively, the "Purchaser Indemnified Parties") from and against
any and all damages, losses, claims, liabilities, 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, "Purchaser Indemnified Costs") which any of the
Purchaser Indemnified Parties may sustain, or to which any of the Purchaser
Indemnified Parties may be subjected, arising out of any breach or default by
the Seller of or under any of the representations, warranties, covenants,
agreements, or other provisions of the Bill of Sale or any agreement or document
executed in connection herewith.
2. DEFENSE OF THIRD-PARTY CLAIMS. A Purchaser 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
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<PAGE>
of which such Purchaser 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
Purchaser Indemnified Party under this Agreement 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 Purchaser 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 Purchaser 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 Indemnifying Parties shall not have employed counsel
reasonably satisfactory to the Purchaser Indemnified Party to have charge
of such third-party action, (iii) the Purchaser Indemnified Party shall
have reasonably concluded that there may be defenses available to such
Purchaser Indemnified Party that are different from or additional to those
available to the Indemnifying Parties, or (iv) the Purchaser Indemnified
Party's counsel shall have advised the Purchaser 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 Purchaser Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgement 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
acknowledgement, injunctive or other equitable relief would be imposed
against the Purchaser Indemnified Party or if, in the opinion of the
Purchaser Indemnified Party, such settlement, compromise, admission, or
acknowledgement could have a material adverse effect on its business or, in
the case of an Purchaser Indemnified Party who is a natural person, on his
or her assets or interests;
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 Purchaser
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 Purchaser Indemnified Party shall be entitled to have sole control
over, the defense or settlement, compromise, admission, or acknowledgement
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,
H-2
<PAGE>
injunction, or other equitable relief against the Purchaser Indemnified
Party which, if successful, would materially adversely affect the
business, operations, assets, or financial condition of the Purchaser
Indemnified Party; PROVIDED, HOWEVER, that the Purchaser Indemnified
Party shall make no settlement, compromise, admission, or
acknowledgement that would give rise to liability on the part of any
Indemnifying Party without the prior written consent of such
Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Agreement 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.
3. DIRECT CLAIMS. In any case in which a Purchaser Indemnified Party
seeks indemnification hereunder which is not subject to Section 2 hereof because
no third-party action is involved, the Purchaser Indemnified Party shall notify
the Indemnifying Parties in writing of any Purchaser Indemnified Costs which
such Purchaser Indemnified Party claims are subject to indemnification under the
terms hereof. The failure of the Purchaser Indemnified Party to exercise
promptness in such notification shall 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.
4. ESCROW. Concurrently herewith the Purchaser, the Seller, the
Shareholder, Jill DiFoggio and Nations Bank of Texas, N.A. (the "Escrow Agent")
will enter into that certain Indemnification Escrow Agreement in accordance with
which the Purchaser shall, at Closing, deposit $96,000 with the Escrow Agent.
If any claim for indemnification a Purchaser Indemnified Party pursuant to this
Agreement prior to the Release Date (as defined in the Indemnification Escrow
Agreement), such Purchaser Indemnified Party may apply for payment of any such
Purchaser Indemnified Costs up to the amount of $96,000 in accordance with the
provisions of the Indemnification Escrow Agreement and this Agreement.
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<PAGE>
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:
------------------------------------
Mark A. Solls, Vice President
and General Counsel
BEST PAGE, INC.
By:
------------------------------------
Salvatore Zarcone, President
-----------------------------------------
Salvatore Zarcone
H-4
<PAGE>
ASSET PURCHASE AGREEMENT
AMONG
SUN PAGING COMMUNICATIONS, A FLORIDA GENERAL PARTNERSHIP,
PALMER COMMUNICATIONS INCORPORATED and
AMERICAN MOBILPHONE, INC.
AND
CONTACT COMMUNICATIONS INC. and
PRONET INC.
November 10, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
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 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Deposit Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . 4
1.7 Indemnification Escrow Agreement. . . . . . . . . . . . . . . . . . 5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PRONET
2.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND THE PARTNERS
3.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Conduct of Business; Certain Actions. . . . . . . . . . . . . . . . 8
3.7 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Pagers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Intellectual Rights . . . . . . . . . . . . . . . . . . . . . . . . 9
(i)
<PAGE>
PAGE
----
3.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Contracts and Agreements. . . . . . . . . . . . . . . . . . . . . . 11
3.15 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Business Relations. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.20 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.21 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 13
3.22 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . 13
3.23 Interest in Competitors, Suppliers, and Customers . . . . . . . . . 14
3.24 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.25 Commission Sales Contracts. . . . . . . . . . . . . . . . . . . . . 14
3.26 Regulatory Certificates . . . . . . . . . . . . . . . . . . . . . . 14
3.27 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4
COVENANTS OF THE SELLERS AND THE PARTNERS
4.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Satisfaction of All Conditions Precedent. . . . . . . . . . . . . . 15
4.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Notice of Litigation. . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 Continuation of Insurance Coverage. . . . . . . . . . . . . . . . . 16
4.9 Maintenance of Credit Terms . . . . . . . . . . . . . . . . . . . . 16
4.10 Updating Information. . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Interim Operations of the Sellers . . . . . . . . . . . . . . . . . 16
4.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 17
4.13 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(ii)
<PAGE>
PAGE
----
ARTICLE 5
REGULATORY APPROVALS
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Purchaser and ProNet . . . . . . . 18
6.2 Conditions to Obligations of the Sellers and the Partners . . . . . 20
ARTICLE 7
TERMINATION
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of the Purchaser and ProNet . . . . . . . . . . . . 21
8.2 Indemnification Of the Seller and the Partners. . . . . . . . . . . 22
8.3 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . 22
8.4 Direct Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9
MISCELLANEOUS
9.1 Collateral Agreements, Amendments, and Waivers. . . . . . . . . . . 24
9.2 Risk of Loss - Damage to Transferred Assets . . . . . . . . . . . . 24
9.3 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . 25
(iii)
<PAGE>
PAGE
----
9.5 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Sellers' Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 25
9.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 25
9.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.9 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 26
9.10 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.12 Survival of Representations, Warranties, and Covenants. . . . . . . 27
9.13 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . 27
9.14 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 27
9.15 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . 27
9.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.17 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.18 Sections; Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 28
9.19 Number and Gender of Words. . . . . . . . . . . . . . . . . . . . . 28
9.22 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 28
9.23 ProNet Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SCHEDULES
1.1 Transferred Assets
1.2 Excluded Assets
3.1 Foreign Qualification
3.3 Conflicts
3.4 Consents
3.5(a) September 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
3.21 Accounts Receivable
3.22 Customers and Suppliers
3.24 Inventory
3.25 Commission Sales Contracts
6.1(g) Current Accounts
(iv)
<PAGE>
EXHIBITS
A - Bill of Sale
B - Assumption Agreement
C - Form of Opinion of Counsel to the Sellers and the General Partners
D - Form of Opinion of FCC Counsel to the Sellers and the Partners
E - Noncompetition Agreement - Palmer Communications Incorporated
E-1 - Noncompetition Agreement - American Mobilphone, Inc.
F - Noncompetition Agreement - Sun Paging Communications
G - License Agreement
H - Allocation of Purchase Price
I - Indemnification Escrow Agreement
J - Deposit Escrow Agreement
(v)
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of November 10, 1995, by and among Sun Paging Communications, a
Florida general partnership (the "Seller"), Palmer Communications
Incorporated ("Palmer"), American Mobilphone, Inc. ("American", collectively
with Palmer, the "Partners"), and Contact Communications Inc., a Delaware
corporation (the "Purchaser") and ProNet Inc., a Delaware corporation
("ProNet").
R E C I T A L S
A. The Partners are the only partners 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 in Florida (such property, assets, and business, including all
rights to affiliated networks, being hereinafter collectively called the
"System").
A G R E E M E N T S
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 1
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, the
Purchaser shall assume and agree to perform and discharge the liabilities and
obligations of the Seller under:
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(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 the Closing Balance Sheet (as hereinafter defined) and
the obligations of the Seller to provide services with respect to the
deferred revenue accounts transferred to the Purchaser at the Closing (as
hereinafter defined) (such deposits, deferred revenue accounts and the
Assumed Contracts collectively referred to herein as the "Assumed
Liabilities"); provided however, that the Purchase Price shall be reduced by
the amount of the customer pager rental deposits and deferred revenues
existing on the Closing Date.
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 in connection with the System with respect to (a) any claims for
workers compensation for claimed injuries occurring prior to the Closing
Date, (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 (Purchaser shall be responsible, however, without
limitation, for any foreign, state, county or local taxes relating to the
Transferred Assets of the System which accrue or arise as of and 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 assessed against Seller for sale of the Transferred
Assets to Purchaser under Section 1.1 hereof (Purchaser shall, however,
assume any liability for any taxes or fees assessed against Purchaser for the
purchase of the Transferred Assets from Seller under Section 1.1 hereof.) (c)
any liability for any violation by the Seller of any
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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 Seller's employee severance policy, if any, (f) any
liability of the Seller relating to any litigation arising from any event,
action, or omission relating to a time period prior to the Closing Date, (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 prior to or after the Closing Date, (i)
any liability of the Seller to its Partners, 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
Partners or distributions in liquidation. Seller shall indemnify Purchaser,
pursuant to Section 8 hereof, for any liabilities of Seller not expressly
assumed by the Purchaser pursuant to this Section 1.3.
1.4 PURCHASE PRICE. The aggregate purchase price payable by the
Purchaser to Seller in consideration for the sale of the Transferred Assets
shall be an amount equal to the sum of (A) $75,000, (the "Indemnification
Funds") which amount shall be deposited with the Escrow Agent (hereinafter
defined) as a deposit in accordance with Section 1.7 hereof and the terms of
the Indemnification Escrow Agreement a copy of which is attached hereto as
EXHIBIT I (B) $2,475,000 payable in cash to Seller on the Closing Date, (C)
an amount payable in cash to Seller on the Closing Date equal to the sum of
the Seller's accounts receivable in respect of services or merchandise
provided by the System, less the amount of Seller's liabilities for Customer
deposits for the System and less the amount of Seller's deferred revenues for
the System, (for the purposes of this calculation, the amount of accounts
receivables, customer deposits and deferred revenue shall be taken from
Seller's accounting records as of the day before the Closing Date (the
"Closing Balance Sheet"), (D) $50,0000 payable to Seller at Closing (the
"Deposit") which amount has been deposited by Purchaser with Nations Bank of
Texas, N.A., (the "Escrow Agent") as a deposit in accordance with the terms
of that certain Depository Agreement of even date herewith, by and among the
parties herein (the "Deposit Escrow Agreement"), a copy of which is attached
hereto as EXHIBIT J, and (E) an amount payable in cash to Seller at the
Closing or a Purchase Prices reduction to be determined by the Seller's
Recurring Monthly Revenue (as hereinafter defined) for the last complete
month prior to the date of the Closing; provided that in the event Recurring
Monthly Revenue is less than $140,000, the Purchase Price shall be reduced by
$10,000 for each $1,000 under $140,000; and further provided that in the
event the Recurring Monthly Revenue exceeds $150,000, the Purchase Price
shall be increased by $10,000 for each $1,000 over $150,000. "Recurring
Monthly Revenue" shall be defined as total monthly operating revenue less net
equipment sales revenue.
For purposes of calculating the Purchase Price, the Seller's accounts
receivable shall be valued as follows: (A) 96% of face amount for accounts
receivable that, as of the Closing Date, are less than 30 days past due from
the date of billing; (B) 90% of face amount for accounts receivable
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that, as of the Closing Date, are 30 days or more and less than 60 days past
due from the date of billing; (C) 30% of face amount for accounts
receivable that, as of the Closing Date, are 60 days or more and less then 90
days past due from the date of billing; and (D) 5% of face amount for
accounts receivable that, as of the Closing Date, are 90 days or more past
due from the date of billing. Notwithstanding the foregoing, any accounts
receivable in respect of any customers that opened new accounts with the
Seller within 30 days immediately prior to the Closing Date shall be valued
at 80% of the face amount for such accounts receivable.
Notwithstanding the foregoing, to the extent that any accounts receivable of
any Seller are in dispute with the obligor or are known by the Seller or
either Partner to be noncollectible at the time of Closing, no value shall 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. The Purchase Price shall be paid by certified bank check or
wire transfer of immediately available funds.
1.5 CLOSING.
(a) CLOSING DATE. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of the Purchaser
located at 6340 LBJ Freeway, Dallas, Texas 75240 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) or such other location as may be agreed
upon by Seller and Purchaser. 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 A (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, and
(ii) the Purchaser shall (A) execute and deliver to the Seller an assumption
agreement with respect to the Assumed Liabilities substantially in the form
attached hereto as EXHIBIT B (the "Assumption Agreement"), (B) deliver to the
Seller by wire transfer the amount of the cash portion of the Purchase Price
to be paid on the Closing Date as provided in Section 1.4 (b); 1.4(c) and 1.4
(e) hereof, and (C) deliver to the Escrow Agent by wire transfer the
Indemnification Funds in accordance with the terms of the Indemnification
Escrow Agreement, a copy of which is attached hereto as Exhibit I; and (iii)
the Escrow Agent shall deliver the Deposit ($50,000) to the Seller by wire
transfer and the interest accrued thereon to the Purchaser.
1.6 DEPOSIT ESCROW AGREEMENT. Pursuant to the Deposit Escrow
Agreement, substantially in the form of EXHIBIT J, attached hereto, the
Purchaser will deliver the Deposit to the Escrow Agent on the date of
execution hereof. After the Sellers have executed and delivered the Seller's
Closing Certificate (as defined in Section 6.1 (a)) to Purchaser and ProNet
and
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ProNet and Purchaser have executed and delivered the Purchaser's Closing
Certificate (as defined in Section 6.2 (a)) to Seller, Purchaser, ProNet and
Sellers shall execute the written instructions in the form of Exhibit B-1 and
deliver Exhibit B-1 to the Escrow Agent instructing the Escrow Agent to
deliver the Deposit to Sellers and the interest accrued thereof to the
Purchaser at the Closing in accordance with Section 1.4 of this Agreement.
If this Agreement is terminated prior to Closing pursuant to Section 7.1
(b), then the Deposit, including all accrued interest thereon, shall be paid
to Seller; and if this Agreement is terminated prior to Closing pursuant to
Section 7.1 (c), then the Deposit, including all accrued interest thereon,
shall be paid to Purchaser.
1.7. INDEMNIFICATION ESCROW AGREEMENT. Prior to or at the Closing,
Purchaser, Sellers, and the Escrow Agent shall enter into an Indemnification
Escrow Agreement (herein so called) substantially in the form of EXHIBIT I,
attached hereto, whereby Buyer and Sellers shall agree that the
Indemnification Funds shall be deposited on the Closing Date into and held
in escrow under and pursuant to the Indemnification Escrow Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PRONET
The Purchaser and ProNet hereby represent and warrant to the Seller and
the Partners as follows (with the understanding that the Seller and the
Partners are relying materially on each such representation and warranty in
entering into and performing this Agreement):
2.1 DUE ORGANIZATION. The Purchaser and ProNet are corporations duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and have full corporate power and corporate authority to own or
lease their properties and to carry on their businesses as, and in the places
where, such properties are owned or leased and such businesses are conducted.
2.2 DUE AUTHORIZATION. The Purchaser and ProNet have full corporate
power and corporate authority to enter into and perform their obligations
under this Agreement and each agreement, document, and instrument required to
be executed by the Purchaser and ProNet in accordance herewith. The
execution, delivery and performance of this Agreement and any other
agreements required to be executed by Purchaser and ProNet have been duly
authorized. This Agreement and the other agreements, documents, and
instruments required to be executed and delivered by the Purchaser and ProNet
in accordance herewith have been, or by the Closing shall have been, duly and
validly executed and delivered by the Purchaser and ProNet and constitute,
valid and binding obligations of the Purchaser and ProNet 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
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fair dealing) and to the discretion of the court before which any proceeding
therefor may be brought.
2.3 FUNDS. As of the date of this Agreement, the Purchaser has access
to sufficient funds or has obtained commitments from a reputable financial
institution to enable it to obtain such funds as are needed to pay the
Purchase Price.
2.4 CONFLICTS. Except as set forth on Schedule 2.4, neither the
execution, delivery, nor performance of this Agreement or any other
agreement, document or instrument to be executed by Purchaser and/or ProNet
in connection herewith shall (a) violate any Federal, state, county, or local
law, rule, or regulation applicable to the Purchaser or ProNet, or (b)
violate, conflict or constitute a default of any provision of the Certificate
of Incorporation or Bylaws of Purchaser or ProNet.
2.5 CONSENTS. Set forth on Schedule 2.5 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, document, or other
instrument to be executed in connection herewith by Purchaser and ProNet.
2.6 BROKERS AND FINDERS. Purchaser and ProNet have not employed any
broker, finder, sales agent or investment banker or incurred any liability to
such in connection with the execution, delivery, or performance of this
Agreement or the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PARTNERS
The Seller and the Partners hereby jointly and severally represent and
warrant to the Purchaser and ProNet as follows (with the understanding that
the Purchaser and ProNet are relying materially on each such representation
and warranty in entering into and performing this Agreement):
3.1 DUE ORGANIZATION; OWNERSHIP. The Seller is a general partnership
duly organized and validly existing, under the laws of the State of Florida
and has full power and 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 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 partnership interest in 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
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kind to acquire from the Seller or the Partners any equity or debt securities
of the Seller or securities convertible into or exchangeable for equity or
debt securities of the Seller.
3.2 DUE AUTHORIZATION. The Seller has full power and 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 Partners. This
Agreement and the agreements, documents, and instruments required to be
executed and delivered by the Seller or the Partners in accordance herewith
have been duly and validly executed and delivered by the Seller and/or the
Partners and constitute valid and binding obligations of the Seller and/or
the Partners 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.
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 the
Partners in connection herewith shall (a) violate any Federal, state, county,
or local law, rule, or regulation applicable to the Seller or the Partners or
their properties, (b) violate or conflict with, or permit the cancellation
of, any agreement to which the Seller or the Partners are a party, or by
which it, or their 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 the
Partners, or (d) violate or conflict with any provision of the partnership
agreement 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 Partners or the Seller.
3.5 FINANCIAL STATEMENTS. [FINANCIAL STATEMENTS TO BE CONFIRMED] The
Seller has delivered to the Purchaser (a) the audited balance sheet and
income statement of Seller through December 31, 1994, (the "1994 Financial
Statements"), (b) balance sheet and income statement of Seller through July
31, 1995 (the "Interim Financial Statements and together with the 1994
Financial Statements, the "Financial Statements"), and (c) a list of the
Transferred Assets together with the book value of each such Transferred
Asset as of September 30, 1995, which list is set forth on SCHEDULE 3.5(a)
attached hereto (the "September Asset List"). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
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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 and, results of operations, of the Seller as
of the indicated dates and for the indicated periods. The September Asset
List has 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.
3.6 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth on
SCHEDULE 3.6 attached hereto, since July 31, 1995, 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, increased the compensation of any other
employees of the System, (b) except as set forth in SCHEDULE 3.6 made any
capital expenditures exceeding $10,000 individually or $25,000 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 $5,000, (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) except as set forth
on Schedule 3.6 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 FCC license related to the conduct of the System to which the Seller is
a party, (l) entered into any other material transactions relating to the
System except in the ordinary course of business, (m) suffered any material
damage, destruction, or loss (whether or not covered by insurance) to any of
the Transferred Assets, (n) 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 (o) 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
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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
material zoning ordinances, material municipal regulations, or other
material rules, regulations, or laws. Except as set forth in SCHEDULE 3.7,
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 1 to SCHEDULE 1.1 includes a true and complete list
of the number and type of pagers in service in the System as of September 30,
1995. In the ordinary course of business, Seller requests that customers
execute valid and binding lease and/or service agreements with the Seller or
agents or resellers. The Seller and the Partners do not know of any current
account or accounts totalling in the aggregate more than 600 pagers in
service 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, "lease" 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 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 material 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 in all material respects and is in
material 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 which would materially impair
Purchaser's ability to operate the System. 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. No claim has been made by any governmental authority to the
effect that any license, authorization, certificate, permit, or order in
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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, servicemarks, tradenames, 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. Except as disclosed on SCHEDULED 3.10, 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, servicemarks,
tradenames, or copyrights or applications therefor. The Seller has good and
marketable title to or the right to use such patents, trademarks, service
marks, tradenames, 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 except as
disclosed on SCHEDULE 3.10. The Seller is not infringing any patent,
trademark, servicemark, tradename, or copyright of others.
3.11 COMPLIANCE WITH LAWS. 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 and the
Partners represent and warrant that they have complied with Seller's and
Partners' obligations 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. No claim has been made by any governmental authority (and,
to the best knowledge of the Seller and the Partners, 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. To the best of the Seller's and the Partners' knowledge, the
Seller has complied with all 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. Attached hereto as SCHEDULE 3.12 is a list of all
current policies of fire, liability, business interruption, and other forms
of insurance and all fidelity bonds held by or applicable to the Seller,
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.
Except as set forth in SCHEDULE 3.12 attached hereto, no event relating to
the Seller has occurred which is likely to result in any prospective upward
adjustment in such premiums. The insurance currently held by the Seller is
in such
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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 cancelled
within the last three years, and no threat has been made to cancel any
insurance policy of the Seller within such period.
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 material 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 from any single agreement could
reasonably be expected to have a value in excess of $10,000 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 Partners 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 and the Partners, 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. Neither the Seller nor the Partners 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
Partners, 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 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
Partners, 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
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the best knowledge of the Seller and the Partners, 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. To the best knowledge of the Seller and the Partners, 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. To the
best knowledge of the Seller and the Partners 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. All 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 and the Partners, there is no basis for any Seller Tax Actions. To
the best knowledge of the Seller and the Partners, there are no liens for
Taxes, penalties, interest, or additions to Taxes on any of the assets of the
Seller. To the best knowledge of the Seller and Partners, proper and
accurate amounts of 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 Partners and its 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
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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 and the Partners, 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 Partners, threatened against or involving the Seller.
3.18 BUSINESS RELATIONS. Neither the Seller nor the Partners knows that
any account or accounts totalling in the aggregate more than 600 pagers in
service on 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.
3.19 BROKERS. Except for Seller's agreement with Daniels & Associates,
neither the Seller nor the Partners 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. To the best knowledge of the Seller and the Partners,
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 (net of reserves set forth on the Seller's Closing Balance
Sheet). 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.
3.22 CUSTOMERS AND SUPPLIERS. SCHEDULE 3.22 attached hereto contains a
true, correct, and complete list of the eight largest customers (measured in
dollar volume of revenue) of the System during the quarter ended June 30,
1995, and the year ended December 31, 1994.
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3.23 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. With the
exception of radio station WARO-FM, owned by Palmer, to the best of their
knowledge none of the Seller, the Partners, nor any employee of the Seller,
or 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 SCHEDULE 1.1 consist of
(and the inventories of the Seller at the Closing will consist of) material
items (including pagers) in good operating condition except pagers in
inventory needing repair.
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. To the best knowledge of the Seller and
the Partners, there are no facts or circumstances 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 INFORMATION FURNISHED. The Seller and the Partners have made
available to the Purchaser and its officers, attorneys, accountants, lenders,
and representatives true and correct copies of all material agreements,
documents, and other items listed on the schedules to this Agreement and have
allowed inspection of all books and records of the Seller relating to the
Transferred Assets, and to the best knowledge of the Seller and the
Partners, neither this Agreement, nor 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 PARTNERS
4.1 INSPECTION. From the date hereof to the Closing, the Seller and
the Partners shall provide the Purchaser and the Purchaser's officers,
attorneys, accountants, representatives, and lenders complete access during
business hours to all books, records, tax returns, files, correspondence,
personnel, facilities, and properties of the Seller; provide the Purchaser
and its officers, attorneys, accountants, representatives, and lenders all
information and material
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pertaining to the business and affairs of the Seller as the Purchaser may
deem necessary or appropriate. 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
Partners contained herein.
4.2 COMPLIANCE. From the date hereof to the Closing, neither the Seller
nor the Partners 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 Partners 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 Partners 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. From the date hereof until 11:59 p.m. on March 31,
1996, or the date of termination of this Agreement, whichever is sooner, the
Seller and the Partners 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 offers 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 March 31,
1996, the Seller and the Partners agree that neither the Seller nor the Partners
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 Partners 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 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 Partners shall, immediately upon the Seller or the Partners
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 the Partners shall, immediately upon the Seller or the Partners 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 Partners prior to the date of
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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 Partners shall, immediately upon the Seller or the Partners 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 Partners 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 Closing, the
Seller shall continue (and the Partners shall cause the Seller to continue) to
effect sales and leases of its products in a manner consistent with past
practices.
4.10 UPDATING INFORMATION. As of the Closing, the Seller and the Partners
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 Partners shall 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) 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 $10,000,
(excluding the sale or purchase of pagers in the ordinary course of
business) (ii) 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, (iii) incur any
indebtedness for borrowed money, issue any debt securities, or enter into
or modify any contract, agreement, commitment, or arrangement with respect
thereto, (iv) 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
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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, (v) enter into, extend, or renew any lease for office
space used in connection with the operation of the System, except in the
ordinary course of business or (vi) except as required by law, adopt,
amend, or terminate any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred 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, (vii) grant any increase in compensation to any director,
officer, consultant, or key employee of the System, or (viii) 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 Partners shall cause the Seller to use) its 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 45 days after the end of each calendar
month beginning with August 1995, the Seller shall furnish to the Purchaser a
balance sheet, and, statement of income of the System for such month prepared by
the Seller as an internal management control in accordance with the generally
accepted accounting principles and past practices 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 and results of operations
as of the indicated dates and for the indicated periods.
4.13 ASSIGNMENTS. From the date hereof until the Closing, the Seller and
the Partners 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
Partners 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 Partners as
contemplated in Section 4.14 hereof, the Purchaser shall file with the FCC, the
FAA, (if applicable) 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, if applicable 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 Shareholder
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 AND PRONET. The
obligations of the Purchaser and ProNet 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 Partners
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 Partners shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
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complied with by the Seller and the Partners at or prior to the Closing;
and the Purchaser shall have received a certificate, dated as of the
Closing Date, signed by the Partners 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 K. Patrick
Meehan, counsel for the Seller and the Partners, dated as of the Closing
Date, in the form attached hereto as EXHIBIT C.
(d) The Purchaser shall have received an opinion of David Kaufman,
Brown, Nietert and Kaufman, Washington, D.C., FCC counsel for the Seller
and the Partners, dated as of the Closing Date, in the form attached hereto
as EXHIBIT D.
(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;
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 (except the Licenses set forth in SCHEDULE 1.2).
(g) As of the Closing Date, the Seller shall have at least 12,000
pagers in service in the System and the Purchaser shall have received a
certificate, dated as of the Closing Date, signed by the Partners setting
forth the number and type (as provided in Appendix A hereto) of pagers in
service in the System. "Pagers in service" shall be defined as a paging
unit that is in service on the Closing Date and has no account receivable
balance more than ninety (90) days old; provided that accounts set forth in
Schedule 6.1(g) will qualify if the account has an established pattern of
late, but regular payments.
(h) As of the Closing Date, the Seller's inventory shall have at
least $50,000 of useable (including pagers needing repair) pagers valued
pursuant to the value matrix as set forth in Schedule 1.1, and the
Purchaser shall have received a certificate, dated as of the Closing Date,
signed by the Partners to the foregoing effect.
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(i) All material consents and approvals as noted on SCHEDULE 3.4
hereto shall have been obtained or waived.
(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 Partners of the Seller to the foregoing effect.
(k) The Purchaser shall have received from the Seller a duly executed
Bill of Sale.
(l) Each of the Partners and the Seller shall have entered into a
Noncompetition Agreement (a "Noncompetition Agreement") with the Purchaser
substantially in the forms attached hereto as EXHIBITS E and F,
respectively.
(m) The Seller shall have duly executed and delivered to the
Purchaser the License Agreement substantially in the form attached hereto
as EXHIBIT G granting the Purchaser the right to the use of the name "Sun
Paging" in the area presently served by the System.
(n) The Seller shall have delivered to the Purchaser assignments of
the Real Estate Leases.
The decision of the Purchaser and ProNet 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 the Partners' respective
representations, warranties, covenants, or indemnities herein.
6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER AND THE PARTNERS. The
obligations of the Seller and the Partners to consummate the transactions
contemplated hereby are subject to the fulfillment of the following conditions:
(a) The representations and warranties of the Purchaser and ProNet
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 and ProNet at or
prior to the Closing shall have been performed in all material respects;
and the Seller and the Partners shall have received a certificate, dated as
of the Closing Date, signed by an officer of the Purchaser and ProNet to
the foregoing effects.
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(b) The Purchaser shall have delivered to the Seller by wire transfer
cash portion of the Purchase Price to be paid on the Closing Date in
accordance with and as specified in Section 1.4 (B), 1.4 (C) and 1.4(E)
hereof.
(c) Purchaser shall have deposited the Indemnification Funds with the
Escrow Agent.
(d) The Deposit shall have been paid to the Seller.
(e) The Purchaser shall have delivered to the Seller an Assumption
Agreement substantially in the form attached hereto as EXHIBIT B with
respect to the Assumed Liabilities.
The decision of the Seller and the Partners to consummate the transactions
contemplated hereby without the satisfaction of any of the preceding conditions
shall not constitute a waiver of any of the Purchaser's or ProNet's respective
representations, warranties, covenants, or indemnities herein.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated prior to the Closing by
(a) the mutual consent of the Purchaser and ProNet and the Seller, (b) the
Seller upon the failure of the Purchaser and ProNet 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 and
ProNet hereunder shall not have been true and correct as of the time at which
such representation or warranty was made, (c) the Purchaser and ProNet upon the
failure of the Seller or the Partners 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
Partners hereunder shall not have been true and correct as of the time at which
such representation or warranty was made, (d) the Purchaser and ProNet in
accordance with the provisions of Article 5 hereof, and (e) the Seller or the
Purchaser and ProNet if the Closing does not occur by June 30, 1996 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.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER AND PRONET. The Seller and the
Partners jointly and severally agree to indemnify and hold harmless the
Purchaser and ProNet and each officer, director, employee, consultant,
stockholder, and affiliate of the Purchaser and ProNet (collectively, the
"Purchaser Indemnified Parties") from and against any and all damages, losses,
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<PAGE>
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 reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) (collectively, "Purchaser
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 the Partners 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 INDEMNIFICATION OF THE SELLER AND THE PARTNERS. The Purchaser and
ProNet agree to indemnify and hold harmless the Seller, the Partners, and each
officer, director, employee, and consultant of the Seller (collectively, the
"Seller Indemnified Parties" and collectively with the Purchaser Indemnified
Parties, the "Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorney's fees and expenses
incurred in the investigating and preparing for any litigation or proceeding)
(collectively, the "Seller Indemnified Costs" and, collectively with the
Purchaser Indemnified Costs, the "Indemnified Costs") which any of the Seller
Indemnified Parties may sustain, or to which any of the Seller Indemnified
Parties may be subjected, arising out of any breach or default by the Purchaser
and ProNet under any of the representations, warranties, convenants, agreements,
or other provisions of this Agreement or any agreement or document executed in
connection herewith.
8.3 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. Such notice shall specify the
provision(s) of this Agreement from which such indemnification obligation
arises. 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; provided, however, such notice
must be provided within eighteen (18) months after the Closing Date. 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
Indemnifying Parties shall not have employed counsel reasonably
satisfactory to the Indemnified Party to have charge of such third-party
action, (iii) the Indemnified Party shall have reasonably concluded that
there may be defenses available to such Indemnified
22
<PAGE>
Party that are different from or additional to those available to the
Indemnifying Parties, or (iv) 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 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;
(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.
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.
8.4 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 give prompt written
notice to the Indemnifying Parties of any Indemnified Costs which such
Indemnified Party claims are subject to indemnification under the terms hereof.
Such notice shall specify the provision(s) of this Agreement from which such
23
<PAGE>
indemnification obligation arises. The failure of the Indemnified Party to
exercise promptness in such notification shall 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; provided, however, such notice
must be provided within eighteen (18) months after the Closing date.
8.5 LIMITATIONS. Notwithstanding the foregoing, the Indemnified
Party shall be responsible for the first $25,000.00 of Indemnified Costs.
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 including specifically that certain letter of intent dated July
26, 1995, among the parties hereto 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.
9.2 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.
9.3 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
24
<PAGE>
this Section 9.4, the same shall be determined by a nationally
recognized accounting firm selected by the Purchaser and Seller and any
such determination by such firm shall be binding and conclusive on the
parties hereto. The charges of such firm shall be shared equally by the
Purchaser and the Seller.
9.4 ALLOCATION OF PURCHASE PRICE. The parties hereto 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 H hereto. It is specifically understood that $50,000 of the Purchase
Price shall be allocated to the Noncompetition Agreements executed by the Seller
and the Partners.
9.5 RECORDS. At the Closing, the Seller and the Partners will turn over
and deliver to the Purchaser all files of the Seller 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 the Partners'
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; provided,
however, the Seller shall not be obligated to deliver the financial books and
records of the Partnership.
9.6 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.
9.7 SUCCESSORS AND ASSIGNS. No rights or obligations of any party hereto
under this Agreement may be assigned (except that the Purchaser or ProNet 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 ProNet or to any
successor entity to the Purchaser or ProNet whether pursuant to a sale of all or
substantially all of the Purchaser's or ProNet's assets, the merger,
consolidation, liquidation, or dissolution of the Purchaser or ProNet, or
otherwise). 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.
9.8 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.
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9.9 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.
9.10 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
exercise of any other right, power, or privilege.
9.11 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.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Fax No: (214) 774-0640
With a copy to: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Mark A. Solls
Fax No: (214) 744-0640
26
<PAGE>
If to the Seller Sun Paging Communications
% American Mobilphone, Inc.
500 Greentree Commons
381 Mansfield Avenue
Pittsburgh, Pennsylvania 15220
Atten: Mr. Fred W. Schwarz
Fax No: (412) 928-7715
With a copy to: Palmer Wireless, Inc.
K. Patrick Meehan, Esquire
Vice President & General Counsel
12800 University Drive, Suite #500
Ft. Myers, Florida 33907
Fax # (813) 433-8213
Each party may change its or his address for purposes of this Section 9.13 by
proper notice to the other parties.
9.12 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 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
for a period of eighteen (18) months from the Closing Date; provided, however,
all representations and warranties with respect to taxes shall survive for the
applicable statute of limitations..
9.13 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.
9.14 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of the Purchaser, but without further consideration, the Seller and the Partners
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 Partners, 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 Partners may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
9.15 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.
27
<PAGE>
9.16 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
9.17 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.
9.18 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.
9.19 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.
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 PRONET GUARANTEE. ProNet hereby agrees to guarantee the obligations
of the Purchaser as set forth in this Agreement.
28
<PAGE>
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
PRONET INC.
By: /s/ Jackie R. Kimzey
----------------------------------------------
Jackie R. Kimzey, Chief Executive Officer
SUN PAGING COMMUNICATIONS
By: /s/ Fred W. Schwarz
-----------------------------
American Mobilphone Inc.
Managing Partner
Title: Fred W. Schwarz
---------------------------
Vice President
PALMER COMMUNICATIONS INCORPORATED
By: /s/ Gordon McCullum
------------------------------
Title: Vice President-Treasurer
---------------------------
AMERICAN MOBILPHONE, INC.
By: /s/ Fred W. Schwarz
-----------------------------
Fred W. Schwarz
Title: Vice President
--------------------------
29
<PAGE>
EXHIBIT A
BILL OF SALE AND ASSIGNMENT
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
THAT Sun Paging Communications, a Florida general partnership ("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, Palmer
Communications Incorporated, American Mobilphone, Inc., ProNet Inc., 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 1
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 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 right or remedy under or by reason of
this Bill of Sale and Assignment or any term, covenant, or condition hereof, and
<PAGE>
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 the event that this Bill of Sale and Assignment conflicts with any terms
contained in the Purchase Agreement, the Purchase Agreement shall control.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale as of
this __ day of ________________, 1995.
SUN PAGING COMMUNICATIONS
By:
-------------------------------------
Title:
-----------------------------------
B-2
<PAGE>
EXHIBIT B
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 Sun Paging Communications, a Florida
general partnership (the "Seller").
W I T N E S S E T H
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 Florida area radio paging
system pursuant to that certain Asset Purchase Agreement dated as of
_____________, 1995, by and among the Purchaser, ProNet Inc., Palmer
Communications Incorporated and American Mobilphone Inc. (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 liable 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, 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
<PAGE>
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 Partners,
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 Partners 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. In the event that this Assumption Agreement conflicts with any terms
contained in the Purchase Agreement, the Purchase Agreement shall control.
B-2
<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
SUN PAGING COMMUNICATIONS
By:
----------------------------------
Title:
-------------------------------
B-3
<PAGE>
EXHIBIT C
---------
FORM OF
OPINION OF K. PATRICK MEEHAN
1. The Seller is a general partnership, duly organized, validly existing,
and in good standing under the laws of the State of Florida.
2. The Seller has full power and 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 action on the part of the Seller. Each of the Seller Transaction
Documents has been duly executed and delivered by the Seller and constitutes the
legal, valid, and binding obligation of the Seller enforceable in accordance
with its terms.
3. The Partners have duly executed and delivered the Purchase Agreement
and the Noncompetition Agreements. The Purchase Agreement and the Partners
Noncompetition Agreements constitute the legal, valid, and binding obligation of
the Partners enforceable in accordance with their respective terms.
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 partnership agreement., 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 Partners of the Purchase
Agreement and the Noncompetition Agreements, nor the performance by the Partners
of their 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 the Shareholder or the Seller or their or its property, or any
material agreement known to this firm to which the Partners or the Seller is a
party, or by which their or its properties is bound.
6. No approvals or authorizations by, or filings or qualifications with,
any state, federal, or local agency, authority, or body 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 the Partners, except such as have been duly
obtained or made.
7. To our knowledge after inquiry, there is no action, suit,
investigation, or proceeding that is pending or threatened against or affecting
the Seller or the Partners in any court
<PAGE>
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 after inquiry, 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 after inquiry, neither the Seller nor the 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. 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 and enforceable instruments
of conveyance, and, to our knowledge after inquiry, all consents of third
parties necessary for such conveyance to be valid and enforceable by the
Purchaser against third parties will have been obtained.
11. To our knowledge after inquiry, 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.
<PAGE>
EXHIBIT D
FORM OF
OPINION OF SELLER'S FCC COUNSEL
1. The Seller and the Partners 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.
<PAGE>
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 Partners or any subsequent holder with respect to their
operation of the System. The Seller and the Partners 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 Partners 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 Partners 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, delivery and performance of the Agreement (including the
assignment of the Licenses from Seller to Purchaser) by the Seller and the
Partners 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).
<PAGE>
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 Partners 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 Partners 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 Partners, other than rulemaking
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.
<PAGE>
EXHIBIT E
---------
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and Palmer Communications Incorporated (the "Partner").
W I T N E S S E T H
-------------------
WHEREAS, concurrently herewith, Sun Paging Communications, a Florida
general partnership ("Sun Paging"), 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, Sun Paging, and
the Partner, substantially all of the property and assets of Sun Paging that are
used in the conduct of Sun Paging's radio paging system business (such property,
assets, and business, including all affiliated networks, being hereinafter
collectively called the "System");
WHEREAS, the Partner has been affiliated with Lewis Paging for a number of
years and, as a principal shareholder and officer of Sun Paging, possesses
valuable knowledge about the business and operations of Sun Paging; and
WHEREAS, the Company has requested that the Partner 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 Partner 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 Partner 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
Partner. Therefore, the Partner 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
Partner's act or omission to act. The Partner agrees to deliver to the Company,
at any time the Company may
<PAGE>
request, all memoranda, notes, plans, records, reports, and other documents
(and copies thereof) relating to the conduct of the System of which it may
then possess or have under its control.
3. NONCOMPETITION. The Partner agrees that it shall not, until 11:59
p.m. on the fifth (5th) 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 Florida Area (as hereinafter
defined); PROVIDED, HOWEVER, that the Partner 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 Partner 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 Florida 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:
(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
<PAGE>
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment.
As used herein, the "Florida 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
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. The Partners 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.
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
<PAGE>
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 Partner agrees that a violation on his
part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, the Partner 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 Partner. 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. In the event that this Noncompetition Agreement conflicts with any
terms contained in the Purchase Agreement, the Purchase Agreement shall control.
<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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0640
PALMER COMMUNICATIONS INCORPORATED
By
-----------------------------------
Title:
--------------------------------
Address:
------------------------------
---------------------------------------
---------------------------------------
<PAGE>
EXHIBIT E-1
-----------
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and American Mobilphone, Inc.(the "Partner").
W I T N E S S E T H
-------------------
WHEREAS, concurrently herewith, Sun Paging Communications, a Florida
general partnership ("Sun Paging"), 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, Sun Paging, and
the Partner, substantially all of the property and assets of Sun Paging that are
used in the conduct of Sun Paging's radio paging system business (such property,
assets, and business, including all affiliated networks, being hereinafter
collectively called the "System");
WHEREAS, the Partner has been affiliated with Lewis Paging for a number of
years and, as a principal shareholder and officer of Sun Paging, possesses
valuable knowledge about the business and operations of Sun Paging; and
WHEREAS, the Company has requested that the Partner 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 Partner 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 Partner 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
Partner. Therefore, the Partner agrees that he
<PAGE>
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 Partner's act or
omission to act. The Partner 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 it may then possess or have under its control.
3. NONCOMPETITION. The Partner agrees that it shall not, until 11:59
p.m. on the fifth (5th) 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 Florida Area (as hereinafter
defined); PROVIDED, HOWEVER, that the Partner 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 Partner 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 Florida 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:
(1) the names of past, present, or future customers of the
Company; or
<PAGE>
(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.
As used herein, the "Florida 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
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. The Partners 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.
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
<PAGE>
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. The Partner agrees that a violation on his
part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, the Partner 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 Partner. 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. In the event that this Noncompetition Agreement conflicts with any
terms contained in the Purchase Agreement, the Purchase Agreement shall control.
<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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0640
AMERICAN MOBILPHONE, INC.
By:
------------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
<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 Sun Paging Communications, a Florida general partnership
("Sun").
W I T N E S S E T H
-------------------
WHEREAS, concurrently herewith Sun 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, Sun, Palmer
Communications Incorporated, and American Mobilphone, Inc., substantially all of
the property and assets that are used in the conduct of Sun '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 Sun 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. Sun 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. Sun 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 Sun . Therefore, Sun 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 Sun'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 Sun becomes legally compelled to disclose
any of the Confidential Information, Sun shall provide the Company
<PAGE>
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 obtained, Sun will furnish only that portion of the
Confidential Information which it is legally required to disclose. Sun
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. Sun agrees that it shall not, until 11:59 p.m. on the
fifth (5th) 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 Florida Area (as hereinafter
defined); PROVIDED, HOWEVER, that Sun 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 Sun 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 Florida 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:
(1) the names of past, present, or future customers of the
Company; or
<PAGE>
(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.
As used herein, the "Florida 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. Sun 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.
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
<PAGE>
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. Sun agrees that a violation on its part of
any covenant contained herein shall cause irreparable damage to the Company and,
consequently, Sun further agrees that the Company shall be entitled, as a matter
of right, to an injunction restraining any further violation of such covenant by
Sun. 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. In the event that this Noncompetition Agreement conflicts with any
terms contained in the Purchase Agreement, the Purchase Agreement shall control.
<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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0640
SUN PAGING COMMUNICATIONS
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
Attn:
----------------------------------
Fax No. ( )
----- ------------------------
<PAGE>
EXHIBIT G
LICENSE AGREEMENT
This License Agreement ("License Agreement") is made on the ___ day of
_____________, 1995, by and between Sun Paging Communications, a Florida general
partnership ("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
"Sun Paging".
2. "Licensed Territory" shall mean the Florida 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 five (5) 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 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
<PAGE>
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 "Sun Paging, Inc.."
6. Licensee may, but shall not be required to, at its sole expense, take
whatever action Licensee, in its sole discretion, deems necessary or advisable
to protect its 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 Licensor decides not to take any action required to
maintain or renew registration for the Marks, Licensee at its expense may take
appropriate action to maintain or renew any such registration in the name of
Licensor, and Licensor shall cooperate reasonably with Licensee, including,
without limitation, by signing required documents, to allow Licensee to effect
any such maintenance or renewal action provided that Licensor shall incur no
liability to Licensee for its failure to maintain any registrations.
8. Licensee may assign or transfer its rights or obligations under this
License Agreement, whether by operation of law or otherwise, without the consent
of Licensor. Licensee shall also 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.
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.
G-2
<PAGE>
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. In the event that this License Agreement conflicts with any terms
contained in the Purchase Agreement, the Purchase Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have duly executed this License
Agreement on the date first above written.
SUN PAGING COMMUNICATIONS
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
CONTACT COMMUNICATIONS INC.
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
G-3
<PAGE>
EXHIBIT H
ALLOCATION OF PURCHASE PRICE
<TABLE>
<CAPTION>
<S> <C> <C>
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 $__________
</TABLE>
* 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 I
______________________________________________________________________________
NORWEST BANK DEPOSITORY AGREEMENT-INDEMNIFICATION ESCROW
______________________________________________________________________________
THE UNDERSIGNED Contact Communications Inc. ("Purchaser"), Sun Paging
Communications ("Seller"), Palmer Communications Incorporated ("Palmer"),
American Mobilphone, Inc. ("American", collectively with Palmer, the
"Partners"), (collectively, the "Undersigned"), in order to designate Norwest
Bank Texas, National Association, (the Depository") as the Depository for the
Undersigned for the purposes and upon the terms and conditions herein set forth,
do hereby represent and warrant to, and agree with each other and the
Depository, as follows:
1. APPOINTMENT OF THE DEPOSITORY. The Depository is hereby appointed
Depository for the Undersigned with respect to the "Property" as that term is
herein defined.
2. THE PROPERTY. At the closing (the "Closing") of the transactions
contemplated by that certain Asset Purchase Agreement dated as of November 10,
1995 (the "Purchase Agreement"), the Undersigned shall deposit with the
Depository, as custodian and depository, the items described in Schedule A
hereto, or in lieu thereof, have made provision in paragraph 22 for the deposit
of items hereunder (such items being herein collectively called the "Property"),
and direct that same be held and disposed of by the Depository as herein
provided.
3. THE DEPOSITORY'S DUTIES AND AUTHORITY TO ACT.
(a) Except as may be otherwise provided in paragraph 22, in which event
the special instructions in said paragraph 22 shall be controlling, the
Depository shall hold the Property in safekeeping and deliver the same or any
part or parcel thereof, including the interest earned from investments made
pursuant to paragraph 20 hereof, only (i) to one or more of the Undersigned in
accordance with and upon the written instructions of each of the other of the
Undersigned and/or (ii) in accordance with and upon the written instructions of
all the Undersigned.
(b) When instructions from more than one of the Undersigned are required,
such instructions may be given by separate instruments of similar tenor. Any of
the Undersigned may hereafter act through an agent or attorney-in-fact only if
written evidence of authority in form and substance satisfactory to the
Depository is furnished to the Depository and agreed to by the Depository.
(c) The Depository may act upon any written notice, request, waiver,
consent, certificate, receipt, authorization, power of attorney or other
document which it in good faith believes to be genuine.
(d) The Depository shall be deemed to have properly delivered any item of
Property upon (i) placing the item in the United States mail in a suitable
package or envelope with first class prepaid postage affixed, addressed to the
addressee at such addressee's address as set forth in this Agreement or such
other address as the Undersigned shall have furnished to the
<PAGE>
Depository in writing; (ii) delivery in person at the Depository's offices;
or (iii) delivery in any other manner pursuant to written instructions of the
Undersigned.
(e) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Depository shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Depository so acting or failing to so act; provided, however, the
Depository shall not be relieved from liability for damages arising out of its
proven gross negligence or willful misconduct under this Agreement. The
Depository shall in no event incur any liability with respect to (i) any action
taken or omitted to be taken in good faith upon advice of legal counsel given
with respect to any questions relating to the duties and responsibilities of the
Depository hereunder or (ii) any action taken or omitted to be taken in reliance
upon any document delivered to the Depository and believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(f) Payment of moneys hereunder shall be made by check or by wire transfer
of immediately available funds in accordance with instructions contained in the
applicable disbursement notice to the Depository.
4. OTHER AGREEMENTS. The Depository is not a party to, nor is it bound
by, nor need it give consideration to the terms or provisions of, any other
agreement or undertaking among the Undersigned or any of them, or between the
Undersigned or any of them and other persons, or any agreement or undertaking
which may be evidenced by or disclosed by the Property, it being the intention
of the parties hereto that the Depository assent to and be obligated to give
consideration only to the terms and provisions hereof. Unless otherwise
provided in paragraph 22, the Depository shall have no duty to determine or
inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of any of the Undersigned with respect to
arrangements or contracts with each other or with others, the Depository's sole
duty hereunder being to hold the Property and to dispose of and deliver the same
in accordance with instructions given to it as provided in paragraph 3.
5. STANDARD OF CARE.
(a) The Depository undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Depository.
(b) If the Depository is required by the terms hereof to determine the
occurrence of any event or contingency, the Depository shall, in making such
determination, be liable only for its proven gross negligence or willful
misconduct, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its business. In
determining the occurrence of any such event or contingency the Depository may
request from any of the Undersigned or any other person such reasonable
additional evidence as the Depository in its sole discretion may deem necessary
to determine any fact relating to the occurrence of such event or contingency,
and may at any time inquire of and consult with others, including without
limitation, any of the Undersigned, and the Depository shall not be liable for
any damages resulting from its delay in acting hereunder pending its receipt and
examination of additional evidence requested by it.
2
<PAGE>
(c) Whenever the Depository is required by the terms hereof to take action
upon the occurrence of any event or contingency, the time prescribed for such
action shall in all cases be a reasonable time after written notice received by
the Depository for the happening of such event or contingency, provided however,
that this provision shall not be deemed to limit or reduce the time allowed the
Depository for action as provided in paragraph 5(b).
6. LIMITATION ON LIABILITY. The Depository shall not be responsible or
liable to the Undersigned or to any other person in any manner whatsoever for
the sufficiency, correctness, genuineness, effectiveness or validity of any of
the Property, or for the form or execution thereof, or for the identity or
authority of any person executing or depositing the same. If any of the
Undersigned are acting as agent for others, all of the Undersigned represent and
warrant that each such agent is authorized to make and enter into this
Agreement. This Agreement is a personal one between the Undersigned and the
Depository. The Depository is authorized by each of the Undersigned to rely
upon all representations, both actual and implied, of each of the Undersigned
and all other persons relating to this Agreement and/or the Property, including
without limitation representations as to marital status, authority to execute
and deliver this Agreement, notifications, receipts or instructions hereunder,
and relationships among persons, firms, corporations or other entities,
including those authorized to receive delivery hereunder, and the Depository
shall not be liable to any person in any manner by reason of such reliance. The
duties of the Depository hereunder shall be only to the Undersigned, their
respective successors, heirs, assigns, executors and administrators and to no
other person, firm, corporation or other entity whatsoever.
7. TIME OF PERFORMANCE. Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not a regular
business day of the Depository, the performance thereof on the next
succeeding regular business day of the Depository shall be deemed to be in
full compliance. Whenever time is referred to in this Agreement, it shall be
the time recognized by the Depository in the ordinary conduct of its normal
business transactions.
8. DEATH, DISABILITY, ETC. OF THE UNDERSIGNED. The death, disability,
bankruptcy, insolvency, reorganization or absence of any of the Undersigned
shall not affect or prevent performance by the Depository of its obligations or
its right to rely upon instructions received hereunder. However, in the event
of the death, disability, bankruptcy, insolvency, reorganization or absence of
any of the Undersigned, the Depository (without liability to any of the
Undersigned) may refrain from taking any action required or requested hereunder.
9. EXAMINATION OF THE PROPERTY. Any of the Undersigned may examine the
Property during the regular business hours of the Depository; such examination
shall, however, be permitted only in the presence of an officer of the
Depository.
10. REMEDIES OF THE DEPOSITORY.
(a) As additional consideration for and as an inducement for the Depository
to act hereunder, it is understood and agreed that in the event of any
disagreement between the parties to this Agreement or in the event any other
person or entity claims an interest in the Property or any part thereof, and
such disagreement or claim results in adverse claims and
3
<PAGE>
demands being made by them or any of them in connection with or for any part
of the Property, the Depository shall be entitled, at the option of the
Depository, to refuse to comply with the instructions or demands of the
parties to this Agreement, or any of such parties, so long as such
disagreement or adverse claim shall continue. In such event, the Depository
shall not be required to make delivery or other disposition of the Property.
Anything herein to the contrary notwithstanding, the Depository shall not be
or become liable to the Undersigned or any of them for the failure of the
Depository to comply with the conflicting or adverse demands of the
Undersigned or any of such parties or of any other persons or entities
claiming an interest in the Property or any part thereof. The Depository
shall be entitled to refrain and refuse to deliver or otherwise dispose of
the Property or any part thereof or to otherwise act hereunder, as stated
above, unless and until (i) the rights of the parties and all other persons
and entities claiming an interest in the Property have been duly adjudicated
in a court having jurisdiction of the parties and the Property or (ii) the
parties to this Agreement and such other persons and entities have reached an
agreement resolving their differences and have notified the Depository in
writing of such agreement and have provided the Depository with indemnity
satisfactory to it against any liability, claims or damages resulting from
compliance by the Depository with such agreement. In addition to the
foregoing, the Depository shall have the right to tender into the registry or
custody of any court having jurisdiction, any part of or all of the Property.
Upon such tender, the parties hereto agree that the Depository shall be
discharged from all further duties under this Agreement; provided, however,
that the filing of any such legal proceedings shall not deprive the
Depository of its compensation hereunder earned prior to such filing and
discharge of the Depository of its duties hereunder.
(b) While any suit or legal proceeding arising out of or relating to this
Agreement or the Property or the Undersigned is pending, whether the same be
initiated by the Depository or by others, the Depository shall have the right at
its option to stop all further performance of this Agreement and instructions
received hereunder until all differences shall have been resolved by agreement
or until the rights of all parties shall have been fully and finally adjudicated
by the court. For purposes of any suit or legal proceeding arising out of or
relating to this Agreement to which the Depository may be a party, the
Undersigned hereby consent and submit to the jurisdiction of the appropriate
court, whether Federal or state, sitting in Dallas County, Texas. The rights
of the Depository under this paragraph are in addition to all other rights which
it may have by law or otherwise.
11. RELIANCE ON COUNSEL. The Depository may from time to time consult
with legal counsel of its own choosing in the event of any disagreement, or
controversy, or question or doubt as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting in good faith in accordance with the opinion
or instructions of such counsel. Any such fees and expenses of such legal
counsel shall be considered part of the fees and expenses of the Depository
described below.
12. FEES AND EXPENSES.
(a) The Undersigned hereby jointly and severally agree to pay the
Depository for its ordinary services hereunder the fees determined in accordance
with, and payable as specified in, the Schedule of Fees set forth in Exhibit
"A", attached hereto. In addition, the Undersigned hereby jointly and severally
agree to pay to the Depository its expenses incurred
4
<PAGE>
in connection with this Agreement, including, but not limited to, legal fees
and expenses, in the event the Depository deems it necessary to retain
counsel. Such expenses shall be paid to the Depository within 10 days
following receipt by any of the Undersigned of a written statement setting
forth such expenses.
(b) The Undersigned jointly and severally agree that in the event any
controversy arises under or in connection with this Agreement or the Property,
or the Depository is made a party to or intervenes in any litigation pertaining
to this Agreement or the Property, to pay to the Depository reasonable
compensation for its extraordinary services and to reimburse the Depository for
all costs and expenses associated with such controversy or litigation,
including, but not limited to, legal fees and expenses.
(c) As security for all fees and expenses of the Depository hereunder and
any and all losses, claims, damages, liabilities and expenses incurred in
connection with the acceptance of appointment hereunder or with the performance
of its obligations under this Agreement and to secure the obligation of the
Undersigned to indemnify the Depository as set forth in paragraph 21 hereof, the
Depository is granted a security interest in and lien upon the Property, which
security interest and lien shall be prior to all other security interests, liens
or claims against the Property or any part thereof. Each of the Undersigned
warrant and agree with the Depository that, unless otherwise expressly set forth
in this Agreement, there is no security interest in the Property or any part
thereof; no financing statement under the Uniform Commercial Code of any
jurisdiction is on file in any jurisdiction claiming a security interest in or
describing, whether specifically or generally, the Property or any part thereof;
and the Depository shall have no responsibility at any time to ascertain whether
or not any security interest exists in the Property or any part thereof or to
file any financing statement under the Uniform Commercial Code of any
jurisdiction with respect to the Property or any part thereof.
(d) The Depository is authorized by the Undersigned to withhold from the
Property, prior to distribution thereof and prior to termination of this
Agreement, all fees and expenses to which the Depository is entitled hereunder.
In addition, in the event any such fees and expenses are not paid to the
Depository on or prior to the date such amounts are due, the Depository is
hereby authorized and directed to pay such amounts owed to it from cash funds
included in the Property or, if no cash funds are then included in the Property,
to sell assets constituting part of the Property for the purpose of paying such
amounts owed to it.
(e) In the event fees and expenses of the Depository are to be paid
pursuant to paragraph 22 hereof, it is understood and agreed by the Undersigned
that such fees and expenses are in addition to those described above and that
such fees and expenses shall be subject to periodic review and modification by
the Depository as determined by the Depository in its sole discretion.
13. EFFECTIVE DATE. The effective date of this Agreement shall be the
date on which it is accepted by the Depository unless otherwise provided in
paragraph 22.
14. TERMINATION AND RESIGNATION. Unless sooner terminated as hereinafter
provided, this Agreement shall terminate without action of any party when all of
the terms hereof shall have been fully performed. Either the Depository or the
Undersigned may terminate this Agreement upon thirty (30) days written notice
(i) signed by the Depository and delivered to each of the Undersigned or (ii)
signed by each of the Undersigned and
5
<PAGE>
delivered to the Depository. Upon termination of this Agreement, the
Depository shall deliver the Property in accordance with the written
instructions delivered by the Undersigned pursuant to paragraph 3(a) hereof.
All fees and expenses owed to the Depository hereunder shall be paid in full
prior to such delivery of the Property, and the Depository is hereby
authorized and directed by the Undersigned to withhold release or
distribution of the Property until such time as the Depository has received
payment in full of such fees and expenses. The Depository is authorized and
directed to deduct such fees and expenses from the Property prior to release
or distribution thereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and such counterparts shall constitute and be
one and the same instrument.
16. ASSIGNMENT OF INTERESTS. None of the Undersigned shall assign or
attempt to assign or transfer his or its interest hereunder or any part
thereof. Any such assignment or attempted assignment by any one or more of
the Undersigned shall be in direct conflict with this Agreement and the
Depository shall not be bound thereby.
17. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
18. HEADINGS. The paragraph headings contained herein are for convenience
of reference only and are not intended to define, limit or describe the scope or
intent of any provision of this agreement.
19. GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
Texas.
20. INVESTMENT OF PROPERTY; WITHHOLDING.
(a) The Depository shall invest cash balances each day in such money
market or other short-term investment funds as shall be specified in writing by
an Authorized Representative on Exhibit "B" [Disclosure and Direction] attached
hereto. Such money market or short-term investment funds may include any open-
end or closed-end management investment trust or investment company registered
under the Investment Company Act of 1940, as amended, for which the Depository
or one of its affiliates acts as investment advisor, custodian, transfer agent,
registrar, sponsor, distributor, manager or otherwise, and any fees paid to the
Depository or its affiliate by such fund shall be in addition to the fees and
expenses owed to the Depository under this Agreement.
(b) The Depository shall not be responsible or liable for determination or
payment of any taxes assessed against the Property or the income therefrom nor
for the preparation or filing of any tax returns other than withholding required
by statute or treaty. Each of the Undersigned agree to provide the Depository
any information necessary to perform any such required withholding and the
Depository shall be entitled to rely on such information. The Depository will
establish the account holding the Property under the TIN of ________________; if
Depository is responsible for tax reporting as set forth in paragraph
6
<PAGE>
22, it will be rendered under the aforementioned TIN. A W-9 certifying to
the party's withholding status in the form set forth on Exhibit "C" attached
hereto will be completed at closing.
(c) The Depository may make any and all investments through its own bond
or investment department. The Depository shall not be held liable or
responsible for the quality or diversity of the assets constituting the Property
or for any loss or depreciation in the value of such assets or any loss
resulting from any investment made by the Depository in accordance with the
terms of this Agreement. If the Depository is required to sell or otherwise
redeem or liquidate any Property prior to its maturity, the Undersigned agree
that the Depository shall not be personally liable for any loss to the Property
(including either principal or income) or other costs incurred as a result of
any such early redemption or liquidation.
21. INDEMNIFICATION AND HOLD HARMLESS. The Undersigned hereby agree to
indemnify and hold the Depository and its directors, employees, officers,
agents, successors and assigns harmless from and against any and all losses,
claims, damages, liabilities and expenses, including without limitation,
reasonable costs of investigation and counsel fees and expenses which may be
imposed on the Depository or incurred by it in connection with its acceptance of
this appointment as the Depository hereunder or the performance of its duties
hereunder. Such indemnity includes, without limitation, all losses, damages,
liabilities and expenses (including counsel fees and expenses) incurred in
connection with any litigation (whether at the trial or appellate levels)
arising from this Escrow Agreement or involving the subject matter hereof. The
indemnification provisions contained in this paragraph 21 are in addition to any
other rights any of the indemnified parties may have by law or otherwise and
shall survive the termination of this Agreement or the resignation or removal of
the Depository.
22. ADDITIONAL TERMS.
SEE EXHIBIT D
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Depository
Agreement - Indemnification Escrow to be executed this _____________day of
_______________, 199__.
SUN PAGING COMMUNICATIONS
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
PALMER COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
AMERICAN MOBILPHONE, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CONTACT COMMUNICATIONS INC.
By:
-----------------------------------------
Name: Mark A. Solls
Title: Vice President and General Counsel
--------------------------------------
The Depository hereby acknowledges receipt of the Property described in
Schedule A hereof and hereby accepts the same as Depository hereunder, subject
to the terms and conditions set forth above, this ___________day of __________,
199__.
Norwest Bank Texas, National Association,
DEPOSITORY
BY:
----------------------------------------
TITLE:
-------------------------------------
8
<PAGE>
ATTACHMENTS:
Schedule A - Description of Property
Exhibit A - Schedule of Fees
Exhibit B - Disclosure and Direction (Investments)
Exhibit C - Withholding Form
9
<PAGE>
SCHEDULE A
DESCRIPTION OF PROPERTY
(Description of the "Property" as that term is defined in paragraph 2 of the
Agreement) In the event the property is other than cash, securities or
negotiable instruments, the following provisions shall apply: (i) Depository
makes no warranty as to the suitability for any particular purpose of the
Property deposited with Depository hereunder, or
(ii) Depository makes no warranty that the facilities of the Depository are
suitable for the deposit of the Property, or (ii) Depository shall not be liable
for any deterioration or destruction of the Property while in the possession of
Depository, except for the gross negligence or willful misconduct of the
Depository, or (iv) Depository has no duty to determine if any Property
deposited hereunder is in fact the property that is required to be deposited
hereunder pursuant to any agreement of the Undersigned.
$75,000.00
The following person(s) are designated as Authorized Representative as that term
is defined in the Agreement and specimen signatures are shown:
CONTACT COMMUNICATIONS INC.
- ----------------------------------- -----------------------------------
By: Mark A. Solls, Vice President Signature
SUN PAGING COMMUNICATIONS
- ----------------------------------- -----------------------------------
By: Signature
PALMER COMMUNICATIONS, INC.
- ----------------------------------- -----------------------------------
By: Signature
AMERICAN MOBILPHONE, INC.
- ----------------------------------- -----------------------------------
By: Signature
10
<PAGE>
EXHIBIT A
SCHEDULE OF FEES
$1,500.00
Out of pocket expenses such as, but not limited to, postage, courier, insurance,
long distance telephone, stationery, travel, legal or accounting, etc., will be
billed at cost.
The initial and administration fee are due at closing.
These fees do not include extraordinary services which will be priced according
to time and scope of duties.
It is acknowledged that the Schedule of Fees shown above are acceptable for the
services mutually agreed upon and the Undersigned authorize the Depository to
perform said services.
ACKNOWLEDGED AND AGREED:
SUN PAGING COMMUNICATIONS
-----------------------------------------------------
BY:
PALMER COMMUNICATIONS, INC.
-----------------------------------------------------
BY:
AMERICAN MOBILPHONE, INC.
-----------------------------------------------------
BY:
CONTACT COMMUNICATIONS INC.
-----------------------------------------------------
BY: Mark A. Solls, Vice President and General Counsel
DATE:
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11
<PAGE>
EXHIBIT D
TO DEPOSITORY AGREEMENT - INDEMNIFICATION ESCROW
22. Additional Terms
a. CLAIMS AGAINST AND PAYMENTS FROM ESCROW.
(i) Claims against the Property may be made by Purchaser, on its own
behalf or on behalf of any other Purchaser Indemnified Party (as defined in the
Purchase Agreement), for indemnification of any Purchaser Indemnified Cost (as
defined in the Purchase Agreement).
(ii) Purchaser shall promptly notify Seller and the Depository in writing
of any sums which Purchaser claims are subject to indemnification under the
Purchase Agreement. Failure of Purchaser to exercise promptness in such
notification shall not amount to a waiver of such claim unless the resulting
delay materially prejudices the position of the Seller with respect to such
claim. Such notice shall consist of a description of the claim and specify each
Indemnified Party and the amount (which may be estimated) of the claim in United
States dollars.
(iii) The Seller may contest the claims specified in paragraph
22(a)(ii) (or any portion thereof) by giving the Depository and Purchaser
written notice of such contest within fifteen days after receipt by the Seller
of a notice from Purchaser under paragraph 22(a)(ii), which notice of contest
shall include a statement of the grounds of such contest and shall state the
amount of any such claim by Purchaser that the Seller do not dispute.
(iv) Payment of any claim for indemnification (or portion thereof) to which
the Property is subject shall become due and payable by the Depository upon
receipt of written authorization executed by the Undersigned.
b. RELEASE OF FUNDS. On the 90th, 180th and 270th day following the
Closing, the Depository shall release to the Seller the lesser of (i) $25,000,
or (ii) $25,000 less the portion of the Property subject to claims by
Purchaser. Payment of Property under this Section 22(b) by the Depository
shall be pursuant to written instructions executed by the Undersigned.
c. Distribution. Depository on or before the above described dates in
Section 22(b) shall distribute to Seller all income earned on the Property.
<PAGE>
d. NOTICES. All notices, consents, or other communications hereunder
shall be in writing and shall be sufficient if delivered personally, sent by
facsimile or similar device, or sent by registered or certified mail, or via
express mail service, postage prepaid, addressed as follows, or to such other
address as any party shall designate in a subsequent notice:
To Buyer: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Atten: Jackie R. Kimzey
Mark A. Solls
(214) 687-2000
Fax # (214) 774-0640
With A Copy To: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Atten: Mark A. Solls
Fax # (214) 774-0640
To Sellers: Sun Paging Communications
% American Mobilphone, Inc.
500 Grentree Commons
381 Mansfield Avenue
Pittsburgh, Pennsylvania 15220
Atten: Mr. Fred W. Schwarz
With A Copy To: Palmer Wireless, Inc.
K. Patrick Meehan, Esquire
Vice President & General Counsel
12800 University Drive, Suite #500
Ft. Myers, Florida 33907
Fax # (813) 433-8213
To Depository: Norwest Bank Texas, N.A.
4300 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Atten: Sherri Hewett, Vice President
Fax # (214) 922-8904
Any such notice shall be deemed sent when received at the address or fax number
so designated.
<PAGE>
e. ALLOCATION OF DEPOSITORY'S FEES. The Undersigned, as among
themselves, agree that all fees and expenses charged by or payable to the
Depository shall be borne fifty percent by the Purchaser and fifty percent by
the Sellers.
f. ALLOCATION OF INDEMNIFICATION LIABILITIES. The Undersigned, as among
themselves, agree that, in the event of any dispute resulting in litigation over
entitlement to or distribution of the Property, the non-prevailing party(ies)
shall bear 100 percent of any and all losses, claims, damages, liabilities and
expenses of the Depository for which the Undersigned may be jointly and
severally liable under the terms of this Agreement.
<PAGE>
EXHIBIT J
______________________________________________________________________________
NATIONSBANK DEPOSITORY AGREEMENT-ESCROW
______________________________________________________________________________
THE UNDERSIGNED Contact Communications Inc. ("Purchaser"), Sun Paging
Communications ("Seller"), Palmer Communications Incorporated ("Palmer"),
American Mobilphone, Inc. ("American", collectively with Palmer, the
"Partners"), (collectively, the "Undersigned"), in order to designate
NationsBank of Texas, National Association, (the "Depository") as the
Depository for the Undersigned for the purposes and upon the terms and
conditions herein set forth, do hereby represent and warrant to, and agree with
each other and the Depository, as follows:
1. APPOINTMENT OF THE DEPOSITORY. The Depository is hereby appointed
Depository for the Undersigned with respect to the "Property" as that term is
herein defined.
2. THE PROPERTY. Concurrently with the execution and delivery hereof, the
Undersigned have deposited with the Depository, as custodian and depository, the
items described in Schedule A hereto, or in lieu thereof, have made provision in
paragraph 22 for the deposit of items hereunder (such items being herein
collectively called the "Property"), and direct that same be held and disposed
of by the Depository as herein provided.
3. THE DEPOSITORY'S DUTIES AND AUTHORITY TO ACT.
(a) Except as may be otherwise provided in paragraph 22, in which event
the special instructions in said paragraph 22 shall be controlling, the
Depository shall hold the Property in safekeeping and deliver the same or any
part or parcel thereof, including the interest earned from investments made
pursuant to paragraph 20 hereof, only (i) to one or more of the Undersigned in
accordance with and upon the written instructions of each of the other of the
Undersigned and/or (ii) in accordance with and upon the written instructions of
all the Undersigned.
(b) When instructions from more than one of the Undersigned are required,
such instructions may be given by separate instruments of similar tenor. Any of
the Undersigned may hereafter act through an agent or attorney-in-fact only if
written evidence of authority in form and substance satisfactory to the
Depository is furnished to the Depository and agreed to by the Depository.
(c) The Depository may act upon any written notice, request, waiver,
consent, certificate, receipt, authorization, power of attorney or other
document which it in good faith believes to be genuine.
(d) The Depository shall be deemed to have properly delivered any item of
Property upon (i) placing the item in the United States mail in a suitable
package or envelope with first class prepaid postage affixed, addressed to the
addressee at such addressee's address as set forth in this Agreement or such
other address as the Undersigned shall have furnished to the Depository in
writing; (ii) delivery in person at the Depository's offices; or (iii) delivery
in any other manner pursuant to written instructions of the Undersigned.
<PAGE>
(e) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Depository shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Depository so acting or failing to so act; provided, however, the
Depository shall not be relieved from liability for damages arising out of its
proven gross negligence or willful misconduct under this Agreement. The
Depository shall in no event incur any liability with respect to (i) any action
taken or omitted to be taken in good faith upon advice of legal counsel given
with respect to any questions relating to the duties and responsibilities of the
Depository hereunder or (ii) any action taken or omitted to be taken in reliance
upon any document delivered to the Depository and believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(f) Payment of moneys hereunder shall be made by check or by wire transfer
of immediately available funds in accordance with instructions contained in the
applicable disbursement notice to the Depository.
4. OTHER AGREEMENTS. The Depository is not a party to, nor is it bound
by, nor need it give consideration to the terms or provisions of, any other
agreement or undertaking among the Undersigned or any of them, or between the
Undersigned or any of them and other persons, or any agreement or undertaking
which may be evidenced by or disclosed by the Property, it being the intention
of the parties hereto that the Depository assent to and be obligated to give
consideration only to the terms and provisions hereof. Unless otherwise
provided in paragraph 22, the Depository shall have no duty to determine or
inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of any of the Undersigned with respect to
arrangements or contracts with each other or with others, the Depository's sole
duty hereunder being to hold the Property and to dispose of and deliver the same
in accordance with instructions given to it as provided in paragraph 3.
5. STANDARD OF CARE.
(a) The Depository undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Depository.
(b) If the Depository is required by the terms hereof to determine the
occurrence of any event or contingency, the Depository shall, in making such
determination, be liable only for its proven gross negligence or willful
misconduct, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its business. In
determining the occurrence of any such event or contingency the Depository may
request from any of the Undersigned or any other person such reasonable
additional evidence as the Depository in its sole discretion may deem necessary
to determine any fact relating to the occurrence of such event or contingency,
and may at any time inquire of and consult with others, including without
limitation, any of the Undersigned, and the Depository shall not be liable for
any damages resulting from its delay in acting hereunder pending its receipt and
examination of additional evidence requested by it.
(c) Whenever the Depository is required by the terms hereof to take action
upon the occurrence of any event or contingency, the time prescribed for such
action shall in all cases be a reasonable time after written notice received by
the Depository for the happening of such event or contingency, provided however,
that this provision shall not be deemed to limit or reduce the time allowed the
Depository for action as provided in paragraph 5(b).
2
<PAGE>
6. LIMITATION ON LIABILITY. The Depository shall not be responsible or
liable to the Undersigned or to any other person in any manner whatsoever for
the sufficiency, correctness, genuineness, effectiveness or validity of any of
the Property, or for the form or execution thereof, or for the identity or
authority of any person executing or depositing the same. If any of the
Undersigned are acting as agent for others, all of the Undersigned represent and
warrant that each such agent is authorized to make and enter into this
Agreement. This Agreement is a personal one between the Undersigned and the
Depository. The Depository is authorized by each of the Undersigned to rely
upon all representations, both actual and implied, of each of the Undersigned
and all other persons relating to this Agreement and/or the Property, including
without limitation representations as to marital status, authority to execute
and deliver this Agreement, notifications, receipts or instructions hereunder,
and relationships among persons, firms, corporations or other entities,
including those authorized to receive delivery hereunder, and the Depository
shall not be liable to any person in any manner by reason of such reliance. The
duties of the Depository hereunder shall be only to the Undersigned, their
respective successors, heirs, assigns, executors and administrators and to no
other person, firm, corporation or other entity whatsoever.
7. TIME OF PERFORMANCE. Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not a regular
business day of the Depository, the performance thereof on the next
succeeding regular business day of the Depository shall be deemed to be in
full compliance. Whenever time is referred to in this Agreement, it shall be
the time recognized by the Depository in the ordinary conduct of its normal
business transactions.
8. DEATH, DISABILITY, ETC. OF THE UNDERSIGNED. The death, disability,
bankruptcy, insolvency, reorganization or absence of any of the Undersigned
shall not affect or prevent performance by the Depository of its obligations or
its right to rely upon instructions received hereunder. However, in the event
of the death, disability, bankruptcy, insolvency, reorganization or absence of
any of the Undersigned, the Depository (without liability to any of the
Undersigned) may refrain from taking any action required or requested hereunder.
9. EXAMINATION OF THE PROPERTY. Any of the Undersigned may examine the
Property during the regular business hours of the Depository; such examination
shall, however, be permitted only in the presence of an officer of the
Depository.
10. REMEDIES OF THE DEPOSITORY.
(a) As additional consideration for and as an inducement for the Depository
to act hereunder, it is understood and agreed that in the event of any
disagreement between the parties to this Agreement or in the event any other
person or entity claims an interest in the Property or any part thereof, and
such disagreement or claim results in adverse claims and demands being made by
them or any of them in connection with or for any part of the Property, the
Depository shall be entitled, at the option of the Depository, to refuse to
comply with the instructions or demands of the parties to this Agreement, or any
of such parties, so long as such disagreement or adverse claim shall continue.
In such event, the Depository shall not be required to make delivery or other
disposition of the Property.
3
<PAGE>
Anything herein to the contrary notwithstanding, the Depository shall not be
or become liable to the Undersigned or any of them for the failure of the
Depository to comply with the conflicting or adverse demands of the
Undersigned or any of such parties or of any other persons or entities
claiming an interest in the Property or any part thereof. The Depository
shall be entitled to refrain and refuse to deliver or otherwise dispose of
the Property or any part thereof or to otherwise act hereunder, as stated
above, unless and until (i) the rights of the parties and all other persons
and entities claiming an interest in the Property have been duly adjudicated
in a court having jurisdiction of the parties and the Property or (ii) the
parties to this Agreement and such other persons and entities have reached an
agreement resolving their differences and have notified the Depository in
writing of such agreement and have provided the Depository with indemnity
satisfactory to it against any liability, claims or damages resulting from
compliance by the Depository with such agreement. In addition to the
foregoing, the Depository shall have the right to tender into the registry or
custody of any court having jurisdiction, any part of or all of the Property.
Upon such tender, the parties hereto agree that the Depository shall be
discharged from all further duties under this Agreement; provided, however,
that the filing of any such legal proceedings shall not deprive the
Depository of its compensation hereunder earned prior to such filing and
discharge of the Depository of its duties hereunder.
(b) While any suit or legal proceeding arising out of or relating to this
Agreement or the Property or the Undersigned is pending, whether the same be
initiated by the Depository or by others, the Depository shall have the right at
its option to stop all further performance of this Agreement and instructions
received hereunder until all differences shall have been resolved by agreement
or until the rights of all parties shall have been fully and finally adjudicated
by the court. For purposes of any suit or legal proceeding arising out of or
relating to this Agreement to which the Depository may be a party, the
Undersigned hereby consent and submit to the jurisdiction of the appropriate
court, whether Federal or state, sitting in Dallas County, Texas. The rights
of the Depository under this paragraph are in addition to all other rights which
it may have by law or otherwise.
11. RELIANCE ON COUNSEL. The Depository may from time to time consult
with legal counsel of its own choosing in the event of any disagreement, or
controversy, or question or doubt as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting in good faith in accordance with the opinion
or instructions of such counsel. Any such fees and expenses of such legal
counsel shall be considered part of the fees and expenses of the Depository
described below.
12. FEES AND EXPENSES.
(a) The Undersigned hereby jointly and severally agree to pay the
Depository for its ordinary services hereunder the fees determined in accordance
with, and payable as specified in, the Schedule of Fees set forth in Exhibit
"A", attached hereto. In addition, the Undersigned hereby jointly and severally
agree to pay to the Depository its expenses incurred in connection with this
Agreement, including, but not limited to, legal fees and expenses, in the event
the Depository deems it necessary to retain counsel. Such expenses shall be
paid to the Depository within 10 days following receipt by any of the
Undersigned of a written statement setting forth such expenses.
4
<PAGE>
(b) The Undersigned jointly and severally agree that in the event any
controversy arises under or in connection with this Agreement or the Property,
or the Depository is made a party to or intervenes in any litigation pertaining
to this Agreement or the Property, to pay to the Depository reasonable
compensation for its extraordinary services and to reimburse the Depository for
all costs and expenses associated with such controversy or litigation,
including, but not limited to, legal fees and expenses.
(c) As security for all fees and expenses of the Depository hereunder and
any and all losses, claims, damages, liabilities and expenses incurred in
connection with the acceptance of appointment hereunder or with the performance
of its obligations under this Agreement and to secure the obligation of the
Undersigned to indemnify the Depository as set forth in paragraph 21 hereof, the
Depository is granted a security interest in and lien upon the Property, which
security interest and lien shall be prior to all other security interests, liens
or claims against the Property or any part thereof. Each of the Undersigned
warrant and agree with the Depository that, unless otherwise expressly set forth
in this Agreement, there is no security interest in the Property or any part
thereof; no financing statement under the Uniform Commercial Code of any
jurisdiction is on file in any jurisdiction claiming a security interest in or
describing, whether specifically or generally, the Property or any part thereof;
and the Depository shall have no responsibility at any time to ascertain whether
or not any security interest exists in the Property or any part thereof or to
file any financing statement under the Uniform Commercial Code of any
jurisdiction with respect to the Property or any part thereof.
(d) The Depository is authorized by the Undersigned to withhold from the
Property, prior to distribution thereof and prior to termination of this
Agreement, all fees and expenses to which the Depository is entitled hereunder.
In addition, in the event any such fees and expenses are not paid to the
Depository on or prior to the date such amounts are due, the Depository is
hereby authorized and directed to pay such amounts owed to it from cash funds
included in the Property or, if no cash funds are then included in the Property,
to sell assets constituting part of the Property for the purpose of paying such
amounts owed to it.
(e) In the event fees and expenses of the Depository are to be paid
pursuant to paragraph 22 hereof, it is understood and agreed by the Undersigned
that such fees and expenses are in addition to those described above and that
such fees and expenses shall be subject to periodic review and modification by
the Depository as determined by the Depository in its sole discretion.
13. EFFECTIVE DATE. The effective date of this Agreement shall be the
date on which it is accepted by the Depository unless otherwise provided in
paragraph 22.
14. TERMINATION AND RESIGNATION. Unless sooner terminated as hereinafter
provided, this Agreement shall terminate without action of any party when all of
the terms hereof shall have been fully performed. Either the Depository or the
Undersigned may terminate this Agreement upon thirty (30) days written notice
(i) signed by the Depository and delivered to each of the Undersigned or (ii)
signed by each of the Undersigned and delivered to the Depository. Upon
termination of this Agreement, the Depository shall deliver the Property in
accordance with the written instructions delivered by the Undersigned pursuant
to paragraph 3(a) hereof. All fees and expenses owed to the Depository
hereunder shall be paid in full prior to such delivery of the Property, and the
Depository is hereby
5
<PAGE>
authorized and directed by the Undersigned to withhold release or
distribution of the Property until such time as the Depository has received
payment in full of such fees and expenses. The Depository is authorized and
directed to deduct such fees and expenses from the Property prior to release
or distribution thereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and such counterparts shall constitute
and be one and the same instrument.
16. ASSIGNMENT OF INTERESTS. None of the Undersigned shall assign or
attempt to assign or transfer his or its interest hereunder or any part
thereof. Any such assignment or attempted assignment by any one or more of
the Undersigned shall be in direct conflict with this Agreement and the
Depository shall not be bound thereby.
17. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
18. HEADINGS. The paragraph headings contained herein are for convenience
of reference only and are not intended to define, limit or describe the scope or
intent of any provision of this agreement.
19. GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
Texas.
20. INVESTMENT OF PROPERTY; WITHHOLDING.
(a) The Depository shall invest cash balances each day in such money
market or other short-term investment funds as shall be specified in writing by
an Authorized Representative on Exhibit "B" [Disclosure and Direction] attached
hereto. Such money market or short-term investment funds may include any open-
end or closed-end management investment trust or investment company registered
under the Investment Company Act of 1940, as amended, for which the Depository
or one of its affiliates acts as investment advisor, custodian, transfer agent,
registrar, sponsor, distributor, manager or otherwise, and any fees paid to the
Depository or its affiliate by such fund shall be in addition to the fees and
expenses owed to the Depository under this Agreement.
(b) The Depository shall not be responsible or liable for determination or
payment of any taxes assessed against the Property or the income therefrom nor
for the preparation or filing of any tax returns other than withholding required
by statute or treaty. Each of the Undersigned agree to provide the Depository
any information necessary to perform any such required withholding and the
Depository shall be entitled to rely on such information. The Depository will
establish the account holding the Property under the TIN of ________________; if
Depository is responsible for tax reporting as set forth in paragraph 22, it
will be rendered under the aforementioned TIN. A W-9 certifying to the party's
withholding status in the form set forth on Exhibit "C" attached hereto will be
completed at closing.
6
<PAGE>
(c) The Depository may make any and all investments through its own bond
or investment department. The Depository shall not be held liable or
responsible for the quality or diversity of the assets constituting the Property
or for any loss or depreciation in the value of such assets or any loss
resulting from any investment made by the Depository in accordance with the
terms of this Agreement. If the Depository is required to sell or otherwise
redeem or liquidate any Property prior to its maturity, the Undersigned agree
that the Depository shall not be personally liable for any loss to the Property
(including either principal or income) or other costs incurred as a result of
any such early redemption or liquidation.
21. INDEMNIFICATION AND HOLD HARMLESS. The Undersigned hereby agree to
indemnify and hold the Depository and its directors, employees, officers,
agents, successors and assigns harmless from and against any and all losses,
claims, damages, liabilities and expenses, including without limitation,
reasonable costs of investigation and counsel fees and expenses which may be
imposed on the Depository or incurred by it in connection with its acceptance of
this appointment as the Depository hereunder or the performance of its duties
hereunder. Such indemnity includes, without limitation, all losses, damages,
liabilities and expenses (including counsel fees and expenses) incurred in
connection with any litigation (whether at the trial or appellate levels)
arising from this Escrow Agreement or involving the subject matter hereof. The
indemnification provisions contained in this paragraph 21 are in addition to any
other rights any of the indemnified parties may have by law or otherwise and
shall survive the termination of this Agreement or the resignation or removal of
the Depository.
22. ADDITIONAL TERMS.
SEE EXHIBIT D
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Depository
Agreement - Escrow to be executed this _____________day of _______________,
199__.
CONTACT COMMUNICATIONS INC. Address
By: 6340 LBJ Freeway
------------------------------------- ---------------------------------
Mark A. Solls Dallas, Texas 75240
---------------------------------
Title: Vice President and General Counsel (214) 687-2000 (214) 774-0640
---------------------------------- ---------------------------------
Company TIN: Telephone # Fax #
-----------------------------
SUN PAGING COMMUNICATIONS Address
By:
-------------------------------------- ---------------------------------
---------------------------------
Title:
---------------------------------- ---------------------------------
Company TIN:
--------------------------- Telephone # Fax #
PALMER COMMUNICATIONS, INC. Address
By:
------------------------------------- ---------------------------------
---------------------------------
Title:
----------------------------------- ---------------------------------
Company TIN:
----------------------------- Telephone # Fax #
AMERICAN MOBILPHONE, INC. Address
By:
------------------------------------- ---------------------------------
---------------------------------
Title:
----------------------------------- ---------------------------------
Company TIN:
----------------------------- Telephone # Fax #
The Depository hereby acknowledges receipt of the Property described in
Schedule A hereof and hereby accepts the same as Depository hereunder, subject
to the terms and conditions set forth above, this ___________day of __________,
199__.
NationsBank of ___________, National Association,
DEPOSITORY
BY:
---------------------------------------------------
TITLE:
--------------------------------------------------
8
<PAGE>
ATTACHMENTS:
Schedule A - Description of Property
Exhibit A - Schedule of Fees
Exhibit B - Disclosure and Direction (Investments)
Exhibit C - Withholding Form
9
<PAGE>
SCHEDULE A
DESCRIPTION OF PROPERTY
(Description of the "Property" as that term is defined in paragraph 2 of the
Agreement) In the event the property is other than cash, securities or
negotiable instruments, the following provisions shall apply: (i) Depository
makes no warranty as to the suitability for any particular purpose of the
Property deposited with Depository hereunder, or
(ii) Depository makes no warranty that the facilities of the Depository are
suitable for the deposit of the Property, or (ii) Depository shall not be liable
for any deterioration or destruction of the Property while in the possession of
Depository, except for the gross negligence or willful misconduct of the
Depository, or (iv) Depository has no duty to determine if any Property
deposited hereunder is in fact the property that is required to be deposited
hereunder pursuant to any agreement of the Undersigned.
$50,000.00 CASH
The following person(s) are designated as Authorized Representative as that term
is defined in the Agreement and specimen signatures are shown:
CONTACT COMMUNICATIONS INC.
- ------------------------------------ ------------------------------------
By: Mark A. Solls, Vice President Signature
SUN PAGING COMMUNICATIONS
- ------------------------------------ ------------------------------------
By: Signature
PALMER COMMUNICATIONS, INC.
- ------------------------------------ ------------------------------------
By: Signature
AMERICAN MOBILPHONE, INC.
- ------------------------------------ ------------------------------------
By: Signature
10
<PAGE>
EXHIBIT A
SCHEDULE OF FEES
$1,800.00
Out of pocket expenses such as, but not limited to, postage, courier, insurance,
long distance telephone, stationery, travel, legal or accounting, etc., will be
billed at cost.
The initial and administration fee are due at closing.
These fees do not include extraordinary services which will be priced according
to time and scope of duties.
It is acknowledged that the Schedule of Fees shown above are acceptable for the
services mutually agreed upon and the Undersigned authorize the Depository to
perform said services.
ACKNOWLEDGED AND AGREED:
SUN PAGING COMMUNICATIONS
------------------------------------------------------
BY:
PALMER COMMUNICATIONS, INC.
------------------------------------------------------
BY:
AMERICAN MOBILPHONE, INC.
------------------------------------------------------
BY:
CONTACT COMMUNICATIONS INC.
------------------------------------------------------
BY: Mark A. Solls, Vice President and General Counsel
DATE:
------------------------------------------------------
11
<PAGE>
EXHIBIT D
22. ADDITIONAL TERMS.
(a) INVESTMENT AND REINVESTMENT. All proceeds, interest and other
payments or distributions made upon or with respect to any investments made
pursuant to the provisions hereof (collectively, the "Accrued Earnings") shall
be reinvested in the manner provided in paragraph 20. As used herein, the term
"Property" shall mean the Deposits (as hereinafter defined) and Accrued
Earnings.
(b) DEPOSIT OF FUNDS. Concurrently herewith and pursuant to the terms
of that certain Asset Purchase Agreement dated as of November 10, 1995, by and
among the Undersigned (the "Asset Purchase Agreement"). Purchaser is depositing
with the Depository the sum of $50,000.00 in cash (the "Deposits").
(c) DISBURSEMENT OF THE PROPERTY. The Property shall be held and
disbursed by the Depository as follows:
(i) UPON THE CLOSING. If the Closing of the transactions
contemplated by the Asset Purchase Agreement occurs on or before June 30,
1996 (the "Target Date"), then upon receipt of written instructions from
the Undersigned, the Depository shall disburse the Deposits to the Seller
as a credit against the purchase price of the assets of the Company as
referenced in the Asset Purchase Agreement and shall disburse the Accrued
Earnings to the Purchaser.
(ii) FAILURE TO CLOSE.
(A) If the Closing of the Transactions contemplated by the Asset
Purchase Agreement does not occur by the Target Date due to Purchaser's
breach of the Asset Purchase Agreement, then, upon receipt of written
instructions from the Undersigned, the Depository shall disburse the
Property to the Seller.
(B) If the Closing of the transactions contemplated by the Asset
Purchase Agreement does not occur by the Target Date due to any reason
other than those set forth in paragraph 22(c)(ii)(A), then upon receipt of
written instructions from the Undersigned, the Depository shall disburse
the Property to the Purchaser.
(d) NOTICES. All notices, consents, or other communications hereunder
shall be in writing and shall be sufficient if delivered personally, sent by
facsimile or similar device, or sent by registered or certified mail, or via
express mail service, postage prepaid, addressed as follows, or to such other
address as any party shall designate in a subsequent notice:
<PAGE>
To Purchaser: CONTACT COMMUNICATIONS INC.
6340 LB. Freeway
Dallas, Texas 75240
Attain: Jackie R. Kimzey
Mark A. Solls
(214) 687-2000
Fax # (214) 774-0640
With A Copy To: PRONET INC.
6340 LB. Freeway
Dallas, Texas 75240
Attain: Mark A. Solls
Fax # (214) 774-0640
To Seller: SUN PAGING COMMUNICATIONS
% American Mobilphone, Inc.
500 Greentree Commons
381 Mansfield Avenue
Pittsburg, Pennsylvania 15220
Atten: Fred W. Schwarz
With A Copy To: PALMER COMMUNICATIONS, INC.
K. Patrick Meehan, Esquire
Vice President & General Counsel
12800 University Drive, Suite #500
Ft. Myers, Florida 33907
Fax# (813) 433-8213
To Depository: NATIONSBANK OF TEXAS, N.A.
901 Main Street, 18th Floor
Dallas, Texas 75202-3714
Atten: Corporate Trust/Billie Collins
Fax #(214) 508-3430
Any such notice shall be deemed sent when received at the address or fax number
so designated.
(e) ALLOCATION OF DEPOSITORY'S FEES. The Undersigned, as among
themselves, agree that all fees and expenses charged by or payable to the
Depository shall be born fifty percent by the Purchaser and fifty percent by the
Seller.
(f) ALLOCATION OF INDEMNIFICATION LIABILITIES. The Undersigned, as among
themselves, agree that, in the event of any dispute resulting in litigation over
entitlement to our distribution of the Property, the non-prevailing party(ies)
shall bear 100 percent of any and all losses, claims, damages, liabilities and
expenses of the Depository for which the Undersigned may be jointly and
severally liable under the terms of this Agreement.
<PAGE>
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- -------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
AMONG SIGNET PAGING OF RALEIGH, INC.,
W. DAVID SWEATT
AND
CONTACT COMMUNICATIONS INC.
SEPTEMBER 27, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE 1
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 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
2.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Purchaser Information . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SHAREHOLDERS
3.1 Due Organization; Ownership . . . . . . . . . . . . . . . . . . . . . 6
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Conduct of Business; Certain Actions. . . . . . . . . . . . . . . . . 7
3.7 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Pagers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Intellectual Rights . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Contracts and Agreements. . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 11
(i)
<PAGE>
PAGE
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3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Business Relations. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.20 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.21 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.22 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . 14
3.23 Interest in Competitors, Suppliers, and Customers . . . . . . . . . . 14
3.24 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.25 Commission Sales Contracts. . . . . . . . . . . . . . . . . . . . . . 14
3.26 Regulatory Certificates . . . . . . . . . . . . . . . . . . . . . . . 14
3.27 Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.28 Sophisticated Investor Status . . . . . . . . . . . . . . . . . . . . 15
3.29 Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.30 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.31 Purchaser Information . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4
COVENANTS OF THE SELLER AND THE SHAREHOLDER
4.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Satisfaction of All Conditions Precedent. . . . . . . . . . . . . . . 17
4.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Notice of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Notice of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Continuation of Insurance Coverage. . . . . . . . . . . . . . . . . . 18
4.9 Maintenance of Credit Terms . . . . . . . . . . . . . . . . . . . . . 18
4.10 Updating Information. . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Interim Operations of the Seller. . . . . . . . . . . . . . . . . . . 18
4.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.14 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5
REGULATORY APPROVALS . . . . . . . . . . . . . .20
(ii)
<PAGE>
ARTICLE 6
CONDITIONS TO CLOSING
PAGE
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6.1 Conditions to Obligations of the Purchaser. . . . . . . . . . . . . . 21
6.2 Conditions to Obligations of the Seller . . . . . . . . . . . . . . . 23
ARTICLE 7
TERMINATION . . . . . . . . . . . . . . . .24
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of the Purchaser. . . . . . . . . . . . . . . . . . . 24
8.2 Indemnification of the Seller and the Shareholder . . . . . . . . . . 24
8.3 Defense of Third-Party Claims . . . . . . . . . . . . . . . . . . . . 25
8.4 Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9
MISCELLANEOUS
9.1 Collateral Agreements, Amendments, and Waivers. . . . . . . . . . . . 27
9.2 Restriction on Transfer of Common Stock . . . . . . . . . . . . . . . 27
9.3 Bulk Sales Compliance . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4 Risk of Loss - Damage to Transferred Assets . . . . . . . . . . . . . 28
9.5 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.6 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . . 28
9.7 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.8 Seller's Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 29
9.9 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 29
9.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.11 Sales Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.12 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.13 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.14 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.15 Survival of Representations, Warranties, and Covenants. . . . . . . . 31
(iii)
<PAGE>
PAGE
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9.16 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.17 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.18 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . 31
9.19 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.20 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.21 Sections; Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.22 Number and Gender of Words. . . . . . . . . . . . . . . . . . . . . . 32
9.23 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . 32
(iv)
<PAGE>
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
3.14 Material Contracts
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 - Bill of Sale
B - Assumption Agreement
C - Form of Opinion of Counsel to the Seller and the Shareholders
D - Form of Opinion of FCC Counsel to the Seller and the
Shareholders
E - Noncompetition Agreement - W. David Sweatt
F - Noncompetition Agreement - Sam A. Miles
G - Noncompetition Agreement - Lee Miles
H - Noncompetition Agreement - Seller
I - License Agreement
J - Registration Rights Agreement
K - Promissory Note
L - Form of Opinion of Counsel to the Purchaser
M - Allocation of Purchase Price
(v)
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of September 27, 1995, by and among SigNet Paging of Raleigh, Inc., a North
Carolina corporation (the "Seller"), W. David Sweatt (the "Shareholder"), and
Contact Communications Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
A. The Shareholder owns 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 affiliated networks, being
hereinafter collectively called the "System").
A G R E E M E N T S
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 1
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.
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, 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");
<PAGE>
(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
ANNEX 8 TO SCHEDULE 1.1 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, (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 the Purchaser under
Section 1.1 hereof and the assumption of liabilities under this Section 1.3 by
the Purchaser, 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 this Agreement (including, without limitation, any
liability arising out of the Seller's employee severance
2
<PAGE>
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 shareholder,
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 Shareholder 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) $[3.4] million, payable on the Closing
Date in cash, (ii) $2.4 million, payable on the Closing Date in 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"), valued at
the Average Closing Price (hereinafter defined) as of the Closing Date, and
payable in cash as provided in the last sentence of this paragraph if the Common
Stock is not then registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and quoted on The Nasdaq Stock
Market (or other quotation system or securities exchange), (iii) $800,000 (the
"Deferred Amount"), 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 shares of Common Stock valued at the Average Closing
Price as of the Deferred Payment Date, or cash, in the discretion of the
Purchaser, plus (iv) an amount calculated in accordance with the provisions of
APPENDIX A, provided that the number of pagers in service in the System exceeds
13,000 pagers (the "Pager Adjustment Amount"), minus (b) the sum of (i) an
amount equal to the product of (A) $615 multiplied by the remainder of
(B) 12,800 minus the number of pagers in service in the System as of the Closing
Date (if the number of pagers in service in the System is less than 12,800),
provided that the number of pagers in service in the System exceeds 12,000
pagers, plus (ii) 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 (collectively, the "Purchase
Price"). As used herein, "Average Closing Price" means the average closing
price of the Common Stock on The Nasdaq Stock Market (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 Closing Date or the Deferred Payment
Date, as applicable; provided, however, that if the Average Closing Price on the
Closing Date or the Deferred Payment Date, as applicable, exceeds $22.00, then
the number of shares of Common Stock to be delivered to the Seller on such date
shall be calculated by dividing the portion of the Purchase Price to be paid in
Common Stock on such date by $22.00; and provided further that if the Average
Closing Price on the Closing
3
<PAGE>
Date or the Deferred Payment Date, as applicable, is less than $18.00, then
the number of shares of Common Stock to be delivered to the Seller on such
date shall be calculated by dividing the portion of the Purchase Price to be
paid in Common Stock on such date by $18.00. Notwithstanding clause (a)(ii)
of this Section 1.4, if the Common Stock is not registered pursuant to
Section 12 of the Exchange Act and quoted on The Nasdaq Stock Market (or
other quotation system or securities exchange) then the portion of the
Purchase Price described in clause (a)(ii) above to be paid in cash rather
than in shares of Common Stock shall not be $2.4 million but shall be an
amount equal to the cash value (calculated on the basis of the closing price
of the Common Stock on the last day on which it is so registered and traded)
of that number of shares of Common Stock that would have been payable to the
Seller as provided in the preceding sentence had the Closing occurred on the
last day on which the Common Stock was so registered and traded.
The cash portion of 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.
1.5 CLOSING.
(a) CLOSING DATE. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Vinson & Elkins
L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas, 75201, 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) or on such other date as the parties may
agree, provided that the Closing shall not occur between December 15 and
December 31, 1995. 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 A
(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
(A) execute and deliver to the Seller an assumption agreement with respect to
the Assumed Liabilities substantially in the form attached hereto as EXHIBIT B
(the "Assumption Agreement"), and (B) deliver to the Seller a certified bank
check or wire transfer for the amount of the cash portion of the Purchase Price,
certificates representing the shares of Common Stock to be paid on the Closing
Date as provided in Section 1.4 hereof, and a promissory note in the form of
EXHIBIT K hereto. At the Closing, ProNet shall execute and deliver to the
Seller the Registration Rights Agreement in the form of EXHIBIT J hereto. Any
Common Stock issued in respect of the Deferred Amount shall be delivered to the
Seller at its address set forth in Section 9.14 hereof.
4
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller and the
Shareholder as follows (with the understanding that the Seller and the
Shareholder are relying materially on each such representation and warranty in
entering into and performing this Agreement):
2.1 DUE ORGANIZATION. The Purchaser and ProNet are each corporations duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and have full corporate power and corporate authority to own or lease
their respective properties and to carry on their respective businesses as, and
in the places where, such properties are owned or leased and such business is
conducted. The Purchaser is a wholly owned subsidiary of ProNet.
2.2 DUE AUTHORIZATION. The Purchaser and ProNet each have full corporate
power and corporate authority to enter into and perform their respective
obligations under this Agreement and each agreement, document, and instrument
required to be executed by either of them in accordance herewith. This
Agreement and any the other agreements, documents, and instruments required to
be executed and delivered by the Purchaser or ProNet in accordance herewith have
been, or by the Closing shall have been, duly and validly executed and delivered
by the Purchaser or ProNet, as applicable, and shall, upon their execution,
constitute valid and binding obligations of the Purchaser or ProNet, as
applicable, enforceable in accordance with their respective terms.
2.3 COMMON STOCK. The Common Stock to be issued by ProNet to the Seller
in partial payment of the Purchase Price, 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").
2.5 BROKERS. Except for a fee to Daniels & Associates, the obligation for
payment of which is and shall remain the sole responsibility of the Purchaser,
the Purchaser has not 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.
5
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SHAREHOLDERS
The Seller and the Shareholder each hereby jointly and severally 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
North Carolina 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. Except 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.
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 Shareholder. This Agreement and the agreements, documents, and
instruments required to be executed and delivered by the Seller or the
Shareholder in accordance herewith have been duly and validly executed and
delivered by the Seller and/or the Shareholder and constitute valid and binding
obligations of the Seller and/or the Shareholder 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.
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 the Shareholder in
connection herewith shall (a) violate any Federal, state, county, or local law,
rule, or regulation applicable to the Seller or the Shareholder, or its or his
properties, (b) violate or conflict with, or permit the cancellation
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of, any agreement to which the Seller or the Shareholder is a party, or by
which it or he or any of its or his 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 the Shareholder, or (d) violate or conflict with any provision
of the certificate of incorporation or by-laws 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. 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, and the related statements of operations and
retained earnings for the period then ended (the "Audited Financial
Statements"), (b) a complete and correct copy of the statement of financial
condition of the Seller as of June 30, 1995, and the related statements of
operations and retained earnings for the period then ended, each of which have
been prepared by Ernst & Young LLP (the "Interim Financial Statements" and,
together with the Audited Financial Statements, the "Financial Statements"), (c)
a complete and correct copy of the Seller's monthly internal management
financial reports for the month ended July 31, 1995, (the "Financial Reports"),
and (d) a complete and correct list of the Transferred Assets together with the
book value of each such Transferred Asset as of June 30, 1995, which list is set
forth on ANNEX 1 to SCHEDULE 1.1 attached hereto (the "June 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 year-end adjustments) 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 June
Asset List has 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 June 30, 1995, 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
Shareholder, 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 June 30, 1995, the Seller has conducted its business
and operations
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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, 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 (other than purchases of pagers consistent with past practices and
purchases of equipment necessary for the operation of the System), (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) cancelled,
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 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,
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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 1 to SCHEDULE 1.1 includes a true and complete list of
the number and type of pagers in service in the System as of June 30, 1995. 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 five percent
of the paging revenues attributable to the System, and the Seller and the
Shareholder do not know of any current subscribers 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 private carriage
pursuant to Part 90 of the Communications Act of 1934, as amended, 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 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. Except as
set forth on SCHEDULE 3.9, the Seller has complied and is in compliance with the
terms and conditions of all licenses, authorizations, certificates, permits, and
orders, and no violation of any such licenses, authorizations, certificates,
permits, or orders, 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. 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.
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3.10 INTELLECTUAL RIGHTS. Attached hereto as SCHEDULE 3.10 is a list and
description of all patents, trademarks, servicemarks, tradenames, 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, servicemarks, tradenames, or copyrights or applications therefor.
The Seller has good and marketable title to or the right to use such patents,
trademarks, service marks, tradenames, 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, servicemark, tradename, or
copyright of others, and neither the Seller nor the Shareholder is aware of any
infringement by others of any such rights owned by the Seller.
3.11 COMPLIANCE WITH LAWS. 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 and the Shareholder represent
and warrant that they have 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 and the Shareholder, 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 and the
Shareholder, 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. 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
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or applicable to the Seller at any time within the past three 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. The insurance 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 cancelled within the last three years, and no threat has been made to
cancel any insurance policy of the Seller within such period.
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 Shareholder 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. Except as set forth on
SCHEDULE 3.14 attached hereto, the Seller is not and, to the best knowledge of
the Seller and the Shareholder, 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. Neither the Seller nor
the 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.
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 Shareholder, 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 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
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(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 Shareholder, 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 and the Shareholder, 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. All 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 and
the Shareholder, there is no basis for any Seller Tax Actions. 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 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 $30,000. SCHEDULE
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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 and the
Shareholder, 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 Shareholder, threatened against or involving the Seller.
3.18 BUSINESS RELATIONS. Neither the Seller nor the Shareholder knows 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 and, except as
previously disclosed in writing to the Purchaser by the Seller, neither the
Seller nor the Shareholder is 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. Neither the Seller nor the 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 and the Shareholder, 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.
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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 and
payable. The weighted average age of the Seller's accounts receivable does not
exceed 15 days. 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.
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, neither the Seller, the Shareholder, nor any officer or
director of the Seller, or 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 June 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. Neither the Seller nor the Shareholder is
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.
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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 the
Shareholder), 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 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.
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In addition, the Seller acknowledges and agrees that a legend evidencing the
restrictions on transfer set forth in Section 9.2 hereof will be placed on all
certificates evidencing Common Stock delivered at the Closing.
3.31 PURCHASER INFORMATION. The Seller has received from the Purchaser
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 Shareholder 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 SHAREHOLDER
4.1 INSPECTION. From the date hereof to the Closing, the Seller and the
Shareholder 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, 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
Shareholder contained herein.
4.2 COMPLIANCE. From the date hereof to the Closing, neither the Seller
nor the Shareholder 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 Shareholder herein to be untrue or incorrect as of the
Closing.
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4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, the Seller and the Shareholder 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. From the date hereof until 5:00 p.m., Dallas time,
on January 31, 1996, the Seller and the Shareholder 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 offers 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 5:00 p.m. Dallas time on January 31, 1996, the Seller and the
Shareholder agree that neither the Seller nor the 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 Shareholder 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 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 Shareholder shall, immediately upon the Seller or the 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 the Shareholder shall, immediately upon the Seller or the 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 Shareholder 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 Shareholder shall, immediately upon the Seller or the 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
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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 Shareholder 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 Closing, the
Seller shall continue (and the Shareholder shall cause the Seller to continue)
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
Shareholder 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 Shareholder shall 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 (other than dividends (A) paid to the Shareholder in respect
of Federal income tax liability resulting from the operations of the
Seller, (B) consistent with past practice, or (C) that could not reasonably
be expected to adversely affect the operating cash flow of the Seller),
(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 (other than sales out of inventory, sales
and dispositions consistent with past practices, and dispositions of
obsolete equipment with notice thereof to the Purchaser), (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,
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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 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. In
addition, the Seller shall continue to write off accounts receivable
balances in accordance with its historical practices.
(b) From the date hereof to the Closing, the Seller shall use (and
the Shareholder shall 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 August 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 Shareholder shall use their best efforts to obtain all necessary consents to
the assignment
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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
Shareholder 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 all licenses,
authorizations, certificates, permits, and orders listed on ANNEX 7 to SCHEDULE
1.1 hereto.
ARTICLE 5
REGULATORY APPROVALS
With the full cooperation and assistance of the Seller and the Shareholder
as contemplated in Section 4.14 hereof, within 30 days after the date 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 Radio Station
Authorizations ("Authorizations") for the System, 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 Shareholder
and shall be relieved of all obligations hereunder as provided in Article 7
hereof.
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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
Shareholder 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 Shareholder 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 Shareholder 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 the
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 Bailey & Dixon,
L.L.P., 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 Joyce & Jacobs,
FCC counsel for the Seller and the Shareholder, 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 June 30, 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.
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(g) As of the Closing Date, the System shall include at least 12,000
pagers in service, 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.
(h) As of the Closing Date, the inventory of the System shall include
at least 400 current model, marketable pagers, 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 this 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.
(l) The Shareholder, Sam Miles, Lee Miles, and the Seller shall each
have entered into a Noncompetition Agreement (a "Noncompetition Agreement")
with the Purchaser substantially in the forms attached hereto as EXHIBITS
E, F, G, and H, respectively.
(m) The Seller shall have duly executed and delivered to the
Purchaser the License Agreement substantially in the form attached hereto
as EXHIBIT I granting the Purchaser the right to the use of the name
"SigNet Paging" in the area presently served by the System.
(n) The Seller and ProNet shall have entered into a Registration
Rights Agreement substantially in the form of EXHIBIT J hereto providing
that ProNet 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.
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(o) The Seller shall have delivered to the Purchaser assignments of
the Real Estate Leases.
(p) The Seller and the Shareholder 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 the Shareholder's respective representations,
warranties, covenants, or indemnities 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 the Shareholder
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 (i) 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 and (ii) certificates
evidencing the shares of Common Stock in the amount of the balance of the
Purchase Price to be paid on the Closing Date 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, the Shareholder and Sam Miles.
(e) The Seller and ProNet shall have entered into the Registration
Rights Agreement.
(f) The Purchaser shall have executed and delivered to the Seller a
promissory note substantially in the form of EXHIBIT K attached hereto.
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(g) The Seller shall have received an opinion of Vinson & Elkins
L.L.P., counsel to the Purchaser, substantially in the form of EXHIBIT L
attached hereto.
ARTICLE 7
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 the 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 Shareholder 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 January 31,
1996; provided, that no party may terminate this Agreement pursuant to (b), (c),
or (e) above if such party is, at the time of any such attempted termination, in
breach of any term hereof.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER. The Seller and the Shareholder
jointly and severally agree to indemnify and hold harmless the Purchaser and
each officer, director, employee, attorney, accountant, stockholder, and
affiliate of the Purchaser (collectively, the "Purchaser Indemnified Parties")
from and against any and all damages, losses, claims, liabilities (including,
without limitation, those liabilities not expressly assumed by the Purchaser as
provided in Sections 1.3 and 9.3 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, "Purchaser Indemnified Costs") which any of the Indemnified
Parties may sustain, or to which any of the Purchaser Indemnified Parties may be
subjected, arising out of any breach or default by the Seller or the 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 INDEMNIFICATION OF THE SELLER AND THE SHAREHOLDER. The Purchaser
agrees to indemnify and hold harmless the Seller, the Shareholder, and each
officer, director, employee, attorney, and accountant of the Seller
(collectively, the "Seller Indemnified
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Parties" and together with the Purchaser Indemnified Parties, the
"Indemnified Parties") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs and reasonable attorneys' fees and expenses incurred
in investigating and preparing for any litigation or proceeding)
(collectively, the "Seller Indemnified Costs" and together with the Purchaser
Indemnified Costs, the "Indemnified Costs") which any of the Seller
Indemnified Parties may sustain, or to which any of the Seller Indemnified
Parties may be subjected, arising out of or relating to any breach or default
by the Purchaser 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.
8.3 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
Indemnifying Parties shall not have employed counsel reasonably
satisfactory to the Indemnified Party to have charge of such third-party
action, (iii) 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, or (iv) 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 acknowledgement 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 acknowledgement,
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 acknowledgement
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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;
(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 acknowledgement 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 acknowledgement that
would give rise to liability on the part of any Indemnifying Party without
the prior written consent of such Indemnifying Party.
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.
8.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 8.3 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 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.
8.5 RIGHT OF OFFSET. The Seller and the Purchaser agree that the
Purchaser shall have the right to offset the amounts of any Purchaser
Indemnified Costs by reducing the Deferred Amount in an amount equal to the
amount of any such Purchaser Indemnified Costs.
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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 the confidentiality provisions set forth in
paragraph 2 of that certain letter of intent dated July 10, 1995, among the
parties hereto 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.
9.2 RESTRICTION ON TRANSFER OF COMMON STOCK. The Seller hereby agrees and
acknowledges that the shares of Common Stock to be received by the Seller on the
Closing Date (the "Transferred Shares") shall be subject to the following
restrictions on transfer. The Seller shall only be permitted to sell, assign,
transfer, or otherwise dispose of that number of Transferred Shares equal to
8.33 percent of the total number of Transferred Shares delivered to the Seller
at Closing in each calendar month beginning on the six month anniversary of the
Closing Date, for a period of 12 calendar months following such date, provided
that any shares of Common Stock so released may be transferred at any time and
from time to time after such release; PROVIDED, HOWEVER, that the Seller shall
be permitted (a) to make a bona fide pledge of the Transferred Shares as
security for indebtedness incurred contemporaneously with the making of such
pledge, so long as the pledgee agrees with the Purchaser in writing to be bound
by foregoing restrictions on transfer in the event of a foreclosure or other
manner of realizing upon any of the Transferred Shares so pledged, and (b) a
transfer or disposition in compliance with applicable law to (i) the
Shareholder, (ii) the Shareholder's spouse or descendants, or (iii) a trust
solely for the benefit of the Shareholder, the Shareholder's spouse or any of
the Shareholder's descendants. The Seller shall not be obligated to transfer
any of the Transferred Shares and upon the expiration of 18 months following the
Closing Date, the Transferred Shares shall be released from the foregoing
restriction. There shall be no contractual restriction on the timing of the
sale, assignment, transfer, or other disposition of the shares of Common Stock,
if any, delivered to the Seller in payment of the Deferred Amount.
9.3 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 Shareholder 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
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such liabilities shall be Indemnified Costs and, as such, shall be subject to
offset by the Purchaser as provided in Section 8.5 hereof.
9.4 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.
9.5 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 9.5, 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.
9.6 ALLOCATION OF PURCHASE PRICE. The parties hereto 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 M hereto.
9.7 RECORDS. At the Closing, the Seller and the Shareholder will turn
over and deliver to the Purchaser all files of the Seller and the Shareholder
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 the 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
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records, accounting information, and operating information and data, current and
historical, reasonably related to the Transferred Assets and/or the System.
9.8 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.
9.9 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. If the Purchaser's rights under this Agreement are
assigned to a successor entity, any portion of the Purchase Price that was
required to be paid, or was payable, in Common Stock shall be payable in cash in
accordance with Section 1.4 hereof. Any assignment, dissolution, or liquidation
in violation of the foregoing shall be null and void. Subject to the preceding
sentences of this Section 9.9, 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.
9.10 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.
9.11 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.
9.12 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.
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9.13 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
exercise of any other right, power, or privilege.
9.14 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
Plano, Texas 75075
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 964-9570
With a copy to: Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975
Attn: Jeffrey A. Chapman
Mark Early
Fax No: (214) 220-7716
If to the Seller SigNet Paging of Raleigh, Inc.
or the Shareholder: 2411-116E Millbrook Road
Raleigh, North Carolina 27604
Attention: W. David Sweatt
Sam A. Miles
Fax No: (919) 872-6474
With a copy to: Bailey & Dixon, L.L.P.
2500 Two Hannover Square
Post Office Box 1351
Raleigh, North Carolina 27602-1351
Attention: Cathleen M. Plaut
Fax No.: (919) 828-6592
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Each party may change its or his address for purposes of this Section 9.14 by
proper notice to the other parties.
9.15 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 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.
9.16 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.
9.17 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of the Purchaser, but without further consideration, the Seller and the
Shareholder 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 Shareholder,
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 Shareholder may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
9.18 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.
9.19 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
9.20 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.
9.21 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.
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9.22 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.
9.23 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.
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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.
[Seal] By: /s/ MARK A. SOLLS
---------------------------------
Mark A. Solls, Vice President and
General Counsel
Attest: BEVERLY MURPHY
----------------
SIGNET PAGING OF RALEIGH, INC.
[Seal] By: /s/ W. DAVID SWEATT
--------------------------------
W. David Sweatt, President
Attest: DONALD P. LEE
----------------
/s/ W. DAVID SWEATT
--------------------------------
W. David Sweatt
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<PAGE>
GUARANTEE
As an inducement to SigNet Paging of Raleigh, Inc., a North Carolina
corporation (the "Seller"), and W. David Sweatt (the "Shareholder") entering
into the Asset Purchase Agreement, dated today, with Contact Communications
Inc., a Delaware corporation (the "Purchaser"), ProNet Inc. ("ProNet"), a
Delaware corporation and the owner of all of the issued and outstanding capital
stock of the Purchaser, hereby guarantees the full and prompt performance by the
Purchaser of all obligations of the Purchaser under the Agreement, including the
payment, when due, of all sums owing by the Purchaser to the Seller or the
Shareholder under the Agreement. This Guarantee shall be governed by the laws
of the State of North Carolina.
PRONET INC.
By: /s/ MARK A. SOLLS
-------------------------------------
Name: Mark A. Solls
Title: Vice President and General Counsel
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APPENDIX A
PAGER ADJUSTMENT AMOUNT
The Pager Adjustment Amount shall be equal to the sum of
(a) the sum of (i) product of (A) $65 times (B) the remainder of (1)
the Closing Date Amount of pagers in service in the System pursuant to
rental agreements with end users minus (2) 7,930 plus (ii) an amount equal
to the Seller's cost with respect to any such additional pagers, plus
(b) the product of (i) $65 times (ii) the remainder of (A) the Closing
Date Amount (as hereinafter defined) of co-am pagers in service in the
System minus (B) 2,340, plus
(c) the product of (i) $25 times (ii) the remainder of (A) the Closing
Date Amount of pagers in service in the System pursuant to agreements with
resellers minus (B) 2,730.
With respect to any of the three categories of pagers described herein, "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(g)
hereof.
<PAGE>
EXHIBIT A
BILL OF SALE AND ASSIGNMENT
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
THAT SigNet Paging of Raleigh, Inc., a North Carolina 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 September ___, 1995, by and among Grantor, W. David
Sweatt, 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 the operation of the System (as
defined in the Purchase Agreement), including, without limitation, the assets
described on SCHEDULE 1 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.
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Nothing in this Bill of Sale and Assignment, express or 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 right 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 North
Carolina.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale as of
this __ day of _________, 1995.
SIGNET PAGING OF RALEIGH, INC.
By: _______________________________________
W. David Sweatt, President
A-2
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EXHIBIT B
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 SigNet Paging of Raleigh, Inc., a
North Carolina corporation (the "Seller").
W I T N E S S E T H
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 radio paging system
pursuant to that certain Asset Purchase Agreement dated as of September __,
1995, by and among the Purchaser, the Seller, and W. David Sweatt (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 (the "Assumed Contracts"), subject, however, to the terms and conditions
of the Purchase Agreement.
2. Except as specifically provided in this Agreement, the Purchaser shall
not be liable 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,
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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 Shareholder 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.
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<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller have executed this
Agreement as of the date first written above.
CONTACT COMMUNICATIONS INC.
By:
------------------------------------------
Mark A. Solls
Vice President and General Counsel
SIGNET PAGING OF RALEIGH, INC.
By:
------------------------------------------
W. David Sweatt, President
B-3
<PAGE>
EXHIBIT C
FORM OF
OPINION OF SELLER'S COUNSEL
1. The Seller is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of North Carolina.
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 and constitutes the legal, valid, and binding obligation of the
Seller enforceable in accordance with its terms.
3. The Shareholder has duly executed and delivered the Purchase Agreement
and the Shareholder Noncompetition Agreement. The Purchase Agreement and the
Shareholder Noncompetition Agreement constitute the legal, valid, and binding
obligation of the Shareholder enforceable in accordance with their respective
terms.
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 Shareholder of the Purchase
Agreement and the Shareholder Noncompetition Agreement, nor the performance by
the Shareholder of his 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 the Shareholder or the Seller or his or its property,
or any material agreement known to this firm to which the Shareholder or the
Seller is a party, or by which his or its properties is bound.
6. No approvals or authorizations by, or filings or qualifications with,
any state, federal, or local agency, authority, or body are required in
connection with the execution,
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delivery, and performance of the Purchase Agreement or any other agreements
or documents executed and delivered pursuant thereto by the Seller and/or the
Shareholder, except such as have been duly obtained or made.
7. To our knowledge after inquiry, there is no action, suit,
investigation, or proceeding that is pending or threatened against or affecting
the Seller or the 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 the Shareholder, would involve the possibility of materially and adversely
affecting the Transferred Assets.
8. To our knowledge after inquiry, 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 after inquiry, neither the Seller nor the 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. 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 and enforceable instruments
of conveyance, and, to our knowledge after inquiry, all consents of third
parties necessary for such conveyance to be valid and enforceable by the
Purchaser against third parties will have been obtained.
11. To our knowledge after inquiry, 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.
C-2
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EXHIBIT D
FORM OF
OPINION OF SELLER'S FCC COUNSEL
1. The Seller and the Shareholder 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 6
to Schedule 1.1 of the Agreement (the "Licenses"), except as listed in SCHEDULE
3.9 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 Shareholder or any subsequent holder with respect to their
operation of the System. The Seller and the Shareholder 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 Shareholder 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 Shareholder 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, delivery and performance of the Agreement
(including the assignment of the Licenses from Seller to Purchaser) by the
Seller and the Shareholder by virtue of the
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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 Shareholder 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 Shareholder 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 rulemaking
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.
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EXHIBIT E
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and W. David Sweatt (the "Shareholder").
W I T N E S S E T H
WHEREAS, concurrently herewith, SigNet Paging of Raleigh, Inc., a North
Carolina corporation ("SigNet"), is selling, transferring, and conveying to the
Company, pursuant to that certain Asset Purchase Agreement dated as of
September, 1995, by and among the Company, SigNet, and the Shareholder (the
"Purchase Agreement"), substantially all of the property and assets of SigNet
that are used in the conduct of SigNet'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 SigNet for a number of
years and, as the sole shareholder and as an officer of SigNet, possesses
valuable knowledge about the business and operations of SigNet; 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
E-1
<PAGE>
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 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 fifth 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 Raleigh-Durham 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; and, provided further, that
this covenant shall not apply to any investment by the
Shareholder in Voicetel of Central North Carolina ("Voicetel");
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 Raleigh-Durham Area;
c. directly or indirectly request or advise any present or future
customers of the System or 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-2
<PAGE>
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation:
(1) the names of past, present, or future customers of the
System or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to the System or the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment.
As used herein the "Raleigh-Durham" area means the counties listed on
Schedule 1 attached hereto.
The Shareholder hereby agrees, if he makes an investment in Voicetel, to
use his best efforts to insure that subsequent to such investment, Voicetel
shall provide paging services to its new customers after such investment solely
pursuant to a reseller agreement to be entered into between Voicetel and the
Company. The Company agrees to provide paging services to Voicetel pursuant to
such agreement, if any, at a rate equal to the lowest rate charged to any of its
resellers in the Raleigh-Durham Area.
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
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. 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.
E-3
<PAGE>
8. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of North Carolina (regardless of the laws that might otherwise govern
under applicable North Carolina 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 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. 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.
E-4
<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: Mark A. Solls
Fax No: (214) 964-9520
------------------------------------------------
W. David Sweatt
Address: c/o Bank of Lafayette
2110 Pinhook Road
Lafayette, Louisiana 70505
E-5
<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 Sam A. Miles (the "Executive").
W I T N E S S E T H
WHEREAS, concurrently herewith, SigNet Paging of Raleigh, Inc., a North
Carolina corporation ("SigNet"), is selling, transferring, and conveying to the
Company, pursuant to that certain Asset Purchase Agreement dated as of
September, 1995, by and among the Company, SigNet, and W. David Sweatt (the
"Purchase Agreement"), substantially all of the property and assets of SigNet
that are used in the conduct of SigNet's radio paging system business (such
property, assets, and business, including all affiliated networks, being
hereinafter collectively called the "System");
WHEREAS, the Executive has been affiliated with SigNet for a number of
years and as an officer and a director of SigNet, possesses valuable knowledge
about the business and operations of SigNet; and
WHEREAS, the Company has requested that the Executive 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 Executive 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. As additional
consideration for the Executive's covenants contained herein, concurrently with
the execution of this Agreement the Company is paying the Executive the sum of
[$1.4 MILLION] in cash.
2. CONFIDENTIAL INFORMATION. The Executive 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
Executive. Therefore, the Executive agrees that he will not disclose to any
person or use for his own account any of
F-1
<PAGE>
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 Executive's act or
omission to act. The Executive 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 Executive agrees that he shall not, until 11:59
p.m. on the fifth 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 State of North Carolina;
PROVIDED, HOWEVER, that the Executive 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 Executive
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 State of North Carolina;
c. directly or indirectly request or advise any present or future
customers of the System or 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:
F-2
<PAGE>
(1) the names of past, present, or future customers of the
System or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to the System or the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment.
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
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. The Executive 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 North Carolina (regardless of the laws that might otherwise govern
under applicable North Carolina 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 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
F-3
<PAGE>
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. The Executive agrees that a violation on
his part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, the Executive 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 Executive. 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.
F-4
<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: Mark A. Solls
Fax No: (214) 964-9520
------------------------------------------------
Sam A. Miles
Address:
--------------------------
--------------------------
--------------------------
F-5
<PAGE>
EXHIBIT G
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and Lee Miles (the "Executive").
W I T N E S S E T H
WHEREAS, concurrently herewith, SigNet Paging of Raleigh, Inc., a North
Carolina corporation ("SigNet"), is selling, transferring, and conveying to the
Company, pursuant to that certain Asset Purchase Agreement dated as of
September, 1995, by and among the Company, SigNet, and W. David Sweatt (the
"Purchase Agreement"), substantially all of the property and assets of SigNet
that are used in the conduct of SigNet's radio paging system business (such
property, assets, and business, including all affiliated networks, being
hereinafter collectively called the "System");
WHEREAS, the Executive has been affiliated with SigNet for a number of
years and as an officer of SigNet possesses valuable knowledge about the
business and operations of SigNet; and
WHEREAS, the Company has requested that the Executive 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 Executive 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 Executive acknowledges that the
information, observations, and data obtained or possessed by her concerning the
business affairs of the System will be the property of the Company and not the
Executive. Therefore, the Executive agrees that she will not disclose to any
person or use for her own account any of such information, observations, or data
unless and to the extent that such information,
G-1
<PAGE>
observations, or data become generally known to and available for use by the
public otherwise than as a result of the Executive's act or omission to act.
The Executive 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 she may
then possess or have under her control.
3. NONCOMPETITION. The Executive agrees that she shall not, until 11:59
p.m. on the fifth 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 State of North Carolina;
PROVIDED, HOWEVER, that the Executive 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 Executive
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 State of North Carolina;
c. directly or indirectly request or advise any present or future
customers of the System or 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:
G-2
<PAGE>
(1) the names of past, present, or future customers of the
System or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to the System or the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment.
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 her address set forth below its or her signature to this
Agreement, or at such other address as it or she 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. The Executive may not assign any of her
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 North Carolina (regardless of the laws that might otherwise govern
under applicable North Carolina 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 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
G-3
<PAGE>
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. The Executive agrees that a violation on
her part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, the Executive 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 Executive. 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.
G-4
<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: Mark A. Solls
Fax No: (214) 964-9520
--------------------------------------
Lee Miles
Address:
----------------------------
----------------------------
----------------------------
----------------------------
G-5
<PAGE>
EXHIBIT H
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
__________, 1995, between Contact Communications Inc., a Delaware corporation
(the "Company"), and SigNet Paging of Raleigh, Inc., a North Carolina
corporation ("SigNet").
W I T N E S S E T H
WHEREAS, concurrently herewith SigNet is selling, transferring, and
conveying to the Company, pursuant to that certain Asset Purchase Agreement
dated as of September, 1995, by and among the Company, SigNet, and W. David
Sweatt (the "Purchase Agreement"), substantially all of the property and assets
that are used in the conduct of SigNet'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 SigNet 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. SigNet 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. SigNet 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 SigNet. Therefore, SigNet 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 SigNet'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 SigNet becomes
legally compelled to disclose any of the Confidential Information, SigNet shall
provide the Company with prompt prior
H-1
<PAGE>
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
obtained, SigNet will furnish only that portion of the Confidential
Information which it is legally required to disclose. SigNet 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. SigNet agrees that it shall not, until 11:59 p.m. on
the fifth 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 State of North Carolina;
PROVIDED, HOWEVER, that SigNet 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 SigNet 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 State of North Carolina
c. directly or indirectly request or advise any present or future
customers of the System or 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:
H-2
<PAGE>
(1) the names of past, present, or future customers of the
System or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to the System or the Company; or
f. directly or indirectly induce or attempt to influence any
employee of the Company to terminate his or her employment.
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. SigNet 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 North Carolina (regardless of the laws that might otherwise govern
under applicable North Carolina 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 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
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<PAGE>
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. SigNet agrees that a violation on its part
of any covenant contained herein shall cause irreparable damage to the Company
and, consequently, SigNet further agrees that the Company shall be entitled, as
a matter of right, to an injunction restraining any further violation of such
covenant by SigNet. 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.
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<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: Mark A. Solls
Fax No: (214) 964-9520
SIGNET PAGING OF RALEIGH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Address:
-----------------------------
-----------------------------
-----------------------------
Fax No.
---------------------
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<PAGE>
EXHIBIT I
LICENSE AGREEMENT
This License Agreement ("License Agreement") is made on the ___ day of
_____________, 1995, by and between SigNet Paging of Raleigh, Inc., a North
Carolina 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 September ___, 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 marks
"SigNet Paging."
2. "Licensed Territory" shall mean the State of North Carolina, 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 540 days beginning on, and
including, the date of the execution of this License.
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<PAGE>
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 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 "SigNet Paging."
6. Licensee may, but shall not be required to, at its sole expense, take
whatever action Licensee, in its sole discretion, deems necessary or advisable
to protect its 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 Licensor decides not to take any action required to
obtain registration for the Marks, Licensee at its expense may take appropriate
action to obtain any such registration in the name of Licensor, and Licensor
shall cooperate reasonably with Licensee, including, without limitation, by
signing required documents, to allow Licensee to effect any such registration.
8. Licensee may assign or transfer its rights or obligations under this
License Agreement, whether by operation of law or otherwise, without the consent
of Licensor. Licensee shall also 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,
I-2
<PAGE>
modified or terminated, in whole or in part, except by an instrument in
writing duly executed by the parties.
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.
IN WITNESS WHEREOF, the parties hereto have duly executed this License
Agreement on the date first above written.
SIGNET PAGING OF RALEIGH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONTACT COMMUNICATIONS INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-3
<PAGE>
EXHIBIT J
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 SigNet Paging of Raleigh, Inc., a North Carolina corporation
("SigNet").
RECITALS:
A. Contact Communications Inc., a wholly owned subsidiary of the Company
("Contact"), SigNet, and W. David Sweatt, the sole shareholder of SigNet (the
"Shareholder") have entered into that certain Asset Purchase Agreement dated as
of September , 1995 (the "Purchase Agreement"), pursuant to which Contact is
to acquire substantially all of SigNet's radio paging business (the "System").
B. Pursuant to the terms of the Purchase Agreement, Contact is paying a
portion of the purchase price for the System by issuing shares of the Company's
common stock, par value $.01 per share ("Common Stock"), pursuant to a private
placement in compliance with Section 4(2) of the Securities Act (as hereinafter
defined) and/or the provisions of Regulation D under the Securities Act.
C. Pursuant to the terms of the Purchase Agreement, the Company has
agreed to register the shares of Common Stock received by SigNet 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.
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<PAGE>
"REGISTRABLE SECURITIES" means the shares of Common Stock received by
SigNet pursuant to the Purchase Agreement and held of record by SigNet, or the
Shareholder, any permitted transferee of Signet, or Sam A. Miles ("Miles") in
the event of a permitted transfer thereof. Any Registrable Security will cease
to be 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
SigNet, the Shareholder, or Miles, as applicable.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. REGISTRATION STATEMENT. Within 180 days after the date hereof, 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 as soon as practicable after such filing and to keep
the Registration Statement effective for a period of 15 months 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 SigNet pursuant to
the terms of the Purchase Agreement, the Company will as expeditiously as
reasonably possible:
(a) furnish to SigNet, prior to filing the Registration Statement, if
requested in writing, copies of the Registration Statement as proposed to be
filed, and thereafter furnish to SigNet 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
SigNet may reasonably request in writing in order to facilitate the disposition
of the Registrable Securities owned by SigNet;
(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 SigNet may reasonably request and do any and all other acts and
things which may be reasonably necessary to enable SigNet to consummate the
disposition in such jurisdictions of the Registrable Securities; PROVIDED that
the Company will not be required to (i) qualify
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<PAGE>
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;
(c) notify SigNet, 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 SigNet any
such supplement or amendment; and
(d) make available for inspection by SigNet 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. SigNet 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. SigNet 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 SigNet to promptly furnish in writing to the
Company such information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration.
SigNet 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, SigNet
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement until SigNet's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection 3(c) hereof, and,
if so directed by the Company, SigNet will deliver to the Company all copies,
other than permanent file copies then in SigNet's
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<PAGE>
possession, of the most recent prospectus covering such Registrable
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 SigNet 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 SigNet, any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities or any out-of-pocket expenses
of SigNet (or its agents).
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless SigNet 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 SigNet or on SigNet'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 determined that it was the responsibility of
SigNet to provide such person with a current
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<PAGE>
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 SIGNET. SigNet agrees to indemnify and hold
harmless 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 SigNet, but only with respect to information
furnished in writing by SigNet or on SigNet'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 SigNet, SigNet 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 SigNet, 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 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
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<PAGE>
action or proceeding, the Indemnifying Party shall indemnify 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 SigNet
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 SigNet.
(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 courier guaranteeing overnight delivery:
(i) if to SigNet, at the most current address given by SigNet to
the Company, in accordance with the provisions of this subsection, which
address initially
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<PAGE>
is Mr. W. David Sweatt, c/o Bank of Lafayette, 2110 Pinhook Road,
Lafayette, Louisiana 70505.
(ii) if to the Company, initially at 600 Data Drive, Suite 100,
Plano, Texas 75075, attention: 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. SigNet shall not assign any rights or
benefits under this Agreement without the prior written consent of the Company,
other than an assignment to the Shareholder or Miles in connection with a
transfer of any Registrable Securities, which assignment shall not relieve
SigNet of any of its obligations hereunder. 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 SigNet.
(d) COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for the Company and SigNet
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 shall 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 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
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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
SigNet 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 SigNet 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
SigNet 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 SigNet pursuant to terms of
the Purchase Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PRONET INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SIGNET PAGING OF RALEIGH, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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EXHIBIT K
PROMISSORY NOTE
$800,000.00 ____________________, 1995
FOR VALUE RECEIVED, CONTACT COMMUNICATIONS, INC. ("Maker"), a Delaware
corporation and wholly owned subsidiary of ProNet Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order of SIGNET
PAGING OF RALEIGH, INC., a North Carolina corporation ("Payee"), the
principal sum of EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($800,000.00),
together with interest thereon from the date hereof through and including the
date of payment at a rate equal to 6.5% per annum.
The full principal amount of this Note together with interest accrued
thereon shall be due and payable on ____________, 1996. The Maker shall have
the ability at any time to prepay this Note without premium or penalty
therefor.
The principal amount of this Note shall be payable in lawful money of
the United States of America; PROVIDED, HOWEVER, that if (A) the Company's
Common Stock, par value $.01 per share ("Common Stock"), is registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as of May 1, 1996, and (B) the Common Stock is quoted
on the National Association of Securities Dealers Automated Automation System
("NASDAQ") (or any other quotation system or securities exchange) as of such
date, then Maker shall be entitled, at its option, to pay the principal
amount of this Note in shares of Common Stock of the Company valued at the
Average Closing Price; and PROVIDED, FURTHER, that if the Average Closing
Price on the date the principal and interest, if any, of this Note (the
"Outstanding Balance") is paid (the "Payment Date") exceeds $22.00, then the
number of shares of Common Stock to be delivered to the Seller on such date
shall be calculated by dividing the Outstanding Balance by $22.00; and if the
Average Closing Price on the Payment Date is less than $18.00, then the
number of shares of Common Stock to be delivered to the Seller on such date
shall be calculated by dividing the Outstanding Balance by $18.00. As used
herein, "Average Closing Price" means the average closing price of the Common
Stock on NASDAQ (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 Payment Date.
This Note shall be binding upon Maker and its legal representatives,
successors and assigns. This Note may not be assigned by the Payee, other
than to Sam A. Miles, without the prior written consent of the Maker.
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<PAGE>
This Note is being issued pursuant to that certain Asset Purchase
Agreement dated September __, 1995 (the "Purchaser Agreement"), among the
Maker, Payee and the sole shareholder of Payee. Should there be any
inconsistencies or conflicts between the Purchaser Agreement and this Note,
this Note shall control and preempt the Purchase Agreement. The payment of
this Note has been guaranteed by the Company pursuant to that certain
Guarantee issued by the Company to Payee dated September ___, 1995.
Maker shall have the right to offset against this Note any Purchaser
Indemnified Costs (as defined in the Purchase Agreement) for which maker is
entitled to indemnification under the Purchase Agreement in accordance with
the terms and conditions set forth in Section 8 of the Purchase Agreement.
The unpaid principal amount of this Note may be declared immediately due
and payable by the holder hereof if Maker shall make a general assignment for
the benefit of creditors or shall become the subject of an "order for relief"
within the meaning of the United States Bankruptcy Code, or shall voluntarily
file a petition in bankruptcy or for reorganization.
No delay or omission on the part of Payee or any holder hereof in
exercising any right or option given herein to Payee or such holder shall
impair such right or option or be considered as a waiver thereof or
acquiescence in any default hereunder.
Maker hereby waives presentment, demand and notice of dishonor and
protest.
Maker shall pay all costs and expenses of collection, including
reasonable attorneys' fees, incurred or paid by the holder hereof in
enforcing this Note.
This Note shall be governed by, and construed in accordance with, the
internal laws of the State of North Carolina.
CONTACT COMMUNICATIONS INC.
By:
--------------------------------------------
Mark A. Solls
Vice President and General Counsel
ATTEST:
By:
-----------------------
Title:
-----------------------
[SEAL]
K-2
<PAGE>
EXHIBIT L
FORM OF OPINION OF VINSON & ELKINS L.L.P.
[Draft - Subject to Opinion Committee review]
__________________, 1995
Signet Paging of Raleigh, Inc.
W. David Sweatt
c/o Bank of Lafayette
2110 Pinhook Road
Lafayette, Louisiana 70505
Ladies and Gentlemen:
This firm has acted as counsel for Contact Communications Inc.
("Contact") and ProNet Inc. ("ProNet"), each of which is a Delaware
corporation, in connection with the acquisition (the "Acquisition") by
Contact of the radio paging system business of SigNet Paging of Raleigh,
Inc., a North Carolina corporation ("SigNet"), pursuant to that certain Asset
Purchase Agreement dated as of September__, 1995, by and among SigNet, W.
David Sweatt, and Contact (the "Purchase Agreement"). This opinion is being
rendered pursuant to Section 6.2(g) of the Purchase Agreement. Unless
otherwise defined herein, each term used herein with its initial letter
capitalized that is defined in the Purchase Agreement has the meaning given
such term in the Purchase Agreement.
In connection with the opinions rendered below, we have examined the
following documents:
(i) the Purchase Agreement;
(ii) the Assumption Agreement;
(iii) the Noncompetition Agreements;
(iv) the Registration Rights Agreement;
(v) the Deferred Purchase Price Note;
(vi) the Certificate of Incorporation and bylaws of ProNet and Contact as
in effect on the date hereof; and
L-1
<PAGE>
Signet Paging of Raleigh, Inc.
W. David Sweatt
Page 2
_______________, 1995
(vii) resolutions of the Board of Directors of each of ProNet and Contact
adopted in connection with the Acquisition.
The documents described in paragraphs (i) through (v) are herein collectively
referred to as the "Transaction Documents."
We have also made such legal and factual examinations and inquiries
as we have deemed advisable or necessary for the purpose of rendering this
opinion. We have, except as set forth below, examined originals or copies of
documents, corporate records, and other writings which we consider relevant
for the purpose of this opinion, including, but not limited to, certificates
of public officials. We have also discussed such matters as we have deemed
relevant to this opinion with the officers of Contact and ProNet.
In rendering this opinion, we have assumed:
(i) that each natural person signing any document reviewed by this
firm had the legal capacity to do so, both at the time of
execution and as of the date hereof, and each person signing any
document reviewed by this firm in a representative capacity
(other than on behalf of ProNet or Contact) had authority to sign
in such capacity, both at the time of execution and as of the
date hereof;
(ii) the genuineness of the signatures appearing on all documents;
(iii) the authenticity of all documents submitted to us as originals;
(iv) the conformity to authentic original documents of all documents
submitted to us as certified, conformed, or photostatic copies;
(v) the due authorization, execution, and delivery of all of the
Transaction Documents by the parties thereto other than ProNet or
Contact; and
(vi) the correctness and accuracy of all facts set forth in all
certificates, reports, and discussions identified in this
opinion.
Whenever a statement or opinion herein is qualified by "known to
this firm," "to the knowledge of this firm," or similar phrase, such phrase
means that, in the course of
L-2
<PAGE>
Signet Paging of Raleigh, Inc.
W. David Sweatt
Page 3
_______________, 1995
rendering the legal services described in the introductory paragraph of this
letter, no facts or circumstances have come to the attention of those
attorneys in this firm who rendered such legal services that gave any of such
attorneys reason to believe that any such information is incorrect in any
respect that would affect the opinions of this firm expressed herein.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary action,
to execute and deliver the Transaction Documents, and we are assuming that
the representations and warranties made by you in the Purchase Agreement are
true and correct.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions, and assumptions set forth herein, and having due
regard for such legal considerations as we deem relevant, we are of the
opinion that:
1. Contact and ProNet are each corporations validly existing and in
good standing under the laws of the State of Delaware.
2. Contact and ProNet each have full corporate power and corporate
authority to execute and deliver the applicable Transaction Documents and to
perform the obligations contemplated thereby. The execution, delivery, and
performance by Contact or ProNet, as the case may be, of the applicable
Transaction Documents have been duly authorized by all necessary corporate
action on the part of Contact or ProNet. Each of the Transaction Documents
has been duly executed and delivered by Contact or ProNet, as the case may
be, and constitutes the legal, valid, and binding obligation thereof.
3. Neither the execution and delivery by Contact or ProNet of, nor the
performance by Contact or ProNet of their respective obligations under, the
applicable Transaction Documents violates or conflicts with, results in a
breach of, or constitutes a default under such entity's Certificate of
Incorporation or bylaws, any law, or any judgment, decree, or order of any
court or any other agency of government known to this firm that is applicable
to such entity or such entity's property.
4. To the knowledge of this firm, other than (a) the approval or
authorization of the Acquisition by the Federal Communications Commission,
the Federal Aviation Administration and any similar state or local regulatory
agencies, commissions or other entities, (b) the filing of the Shelf
Registration with the Securities and Exchange
L-3
<PAGE>
Signet Paging of Raleigh, Inc.
W. David Sweatt
Page 4
_______________, 1995
Commission, the filing of any required amendments thereto and the declaration
of the effectiveness thereof as and in the manner and for the purpose
contemplated by the Registration Rights Agreement, and (c) any approvals,
authorizations, filings, or qualifications related to the offering
contemplated by the Shelf Registration by or with such state securities or
blue sky agencies, commissions, or other entities as are required by the
Registration Rights Agreement, no approvals or authorizations by, or filings
or qualifications with, any state, federal, or local agency, authority, or
body are required to be obtained by either Contact or ProNet in connection
with the execution and delivery by, or the performance of their respective
obligations under, the Transaction Documents except such as have been duly
obtained or made.
5. To the knowledge of this firm, there is no action, suit,
investigation, or proceeding that is pending or threatened against or
affecting Contact or ProNet in any court or before any governmental
authority, arbitration board, or tribunal that involves any of the
transactions contemplated by the Transaction Documents.
The foregoing opinions are limited by and subject to the following:
(a) The opinions expressed herein with respect to the validity, binding
nature, and enforceability of the Transaction Documents are subject to (i)
laws relating to bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, rearrangement, liquidation, conservatorship,
moratorium, and other laws affecting the enforcement of creditors' rights or
the collection of debtors' obligations generally, (ii) principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law), (iii) standards of commercial reasonableness and good faith, (iv)
public policy, and (v) other applicable laws, regulations, and procedures,
provided that any limitations imposed by such other applicable laws,
regulations, and procedures will not, in the opinion of this firm, preclude
the practical realization of the benefits intended to be conferred by such
agreements (though they may result in delays thereof and we express no
opinion as to the economic consequences, if any, of such delays).
(b) We express no opinion with respect to (i) the enforceability of
provisions in the Transaction Documents relating to delay or omission of
enforcement of rights or remedies, or waivers of defenses, waivers of jury
trials, or waivers of benefits of appraisement, valuation, stay, extension,
redemption, or other nonwaivable benefits bestowed by operation of law, (ii)
the enforceability of the indemnification and contribution provisions set
forth in the Transaction Documents to the extent they purport to relate to
L-4
<PAGE>
Signet Paging of Raleigh, Inc.
W. David Sweatt
Page 5
_______________, 1995
liabilities resulting from or based upon negligence or any violation of
federal or state securities or blue sky laws, (iii) the right of any person
or entity to institute or maintain any action in any court or upon matters
respecting the jurisdiction of any court, or (iv) the enforceability of any
severability provisions set forth in the Transaction Documents.
(c) In rendering the opinions set forth in Paragraph 1 above with
respect to the valid corporate existence and good standing of Contact and
ProNet, we have relied solely on the certificates of authorities in the State
of Delaware as of a date we deem sufficiently recent.
(d) In rendering the opinions set forth in Paragraph 3 above with
respect to conflicts of the Transaction Documents with any laws, we express
no opinion with respect to the Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder, the Federal Aviation Act of
1958, as amended, and the rules and regulations promulgated thereunder, or
the statutes, ordinances, rules, or regulations of any state or local
regulatory agencies, commissions, or other entities having jurisdiction over
the System, Contact, or ProNet.
(e) In rendering the portions of the foregoing opinions that involve a
concept of materiality with respect to factual matters, we have relied
exclusively on the officers of Contact and ProNet in determining materiality.
(f) We are members of the Bar of the State of Texas only. The opinions
above are limited to the laws of the United States of America and the laws of
the State of Texas. We note that the Transaction Documents provide that they
are to be governed by the laws of states other than the State of Texas.
While we express no opinion with respect to the laws of such other states, we
have assumed that the internal laws of such other states are the same as the
internal laws of the State of Texas. We have made no investigation to
confirm whether such assumption is correct.
We express no opinion as to any matter other than as expressly set forth
above, and no opinion on any other matter may be inferred herefrom. This
opinion is given as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein. This opinion is for the sole use and benefit of the
L-5
<PAGE>
Signet Paging of Raleigh, Inc.
W. David Sweatt
Page 6
_______________, 1995
Seller and the Shareholders, and no other person may be furnished a copy of
such opinion or may rely on such opinion without our prior written consent.
Very truly yours,
VINSON & ELKINS L.L.P.
L-6
<PAGE>
EXHIBIT M
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 _______
-noncompetition agreements _______
-prepaid expenses _______
CLASS IV ASSETS (Section 197 assets, including goodwill and
going-concern value) $_______*
TOTAL PURCHASE PRICE $_______
* Subject to adjustment in respect of the number of pagers in service in the
System pursuant to Section 1.4 of the Purchase Agreement.
M-1
<PAGE>
STOCK PURCHASE AGREEMENT
AMONG
COBBWELLS, INC., JAMES H. COBB, III
and WARREN K. WELLS
AND
CONTACT COMMUNICATIONS INC. and
PRONET INC.
November 22, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Plan of Redemption and Sale. . . . . . . . . . . . . . .2
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Deposit Escrow Agreement. . . . . . . . . . . . . . . . .4
1.5 Determination Of Accrued Liabilities
and Excess Cash Or Cash Deficiency. . . . . . . . . . . .4
1.6 Post Closing Admustments. . . . . . . . . . . . . . . . .5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND PRONET
2.1 Due Organization. . . . . . . . . . . . . . . . . . . . 5
2.2 Due Authorization . . . . . . . . . . . . . . . . . . . 5
2.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . .6
2.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . .6
2.5 Brokers and Finders . . . . . . . . . . . . . . . . . . .6
2.6 Regulatory Certificates . . . . . . . . . . . . . . . . .6
2.7 Common Stock. . . . . . . . . . . . . . . . . . . . . . .6
2.8 Purchase Information. . . . . . . . . . . . . . . . . . .7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PAGE ONE AND THE SELLERS
3.1 Due Organization; Ownership . . . . . . . . . . . . . . 7
3.2 Capital Stock.. . . . . . . . . . . . . . . . . . . . . 7
3.3 Title to Shares.. . . . . . . . . . . . . . . . . . . . 7
3.4 Due Authorization . . . . . . . . . . . . . . . . . . . 8
3.5 Conflicts . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Financial Statements. . . . . . . . . . . . . . . . . . 8
3.8 Conduct of Business; Certain Actions. . . . . . . . . . 9
3.9 Properties. . . . . . . . . . . . . . . . . . . . . . 10
3.10 Pagers. . . . . . . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
PAGE
----
3.11 Licenses and Permits. . . . . . . . . . . . . . . . . 11
3.12 Intellectual Rights . . . . . . . . . . . . . . . . . 11
3.13 Compliance with Laws. . . . . . . . . . . . . . . . . 12
3.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Contracts and Agreements. . . . . . . . . . . . . . . 13
3.17 Claims and Proceedings. . . . . . . . . . . . . . . . 13
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Personnel . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Business Relations. . . . . . . . . . . . . . . . . . . 15
3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 15
3.22 Warranties. . . . . . . . . . . . . . . . . . . . . . . 15
3.23 Accounts Receivable . . . . . . . . . . . . . . . . . . 15
3.24 Customers and Suppliers . . . . . . . . . . . . . . . . 16
3.25 Interest in Competitors, Suppliers, and Customers . . . 16
3.26 Inventory . . . . . . . . . . . . . . . . . . . . . . . 16
3.27 Commission Sales Contracts. . . . . . . . . . . . . . . 16
3.28 Regulatory Certificates . . . . . . . . . . . . . . . . 16
3.29 Investment. . . . . . . . . . . . . . . . . . . . . . . 16
3.30 Accredited Investor Status. . . . . . . . . . . . . . . 16
3.31 Investment Risk . . . . . . . . . . . . . . . . . . . . 16
3.32 Legends . . . . . . . . . . . . . . . . . . . . . . . . 17
3.33 Purchaser Information . . . . . . . . . . . . . . . . . 17
3.34 Information . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 4
COVENANTS OF PAGE ONE AND THE SELLERS
4.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Compliance. . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Satisfaction of All Conditions Precedent. . . . . . . . 18
4.4 No Solicitation . . . . . . . . . . . . . . . . . . . . 18
4.5 Notice of Developments. . . . . . . . . . . . . . . . . 18
4.6 Notice of Breach. . . . . . . . . . . . . . . . . . . . 18
4.7 Notice of Litigation. . . . . . . . . . . . . . . . . . 19
4.8 Continuation of Insurance Coverage. . . . . . . . . . . 19
4.9 Maintenance of Credit Terms . . . . . . . . . . . . . . 19
4.10 Updating Information. . . . . . . . . . . . . . . . . . 19
4.11 Interim Operations of The Companies . . . . . . . . . . 19
4.12 Financial Statements. . . . . . . . . . . . . . . . . . 20
4.13 Assignments . . . . . . . . . . . . . . . . . . . . . . 21
4.14 Licenses. . . . . . . . . . . . . . . . . . . . . . . . 21
ii
<PAGE>
PAGE
----
ARTICLE 5
REGULATORY APPROVALS
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Purchaser. . . . . . . 22
6.2 Conditions to Obligations of the Sellers. . . . . . . . 24
ARTICLE 7
TERMINATION
7.1 Termination.............................................25
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification of the Purchaser. . . . . . . . . . . . 25
8.2 Indemnification of Page One and the Sellers . . . . . . 26
8.3 Defense of Third-Party Claims . . . . . . . . . . . . . 26
8.4 Direct Claims . . . . . . . . . . . . . . . . . . . . . 28
8.5 Indemnification Exclusive Remedy. . . . . . . . . . . . 28
8.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . 28
8.7 Time Limitations. . . . . . . . . . . . . . . . . . . . 28
8.8 Limitations As to Amounts . . . . . . . . . . . . . . . 29
8.9 Maximum Liability . . . . . . . . . . . . . . . . . . . 29
8.10 Tax Effect and Insurance. . . . . . . . . . . . . . . . 29
8.11 Right Of Set-Off. . . . . . . . . . . . . . . . . . . . 29
8.12 Subrogation . . . . . . . . . . . . . . . . . . . . . . 30
8.13 Arbitration . . . . . . . . . . . . . . . . . . . . . . 30
8.14 No Contribution . . . . . . . . . . . . . . . . . . . . 31
iii
<PAGE>
PAGE
----
ARTICLE 9
MISCELLANEOUS
9.1 Collateral Agreements, Amendments, and Waivers. . . . . 31
9.2 Risk Of Loss. . . . . . . . . . . . . . . . . . . . . . 31
9.3 Prorations. . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Allocation Of Purchase Price. . . . . . . . . . . . . . 32
9.5 Records . . . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Seller's Liabilities. . . . . . . . . . . . . . . . . . 32
9.7 Successors and Assigns. . . . . . . . . . . . . . . . . 32
9.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Sales Tax . . . . . . . . . . . . . . . . . . . . . . . 33
9.10 Invalid Provisions. . . . . . . . . . . . . . . . . . . 33
9.11 Waiver....... . . . . . . . . . . . . . . . . . . . . . 33
9.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . 33
9.13 Survival of Representations, Warranties and Covenants . 35
9.14 Public Announcement........ . . . . . . . . . . . . . . 35
9.15 Further Assurances. . . . . . . . . . . . . . . . . . . 35
9.16 No Third-Party Beneficiaries. . . . . . . . . . . . . . 35
9.17 Governing Law . . . . . . . . . . . . . . . . . . . . . 35
9.18 Headings. . . . . . . . . . . . . . . . . . . . . . . . 35
9.19 Sections; Exhibits. . . . . . . . . . . . . . . . . . . 35
9.20 Number and Gender of Words. . . . . . . . . . . . . . . 36
9.21 Specific Performance. . . . . . . . . . . . . . . . . . 36
9.22 ProNet Guarantee. . . . . . . . . . . . . . . . . . . . 36
SCHEDULES
1.1(a) Excluded Assets
3.1 Foreign Qualification
3.5 Conflicts
3.6 Consents
3.7(a) July Asset List
3.8 Conduct of Business
3.9 Real Properties & Leaseholds
3.10 Pagers
3.11 Licenses and Permits
3.12 Intellectual Rights
3.14 Insurance
3.16 Material Contracts
3.17 Claims and Proceedings
3.18 Taxes
3.19 Personnel
iv
<PAGE>
PAGE
----
3.22 Warranties
3.23 Accounts Receivable
3.24 Customers and Suppliers
3.25 Interest In Competitors, Buppliers and Customers
3.26 Inventory
3.27 Commission Sales Contracts
EXHIBITS
A - Escrow Deposit Agreement
B - Registration Rights Agreements
C - Form of Opinion of Counsel to Page One and the Sellers
D - Form Of Opinion of FCC Counsel to Page One and the Sellers
E - Noncompetition Agreement - John W. Cobb, III
F - Noncompetition Agreement - Warren K. Wells
G - Form Of Opinion of Counsel to Purchaser and ProNet
H - ProNet Guaranties
I - Allocation Of Purchase Price
J - Inventory Valuation - Pager Prices
K - Lease Agreement
v
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of November 22, 1995, by and among Cobbwells, Inc. d/b/a Page One, a
Georgia business corporation ("Page One"), James H. Cobb, III ("Cobb") and
Warren K. Wells ("Wells" and together with Cobb, the "Sellers"), and Contact
Communications Inc., a Delaware corporation (the "Purchaser") and ProNet Inc., a
Delaware corporation and the parent corporation of the Purchaser ("ProNet").
R E C I T A L S
A. The Sellers desire to adopt a plan to terminate completely their
interests in Page One (the "Plan") under which all of the shares of common stock
owned by them will be redeemed by Page One or sold to the Purchaser;
B. The Sellers collectively own 153 shares of the common stock of Page
One, which shares constitute all of its issued and outstanding capital stock;
C. Pursuant to the Plan, Page One will redeem 1.5 shares of common stock
from Cobb and 1.5 shares of common stock from Wells in consideration of the
distribution of cash and certain property;
D. After said redemption, 150 shares of common stock (the "Shares") will
be issued and outstanding;
E. Page One operates a radio paging system business (such property,
assets and business, including all rights to affiliated networks, being
sometimes hereinafter collectively referred to as the "System"); and
F. The Purchaser desires to purchase from the Sellers and the Sellers
desire to sell to the Purchaser the Shares in consideration of the Purchase
Price (hereinafter defined), upon the terms and subject to the conditions set
forth below.
A G R E E M E N T S
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:
1
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 PLAN OF REDEMPTION AND SALE.
(a) REDEMPTION. Page One shall redeem from its earned surplus 1.5
shares of its common stock, each, from Cobb and Wells. In consideration of such
redemption, Page One shall transfer to Cobb and Wells the assets described on
SCHEDULE 1.1(a) attached (the "Excluded Assets"). The redemption described
herein shall occur immediately prior to the Closing (as hereinafter defined).
(b) PURCHASE AND SALE. On the Closing Date (as hereinafter
defined), the Sellers shall sell to the Purchaser, and the Purchaser shall
purchase from the Sellers, on the terms and conditions set forth in this
Agreement, the Shares, free and clear of all liens, security interests, claims,
rights of another, and encumbrances of any kind or character.
1.2 PURCHASE PRICE. The aggregate purchase price payable by the Purchaser
in consideration for the sale of the Shares shall be an amount equal to the
remainder of (a) the sum of (i) $11,340,000 (ii) $4,860,000 (the "Deferred
Amount"), to be paid in whole or in part on or before the first anniversary of
the Closing Date (such date being referred to herein as the "Deferred Payment
Date"), (iii) an amount, payable in cash on the Closing Date, equal to the
amount of the Page One's accounts receivable in respect of services or
merchandise provided by the Page One prior to the Closing Date as of 11:59 p.m.
on the day immediately preceding the Closing Date, (iv) $500,000 (the
"Deposit") which amount has been deposited with NationsBank of Texas, N.A., (the
"Escrow Agent") as a deposit in accordance with the terms of that certain
"Depository Agreement of even date herewith, by and among the parties herein
(the "Deposit Escrow Agreement"), a copy of which is attached hereto as
EXHIBIT A, and (v) an amount payable in cash at the Closing in respect of the
Page One's Recurring Monthly Revenue (as hereinafter defined) for the last
complete month prior to the date of the Closing; provided that in the event
Recurring Monthly Revenue is less than $328,000, the Buyer shall have the
option to terminate this Agreement, with the Deposit (and any accrued interest)
payable to Buyer; and further provided that in the event the Recurring Monthly
Revenue exceeds $328,000, the Purchase Price shall be increased by $25,000 for
each $1,000 over $328,000 (vi) plus an amount equal to the Excess Cash (as
defined in Section 1.5 below) or minus an amount equal to the Cash Deficiency
(as defined in Section 1.5 below), minus (b) the amount of any revenues
collected by the Page One prior to the Closing Date in respect of services or
merchandise to be provided to customers of the System after the Closing Date
(collectively, the "Purchase Price"). "Recurring Monthly Revenue" shall be
defined as total monthly operating revenue less net equipment sales revenue as
set forth in the summary billing by price code generated by the Page One in its
ordinary course.
For purpose of calculating the Purchase Price, the Page One's accounts
receivable shall be valued as follows:
2
<PAGE>
The following formula will be used to determine the payoff on each customer
account on Page One's accounts receivable aging at Closing. Page One will
give Purchaser a list of every account written off between July 1, 1995 and
Closing. The accounts receivable balance at Closing should not include the
current month's billing as the Closing shall take place on the first day of
a month (e.g. if the transaction anticipated hereby closes January 2, the
accounts receivable aging should be run before the January billing).
1. For accounts whose entire balance is current, the accounts will be
valued at 95%.
2. For accounts whose oldest balance is 30 days, the portion in 30 days
will be paid at 80%, with the current portion paid at 95%.
3. For accounts whose oldest balance is 60 days, the portion in 60 days
will be paid at 50%, the 30 day portion will be paid at 80% and the
current portion at 95%.
4. For accounts whose oldest balance is 90 days, the portion in 90 days
will be paid at 5%, the 60 day portion will be paid at 10%, the 30 day
portion will be paid at 20% and the current portion will be paid at
30%.
5. For accounts whose oldest balance is 120 days, the portion in 120 days
will be paid at 2%, with the current - 90 days categories paid as
indicated in (4.) above.
Notwithstanding the foregoing, to the extent that any such accounts
receivable of Page One are in dispute with the obligor or are known by Page One
or any Sellers to be non-collectible at the time of Closing, no value shall 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.
The Deferred Amount shall be payable, in the Purchaser's sole
discretion, either all in (a) shares of common stock, par value $.01 per share
("Common Stock"), of ProNet, valued at the Average Closing Price (hereinafter
defined) as of the Deferred Payment Date, or (b) cash. The Purchase Price (less
the Deferred Amount) shall be paid to the Sellers by the Purchaser by certified
bank check or wire transfer of immediately available funds. The cash portion,
if any, of the Deferred Amount shall be paid by certified bank check or wire
transfer of immediately available funds. As used herein, "Average Closing
Price" means the average closing price of the Common Stock on the Stock Market
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 on the 25th day immediately preceding the
Deferred Payment Date. The Purchaser shall pay to the Sellers interest at a rate
of six and one-half percent (6 1/2%) per annum on any portion of the Deferred
Amount, calculated from the Closing Date (hereinafter defined) until paid in
full as a lump sum on the Deferred Payment Date.
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1.3 CLOSING.
(a) Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of the Purchaser located
at 6340 LBJ Freeway, Dallas, Texas 75240 at 9:00 a.m., local time, on the later
of (i) January 2, 1996, or (ii) the first day of the month following 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) each Seller shall
execute and deliver to the Purchaser stock certificates evidencing all of the
Shares owned by such Seller duly endorsed or accompanied by a duly executed
stock power assigning such Shares to the Purchaser and otherwise in good form
for transfer and any bills of sale, assignments, certificates of title,
endorsements, and other instruments of conveyance as may be necessary to
transfer the Shares to the Purchaser, (ii) the Purchaser shall 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 1.2 hereof, and (iii) the Escrow Agent shall deliver the Deposit to the
Seller by wire transfer 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 or pursuant to Section 1.2 herein
shall be delivered to the Sellers at the addresses set forth in Section 9.12
hereof.
1.4 DEPOSIT ESCROW AGREEMENT. Upon execution of this Agreement, the
parties shall execute and deliver the Deposit Escrow Agreement, substantially in
the form of EXHIBIT A, attached hereto, and the Purchaser will deliver the
Deposit to the Escrow Agent and upon execution of the Deposit Escrow Agreement
by the Escrow Agent, this Agreement shall be effective. After the Sellers have
executed and delivered the Sellers' Closing Certificate (as defined in Section
6.1 (a)) to Purchaser and ProNet and ProNet and Purchaser have executed and
delivered the Purchaser's Closing Certificate (as defined in Section 6.2 (a)) to
the Sellers, the Sellers, Purchaser, ProNet and Page One shall execute written
instructions to the Escrow Agent in accordance with Section 3(a) of the Deposit
Escrow Agreement instructing the Escrow Agent to deliver the Deposit to the
Sellers and the interest accrued thereon to the Purchaser at the Closing in
accordance with Section 1.3 of this Agreement. If this Agreement is terminated
prior to Closing as provided for in Section 7.1, then the parties shall follow
the procedures set forth in the Deposit Escrow Agreement.
1.5 DETERMINATION OF ACCRUED LIABILITIES AND EXCESS CASH OR CASH
DEFICIENCY. All liabilities of Page One as of the Closing Date shall be
recorded on its financial records. Any liability of Page One as of the Closing
Date which is unrecorded in its financial records as of the Closing Date shall
constitute Purchaser Indemnified Costs (as defined in Section 8.1 below). In
establishing Page One's liabilities as of the Closing Date, all Taxes, rents and
other lease charges, power and utility charges, license or other fees, wages,
salaries, and commissions, all contractual obligations, prepaid items and
expenses, and similar items shall be accrued as of 12:01 a.m. on the Closing
Date and reflected as liabilities in the financial records of Page One as of the
Closing
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Date. If there shall be any dispute in regard to any amount accrued under
this Section 1.5 (or if such a dispute shall arise after the Closing Date),
the same shall be determined by a nationally recognized accounting firm
selected by the Purchaser in its sole and absolute discretion and such
determination shall be binding and conclusive on the parties. The charges of
such firm shall be shared equally by the Purchaser and Sellers. If Page One
has cash on hand and deposit at the Closing in excess of its accrued
liabilities at that time, such cash shall be considered "Excess Cash", and if
Page One's accrued liabilities exceed its cash on hand and deposit at the
Closing, such deficiency shall be considered the "Cash Deficiency", and the
Purchase Price shall be adjusted for such Excess Cash or Cash Deficiency as
provided in Section 1.2 above.
1.6 POST CLOSING ADJUSTMENTS. The Sellers shall make a good
faith effort to accrue all liabilities and prepaid items as of 12:01 a.m. on the
Closing Date as required by Section 1.5 above and the cash payable at Closing
shall be based on information and certificates provided at the Closing. The
Sellers and the Purchaser shall, no later than thirty (30) days after the
Closing Date, agree on the final amounts of such accrued liabilities and prepaid
items. Upon such final determination, either (i) the Sellers shall reimburse
the Purchaser that portion of the Purchase Price paid in cash at the Closing
that exceeds the amount due from the Purchaser pursuant to Section 1.1 above or
(ii) the Purchaser shall pay to the Sellers an amount equal to any deficiency in
the Purchase Price paid in cash at the Closing. Any post closing adjustment
payable under this Section 1.6 shall be payable by the personal check of the
payor. In the event the parties are unable to agree on the post closing
adjustment, the procedure for resolving disputes stated in Section 1.5 above
shall be followed.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PRONET
The Purchaser hereby represents and warrants to Page One and the Sellers
as follows (with the understanding that Page One and the Sellers 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 and ProNet have 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 and ProNet in accordance herewith. This Agreement and the
other agreements, documents, and instruments required to be executed and
delivered by the Purchaser and ProNet in accordance herewith have been, or by
the Closing shall have been, duly and validly executed and delivered by the
Purchaser and ProNet and shall constitute, or by the Closing shall constitute,
valid and binding obligations of the Purchaser and ProNet enforceable in
accordance with their respective terms, except that (a) such enforcement may be
subject to applicable bankruptcy, insolvency, fraudulent transfer, or
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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 CONFLICTS. Except as set forth on Schedule 2.3, neither the
execution, delivery, nor performance of this Agreement, the ProNet Guaranties
(as defined in Section 6.2 (_) of this Agreement, or any other agreement,
document, or instrument to be executed by either of the Purchaser or ProNet in
connection herewith shall (a) violate in any material respect any federal,
state, county, or local law, rule, or regulation applicable to either of the
Purchaser or ProNet, as the case may be, or their properties, (b) violate or
conflict with any provision of the certificate of incorporation or by-laws of
such entity, (c) violate or conflict with, or permit the cancellation of, any
agreement to which such entity is a party, or by which it or any of its
properties are bound, or result in the creation of any lien, security interest,
charge, or encumbrance upon any of such properties, or (d) result in the
acceleration of the maturity of any indebtedness of, or indebtedness secured by
any property or other assets of, such entity.
2.4 CONSENTS. Set forth on Schedule 2.4 attached is a complete list of
all action, 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 either of the Purchaser or
ProNet.
2.5. BROKERS AND FINDERS. Neither the Purchaser nor ProNet has incurred
any liability to any finder, broker, or sales agent in connection with the
execution, delivery, or performance of this Agreement or the transactions
contemplated hereby.
2.6 REGULATORY CERTIFICATES. The Purchaser is qualified under the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, to become the licensee of the FCC licenses,
authorizations and permits listed on Schedule 2.6. The Purchaser knows of no
reason, fact, allegation, or claim pertaining to the Purchaser or ProNet which
could reasonably be expected to materially delay or cause any material delay in
the processing of the application for FCC consent to the transactions
contemplated hereunder.
2.7 COMMON STOCK. The Common Stock, if any, to be issued by ProNet to
the Sellers 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 and registered by ProNet for offer and
resale by the Sellers pursuant to the provisions of the Registration Rights
Agreement (attached as Exhibit "B"). Assuming the accuracy of the
representations and warranties of the Seller made in Section 3.29 through 3.33
of this Agreement, the offer, issuance, sale and delivery after sale of the
Common Stock, if any, delivered pursuant to this Agreement will be exempt from
registration under Section 5 of the Securities Act pursuant to Section 4(2)
thereof and will be exempt from registration under the Georgia Securities Act of
1973, as amended, pursuant to Section 9(13) thereof.
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2.8 PURCHASER INFORMATION. The Purchaser and ProNet have delivered to the
Sellers true and correct copies of ProNet's most recent Proxy Statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and reports on Form 8-K filed
in the three months immediately preceding the date of this Agreement (the
"ProNet Filings").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PAGE ONE AND THE SELLERS
Page One and the Sellers hereby jointly and severally 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. Page One is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia and has full corporate power and 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. Page One 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; provided, however, there are no other states
where Page One's failure to qualify will have a Material Adverse Effect on the
operation of the System. No other jurisdiction has asserted a claim that Page
One is required to qualify to do business as a foreign corporation in such
jurisdiction. All of the equity securities of Page One are owned of record and
beneficially as set forth on Schedule 3.1 attached hereto.
3.2 CAPITAL STOCK. The authorized capital stock of Page One consists
solely of 1,000 shares of Page One Common Stock, of $100.00 par value of which
153 shares are issued and outstanding. All of the Shares are duly authorized
and validly issued, fully paid, and nonassessable. None of the Shares was
issued in violation of any preemptive or preferential right. There are no other
equity securities of Page One outstanding. There are outstanding no securities
or indebtedness convertible into, exchangeable for, or carrying the right to
acquire, Page One Common Stock or other equity securities of Page One, or
subscriptions, warrants, options, rights, or other arrangements or commitments
obligating Page One to issue or dispose of any Page One Common Stock or other
equity securities or any ownership therein.
3.3 TITLE TO SHARES. Cobb is the true and lawful owner, of record and
beneficially, of 75 of the Shares and Wells is the true and lawful owner, of
record and beneficially, of 75 of the Shares. The Shares are, and on the
Closing Date will be, owned by the Sellers free and clear of all liens, security
interests, pledges, assessments, charges, adverse claims, leases, licenses,
restrictions, or other encumbrances (collectively, "Liens"). Other than the
rights and obligations arising under this Agreement, none of the Shares is
subject to any rights of any other person to acquire the same. None of the
Shares is subject to any Liens or restrictions on transfer thereof, except for
restrictions imposed by applicable federal and state securities laws.
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3.4 DUE AUTHORIZATION. Page One 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 Page One in
accordance herewith. The execution, delivery, and performance of this Agreement
and any agreements, documents, and instruments required to be executed by Page
One have been duly authorized by the Board of Directors of Page One and the
Sellers. This Agreement and the agreements, documents, and instruments required
to be executed and delivered by either of the Sellers or Page One in accordance
herewith have been duly and validly executed and delivered by the Sellers and/or
Page One as provided therein and constitute valid and binding obligations of the
Sellers and/or Page One as provided therein 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.
3.5 CONFLICTS. Except as set forth on Schedule 3.5, neither the
execution, delivery, nor performance of this Agreement or any other agreement,
document, or instrument to be executed by Page One and/or the Sellers in
connection herewith shall (a) violate in any material respect any Federal,
state, county, or local law, rule, or regulation applicable to Page One or the
Sellers, or its or their properties, (b) violate or conflict with, or permit the
cancellation of, any agreement to which Page One or the Sellers 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,
Page One or the Sellers, or (d) violate or conflict with any provision of the
articles of incorporation or by-laws of Page One.
3.6 CONSENTS. Set forth on Schedule 3.6 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 Sellers or Page One.
3.7 FINANCIAL STATEMENTS. Page One has delivered to the Purchaser (a) a
complete and correct copy of the audited financial statements of Page One as of
December 31, 1994, (the "1994 Financial Statements"), (b) a complete and correct
copy of the statement of financial condition of Page One as of July 31, 1995,
and the related statements of operations and retained earnings for the period
then ended (the Interim Financial Statements together with the 1994 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 July 31, 1995, which list is set forth on Schedule 3.7(a) attached
hereto (the "July 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
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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 Page
One as of the indicated dates and for the indicated periods. The July Asset
List has been prepared in accordance with and is otherwise consistent with
the books and records of Page One, 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
the 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
Page One and the Sellers, 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 as defined in Section 3.9 below on
the business, properties, assets, or prospects of the System.
3.8 CONDUCT OF BUSINESS; CERTAIN ACTIONS. Except as set forth on Schedule
3.8 attached hereto, since December 31, 1994, Page One 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 other than the Sellers or, except for
wage and salary increases made in the ordinary course of business and consistent
with the past practices of Page One, 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, (other than sales of inventory in
ordinary course) (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 Page One's assets, that will not be satisfied at
or before Closing, (g) cancelled, waived, or released any debts, rights, or
claims of the System against third parties, (h) made any change in the method of
accounting of Page One, (i) made any investment or commitment therefor in any
person, business, corporation, limited liability company, association,
partnership, joint venture, trust, or other entity that would impair the
System's cash flow or performance, (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 Page One is a party,
except in the ordinary course of business or as expressly permitted in this
Agreement, (l) entered into any other material transactions relating to the
System except in the ordinary course 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 3.8, (o) suffered any material damage,
destruction, or loss (whether or not covered by insurance) to any of Page One's
assets, (p) experienced any
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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.
3.9 PROPERTIES.
A. Real Property. Schedule 3.9 Page One does not own any interest in
any real property.
B. Personal Property. Except for inventory and supplies disposed of or
consumed in the ordinary course of business, consistent with past practice, Page
One owns all of its inventory, equipment, and other personal property (both
tangible and intangible) reflected on the latest balance sheet included in the
Financial Statements, and any notes and schedules thereto, and those assets
shall be free and clear of any Liens, except for statutory liens for current
Taxes not yet due and payable at the Closing.
C. LEASEHOLDS. Schedule 3.9 hereto lists all leases of real property,
all leases of vehicles and rolling stock and all other leases of personal
property with annual lease payments over $5,000, to which Page One is a party or
to which any of the assets of Page One is subject. Page One holds the leasehold
estates created by all such leases free and clear of any Liens, except for (i)
statutory liens for current Taxes not yet due and payable, (ii) in the case of
leases of real property, agreements with, and/or conditions imposed on the
issuance of land use permits, zoning, business licenses, use permits or other
entitlements of various types issued by city, county, state, and federal
governmental bodies or agencies, necessary or beneficial to the continued use
and occupancy of Page One's leasehold estates, or the continuation of the
operation of the System, (iii) mechanics', carriers', workers', repairers', and
other similar liens imposed by law arising or incurred in the ordinary course of
business for obligations not yet due, and (iv) in the case of lease of vehicles,
rolling stock, and other personal property, encumbrances, which do not,
individually or in the aggregate, materially impair the operation of the System
at the facility at which such leased equipment or other personal property is
located.
D. 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 as set
forth on Schedule 3.9 attached hereto. Except as set forth in Schedule 3.9
attached hereto, Page One has good and marketable title to all of its assets.
Except as set forth on Schedule 3.9 attached hereto, the assets of Page One are
free and clear of all liens (including any liens for Taxes (as defined in
Section 3.18 hereof), security interests, claims, rights of another, and
encumbrances. Except as set forth in Schedule 3.9 attached hereto, the tangible
assets of Page One are in good operating condition and repair, normal wear and
tear excepted, and are free from material defects. It is understood that the
burden of proof will be on the Purchaser to prove that any of Page One's assets
were not in good operating condition prior to the Closing. 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 in a manner that will result in a Material Adverse Effect.
The term "Material Adverse Effect" shall mean (a) the revocation or suspension
of any license,
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authorization, or permit necessary to the operation of the System, or (b) the
imposition of any fine, penalty, fee, assessment, or the incurrence of other
cost that, individually, or in the aggregate, equals or exceeds $5,000. No
covenants, easements, rights-of-way, or regulations of record impair the uses
of the assets of Page One for the purposes for which they are now operated.
There are no other parties in possession of any portion of the assets owned
by Page One. To the knowledge of Page One and Sellers, there are no pending
or threatened condemnation or similar proceedings or assessments affecting
the assets of Page One.
3.10 PAGERS. Schedule 3.10 includes a true and complete list of the number
and type of pagers in service in the System as of October 31, 1995. All of such
pagers in service are operating pursuant to valid and binding rental and/or
service agreements with Page One or agents or resellers Ones, no single
subscriber or related group of subscribers accounts for more than five percent
of the paging revenues attributable to the System, and Page One does not know
and the Page One has received no written notice, of any current subscribers 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 Page One or its agents or resellers to permit the customer to utilize 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 3.10.
3.11 LICENSES AND PERMITS. Set forth on Schedule 3.11 attached hereto is a
list of all federal, state, county, and local governmental licenses,
authorizations, certificates, permits, and orders held or applied for by Page
One in connection with or related to the operation of the System (collectively,
the "Licenses"). Except as set forth on Schedule 3.11, Page One 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 that could reasonably be expected to
have a Material Adverse Effect on the operation of the System. Other than the
consents required to be obtained in connection with this Agreement (which
consents are set forth on Schedule 3.6 hereto). To the knowledge of Page One
and Sellers, 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 Page One or the
Purchaser or the ownership by Page One of its assets. No claim has been
communicated by any governmental authority to Page One or Sellers to the effect
that any license, authorization, certificate, permit, or order in addition to
those listed on Schedule 3.11 is necessary in respect of the operation of the
System.
3.12 INTELLECTUAL RIGHTS. Attached hereto as Schedule 3.12 is a list and
description of all patents, trademarks, servicemarks, tradenames, and copyrights
and applications therefor related to the System and owned by or registered in
the name of Page One or in which Page One has any right, license, or interest.
Page One is not a party to any license agreements whether written or oral,
either as licensor or licensee, with respect to any patents, trademarks,
servicemarks, tradenames, or copyrights or applications therefor. To the best
of Page One's and the Sellers' knowledge, Page One has good and marketable title
to or the right to use such patents,
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trademarks, service marks, tradenames, and copyrights and all inventions,
processes, designs, formulae and trade secrets, necessary for the conduct of
its business, without the payment of any royalty or similar payment. To the
best of Page One's and the Sellers' knowledge, Page One is not infringing any
patent, trademark, servicemark, tradename, or copyright of others, and
neither Page One nor the Sellers is aware of any infringement by others of
any such rights owned by Page One.
3.13 COMPLIANCE WITH LAWS. Page One 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
Page One's business the violation of which could reasonably be expected to have
a Material Adverse Effect on the operation of the System, 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 to the knowledge of Page One and
the Sellers by the laws, regulations, and orders to which the Page One or its
properties or operations are subject. Page One and the Sellers represent and
warrant that they have 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 Page One's
business to the extent that such failure to comply might reasonably be
anticipated to have a Material Adverse Effect on the operation of the System.
To the knowledge of Page One and the Sellers, none of the owners of any of the
towers on which Page One leases tower space have 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 communicated by any governmental
authority (and, to the best knowledge of Page One and the Sellers, 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, Page One 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 to the extent that such failure to comply might
reasonably be anticipated to have a Material Adverse Effect on the operation of
the System.
3.14 INSURANCE. Attached hereto as Schedule 3.14 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 Page One 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 Page One has occurred which is likely to result in any prospective
upward adjustment in such premiums. Excluding insurance policies which have
expired and been replaced, no insurance policy of Page One has been cancelled
within the last three years, and to Page One's and Sellers'
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knowledge, no threat has been made to cancel any insurance policy of Page One
within such period.
3.15 ERISA PLANS. Page One has no employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), except as
set forth on Schedule 3.15 attached hereto.
3.16 CONTRACTS AND AGREEMENTS. The contracts and agreements listed and
described in Schedule 3.16 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 Ones)
to which Page One is a party or by which Page One or its properties are bound
with respect to which the obligations of or the benefits to be received by the
Page One could reasonably be expected to have a value in excess of $5,000 in any
consecutive 12 month period (each a "Material Agreement"). Page One has also
furnished to the Purchaser the Page One's standard form rental agreement and
agreement with resellers used in the ordinary course of the Page One's business.
Page One is not a lessor under any rental agreement or reseller agreement that
varies from such standard form agreement in any material respect. Page One and
the Sellers 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. Page One is not and, to the
best knowledge of Page One and the Sellers, 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
Page One has not waived any material right under any Material Agreements.
Neither Page One nor the Sellers 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, Page One 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(g)(7) of the Code.
3.17 CLAIMS AND PROCEEDINGS. Attached hereto as Schedule 3.17 is a list
and description of all material claims, actions, suits, proceedings, and
investigations pending or, to the best knowledge of Page One and the Sellers,
threatened against or affecting Page One or any of its properties or assets, at
law or in equity, or before or by any court, municipal or other governmental
department, commission, board, agency, or instrumentality. Except as set forth
on Schedule 3.17 attached hereto, none of such claims, actions, suits,
proceedings, or investigations will result in any liability or loss to Page One
which (individually or in the aggregate) is material to Page One, and Page One
has not been, and Page One 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 Page One and the Sellers, 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 Page One and the Sellers, 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,
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operations, or financial condition or prospects of the System or result in a
material liability of Page One.
3.18 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 Page One 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 Page One. 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 Page
One 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 Page One. All annual or
other FCC regulatory fees arising from the operations of Page One have been
paid. Page One 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 Page One. To the best knowledge of Page One and
the Sellers, there is no basis for any Page One Tax Actions. No liens have been
asserted for Taxes, penalties, interest, or additions to Taxes on any of the
assets of Page One. Proper and accurate amounts of any and all payroll and
employment Taxes that are required to be withheld have been withheld and
remitted by Page One 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.
3.19 PERSONNEL. Attached hereto as Schedule 3.19 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 3.19 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 3.19 attached hereto also contains
a brief description of all material terms of all employment agreements and
confidentiality agreements to which Page One is a party and all severance
benefits which any director, officer, or employee of Page One is or may be
entitled to receive. Page One 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 Page One is a party and under which any of its employees are entitled to
receive benefits of any nature. The employee relations of the Page One are good
and there is no pending or, to the best knowledge of Page One and the Sellers,
threatened labor dispute or union organization campaign involving Page One.
None of the employees of Page One is represented by any labor union or
organization. Page One is in material
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compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, and wages and hours
and is not to the knowledge of Page One or Sellers engaged in any unfair
labor practices. There is no unfair labor practice claim against Page One
before the National Labor Relations Board or any strike, labor dispute, work
slowdown, or work stoppage pending or, to the best knowledge of Page One and
the Sellers, threatened against or involving Page One.
3.20 BUSINESS RELATIONS. Neither Page One nor the Sellers knows 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
substantially the same manner as such business was previously conducted with
Page One. Page One 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 Page One in the operation of the System nor is
Page One or the Sellers aware of any facts which could lead any of them
reasonably to believe that the operation of the System will be subject to any
such material disruption.
3.21 BROKERS. Neither Page One nor the Sellers 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.
3.22 WARRANTIES. Attached hereto as Schedule 3.22 is a list and brief
description of all warranties and guarantees made by Page One to third parties
with respect to any products sold or leased or services rendered by Page One in
connection with the operation of the System. Except as set forth on
Schedule 3.22 attached hereto, no claims for any material breach of product or
service warranties to customers have been made against Page One since January 1,
1992. To the best knowledge of Page One and the Sellers, no state of facts
exists, or event has occurred, which may form the basis of any material claim
against Page One for liability on account of any express or implied warranty to
any third party related to the operation of the System.
3.23 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 3.23 attached
hereto, all of the accounts, notes, and loans receivable that have been recorded
on the books of Page One are bona fide and represent amounts validly due and all
such accounts receivable (net of reserves set forth on Page One's balance sheet
as of July 31, 1995) will be collected in full within 60 days after the Closing
Date. All of such accounts, notes, and loans receivable will be free and clear
of any security interests, liens, encumbrances, or other charges as of the
Closing; 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. Page One hereby guarantees the
collection in full by Purchaser of any accounts receivable in respect of any
customers that opened new accounts with Page One 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 8.11 hereof.
3.24 CUSTOMERS AND SUPPLIERS. Schedule 3.24 attached hereto contains a
true, correct, and complete list of (a) the ten largest customers (measured in
dollar volume of revenue) of the
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System during the year ended December 31, 1994, and the quarter ended June 30,
1995, (b) the ten largest suppliers (measured in dollar volume of
purchases) of the System during the year ended December 31, 1994, and the
quarter ended June 30, 1995, 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).
3.25 INTEREST IN COMPETITORS, SUPPLIERS, AND CUSTOMERS. Except as set
forth in Schedule 3.25, none of Page One, the Sellers, nor any officer or
director of Page One, or 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.
3.26 INVENTORY. Except as set forth on Schedule 3.26 attached hereto, the
inventories shown on the Financial Statements and the July Asset List consist of
(and the inventories of Page One at the Closing will consist of) items of a
quality and quantity usable and readily salable in the ordinary course of
business by Page One.
3.27 COMMISSION SALES CONTRACTS. Except as disclosed in Schedule 3.27
attached hereto, Page One does not employ or have any relationship with any
individual, corporation, partnership, or other entity whose compensation from
Page One arising from the operation of the System is in whole or in part
determined on a commission basis.
3.28 REGULATORY CERTIFICATES. Neither Page One nor the Sellers is aware of
any information concerning Page One or its operations that could reasonably be
expected to 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 continued
operation of the System and ownership of its assets after the Closing Date by
Page One as provided in this Agreement.
3.29 INVESTMENT. The Sellers are acquiring the Common Stock, if any, from
the Purchaser pursuant hereto for their own accounts 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 the
Sellers), nor with any present intention of distributing or selling the same;
except pursuant to the "shelf" registration statement as set forth in the
Registration Rights Agreement, and, other than pursuant to the provisions of the
Registration Rights Agreement attached as Exhibit B hereto, the Sellers have no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness, or commitment providing for the disposition thereof.
3.30 ACCREDITED INVESTOR STATUS. The Sellers are Accredited Investors, as
such term is defined in Rule 501 promulgated under the Securities Act of 1933,
as amended (the "Securities Act").
3.31 INVESTMENT RISK. The Sellers acknowledge and agree that the
acquisition by them of Common Stock, if any, from the Purchaser pursuant to this
Agreement carries a certain degree
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of risk and they have taken full cognizance of and understand that there are
substantial risks related to the acquisition of Common Stock.
3.32 LEGENDS. The Sellers understand, acknowledge, and agree that a legend
will be placed on all certificates evidencing 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.
3.33 PURCHASER INFORMATION. The Sellers have received from the Purchaser
true and correct copies of the ProNet Filings. The Sellers have carefully read
or reviewed and is familiar with the ProNet Filings. The Sellers and the
Sellers' 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 Sellers'
satisfaction.
3.34 INFORMATION FURNISHED. Page One and the Sellers 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
Page One, 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.
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ARTICLE 4
COVENANTS OF PAGE ONE AND THE SELLERS
4.1 INSPECTION. From the date hereof to the Closing, Page One and the
Sellers 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, facilities, and properties of Page One; provide the Purchaser and its
officers, attorneys, accountants, representatives, and lenders all information
and material pertaining to the business and affairs of Page One as the Purchaser
may reasonably deem necessary or appropriate; and use reasonable efforts to
afford the Purchaser and its officers, attorneys, accountants, and
representatives the opportunity to meet with the customers and suppliers of Page
One to discuss the business, condition (financial or otherwise), operations, and
prospects of Page One. Any investigation by the Purchaser or its officers,
attorneys, accountants, representatives, or lenders shall not in any manner
affect the representations and warranties of Page One and the Sellers contained
herein.
4.2 COMPLIANCE. From the date hereof to the Closing, neither Page One nor
the Sellers shall take or fail to take any action which action or failure to
take such action shall cause the representations and warranties made by Page One
or the Sellers herein to be untrue or incorrect as of the Closing.
4.3 SATISFACTION OF ALL CONDITIONS PRECEDENT. From the date hereof to the
Closing, Page One and the Sellers shall use all commercially reasonable efforts
to cause all conditions precedent to the obligations of the Purchaser hereunder
to be satisfied by the Closing.
4.4 NO SOLICITATION. From the date hereof until 11:59 p.m., C.D.T. on
June 30, 1996, Page One and the Sellers shall not, and shall use their best
efforts to cause the officers, directors, employees, and agents of Page One not
to, (a) solicit, initiate or encourage the submission of proposals or offers
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 Shares, or any
other securities of Page One, or any merger, consolidation, or business
combination with Page One 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
C.D.T. p.m. on June 30, 1996, Page One and the Sellers agree that neither Page
One nor the Sellers will enter into any agreement or consummate any transaction
that would interfere with the consummation of the transactions contemplated by
this Agreement. Page One and the Sellers 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 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.
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4.5 NOTICE OF DEVELOPMENTS. From the date hereof to the Closing, Page One
and the Sellers shall, immediately upon Page One or the Sellers becoming aware
thereof, notify the Purchaser of any material problems or developments with
respect to the business, operations, assets, or prospects of Page One.
4.6 NOTICE OF BREACH. From the date hereof to the Closing, Page One and
the Sellers shall, immediately upon the Page One or the Sellers becoming aware
thereof, give written notice in such detail as Purchaser shall reasonably
request 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 Page One
or the Sellers 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, Page One
and the Sellers shall, promptly upon Page One or the Sellers 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 Page One becomes a party or which is
threatened against Page One, (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, Page One shall use commercially reasonable efforts to keep (and the
Sellers shall use commercially reasonable efforts to cause Page One to keep) in
full force and effect insurance coverage for Page One and its assets and
operations comparable in amount and scope to the coverage now maintained
covering Page One and its assets and operations.
4.9 MAINTENANCE OF CREDIT TERMS. From the date hereof to the Closing,
Page One shall continue (and the Sellers shall cause Page One to continue) to
effect sales and leases of its products only on the terms that have historically
been offered by Page One or on such other terms which are no less favorable to
Page One.
4.10 UPDATING INFORMATION. As of the Closing, Page One and the Sellers
shall update all information set forth in the schedules to this Agreement.
4.11 INTERIM OPERATIONS OF PAGE ONE.
(a) From the date hereof to the Closing, Page One shall conduct (and
the Sellers shall cause Page One to conduct) its business only in the
ordinary course consistent with past practice, and Page One shall not,
unless the Purchaser gives its prior written approval which approval shall
not be unreasonably withheld, delayed or conditioned,
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(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 Page One to issue
securities, (ii) declare, set aside, make, or pay any dividend or other
distribution with respect to its capital stock, except for dividends of
cash or cash equivalents in excess of accounts payable, (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 material 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 Page One 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 unless requested in
writing by Purchaser to do so, or (ix) except as required by law, adopt,
amend, or terminate any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred 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 Page One, 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, without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld, conditioned, or delayed,
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 without the prior written consent of
Purchaser which consent shall not be unreasonably withheld, conditioned, or
delayed.
(b) From the date hereof to the Closing, Page One shall use (and the
Sellers shall cause the Page One to use) commercially reasonable efforts
consistent with its past practices 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 Page
One's banking relationships and credit facilities that are material to the
operation of the System, to preserve the goodwill of those having business
relationships with Page One, and to comply with all applicable laws.
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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 August 1995, Page One 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 Page One 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, Page One and the
Sellers shall use commercially reasonable efforts to obtain all necessary
consents all of which are described on Schedule 3.6 hereto.
4.14 LICENSES. From the date hereof until the Closing, Page One and the
Sellers shall cooperate and assist 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 to
Schedule 3.11 hereto.
ARTICLE 5
REGULATORY APPROVALS
With the full cooperation and assistance of Page One and the Sellers 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 Page One. 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
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Order until such time as the Purchaser notifies Page One in writing of its
willingness to accept such conditions in Purchaser's sole discretion.
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 Page One and the Sellers
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;
Page One and the Sellers shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by Page One and the Sellers 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 Page One and by the Sellers 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 John M. Cogburn,
Jr., Esquire, counsel for Page One and the Sellers, dated as of the Closing
Date, in the form attached hereto as Exhibit C.
(d) The Purchaser shall have received an opinion of Haley, Bader &
Potts, P.L.C., FCC counsel for Page One and the Sellers, dated as of the
Closing Date, in the form attached hereto as Exhibit D.
(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
which casualty or damage shall not have been repaired or replaced (or
provision made therefor) reasonably satisfactory to Purchaser; there shall
have been no material adverse change in the financial condition, business,
properties, operations, or prospects of the System since July 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,
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and assignment of the Shares to the Purchaser and to the ownership of its
assets and the operation of the System by Page One after the Closing Date.
(g) As of the Closing Date, Page One shall have at least 27,328
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 Page
One setting forth the number and type (as provided in Schedule 3.10 of
pagers in service in the System.
(h) As of the Closing Date, Page One's inventory valued as set forth
in EXHIBIT J shall include at least $200,000 of useable, current-model
pagers as set forth in the July Asset List and the Purchaser shall have
received a certificate, dated as of the Closing Date, signed by the
President of Page One to the foregoing effect.
(i) All consents and approvals (i) listed on Schedule 3.6 hereto and
(ii) otherwise required in connection with the execution, delivery, and
performance of this 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 Page One 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 Page One to the foregoing effect.
(k) The Purchaser shall have received from the Page One all
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
marketable title to the Shares in accordance herewith.
(l) Each of the Sellers shall have entered into a Noncompetition
Agreement (a "Noncompetition Agreement") with the Purchaser substantially
in the forms attached hereto as Exhibits E and F.
(m) The Sellers and ProNet shall have entered into a Registration
Rights Agreement substantially in the form of EXHIBIT B hereto providing
that ProNet 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 Page One
pursuant to this Agreement, if any.
(n) Page One and the Sellers 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.
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(o) The Sellers and the Purchaser (or an affiliate of the Purchaser,
including Page One) shall hve entered into a Lease Agreement (substantially in
the form to be attached hereto as EXHIBIT K ) regarding the premises located at
232 Meriwether Griffin, Georgia 30223.
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 Page One's or the Sellers' respective representations,
warranties, covenants, or indemnities herein.
6.2 CONDITIONS TO OBLIGATIONS OF PAGE ONE AND THE SELLERS. The
obligations of the Sellers to consummate the transactions contemplated hereby
are subject to the fulfillment of the following conditions:
(a) The representations and warranties of the Purchaser and ProNet
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 and ProNet at or
prior to the Closing shall have been performed in all material respects;
and the Page One and the Sellers shall have received a certificate, dated
as of the Closing Date, signed by an authorized officer of the Purchaser
and ProNet to the foregoing effects.
(b) The Purchaser shall have delivered to the Sellers 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 in accordance with and as
specified in Section 1.3 hereof.
(c) The Purchaser shall have entered into the Noncompetition
Agreements with the Sellers.
(d) Each Seller and ProNet shall have entered into a Registration
Rights Agreement substantially in the form of EXHIBIT B hereto providing
that ProNet 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 Sellers
pursuant to this Agreement, if any.
(e) The Sellers shall have received an opinion of Mark A. Solls,
Esquire, counsel for the Purchaser, dated as of the Closing Date, in the
form attached hereto as EXHIBIT G.
(f) 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.
(g) All necessary action (corporate or otherwise) shall have been
taken by the Purchaser to authorize, approve, and adopt this Agreement and
the consummation and
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performance of the transactions contemplated hereby, and the Sellers shall
have received a certificate, dated as of the Closing Date, signed by an
officer of the Purchaser to the foregoing effect.
(h) Purchaser and ProNet shall have delivered such good standing
certificates, officer's certificates, and similar documents and
certificates as counsel for the Sellers shall have reasonably requested
prior to the Closing Date.
(i) ProNet shall have executed and delivered to each of the Sellers
guaranty agreements substantially in the form attached hereto as EXHIBIT H
(the "ProNet "Guaranties").
The decision of the Sellers to consummate the transactions contemplated hereby
without the satisfaction of any of the preceding conditions shall not constitute
a waiver of any of the Purchaser's or ProNet's respective representations,
warranties, covenants, or indemnities herein.
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 Sellers, (b) the Sellers 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 Page One or the Sellers 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 Page One or the Sellers 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 Sellers or the Purchaser if the Closing does not occur by June 30,
1996; 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.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF THE PURCHASER. The Sellers and Page One jointly
and severally agree to indemnify and hold harmless the Purchaser and ProNet
(collectively, the "Purchasers Indemnified Parties") and collectively with the
Sellers Indemnified parties, the "Indemnified Parties") from and against any and
all damages, losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses incurred in investigating and preparing for any litigation
or proceeding) (collectively, "Purchasers Indemnified Costs" and collectively
with the Sellers
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Indemnified Costs, the "Indemnified Costs") which any of the Purchasers
Indemnified Parties may sustain, or to which any of the Purchasers
Indemnified Parties may be subjected, arising out of any breach or default by
Page One or the Sellers 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 INDEMNIFICATION OF PAGE ONE AND THE SELLERS. The Purchaser and ProNet
agree to indemnify and hold harmless Page One, the Sellers, and each officer,
director, employee, and consultant of Page One (collectively, the "Sellers
Indemnified Parties" and collectively with the Purchaser Indemnified Parties,
the "Indemnified Parties") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs and reasonable attorney's fees incurred in investigating and
preparing for any litigation or proceeding) (collectively, the "Sellers
Indemnified Costs" and, collectively with the Purchaser Indemnified Costs, the
"Indemnified Costs") which any of the Sellers Indemnified Parties may sustain,
or to which any of the Sellers Indemnified Parties may be subjected, arising out
of any breach or default by the Purchaser under any of the representations,
warranties, covenants, agreements, or other provisions of this Agreement or any
agreement or document executed in connection herewith.
8.3 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 reasonable
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, or (ii)
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
(which approval shall not be unreasonably withheld, conditioned or delayed)
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;
(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 be entitled to sole control of the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (provided, however, that the Indemnified Party shall be
entitled to participate at their own expense in the defense of), but the
Indemnified Party shall be entitled to have sole control over any third-
party action as to which the Indemnifying Party (i) fails 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 no settlement of a third-party
action involving the asserted liability of an Indemnifying Party shall be
made without prior written consent by or on behalf of the Indemnifying
Party, which consent shall not be unreasonably withheld, conditioned, or
delayed. Consent shall be presumed in the case of settlements of $10,000
or less where the Indemnifying Party has not responded within five (5)
business days to notice of a proposed settlement. If the indemnifying Party
assumes the defense of a third-party action, (i) no compromise or
settlement thereof may be effected by the Indemnifying Party without the
Indemnified Party's consent unless (A) there is no finding or admission of
any violation of the rights of any person and no effect on any other claim
that may be made against the indemnified Party, (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying
Party and (C) the compromise or settlement includes, as an unconditional
term thereof, the giving by the claimant or the plaintiff to the
Indemnified Party of a release, in form and substance, reasonably
satisfactory to the Indemnified Party, from all liability in respect of
such third-party action and (ii) the Indemnified Party shall have no
liability with respect to any compromise or settlement thereof effected
without its consent; and
(e) In connection with the defense, compromise or settlement of any
third party action, the parties to this Agreement (i) shall execute such
powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may
reasonably be related to any such claim or action, (ii) shall provide such
counsel, accountants and other representatives of each party during normal
business hours access to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other party
and will furnish to such party copies of all documents as may reasonably be
requested (certified, if requested).
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8.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 8.3 hereof because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party 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 not
amount to a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Party with respect to such claim.
8.5 INDEMNIFICATION EXCLUSIVE REMEDY. If the Closing occurs, except for
remedies based upon fraud and except for statutory and equitable remedies, the
remedies provided in this Article 8 constitute the sole and exclusive remedies
for recovery against any Indemnifying Party based upon the inaccuracy, untruth,
incompleteness or breach of any representation or warranty of any Indemnifying
Party contained in this Agreement or in any certificate, schedule or exhibit
furnished by any Indemnifying Party in connection herewith, or based upon the
failure of any Indemnifying Party to perform any covenant, agreement or
undertaking required by the terms of this Agreement to be performed by such
Indemnifying Party.
8.6 SURVIVAL. All representations, warranties and agreements contained in
this Agreement or in any certificate delivered pursuant hereto shall survive the
Closing notwithstanding any investigation conducted with respect thereto or any
knowledge acquired as to the accuracy or inaccuracy of any such representation
or warranty.
8.7. TIME LIMITATIONS. No Indemnifying Party shall have any liability to
any Indemnified Party under or in connection with: (a) a breach of any of the
representations, warranties, covenants, or agreements made or to be performed by
such Indemnifying Party contained in this Agreement (except as provided in (b)
and (c) of this Section 8.7) , unless written notice asserting an Indemnified
Cost based thereon is given to the Indemnifying Party prior to the later of (i)
the second anniversary of the date on which such covenant or agreement is to be
performed or (ii) the ninetieth (90th) day after receipt by Purchaser of its
audited financial statements for the first full fiscal year after the Closing if
such breach relates to a financial representation, warranty, covenant or
agreement of Page One or Sellers; (b) a breach of any representation, warranty,
covenant or agreement made or to be performed by Page One and Sellers relating
to any Taxes, Returns, or Seller Tax Actions, including without limitation,
those representations and warranties made by Page One and the Sellers in Section
3.18, unless written notice asserting an Indemnified Cost based thereon is given
to the Indemnifying Party prior to the later (i) the ninetieth (90th) day after
the date upon which the liability to which any such Indemnified Cost may relate
is barred by all applicable statues of limitation and (ii) the ninetieth (90th)
day after the date upon which any claim for refund or credit related to such
Indemnified Cost is barred by all applicable statues of limitation; or (c) a
breach of any representation, warranty, covenant or agreement made or to be
performed by Page One and the Sellers contained in this Agreement related to any
environmental matters, including without limitation, those representations and
warranties made by Page One and the Sellers in Section 3.13 which relate to
environmental matters, unless written notice asserting an Indemnified Cost is
given to the Indemnifying Party prior to the fifth anniversary of the Closing;
PROVIDED HOWEVER, any liability of Page One and the Sellers relating to, arising
out of, or based upon their representations and
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warranties set forth in Section 3.4 relating to due authorization and 3.9
relating to title may be asserted at any time, and FURTHER PROVIDED, HOWEVER,
any claim for indemnification under this Article 8 which is based on fraud
may be asserted at any time. It is specifically understood that any written
notice specifying an Indemnified Cost shall describe the damage, loss, claim
or liability to the extent known by the Indemnified Party; PROVIDED, HOWEVER,
the Indemnified Party shall not be obligated to detail the amount of such
damage, loss, claim or liability until known to the Indemnified Party and the
failure to detail such amount shall not effect the Indemnified Cost.
8.8 LIMITATIONS AS TO AMOUNT. No Indemnifying Party shall have any
liability with respect to the matters described in this Article 8 until the
total of all Indemnified Costs for which such Indemnifying Party is responsible
exceeds $100,000 and then only for the amount by which such Indemnified Costs
exceed $25,000. For the purpose of determining the limitation on liability
under this Section 8.8, only the amount of the joint and not the several
liability of the Indemnifying Parties under this Article 8 shall be considered.
The limitations set forth in this Section 8.8 shall not apply to any intentional
misrepresentation or breach of warranty of any Indemnifying Party or any
intentional failure to perform or comply with any covenant or agreement of any
Indemnifying Party, and the Indemnifying Parties shall be liable for all
Indemnified Costs with respect thereto. It is agreed that the payment of post-
Closing expenses as set forth in Section 9.6 shall not be considered Indemnified
Costs.
8.9 MAXIMUM LIABILITY. In no event shall (i) the aggregate liability of
Page One and the Sellers with regard to Purchaser Indemnified Costs or (ii) the
aggregate liability of the 1 and ProNet with regard to Page One Indemnified
Costs exceed the aggregate purchase price determined under Section 1.2 of this
Agreement.
8.10 TAX EFFECT AND INSURANCE. The liability of any Indemnifying Party
with respect to any Indemnified Cost shall be reduced by the tax benefit
actually realized and any insurance proceeds received by the Indemnified Party
as a result of any Indemnified Cost upon which such claim for indemnification is
based, and shall include any tax detriment actually suffered by the Indemnified
Party as a result of such Indemnified Costs. The amount of any such tax benefit
or detriment shall be determined by taking into account the effect, if any and
to the extent determinable, of timing differences resulting from the
acceleration or deferral of items of gain or loss resulting from such
Indemnified Costs and shall otherwise be determined so that payment buy the
Indemnifying Party of the Indemnified Costs, as adjusted to give effect to any
such tax benefit or detriment, will make the Indemnified party as economically
whole as is reasonably practical with respect to the Indemnified Costs upon
which the claim for indemnification is based. Any dispute as to the amount of
such tax benefit or detriment shall be resolved by arbitration as provided in
Section 8.13 below.
8.11 RIGHT OF SET-OFF. Purchaser and ProNet, at their option and in
addition to any other remedies they may have at law or in equity, may set-off
the amount of any Purchasers Indemnified Cost to which they, or either of them
may be entitled under this Article 8 by reducing the Deferred Amount in a sum
equal to the amount of such Indemnified Costs. The Purchaser's Indemnified
Party claiming the right of set-off shall give Page One and the Sellers written
notice of any claim with respect to which such Purchasers Indemnified Party
intends to pursue its right
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of set-off against the Deferred Amount. Not later than fifteen (15) days
following the receipt of such notice, Page One and the Sellers shall provide
the Purchaser's Indemnified party with written notice whether Page One and
the Sellers contest such claim or accept such claim; and if the claim is
accepted, Purchaser shall be entitled to deduct that amount of such
Purchaser's Indemnified Costs from the Deferred Amount. In the event that
Page One and the Sellers contest such claim in part, but not in full, Page
One and the Sellers shall provide written notice with respect of the amount
they do not contest, and the Purchaser's Indemnified Party shall be entitled
to set-off against the Deferred Amount the amount not contested, subject to
the limitation set forth in Section 8.8 above. With respect to any amount
that Page One and the Sellers shall contest, the parties shall promptly
submit to mediation and arbitration in accordance with the provisions of
Section 8.13 below the question whether Purchaser's Indemnified Parties shall
be entitled to indemnification with respect to such disputed amount. Any
determination in connection with such mediation or arbitration shall be
binding upon the affected parties, and promptly upon such determination,
Purchaser shall be entitled to set-off against the Deferred Amount the full
amount to which the mediation or arbitration shall determine the Purchaser's
Indemnified Party is entitled. In the event that any such claim is submitted
to mediation and arbitration and is not resolved by the Deferred payment
Date, Purchaser shall deposit cash (or ProNet shall deposit Common Stock at
Purchaser's sole discretion) with such mediator or arbitrator or with such
other escrow agent satisfactory to Purchaser and the Sellers an amount equal
to the amount which Purchaser's Indemnified Party claims the right of
indemnification to be held by such escrow agent until the amount of the
disputed Purchaser's Indemnified Cost is determined. Purchaser shall be
allowed to adjust the interest payable on the Deferred Amount based on the
amount of the Purchaser's Indemnified Cost which is set-off against the
Deferred Amount as follows: (i) if such set-off is based upon the breach of
any of the representations and warranties made by Page One and the Sellers
pursuant to this Agreement, the adjustment shall relate back to the Closing
Date or (ii) if such set-off relates to the breach of any covenant or
agreement made by Page One or Sellers pursuant to this Agreement, the
adjustment shall relate back to the date of the breach. Neither the exercise
nor the failure to exercise such right of set-off shall constitute an
election of remedies nor limit the Purchaser's Indemnified Party in any
manner in the enforcement of any other remedies that maybe available to it
pursuant to this Agreement.
8.12 SUBROGATION. Upon payment in full of any Indemnified Cost, whether
such payment is effected by set-off or otherwise, or the payment of any judgment
or settlement with respect to a third-party action, the Indemnifying Party shall
be subrogated to the extent of such payment to the rights of the Indemnified
Party against any person or entity with respect to the subject matter of such
Indemnified Cost.
8.13 ARBITRATION. All disputes arising under this Article 8 (other than
claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matters at issue
and selected by the Indemnifying Party and Indemnified Party in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be held in such place in Atlanta, Georgia, as may be specified
by the arbitrator (or any place agreed to by the Indemnifying Party, the
Indemnified Party, and the arbitrator). The decision of the arbitrator shall be
final and binding as to any matters submitted under this Article 8; PROVIDED,
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HOWEVER, if necessary, such decision and satisfaction procedure may be enforced
by either the Indemnifying party or the Indemnified Party in any court of record
having jurisdiction over the subject matter or over any of the parties to this
Agreement. All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the Indemnified
Parties as the other party. If the arbitrator's decision is a compromise, the
determination of which party or parties bears the costs and expenses incurred in
connection with any such arbitration proceeding shall be made by the arbitrator
on the bases of the arbitrator's assessment of the relative merits of the
parties' positions.
8.14 NO CONTRIBUTION. In the event the Closing occurs, the Sellers, and
not Page One shall be fully liable for Indemnified Costs sustained by the
Indemnified Parties; accordingly, if the Closing occurs the Sellers shall not be
entitled to contribution or any other payments from Page One for any Indemnified
Costs that the Sellers are obligated to pay pursuant to this Agreement or under
applicable law.
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 among the parties hereto 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.
9.2 RISK OF LOSS - DAMAGE TO TRANSFERRED ASSETS. The parties hereto
hereby agree that the risk of loss or damage to any of the assets and property
of Page One shall be upon Page One prior to the Closing and upon the Purchaser
thereafter.
9.3 PRORATIONS. All annual or periodic ad valorem fees, taxes, and
assessments and similar charges imposed by taxing authorities on the Shares and
the transferred assets (collectively, "Property Taxes") shall be borne and paid
(a) by the Sellers 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
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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 Sellers shall be allocated between the
Purchaser and the Sellers 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 Sellers; 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
or where known thereafter 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
Sellers.
9.4 ALLOCATION OF PURCHASE PRICE. The parties hereto 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 I hereto.
9.5 RECORDS. At the Closing, Page One and the Sellers will turn over
and deliver to the Purchaser all files of Page One and each of the Sellers
relating to the assets and liabilities of Page One 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 Page
One's or the Sellers' possession relating to the design, construction,
maintenance, and operation of facilities, improvements, and equipment included
in the assets and/or the System and liabilities of Page One, and all appropriate
books records, accounting information, and operating information and data,
current and historical, reasonably related to such assets and/or the System and
liabilities. Purchaser shall make all such transferred books and records
available for inspection and copying by Sellers for the purposes of preparing
Sellers' tax returns, any tax audits of Sellers, and other purposes not
inconsistent with this Agreement. Further, Purchaser agrees to maintain normal
records with regard to the transferred assets and to make such records available
to Sellers for the foregoing purposes. Purchaser's obligation to make records
available to Sellers pursuant to this Section 9.5 shall be limited to regular
business hours, after reasonable prior notice, for a period of seven (7) years
after Closing. The Sellers shall pay for any and all reasonable costs
associated with Purchaser's obligations under this Section 9.5
9.6 PAGE ONE'S LIABILITIES. The Sellers agree to cause Page One to
satisfy, pay and extinguish all of its liabilities on or before the Closing Date
or to provide at Closing a sufficient cash balance in Page One to satisfy the
requirements of Section 1.5 above.
9.7 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 or the merger, consolidation, liquidation, or dissolution of
the Purchaser, 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 1.3 hereof only
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<PAGE>
to an entity, the common stock (if a 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 9.7, 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. Upon any assignment by Purchaser and/or ProNet hereunder,
the Purchaser and ProNet shall remain jointly and severably liable with the
assignee.
9.8 EXPENSES. Each of the parties hereto shall pay its or his own
respective costs and expenses incurred in connection with this Agreement. The
Sellers 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.
9.9 SALES TAXES. The parties hereto expressly agree that the Sellers
shall be responsible for and shall pay all federal, state, county, or local
taxes of the Sellers and the Purchaser arising by reason of, or resulting from,
the sale of the Shares and the transferred assets and the assumption of
liabilities contemplated hereby.
9.10 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.
9.11 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
exercise of any other right, power, or privilege.
9.12 NOTICES.
(i) GENERALLY. All notices, requests, and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be delivered (a) personally to the addressee by hand with a written
receipt for delivery, (b) by nationally recognized overnight delivery service
(the "Overnight Service") for next business day delivery or
33
<PAGE>
(c) by certified or registered mail, return receipt requested, postage
prepaid (the "Mail"). Rejection or other refusal to accept or inability to
deliver because of changed address of which no notice has been received shall
also constitute receipt. All notices and communications required or
permitted under this Agreement shall be delivered to the addressee thereof at
the address indicated below:
If to Sellers: James H. Cobb, III
Warren K. Wells
234 Meriwether Street
Griffin, Georgia 30223
With a copy to: John M. Cogburn, Jr.
P.O. Box 907
Griffin, Georgia 30224
If By Overnight Service 115 North Sixth Street
Griffin, Georgia 30223
If To Purchaser: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
With a copy to: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Mark A. Solls
(ii) NOTICES BY TELECOPIER. Any party may give notices to any
other party named below by way of telefacsimile ("fax") transmission. If a
notice pursuant to this Agreement is given by fax, it shall be directed to the
telephone number indicated below, and the sending party must have a written
confirmation from the receiving party (which confirmation may be sent by fax,
Overnight Service, or Mail) before a notice given by fax is deemed effective.
Notices pursuant to this Agreement by fax shall be directed as follows:
If to Sellers: (770) 229-4339
If to John M. Cogburn, Jr.: (770) 228-5018
If to Purchaser Or ProNet: (214) 774-0640
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<PAGE>
(iii) EFFECTIVE DATE OF NOTICES. Notice given by Overnight
Service or Mail shall be deemed to be effective at the time of (a) the first
business day following deposit with the Overnight Service or (b) the date of
receipt of the Mail, as the case may be.
(iv) CHANGE OF ADDRESS. Any party may change the address or
telephone number to which notices pursuant to this Agreement shall be sent. Any
change of address shall be effective ten (10) days after notice of the change is
delivered in accordance with this Section 9.12.
9.13 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 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
for two years; provided, however, any covenants, representations and warranties
relating to taxes shall survive for the applicable statute of limitations.
9.14 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.
9.15 FURTHER ASSURANCES. From time to time hereafter, (a) at the request
of the Purchaser, but without further consideration, Page One and the Sellers
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 Page One or the Sellers, but
without further consideration, the Purchaser shall execute and deliver such
other certificates, statements, and documents, and take such other action as
Page One or the Sellers may reasonably request in order to more effectively
consummate the transactions contemplated hereby.
9.16 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.
9.17 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia..
9.18 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.
9.19 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
35
<PAGE>
and provisions contained and as contemplated herein prior to or at the time of
the execution and delivery thereof.
9.20 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.
9.21 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.
9.22 PRONET GUARANTEE. ProNet hereby guarantees the duties and
obligations of the Purchaser under the terms of this Agreement and will execute
and deliver the ProNet Guaranties to the Sellers.
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<PAGE>
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
PRONET INC.
By: /s/ JACKIE R. KIMZEY
--------------------------------------------------
Jackie R. Kimzey, Chief Executive Officer
COBBWELLS, INC.
By: /s/ JAMES H. COBB
--------------------------------------------------
James H. Cobb, III, President
Attest: /s/ WARREN K. WELLS
---------------------------------------------
Warren K. Wells, Secretary
/s/ JAMES H. COBB
-----------------------------------------------------
James H. Cobb, III, Seller
/s/ WARREN K. WELLS
-----------------------------------------------------
Warren K. Wells, Seller
<PAGE>
EXHIBIT A
_______________________________________________________________________________
NATIONSBANK DEPOSITORY AGREEMENT-ESCROW
_______________________________________________________________________________
THE UNDERSIGNED Contact Communications Inc. ("Purchaser"), Cobbwells, Inc.
("Seller"), James H. Cobb III ("Cobb"), and Warren K. Wells ("Wells" and
collectively with Cobb, the "Shareholders"), (collectively, the "Undersigned"),
in order to designate NationsBank of Texas, National Association, (the
"Depository") as the Depository for the Undersigned for the purposes and upon
the terms and conditions herein set forth, do hereby represent and warrant to,
and agree with each other and the Depository, as follows:
1. APPOINTMENT OF THE DEPOSITORY. The Depository is hereby appointed
Depository for the Undersigned with respect to the "Property" as that term is
herein defined.
2. THE PROPERTY. Concurrently with the execution and delivery hereof, the
Undersigned have deposited with the Depository, as custodian and depository, the
items described in Schedule A hereto, or in lieu thereof, have made provision in
paragraph 22 for the deposit of items hereunder (such items being herein
collectively called the "Property"), and direct that same be held and disposed
of by the Depository as herein provided.
3. THE DEPOSITORY'S DUTIES AND AUTHORITY TO ACT.
(a) Except as may be otherwise provided in paragraph 22, in which event
the special instructions in said paragraph 22 shall be controlling, the
Depository shall hold the Property in safekeeping and deliver the same,
including the interest earned from investments made pursuant to paragraph 20
hereof, only (i) to one or more of the Undersigned in accordance with and upon
the written instructions of each of the other of the Undersigned or (ii) in
accordance with and upon the written instructions of all the Undersigned.
(b) When instructions from more than one of the Undersigned are required,
such instructions may be given by separate instruments of similar tenor. Any of
the Undersigned may hereafter act through an agent or attorney-in-fact only if
written evidence of authority in form and substance satisfactory to the
Depository is furnished to the Depository and agreed to by the Depository.
(c) The Depository may act upon any written notice, request, waiver,
consent, certificate, receipt, authorization, power of attorney or other
document which it in good faith believes to be genuine.
(d) The Depository shall be deemed to have properly delivered any item of
Property upon (i) placing the item in the United States mail in a suitable
package or envelope with first class prepaid postage affixed, addressed to the
addressee at such addressee's address as set forth in this Agreement or such
other address as the Undersigned shall have furnished to the Depository in
writing; (ii) delivery in person at the Depository's offices; or (iii) delivery
in any other manner pursuant to written instructions of the Undersigned.
(e) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Depository shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Depository so acting or failing to
<PAGE>
so act; provided, however, the Depository shall not be relieved from
liability for damages arising out of its proven gross negligence or willful
misconduct under this Agreement. The Depository shall in no event incur any
liability with respect to (i) any action taken or omitted to be taken in good
faith upon advice of legal counsel given with respect to any questions
relating to the duties and responsibilities of the Depository hereunder or
(ii) any action taken or omitted to be taken in reliance upon any document
delivered to the Depository and believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(f) Payment of moneys hereunder shall be made by check or by wire transfer
of immediately available funds in accordance with instructions contained in the
applicable disbursement notice to the Depository.
4. OTHER AGREEMENTS. The Depository is not a party to, nor is it bound
by, nor need it give consideration to the terms or provisions of, any other
agreement or undertaking among the Undersigned or any of them, or between the
Undersigned or any of them and other persons, or any agreement or undertaking
which may be evidenced by or disclosed by the Property, it being the intention
of the parties hereto that the Depository assent to and be obligated to give
consideration only to the terms and provisions hereof. Unless otherwise
provided in paragraph 22, the Depository shall have no duty to determine or
inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of any of the Undersigned with respect to
arrangements or contracts with each other or with others, the Depository's sole
duty hereunder being to hold the Property and to dispose of and deliver the same
in accordance with instructions given to it as provided in paragraph 3.
5. STANDARD OF CARE.
(a) The Depository undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Depository.
(b) If the Depository is required by the terms hereof to determine the
occurrence of any event or contingency, the Depository shall, in making such
determination, be liable only for its proven gross negligence or willful
misconduct, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its business. In
determining the occurrence of any such event or contingency the Depository may
request from any of the Undersigned or any other person such reasonable
additional evidence as the Depository in its sole discretion may deem necessary
to determine any fact relating to the occurrence of such event or contingency,
and may at any time inquire of and consult with others, including without
limitation, any of the Undersigned, and the Depository shall not be liable for
any damages resulting from its delay in acting hereunder pending its receipt and
examination of additional evidence requested by it.
(c) Whenever the Depository is required by the terms hereof to take action
upon the occurrence of any event or contingency, the time prescribed for such
action shall in all cases be a reasonable time after written notice received by
the Depository for the happening of such event or contingency, provided however,
that this provision shall not be deemed to limit or reduce the time allowed the
Depository for action as provided in paragraph 5(b).
2
<PAGE>
6. LIMITATION ON LIABILITY. The Depository shall not be responsible or
liable to the Undersigned or to any other person in any manner whatsoever for
the sufficiency, correctness, genuineness, effectiveness or validity of any of
the Property, or for the form or execution thereof, or for the identity or
authority of any person executing or depositing the same. If any of the
Undersigned are acting as agent for others, all of the Undersigned represent and
warrant that each such agent is authorized to make and enter into this
Agreement. This Agreement is a personal one between the Undersigned and the
Depository. The Depository is authorized by each of the Undersigned to rely
upon all representations, both actual and implied, of each of the Undersigned
and all other persons relating to this Agreement and/or the Property, including
without limitation representations as to marital status, authority to execute
and deliver this Agreement, notifications, receipts or instructions hereunder,
and relationships among persons, firms, corporations or other entities,
including those authorized to receive delivery hereunder, and the Depository
shall not be liable to any person in any manner by reason of such reliance. The
duties of the Depository hereunder shall be only to the Undersigned, their
respective successors, heirs, assigns, executors and administrators and to no
other person, firm, corporation or other entity whatsoever.
7. TIME OF PERFORMANCE. Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not a regular
business day of the Depository, the performance thereof on the next succeeding
regular business day of the Depository shall be deemed to be in full compliance.
Whenever time is referred to in this Agreement, it shall be the time recognized
by the Depository in the ordinary conduct of its normal business transactions.
8. DEATH, DISABILITY, ETC. OF THE UNDERSIGNED. The death, disability,
bankruptcy, insolvency, reorganization or absence of any of the Undersigned
shall not affect or prevent performance by the Depository of its obligations or
its right to rely upon instructions received hereunder. However, in the event
of the death, disability, bankruptcy, insolvency, reorganization or absence of
any of the Undersigned, the Depository (without liability to any of the
Undersigned) may refrain from taking any action required or requested hereunder.
9. EXAMINATION OF THE PROPERTY. Any of the Undersigned may examine the
Property during the regular business hours of the Depository; such examination
shall, however, be permitted only in the presence of an officer of the
Depository.
10. REMEDIES OF THE DEPOSITORY.
(a) As additional consideration for and as an inducement for the Depository
to act hereunder, it is understood and agreed that in the event of any
disagreement between the parties to this Agreement or in the event any other
person or entity claims an interest in the Property or any part thereof, and
such disagreement or claim results in adverse claims and demands being made by
them or any of them in connection with or for any part of the Property, the
Depository shall be entitled, at the option of the Depository, to refuse to
comply with the instructions or demands of the parties to this Agreement, or any
of such parties, so long as such disagreement or adverse claim shall continue.
In such event, the Depository shall not be required to make delivery or other
disposition of the Property. Anything herein to the contrary notwithstanding,
the Depository shall not be or become liable
3
<PAGE>
to the Undersigned or any of them for the failure of the Depository to comply
with the conflicting or adverse demands of the Undersigned or any of such
parties or of any other persons or entities claiming an interest in the
Property or any part thereof. The Depository shall be entitled to refrain
and refuse to deliver or otherwise dispose of the Property or any part
thereof or to otherwise act hereunder, as stated above, unless and until (i)
the rights of the parties and all other persons and entities claiming an
interest in the Property have been duly adjudicated in a court having
jurisdiction of the parties and the Property or (ii) the parties to this
Agreement and such other persons and entities have reached an agreement
resolving their differences and have notified the Depository in writing of
such agreement and have provided the Depository with indemnity satisfactory
to it against any liability, claims or damages resulting from compliance by
the Depository with such agreement. In addition to the foregoing, the
Depository shall have the right to tender into the registry or custody of any
court having jurisdiction, any part of or all of the Property. Upon such
tender, the parties hereto agree that the Depository shall be discharged from
all further duties under this Agreement; provided, however, that the filing
of any such legal proceedings shall not deprive the Depository of its
compensation hereunder earned prior to such filing and discharge of the
Depository of its duties hereunder.
(b) While any suit or legal proceeding arising out of or relating to this
Agreement or the Property or the Undersigned is pending, whether the same be
initiated by the Depository or by others, the Depository shall have the right at
its option to stop all further performance of this Agreement and instructions
received hereunder until all differences shall have been resolved by agreement
or until the rights of all parties shall have been fully and finally adjudicated
by the court. For purposes of any suit or legal proceeding arising out of or
relating to this Agreement to which the Depository may be a party, the
Undersigned hereby consent and submit to the jurisdiction of the appropriate
court, whether Federal or state, sitting in Dallas County, Texas. The rights
of the Depository under this paragraph are in addition to all other rights which
it may have by law or otherwise.
11. RELIANCE ON COUNSEL. The Depository may from time to time consult
with legal counsel of its own choosing in the event of any disagreement, or
controversy, or question or doubt as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting in good faith in accordance with the opinion
or instructions of such counsel. Any such fees and expenses of such legal
counsel shall be considered part of the fees and expenses of the Depository
described below.
12. FEES AND EXPENSES.
(a) The Undersigned hereby jointly and severally agree to pay the
Depository for its ordinary services hereunder the fees determined in accordance
with, and payable as specified in, the Schedule of Fees set forth in Exhibit
"A", attached hereto. In addition, the Undersigned hereby jointly and severally
agree to pay to the Depository its reasonable expenses incurred in connection
with this Agreement, including, but not limited to, legal fees and expenses, in
the event the Depository deems it necessary to retain counsel. Such expenses
shall be paid to the Depository within 10 days following receipt by any of the
Undersigned of a written statement setting forth such expenses.
4
<PAGE>
(b) The Undersigned jointly and severally agree that in the event any
controversy arises under or in connection with this Agreement or the Property,
or the Depository is made a party to or intervenes in any litigation pertaining
to this Agreement or the Property, to pay to the Depository reasonable
compensation for its extraordinary services and to reimburse the Depository for
all reasonable costs and expenses associated with such controversy or
litigation, including, but not limited to, legal fees and expenses.
(c) As security for all fees and expenses of the Depository hereunder and
any and all losses, claims, damages, liabilities and expenses incurred in
connection with the acceptance of appointment hereunder or with the performance
of its obligations under this Agreement and to secure the obligation of the
Undersigned to indemnify the Depository as set forth in paragraph 21 hereof, the
Depository is granted a security interest in and lien upon the Property, which
security interest and lien shall be prior to all other security interests, liens
or claims against the Property or any part thereof. Each of the Undersigned
warrant and agree with the Depository that, unless otherwise expressly set forth
in this Agreement, there is no security interest in the Property or any part
thereof; no financing statement under the Uniform Commercial Code of any
jurisdiction is on file in any jurisdiction claiming a security interest in or
describing, whether specifically or generally, the Property or any part thereof;
and the Depository shall have no responsibility at any time to ascertain whether
or not any security interest exists in the Property or any part thereof or to
file any financing statement under the Uniform Commercial Code of any
jurisdiction with respect to the Property or any part thereof.
(d) The Depository is authorized by the Undersigned to withhold from the
Property, prior to distribution thereof and prior to termination of this
Agreement, all fees and expenses to which the Depository is entitled hereunder.
In addition, in the event any such fees and expenses are not paid to the
Depository on or prior to the date such amounts are due, the Depository is
hereby authorized and directed to pay such amounts owed to it from cash funds
included in the Property or, if no cash funds are then included in the Property,
to sell assets constituting part of the Property for the purpose of paying such
amounts owed to it.
(e) In the event fees and expenses of the Depository are to be paid
pursuant to paragraph 22 hereof, it is understood and agreed by the Undersigned
that such fees and expenses are in addition to those described above and that
such fees and expenses shall be subject to periodic review and modification by
the Depository as determined by the Depository in its sole discretion.
13. EFFECTIVE DATE. The effective date of this Agreement shall be the date
on which it is accepted by the Depository unless otherwise provided in paragraph
22.
14. TERMINATION AND RESIGNATION. Unless sooner terminated as hereinafter
provided, this Agreement shall terminate without action of any party when all of
the terms hereof shall have been fully performed. Either the Depository or the
Undersigned may terminate this Agreement upon thirty (30) days written notice
(i) signed by the Depository and delivered to each of the Undersigned or (ii)
signed by each of the Undersigned and delivered to the Depository. Upon
termination of this Agreement, the Depository shall deliver the Property in
accordance with the written instructions delivered by the Undersigned pursuant
to paragraph 3(a) hereof. All fees and expenses owed to the Depository
hereunder shall be paid in full prior to such delivery of the Property, and the
Depository is hereby
5
<PAGE>
authorized and directed by the Undersigned to withhold release or
distribution of the Property until such time as the Depository has received
payment in full of such fees and expenses. The Depository is authorized and
directed to deduct such fees and expenses from the Property prior to release
or distribution thereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which
shall be deemed an original, and such counterparts shall constitute and be one
and the same instrument.
16. ASSIGNMENT OF INTERESTS. None of the Undersigned shall assign or
attempt to assign or transfer his or its interest hereunder or any part thereof.
Any such assignment or attempted assignment by any one or more of the
Undersigned shall be in direct conflict with this Agreement and the Depository
shall not be bound thereby.
17. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
18. HEADINGS. The paragraph headings contained herein are for convenience
of reference only and are not intended to define, limit or describe the scope or
intent of any provision of this agreement.
19. GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
Texas.
20. INVESTMENT OF PROPERTY; WITHHOLDING.
(a) The Depository shall invest cash balances each day in such money
market or other short-term investment funds as shall be specified in writing by
an Authorized Representative on Exhibit "B" [Disclosure and Direction] attached
hereto. Such money market or short-term investment funds may include any open-
end or closed-end management investment trust or investment company registered
under the Investment Company Act of 1940, as amended, for which the Depository
or one of its affiliates acts as investment advisor, custodian, transfer agent,
registrar, sponsor, distributor, manager or otherwise, and any fees paid to the
Depository or its affiliate by such fund shall be in addition to the fees and
expenses owed to the Depository under this Agreement.
(b) The Depository shall not be responsible or liable for determination or
payment of any taxes assessed against the Property or the income therefrom nor
for the preparation or filing of any tax returns other than withholding required
by statute or treaty. Each of the Undersigned agree to provide the Depository
any information necessary to perform any such required withholding and the
Depository shall be entitled to rely on such information. The Depository will
establish the account holding the Property under the TIN of Contact
Communications Inc. 75-2548538; if Depository is responsible for tax reporting
as set forth in paragraph 22, it will be rendered under the aforementioned TIN.
A W-9 certifying to the party's withholding status in the form set forth on
Exhibit "C" attached hereto will be completed at closing.
6
<PAGE>
(c) The Depository may make any and all investments through its own bond
or investment department. The Depository shall not be held liable or
responsible for the quality or diversity of the assets constituting the Property
or for any loss or depreciation in the value of such assets or any loss
resulting from any investment made by the Depository in accordance with the
terms of this Agreement. If the Depository is required to sell or otherwise
redeem or liquidate any Property prior to its maturity, the Undersigned agree
that the Depository shall not be personally liable for any loss to the Property
(including either principal or income) or other costs incurred as a result of
any such early redemption or liquidation.
21. INDEMNIFICATION AND HOLD HARMLESS. The Undersigned hereby agree to
indemnify and hold the Depository and its directors, employees, officers,
agents, successors and assigns harmless from and against any and all losses,
claims, damages, liabilities and expenses, including without limitation,
reasonable costs of investigation and counsel fees and expenses which may be
imposed on the Depository or incurred by it in connection with its acceptance of
this appointment as the Depository hereunder or the performance of its duties
hereunder. Such indemnity includes, without limitation, all losses, damages,
liabilities and expenses (including counsel fees and expenses) incurred in
connection with any litigation (whether at the trial or appellate levels)
arising from this Escrow Agreement or involving the subject matter hereof. The
indemnification provisions contained in this paragraph 21 are in addition to any
other rights any of the indemnified parties may have by law or otherwise and
shall survive the termination of this Agreement or the resignation or removal of
the Depository.
22. ADDITIONAL TERMS.
SEE EXHIBIT D
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Depository
Agreement - Escrow to be executed this 22nd day of November, 1995.
CONTACT COMMUNICATIONS INC. Address
By: /s/ MARK A. SOLLS 6340 LBJ Freeway
-------------------------------- Dallas, Texas 75240
Mark A. Solls (214) 687-2000 (214) 774-0640
Title: Vice President and General Counsel Telephone # Fax #
Company TIN:
----------------------
COBBWELLS, INC. Address
By: /s/ JAMES H. COBB, III 234 Meriwether Street
------------------------------ Griffin, Georgia 30223
Title: President 770/229-1565 770/229-4339
Company TIN: Telephone # Fax #
----------------------
JAMES H. COBB, III Address
By: /s/ JAMES H. COBB, III 234 Meriwether Street
------------------------------ Griffin, Georgia 30223
Title: 770/229-1565 770/229-4339
----------------------------
Company TIN: Telephone # Fax #
----------------------
WARREN K. WELLS Address
By: /s/ WARREN K. WELLS 234 Meriwether Street
------------------------------ Griffin, Georgia 30223
Title: 770/229-1565 770/229-4339
----------------------------
Company TIN: Telephone # Fax #
----------------------
The Depository hereby acknowledges receipt of the Property described in
Schedule A hereof and hereby accepts the same as Depository hereunder, subject
to the terms and conditions set forth above, this ___________ day of __________,
199__.
NationsBank of Texas, National Association,
DEPOSITORY
BY: /s/ BILLIE COLLINS
--------------------------
TITLE: Assistant Vice President
--------------------------
8
<PAGE>
ATTACHMENTS:
Schedule A - Description of Property
Exhibit A - Schedule of Fees
Exhibit B - Disclosure and Direction (Investments)
Exhibit C - Withholding Form
9
<PAGE>
SCHEDULE A
DESCRIPTION OF PROPERTY
(Description of the "Property" as that term is defined in paragraph 2 of the
Agreement) In the event the property is other than cash, securities or
negotiable instruments, the following provisions shall apply: (i) Depository
makes no warranty as to the suitability for any particular purpose of the
Property deposited with Depository hereunder, or (ii) Depository makes no
warranty that the facilities of the Depository are suitable for the deposit
of the Property, or (ii) Depository shall not be liable for any deterioration
or destruction of the Property while in the possession of Depository, except
for the gross negligence or willful misconduct of the Depository, or (iv)
Depository has no duty to determine if any Property deposited hereunder is in
fact the property that is required to be deposited hereunder pursuant to any
agreement of the Undersigned.
$500,000.00 CASH
The following person(s) are designated as Authorized Representative as that term
is defined in the Agreement and specimen signatures are shown:
CONTACT COMMUNICATIONS INC. /s/ MARK A. SOLLS
- ----------------------------------- ---------------------------------
By: Mark A. Solls, Vice President Signature
COBBWELLS, INC. /s/ JAMES H. COBB, III
- ----------------------------------- ---------------------------------
By: President Signature
JAMES H. COBB, III /s/ JAMES H. COBB, III
- ----------------------------------- ---------------------------------
By: Signature
WARREN K. WELLS /s/ WARREN K. WELLS
- ----------------------------------- ---------------------------------
By: Signature
10
<PAGE>
EXHIBIT A
SCHEDULE OF FEES
$1,800.00
Out of pocket expenses such as, but not limited to, postage, courier, insurance,
long distance telephone, stationery, travel, legal or accounting, etc., will be
billed at cost.
The initial and administration fee are due at closing.
These fees do not include extraordinary services which will be priced according
to time and scope of duties.
It is acknowledged that the Schedule of Fees shown above are acceptable for the
services mutually agreed upon and the Undersigned authorize the Depository to
perform said services.
ACKNOWLEDGED AND AGREED:
COBBWELLS, INC.
/s/ JAMES H. COBB, III
---------------------------------------
BY: President
JAMES H. COBB, III
/s/ JAMES H. COBB, III
---------------------------------------
BY:
WARREN K. WELLS
/s/ WARREN K. WELLS
---------------------------------------
BY:
CONTACT COMMUNICATIONS INC.
/s/ MARK A. SOLLS
---------------------------------------
BY: Mark A. Solls, Vice President and
General Counsel
DATE:
----------------------------------
11
<PAGE>
EXHIBIT D
22. ADDITIONAL TERMS.
(a) INVESTMENT AND REINVESTMENT. All proceeds, interest and other
payments or distributions made upon or with respect to any investments made
pursuant to the provisions hereof (collectively, the "Accrued Earnings") shall
be reinvested in the manner provided in paragraph 20. As used herein, the term
"Property" shall mean the Deposits (as hereinafter defined) and Accrued
Earnings.
(b) DEPOSIT OF FUNDS. Concurrently herewith and pursuant to the terms
of that certain Stock Purchase Agreement dated as of November 22, 1995, by and
among the Undersigned (the "Stock Purchase Agreement"). Purchaser is depositing
with the Depository the sum of $500,000.00 in cash (the "Deposit").
(c) DISBURSEMENT OF THE PROPERTY. The Property shall be held and
disbursed by the Depository as follows:
(i) UPON THE CLOSING. If the Closing of the transactions
contemplated by the Stock Purchase Agreement occurs on or before June
30, 1996 (the "Target Date"), then upon receipt of written
instructions from the Undersigned, the Depository shall disburse the
Deposits to the Seller as a credit against the purchase price of the
Shares as referenced in the Stock Purchase Agreement and shall
disburse the Accrued Earnings to the Purchaser.
(ii) FAILURE TO CLOSE.
(A) If the Closing of the transactions contemplated by the
Stock Purchase Agreement does not occur by the Target Date due to
Purchaser's breach of the Stock Purchase Agreement, then, upon receipt
of written instructions from the Undersigned, the Depository shall
disburse the Property to the Seller.
(B) If the Closing of the transactions contemplated by the
Stock Purchase Agreement does not occur by the Target Date due to any
reason other than those set forth in paragraph 22(c)(ii)(A), then upon
receipt of written instructions from the Undersigned, the Depository
shall disburse the Property to the Purchaser.
(d) NOTICES.
(i) GENERALLY. All notices, requests, and other combinations
required or permitted to be given under this Agreement shall be in writing and
shall be delivered (a) personally to the addressee by hand with a written
receipt for delivery, (b) by nationally recognized overnight delivery service
(the "Overnight Service") for next business day delivery or (c) by certified or
registered mail, return receipt requested,
<PAGE>
postage prepaid (the "Mail"). All notices and communications required or
permitted under this Agreement shall be delivered to the addressee thereof at
the address indicated below:
If to Seller or Shareholders: James H. Cob, III
Warren K. Wells
234 Meriwether Street
Griffin, Georgia 30223
With a copy to: James M. Cogburn, Jr.
P.O. Box 907
Griffin, Georgia 30224
If By Overnight Service 115 North Sixth Street
Griffin, Georgia 30223
If To Purchaser: Contact Communications Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
With a copy to: ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Mark A. Solls
If To Depository: NationsBank Of Texas, N.A.
901 Main Street, 18th Floor
Dallas, Texas 75202
Attn: Billie Collins
(ii) Notices by Telecopier. Any party may give notices to any
other party named below by way of telefacsimile ("fax") transmission. If a
notice pursuant to this Agreement is given by fax, it shall be directed to the
telephone number indicated below, and the sending party must have a written
confirmation from the receiving party (which confirmation may be sent by fax,
Overnight Service, or Mail) before a notice given by fax is deemed effective.
Notices pursuant to this Agreement by fax shall be directed as follows:
If to Seller Or Shareholders: (770) 229-4339
If to John M. Cogburn, Jr.: (770) 228-5018
If to Purchaser Or ProNet: (214) 774-0640
<PAGE>
If To Depository: (214) 508-1797
(iii) Effective Date of Notices. Notice given by Overnight
Service or Mail shall be deemed to be effective at the time of (a) the first
business day following deposit with the Overnight Service or (b) the date of
receipt of the Mail, as the case may be.
(iv) Change of Address. Any party may change the address or
telephone number to which notices pursuant to this Agreement shall be sent. Any
change of address shall be effective ten (10) days after notice of the change is
delivered in accordance with paragraph 22 (d).
Any such notice shall be deemed sent when received at the address or fax number
so designated.
(e) ALLOCATION OF DEPOSITORY'S FEES. The Undersigned, as among
themselves, agree that all fees and expenses charged by or payable to the
Depository shall be born fifty percent by the Purchaser and fifty percent by the
Seller.
(f) ALLOCATION OF INDEMNIFICATION LIABILITIES. The Undersigned, as among
themselves, agree that, in the event of any dispute resulting in litigation over
entitlement to our distribution of the Property, the non-prevailing party(ies)
shall bear 100 percent of any and all losses, claims, damages, liabilities and
expenses of the Depository for which the Undersigned may be jointly and
severally liable under the terms of this Agreement.
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
January 5, 1996, by and among PRONET INC., a Delaware corporation (the
"Company"), and JAMES H. COBB, III (the "Seller").
RECITALS:
A. Contact Communications Inc., a wholly owned subsidiary of the Company
("Contact"), Cobbwells, Inc. ("Cobbwells") , the Seller, and James H. Cobb have
entered into that certain Stock Purchase Agreement dated as of November 22, 1995
(the "Purchase Agreement"), pursuant to which Contact is to acquire Cobbwells.
B. Pursuant to the terms of the Purchase Agreement, Contact may elect to
pay a portion of the purchase price for Cobbwells 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 the Seller 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.
<PAGE>
"REGISTRABLE SECURITIES" means the shares of Common Stock received by
the Seller pursuant to the Purchase Agreement and held of record by the Seller.
Any Registrable Security will cease to be a Registrable Security when such
Registrable Security is no longer held of record by the Sellers.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. REGISTRATION STATEMENT. Prior to the issuance of Common Stock by the
Company to the Seller , 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 have the Registration Statement
declared effective by the Commission under the Securities Act prior to or
concurrently with the delivery of any such shares of Common Stock and to keep
the Registration Statement effective at least until 180 days has elapsed
following the date of such delivery (the delivery date). The Company further
agrees, if necessary, to supplement or make amendments to the Registration
Statement, as and when 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.
The Company shall:
(a) furnish to the Seller, upon delivery of the Registrable
Securities, three copies of the Registration Statement as proposed to be filed,
and thereafter furnish to the Seller 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 the Seller
may reasonably request in writing in order to facilitate the disposition of the
Registrable Securities owned by the Seller;
(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 the Sellers may reasonably request, such that any such
registration or qualification would be effective prior to or concurrently with
the Delivery Date and do any and all other acts and things which may be
reasonably necessary to enable the Seller to consummate the disposition of the
Registrable Securities in such jurisdictions, 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
<PAGE>
for this subsection, (ii) subject itself to taxation in any such jurisdiction
or (iii) consent to general service of process in any such jurisdiction;
(c) notify the Seller, 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 the Seller any such supplement or amendment; and
(d) make available for inspection by the Seller 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. The Seller 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. The Seller
further agrees that he 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 the Seller to promptly furnish in writing to the
Company such information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration.
The Seller 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, the
Seller will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement until the Seller's receipt of the copies
of the supplemented or amended prospectus contemplated by subsection 3(c)
hereof, and, if so directed by the Company, the Seller will deliver to the
Company all copies, other than permanent file copies then in the Sellers'
possession, of the most recent prospectus covering such Registrable 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
<PAGE>
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 the Seller 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 fees and disbursements
of counsel for the Company and the fees and expenses for independent certified
public accountants retained by the Company; and (e) the 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 the Seller ,
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities or any out-of-pocket expenses of the Seller (or his
agents).
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Seller 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 the Seller or on the Seller's behalf
expressly for use therein; PROVIDED, 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 determined that it was the responsibility of the Seller 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 THE SELLERS. The Seller agrees to indemnify
and hold harmless, 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 the Sellers , but only with respect to
information furnished in writing by the Seller or on the Seller'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.
<PAGE>
(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 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 indemnify 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 Indemnified Party on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each Indemnified Party 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 the
Indemnified Party the Seller 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. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Sellers as follows (with
the understanding that Seller is relying materially on each such representation
and warranty in entering into and performing this Agreement):
6.1 DUE ORGANIZATION. The Company 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.
<PAGE>
6.2 DUE AUTHORIZATION. The Company 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 Company
in accordance herewith. This Agreement and the other agreements, documents, and
instruments required to be executed and delivered by the Company in accordance
herewith have been duly and validly executed and delivered by the Company and
constitute valid and binding obligations of the Company 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.
6.3 COMMON STOCK. The Common Stock, if any, to be issued by the Company
to the Sellers pursuant to the Purchase Agreement, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid, and non-assessable.
7. 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 the Seller.
(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 courier guaranteeing overnight delivery:
(i) if to the Seller, at the most current address given by the
Seller to the Company, in accordance with the provisions of this subsection,
which address initially is 234 Meriwether Street, Griffin, Georgia 30223,
attention James H. Cobb, III.
(ii) if to the Company, initially at 6340 LBJ Freeway, Dallas,
Texas 75240, 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. The Seller shall not assign any rights
or benefits under this Agreement without the prior written consent of the
Company which consent shall not be unreasonably withheld, conditioned, or
delayed. In the event of an assignment by the Company of its obligations under
this Agreement in connection with an assignment by Contact of its right to pay
the deferred portion of the Purchase Price (as defined in the Purchase
Agreement) as provided in Section 9.7 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 9.7 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 the Seller. The Company
shall, in any event, remain jointly and severally responsible, with the
assignee, for all of its obligations under this Agreement.
<PAGE>
(d) COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for the Company and the
Seller 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 shall 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 GEORGIA 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 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
the Seller 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 the Seller 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 the
Seller 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 the Seller pursuant to terms
of the Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PRONET INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-----------------------------------------
James H. Cobb, III
<PAGE>
EXHIBIT B-1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
January 5, 1996, by and among PRONET INC., a Delaware corporation (the
"Company"), and WARREN K. WELLS (the "Seller").
RECITALS:
A. Contact Communications Inc., a wholly owned subsidiary of the Company
("Contact"), Cobbwells, Inc. ("Cobbwells") , the Seller, and Warren K. Wells
have entered into that certain Stock Purchase Agreement dated as of November 22,
1995 (the "Purchase Agreement"), pursuant to which Contact is to acquire
Cobbwells.
B. Pursuant to the terms of the Purchase Agreement, Contact may elect to
pay a portion of the purchase price for Cobbwells 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 the Seller 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.
<PAGE>
"REGISTRABLE SECURITIES" means the shares of Common Stock received by
the Seller pursuant to the Purchase Agreement and held of record by the Seller.
Any Registrable Security will cease to be a Registrable Security when such
Registrable Security is no longer held of record by the Sellers.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. REGISTRATION STATEMENT. Prior to the issuance of Common Stock by the
Company to the Seller , 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 have the Registration Statement
declared effective by the Commission under the Securities Act prior to or
concurrently with the delivery of any such shares of Common Stock and to keep
the Registration Statement effective at least until 180 days has elapsed
following the date of such delivery (the delivery date). The Company further
agrees, if necessary, to supplement or make amendments to the Registration
Statement, as and when 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.
The Company shall:
(a) furnish to the Seller, upon delivery of the Registrable
Securities, three copies of the Registration Statement as proposed to be filed,
and thereafter furnish to the Seller 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 the Seller
may reasonably request in writing in order to facilitate the disposition of the
Registrable Securities owned by the Seller;
(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 the Sellers may reasonably request, such that any such
registration or qualification would be effective prior to or concurrently with
the Delivery Date and do any and all other acts and things which may be
reasonably necessary to enable the Seller to consummate the disposition of the
Registrable Securities in such jurisdictions, PROVIDED that the Company will not
be required to (i) qualify
<PAGE>
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;
(c) notify the Seller, 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 the Seller any such supplement or amendment; and
(d) make available for inspection by the Seller 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. The Seller 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. The Seller
further agrees that he 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 the Seller to promptly furnish in writing to the
Company such information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration.
The Seller 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, the
Seller will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement until the Seller's receipt of the copies
of the supplemented or amended prospectus contemplated by subsection 3(c)
hereof, and, if so directed by the Company, the Seller will deliver to the
Company all copies, other than permanent file copies then in the Sellers'
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. If the Company shall give such
<PAGE>
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
the Seller 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 fees and disbursements
of counsel for the Company and the fees and expenses for independent certified
public accountants retained by the Company; and (e) the 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 the Seller ,
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities or any out-of-pocket expenses of the Seller (or his
agents).
5. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Seller 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 the Seller or on the Seller's behalf
expressly for use therein; PROVIDED, 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 determined that it was the responsibility of the Seller 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.
<PAGE>
(b) INDEMNIFICATION BY THE SELLERS. The Seller agrees to indemnify
and hold harmless, 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 the Sellers , but only with respect to
information furnished in writing by the Seller or on the Seller'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.
(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 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 indemnify 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
<PAGE>
between the Company on the one hand and each Indemnified Party on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each Indemnified Party 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 the
Indemnified Party the Seller 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. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Sellers as follows (with
the understanding that Seller is relying materially on each such representation
and warranty in entering into and performing this Agreement):
6.1 DUE ORGANIZATION. The Company 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.
6.2 DUE AUTHORIZATION. The Company 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 Company
in accordance herewith. This Agreement and the other agreements, documents, and
instruments required to be executed and delivered by the Company in accordance
herewith have been duly and validly executed and delivered by the Company and
constitute valid and binding obligations of the Company 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.
<PAGE>
6.3 COMMON STOCK. The Common Stock, if any, to be issued by the Company
to the Sellers pursuant to the Purchase Agreement, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid, and non-assessable.
7. 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 the Seller.
(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 courier guaranteeing overnight delivery:
(i) if to the Seller, at the most current address given by the
Seller to the Company, in accordance with the provisions of this subsection,
which address initially is 234 Meriwether Street, Griffin, Georgia 30223,
attention Warren K. Wells.
(ii) if to the Company, initially at 6340 LBJ Freeway, Dallas,
Texas 75240, 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. The Seller shall not assign any rights
or benefits under this Agreement without the prior written consent of the
Company which consent shall not be unreasonably withheld, conditioned, or
delayed. In the event of an assignment by the Company of its obligations under
this Agreement in connection with an assignment by Contact of its right to pay
the deferred portion of the Purchase Price (as defined in the Purchase
Agreement) as provided in Section 9.7 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 9.7 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 the Seller. The Company
shall, in any event, remain jointly and severally responsible, with the
assignee, for all of its obligations under this Agreement.
(d) COUNTERPARTS. This Agreement may be executed in a number of
identical counterparts and it shall not be necessary for the Company and the
Seller 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 shall
<PAGE>
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 GEORGIA 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 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
the Seller 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 the Seller 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 the
Seller 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 the Seller pursuant to terms
of the Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PRONET INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-------------------------------------------
Warren K. Wells
<PAGE>
EXHIBIT C
FORM OR
OPINION OF JOHN M. COGBURN, JR.
January 5, 1996
Contact Communications Inc. and
ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attn: Mark A. Solls, Vice President and
General Counsel
Gentlemen:
We have acted as counsel to James H. Cobb, III, and Warren K. Wells (the
"Sellers") and CobbWells, Inc., a Georgia corporation (the "Company") in
connection with the negotiation of the Stock Purchase Agreement (the
"Agreement") and the related agreements which are attached thereto as Exhibits
(collectively, the Agreement and Exhibits are referred to below as the
"Transaction Documents") and relating to the sale of all of the Shares to
Contact Communications Inc. (the "Transaction"). This opinion is rendered
pursuant to Section 6.1(c) of the Agreement. Capitalized terms used in this
opinion and not otherwise defined shall have the same meanings given to such
terms in the Agreement.
In the capacity described above, we have considered such matters of law and
of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of the
Company, certificates of the Sellers and officers and representatives of the
Company, certificates of public officials, and other documents as we have deemed
appropriate as a basis for the opinions set forth below. Except as stated in
this paragraph, we have undertaken no independent factual investigation.
In making our examination of the Transaction Documents to which the
Purchaser and ProNet are parties, we have assumed that the Purchaser and ProNet
have the power to enter into and perform all of their obligations thereunder and
also have assumed the due
<PAGE>
Contact Communications Inc. and
ProNet Inc.
January 5, 1996
Page 2
authorization by the Purchaser and ProNet of all requisite action and the due
execution and delivery of such documents by the Purchaser and ProNet.
The opinions expressed below are subject to the following further
qualifications:
(i) Our opinion is subject the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws
relating to or affecting the rights of creditors generally and to
general principles of equity.
(ii) The opinions set forth in this letter are limited to the laws of
the state of Georgia and applicable federal laws, but we expressly do
not opine on any matter related to the violation of any securities,
communications, or antitrust or unfair competition laws or
regulations.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Georgia.
2. The Company has full corporate power and corporate authority to
execute and deliver the Transaction Documents and to perform the
obligations contemplated thereby. The execution and delivery by
the Company of each of the Transaction Documents to which it is a
party have been duly authorized by all necessary corporate action
on the part of the Company. Such documents have been duly
executed and delivered by the Company and constitute the legal,
valid, and binding obligations of the Company enforceable in
accordance with their respective terms.
3. The Sellers have duly executed and delivered the Transaction
Documents to which they are parties. Such documents constitute
the legal, valid, and binding obligations of the Sellers
enforceable in accordance with their respective terms.
4. Neither the execution and delivery by the Company of the
Transaction Documents to which it is a party, nor the performance
by the Company
<PAGE>
Contact Communications Inc. and
ProNet Inc.
January 5, 1996
Page 3
of its obligations thereunder violates or conflicts with, results
in a breach of, or constitutes a default under the Company's
articles 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 Company or its
property, or any Material Agreement known to this firm to which
the Company is a party or by which the Company's property is
bound.
5. Neither the execution and delivery by the Sellers of the
Transaction Documents executed by them, nor the performance by
the Sellers of their 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 the Sellers or their property, or any material agreement
known to this firm to which the Sellers are parties, or by which
their property is bound.
6. Except for the approval or authorization of the Federal
Communications Commission, the Federal Aviation Administration,
the Securities and Exchange Commission, and similar state and
local regulatory agencies, boards, or authorities, to our
knowledge, no approvals or authorizations by, or filings or
qualifications with, any state, federal, or local agency,
authority, or body are required in connection with the execution,
delivery, and performance of the Agreement or any other
agreements or documents executed and delivered pursuant thereto
by the Company and/or the Sellers, except such as have been duly
obtained or made.
7. To our knowledge after inquiry, there is no action, suit,
investigation, or proceeding that is pending or threatened
against or affecting the Company or the Sellers in any court or
before any governmental authority, arbitration board, or tribunal
that (a) involves any of the transactions contemplated by the
Agreement or (b) if decided adversely to the Company or such
Sellers, would materially and adversely affect the Company's
assets.
<PAGE>
Contact Communications Inc. and
ProNet Inc.
January 5, 1996
Page 4
8. To our knowledge after inquiry, there are no pending or
threatened condemnation or similar proceedings or assessments
affecting the Company's assets or any part thereof and there are
no such proceedings or assessments contemplated by any
governmental authority.
9. To our knowledge after inquiry, neither the Company nor the
Sellers have entered into any agreement pursuant to which any
other individual or entity has obtained the right to acquire any
or all of the Shares or any of the Company's assets, except as
such assets may be sold or leased in the ordinary course of
business.
10. Upon the consummation by the Sellers and the Company of the
transactions contemplated by the Agreement, the Purchaser shall
have duly and validly acquired all of the right, title and
interest in and to the Shares and the Shares will have been
conveyed by proper and enforceable instruments of conveyance,
and, to our knowledge after inquiry, all consents of third
parties necessary for such conveyance to be valid and enforceable
by the Purchaser against third parties will have been obtained.
11. To our knowledge after inquiry, the Company 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, except the CobbWells, Inc., d/b/a Page One
Flexible Benefit Plan dated April 15, 1995.
We call your attention to the fact that although we have acted as legal
counsel to the Sellers and the Company in this transaction, we are not involved
in the day to day affairs of the Company, and our knowledge of the existence of
any litigation, proceedings, or contractual matters which would bear upon the
opinions set forth above, must therefore be based solely upon matters brought to
our attention by the Sellers. However, we have no reason to believe that any
matter material to the Transaction has not been brought to our attention. The
phrase "after inquiry" as used above means inquiry of the Sellers.
<PAGE>
Contact Communications Inc. and
ProNet Inc.
January 5, 1996
Page 5
This opinion is solely for the benefit of the addressees and may not be
relied upon by any other person or party or in any other context without our
prior written consent. We expressly disclaim any responsibility for advising
you of any change in conditions, including any changes the law or in factual
matters, occurring subsequent to the date of this opinion.
Sincerely,
JOHN M. COGBURN, JR.
JMCjr/kas
<PAGE>
EXHIBIT D
FORM OF
OPINION OF PAGE ONE'S FCC COUNSEL
1. The Page One and the Sellers 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 Page One 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 Page One's operation of
the System, were duly issued by the FCC to the Page One 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 Page One
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 Page One 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 Page One or the Sellers or any subsequent holder with respect to their
operation of the System. The Page One and the Sellers 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 Page One and the Sellers 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 Page One or the Sellers 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, delivery and performance of the Agreement
(including the assignment of the Licenses from Page One to Purchaser) by the
Page One and the Sellers by virtue of the Licenses are in full force and effect
and their grant is "final,"
<PAGE>
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 Page One has obtained all necessary clearances from the
Federal Aviation Administration ("FAA") for the construction of all radio
towers associated with the System. The Page One and the Sellers 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 Page One or the Sellers 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 Page One or the Sellers, other than rulemaking
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 Page
One have been made in a timely manner.
<PAGE>
EXHIBIT E
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
January 5, 1996, between CONTACT COMMUNICATIONS INC., a Delaware corporation
(the "Company"), and JAMES H. COBB, III (the "Shareholder").
W I T N E S S E T H
WHEREAS, concurrently herewith, the Shareholder is selling, transferring,
and assigning 75 shares of common stock of Cobbwells, Inc., a Georgia business
corporation, pursuant to that certain Stock Purchase Agreement (the "Purchase
Agreement") dated as of November 22, 1995, by and among the Company, Cobbwells,
Inc., the Shareholder, and Warren K. Wells; and
WHEREAS, Cobbwells, Inc., owns and operates a radio paging system business
(such property, assets, and business, including all affiliated networks, being
hereinafter collectively called the "System"); and
WHEREAS, the Shareholder has been affiliated with Cobbwells, Inc. for a
number of years and, as a principal Shareholder and officer of Cobbwells, Inc.,
possesses valuable knowledge about the business and operations of Cobbwells,
Inc. and the System; 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 is the property of Cobbwells, Inc. and not the
Shareholder. Therefore, the Shareholder agrees that he will not disclose to any
third party (unless expressly authorized in writing by the
<PAGE>
Company) 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 act except as otherwise
expressly permitted by this Agreement or required by law. 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 fifth (5th) 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 protected 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 protected Area;
c. directly or indirectly request or advise any present or future
customers of the Company to cancel any contracts with Cobbwells,
Inc. or the Company or curtail their dealings with Cobbwells,
Inc. or the Company;
d. directly or indirectly request or advise any present or future
service provider or financial resource of the System or
Cobbwells, Inc. or the Company to withdraw, curtail, or cancel
the furnishing of such service or resource to Cobbwells, Inc. or
the Company;
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation:
<PAGE>
(1) the names of past, present, or future customers of
Cobbwells, Inc. or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to Cobbwells, Inc. or the Company;
or
f. directly or indirectly induce or attempt to influence any
employee of Cobbwells, Inc. or the Company to terminate his or
her employment.
As used herein, the protected "Area" means Georgia and South Carolina.
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
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. The Shareholder may not delegate any of his
obligations hereunder. Any delegation 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 Georgia (regardless of the laws that might otherwise govern under
applicable Georgia 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 this Agreement shall not
be deemed a waiver of any subsequent default or breach of the same or any other
provision of this Agreement.
<PAGE>
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. 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.
<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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0646
James H. Cobb, III
--------------------------------------
Address:
-----------------------------
--------------------------------------
--------------------------------------
--------------------------------------
<PAGE>
EXHIBIT F
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
January 5, 1996, between CONTACT COMMUNICATIONS INC., a Delaware corporation
(the "Company"), and WARREN K. WELLS (the "Shareholder").
W I T N E S S E T H
WHEREAS, concurrently herewith, the Shareholder is selling, transferring,
and assigning 75 shares of common stock of Cobbwells, Inc., a Georgia business
corporation, pursuant to that certain Stock Purchase Agreement (the "Purchase
Agreement") dated as of November 22, 1995, by and among the Company, Cobbwells,
Inc., the Shareholder, and Warren K. Wells; and
WHEREAS, Cobbwells, Inc., owns and operates a radio paging system business
(such property, assets, and business, including all affiliated networks, being
hereinafter collectively called the "System"); and
WHEREAS, the Shareholder has been affiliated with Cobbwells, Inc. for a
number of years and, as a principal Shareholder and officer of Cobbwells, Inc.,
possesses valuable knowledge about the business and operations of Cobbwells,
Inc. and the System; 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 is the property of Cobbwells, Inc. and not the
Shareholder. Therefore, the Shareholder agrees
<PAGE>
that he will not disclose to any third party (unless expressly authorized in
writing by the Company) 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 act
except as otherwise expressly permitted by this Agreement or required by law.
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 fifth (5th) 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 protected 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 protected Area;
c. directly or indirectly request or advise any present or future
customers of the Company to cancel any contracts with Cobbwells,
Inc. or the Company or curtail their dealings with Cobbwells,
Inc. or the Company;
d. directly or indirectly request or advise any present or future
service provider or financial resource of the System or
Cobbwells, Inc. or the Company to withdraw, curtail, or cancel
the furnishing of such service or resource to Cobbwells, Inc. or
the Company;
<PAGE>
e. directly or indirectly disclose or communicate to any other
person, firm, or corporation:
(1) the names of past, present, or future customers of
Cobbwells, Inc. or the Company; or
(2) any names of past, present, or future employees or other
knowledge of or relating to Cobbwells, Inc. or the Company;
or
f. directly or indirectly induce or attempt to influence any
employee of Cobbwells, Inc. or the Company to terminate his or
her employment.
As used herein, the protected "Area" means Georgia and South Carolina .
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
the parties hereto respecting the subject matter hereof and supersedes all prior
discussions and understandings.
7. ASSIGNMENT; PARTIES BOUND. The Company may delegate its rights and
obligations hereunder to any party. The Shareholder may not assign any of his
obligations hereunder. Any delegation 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 Georgia (regardless of the laws that might otherwise govern under
applicable Georgia 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. 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.
<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: 6340 LBJ Freeway
Dallas, Texas 75240
Attn: Jackie R. Kimzey
Mark A. Solls
Fax No: (214) 774-0646
Warren K. Wells
-------------------------------------
Address:
----------------------------
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE>
EXHIBIT G
CONTACT COMMUNICATIONS INC.
600 DATA DRIVE, SUITE 100
PLANO, TEXAS 75075
January 5, 1996
Mr. James H. Cobb, III
President
Cobbwells, Inc.
245 Meriwether Stret
Griffin, GA 30223-3010
Dear James:
I have acted as counsel to ProNet Inc., a Delaware corporation ("ProNet"),
and Contact Communications Inc., a Delaware corporation ("Buyer"), in
connection with the purchase of substantially all of the property and assets
used in the radio paging systems business conducted in the name of Cobbwells,
Inc. d/b/a Page One/Airtel, a Georgia Corporation, pursuant to the Asset
Purchase Agreement dated Novembrer 22, 19995, 1995, ("Agreement") between you,
buyer and ProNet. Except as otherwise indicated herein, capitalized terms used
in this opinion letter are defined in the Agreement.
In giving the opinion set forth below, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of the following
documents: (i) the Agreement, including all exhibits and schedules thereto,
(ii) copies of some of the agreements, certificates and other documents
delivered at the Closing under the Agreement, (iii) certificates of officers of
ProNet and Buyer and public officials, and (iv) such corporate records and
documents and other documents and certificates as I have deemed appropriate in
connection with the limited opinion hereinafter expressed. In such examination
I have assumed the genuineness of all signatures, the authenticity of all
documents submitted to me as originals, the legal capacity of natural persons,
the conformity to the originals of all documents submitted to me as copies and
the authenticity of the originals of such documents. As to questions of fact
material to our opinion which I did not independently verify, I have relied upon
the representations of (a) other officers or agents of ProNet or Buyer or (b)
public officials.
I have relied upon, and assumed the accuracy of, the representations and
warranties and other statements of fact contained in the Agreement and in
other certificates and documents I have reviewed. Except in my capacity as
an officer of ProNet and Buyer or as described herein, I have not undertaken
any independent investigation to determine the existence or absence of such
facts. Further, I assume that none of the information provided to me
contains any untrue statement or omits any fact necessary to make the
statement, made under the circumstances which they are made, not misleading.
I have assumed the power and authority of you to execute, deliver
<PAGE>
James H. Cobb, III
Page -2-
and perform the Agreement and all related documents to which you are a party,
that the Agreement and each related document constitute valid and binding
obligations of you enforceable against you in accordance with its respective
terms, and that you have taken all actions necessary to consummate the
Agreement and related transactions.
This opinion is limited to the specific matters enumerated below. No
opinion should be inferred as to any other matter.
Subject to the qualifications set forth herein, it is my opinion that:
1. Each of ProNet and Buyer is a corporation, validly existing and in
good standing under the laws of the State of Delaware and duly qualified and in
good standing to do business in the State of Texas.
2. Each of ProNet and Buyer has the corporate right, power, authority
and capacity to execute and deliver the Agreement, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement, the performance of its obligations
thereunder and the consummation of the transactions contemplated thereby have
been duly and validly authorized and approved by the boards of directors and the
stockholders of each ProNet and Buyer, and no other corporate proceedings on the
part of ProNet and Buyer are necessary to authorize the execution and delivery
of the Agreement, the performance of its obligations thereunder, or the
consummation of the transactions contemplated thereby. The Agreement has been
duly and validly executed and delivered by each ProNet and Buyer, and the
Agreement constitutes the legal, valid and binding agreement of each ProNet and
Buyer enforceable against each of them in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors rights generally and general equitable
principles.
3. To the best of my knowledge and except for consents, transfer
restrictions and other matters indicated in the Agreement, no filing or
registration with or notice to and no governmental authorization or approval of
any governmental authority, creditor or other person in a contractual
relationship with ProNet or Buyer is necessary in connection with the ProNet's
or Buyer's execution and delivery of the Agreement, the performance of its
obligations thereunder, or the consummation of the transactions contemplated
thereby. Further, to the best of my knowledge and except for consents, transfer
restrictions and other matters indicated in the Agreement, neither the
execution and delivery of the Agreement, the consummation of the
transactions contemplated thereby, nor the compliance by the ProNet or Buyer
with any of the provisions hereof will (i) conflict with or violate any
provision of the Certificate or Articles of incorporation or Bylaws or other
charter documents of ProNet or Buyer, or (ii) result in a material conflict,
violation, breach, default or termination (or give rise to any right
of or
<PAGE>
James H. Cobb, III
Page -3-
license to which ProNet or Buyer is a party or by which ProNet or Buyer or
any of their respective properties or assets may be bound.
The law covered by the opinions expressed herein is limited to the federal
law of the United States, the law of the State of Texas, and the corporate law
of the State of Delaware his opinion is solely for your information in
connection with the Agreement and related transactions and may not be relied
upon by any other person or for any other purpose without my prior written
consent. This opinion is rendered as of the date hereof and I undertake no, and
hereby disclaim any, obligation to advise you of any change.
Very truly yours,
- ----------------------------------
Mark A. Solls
Vice President and General Counsel
ProNet Inc.
Contact Communications Inc.
<PAGE>
EXHIBIT H
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is given January 5, 1996, to
JAMES H. COBB, III (the "Seller") by PRONET INC., a Delaware corporation (the
"Guarantor") for the obligations of CONTACT COMMUNICATIONS INC., a Delaware
Corporation (the "Purchaser").
RECITALS
WHEREAS, the Seller has sold seventy-five (75) Shares of the common stock
of CobbWells, Inc., a Georgia corporation (the "Shares") to the Purchaser
pursuant to a Stock Purchase Agreement by and among CobbWells, Inc., the Seller,
Warren K. Wells, the Purchaser, and the Guarantor dated November 22, 1995, (the
"Purchase Agreement"); and
WHEREAS, a portion of the Purchase Price of the Shares (the "Deferred
Amount") is to be paid in whole or in part on or before the first anniversary of
the date of the Closing of the sale of the Shares pursuant to the Purchase
Agreement; and
WHEREAS, Guarantor agreed in Section 9.22 of the Purchase Agreement to
guarantee all of the duties and obligations of the Purchaser under the Purchase
Agreement; and
WHEREAS, the Purchaser is the wholly owned subsidiary of the Guarantor; and
WHEREAS, without this Guaranty the Seller would be unwilling to enter into
the Purchase Agreement and accept the Deferred Amount from the Purchaser as a
portion of the Purchase Price for the Shares;
WHEREAS, because of the direct benefit to the Guarantor from the purchase
of the Shares by the Purchaser, the Guarantor agrees to guarantee to the Seller
the obligations of the Purchaser as set forth herein.
NOW THEREFORE, in consideration of the Seller's entering into the Purchase
Agreement, selling the Shares to the Purchaser, and accepting the Deferred
Amount as a portion of the Purchase Price, the Guarantor hereby covenants and
agrees with the Seller as follows:
1. GUARANTY OF PAYMENT. The Guarantor hereby unconditionally and
irrevocably guarantees to the Seller the full payment and performance, when due,
by acceleration or otherwise, of all past, present, and future indebtedness,
liabilities, and obligations of the Purchaser to the Seller of any kind and
description in connection with the Purchase Agreement, including but not limited
to the Deferred Amount (collectively, the "Purchaser's Obligations"). The
guaranty of the Guarantor as set forth in this section is an absolute,
continuing, primary, and unconditional guaranty of payment and performance and
not of collection. This Guaranty may be enforced by the Seller against the
Guarantor without the necessity at any time of the Seller's resorting to or
exhausting any other
<PAGE>
security or collateral now or hereafter pledged, assigned, or granted to the
Seller and without the necessity at any time of the Seller's having recourse
against the Purchaser under the Purchase Agreement. The Guarantor on demand
shall pay to the Seller in immediately available funds, in lawful money of
the United States of America, the Deferred Amount or satisfy the same with
Common Stock as provided in the Purchase Agreement. The obligation hereunder
may be considered by the Seller as either a guaranty or an agreement of
surety. If a claim is ever made upon the Seller for the repayment or any or
all of the Deferred Amount and the Seller repays all or part of such amount
by reason of (a) any judgment, decree, or order of any court or
administrative body having jurisdiction over the Seller or any of his
property or (b) any settlement or compromise of any such claim effected by
the Seller with any such claimant, including the Purchaser, then in such
event the Guarantor agrees that any such judgment, decree, order, settlement,
or compromise shall be binding upon the Guarantor, notwithstanding any
revocation hereof, and the Guarantor shall be and remain obligated to the
Seller for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Seller, such amount to be
included in the term "Purchaser's Obligations."
Nothing contained herein shall prevent the Seller from suing on the
Purchase Agreement or from exercising any other rights available to it under the
Purchase Agreement, if neither the Purchaser nor the Guarantor timely performs
the obligations of the Purchaser thereunder. The exercise of any of the
aforesaid rights shall not constitute a discharge of any of the Guarantor's
obligations hereunder. Neither the Guarantor's obligations under this Guaranty
nor any remedy for the enforcement thereof shall be impaired, modified, changed,
or released in any manner whatsoever by an impairment, modification, change,
release, or limitation of the liability of the Purchaser by reason of the
Purchaser's bankruptcy or insolvency or any subsequent reorganization, merger,
or consolidation of the Purchaser or any other change in its composition,
nature, personnel, or location.
2. NATURE OF OBLIGATIONS. The Guarantor acknowledges and agrees that no
change in the nature of terms of the Purchaser's Obligations, or other
agreements, instruments, or contracts evidencing, related to, or attendant with
the Purchaser's Obligations (including any novation), whether by operation of
law or otherwise, shall discharge all or any part of the liabilities and
obligations of the Guarantor pursuant to this Guaranty. It is the purpose and
intent of the Guarantor and the Seller that the covenants, agreements, and all
liabilities and obligations of the Guarantor hereunder are absolute,
unconditional, and irrevocable under any and all circumstances, including,
without limitation, the invalidity or unenforceability of the Purchase
Agreement. Without limiting the generality of the foregoing, the Guarantor
agrees that until each and every one of the covenants and agreements of this
Guaranty are fully performed, the Guarantor's undertakings hereunder shall not
be released, in whole or in part, by any action or thing which might, but for
this paragraph of this Guaranty, be deemed a legal or equitable discharge of a
surety or guarantor, or by reason of any waiver, omission of the Seller or his
failure to proceed promptly or otherwise, or by reason of any action taken or
omitted by the Seller, whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of, the Guarantor, or
by reason of any further dealings between the Purchaser and the Seller, or any
other guarantor or surety, and the Guarantor hereby expressly waives and
surrenders any defense to its liability hereunder based upon, and shall be
deemed to have consented
2
<PAGE>
to, any of the foregoing acts, omissions, things, agreements, or waivers.
Without limiting the generality of the foregoing the Guarantor gives its
consents for the Seller to do any one or more of the following without in any
manner affecting, impairing, limiting, modifying, or releasing any of the
obligations of the Guarantor under this Guaranty and without notice to or
consent of the Guarantor; (a) exchange, extend, or renew the time or place
of payment of the Deferred Amount in whole or in part, to a time certain or
otherwise whether or not longer than the original period; (b) extend or
change the terms of performance of any other obligations of the Purchaser
under the Purchase Agreement; (c) modify, amend, or waive any of the
provisions of the Purchase Agreement: (d) release or grant indulgences to
the Purchaser; (e) fail to exercise due diligence or omit to enforce any
right, power, or privilege under the Purchase Agreement.
3. WAIVER OF RIGHTS. The Guarantor expressly waives: (a) notice of the
execution and delivery of the Purchase Agreement and creation of the Purchaser's
Obligations; (b) notice of acceptance of this Guaranty by the Seller and of all
extensions of credit to the Purchaser by the Seller; (c) demand for payment of
any of the Deferred Amount; (d) protest and notice of dishonor or of default
or nonpayment to the Guarantor or to any other party with respect to the
Deferred Amount; (e) demand for payment under this Guaranty; (f) the
provisions of Section 10-7-24 of the Official Code of Georgia Annotated; and (g)
all rights of subrogation, indemnification, contribution, and reimbursement from
the Purchaser, all rights to enforce any remedy the Seller may have against the
Purchaser, and any benefit of, or right to participate in, any collateral or
security now or hereafter held by the Seller in respect to the Purchaser's
Obligations, even upon payment in full of the Deferred Amount.
5. TERM OF GUARANTY; WARRANTIES. This Guaranty shall continue in full
force and effect until the Deferred Amount is fully paid or Common Stock is
delivered to the Seller as provided in the Purchase Agreement, and all of the
Purchaser's Obligations are discharged. The Guarantor warrants and represents
to the Seller that (a) the Guarantor will directly benefit from the financial
accommodations being extended to the Purchaser by the Seller; (b) this
Guaranty is binding upon and enforceable against the Guarantor, in accordance
with its terms; (c) the execution and delivery of this Guaranty do not violate
or constitute a breach of any agreement to which the Guarantor is a party or of
any applicable laws; and (d) there is no litigation, claim, action, or
proceeding pending, or, to the best knowledge of the Guarantor, threatened
against the Guarantor that would materially adversely affect the financial
condition of the Guarantor or its ability to fulfill its obligations hereunder.
6. ATTORNEYS' FEES AND COSTS OF COLLECTION. If at any time or times
hereafter the Seller employs counsel to pursue collection to intervene, to sue
for enforcement of the terms hereof or of the Purchaser's Obligations, or to
file a petition, complaint, answer, motion, or other pleading in any suit or
proceeding relating to this Guaranty or the Purchaser's Obligations, then in
such event, all of the reasonable attorneys' fees and disbursements relating
thereto and any other fees and disbursements incurred by or on behalf of the
Seller, due to the failure of the Purchaser to pay the Deferred Amount when due
and payable, or to fulfill any other of the Purchaser's Obligations, shall be an
additional liability of the Guarantor to the Seller, payable on demand.
3
<PAGE>
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default (an "Event of Default") under this
Guaranty: (a) the failure of the Guarantor to pay to the Seller as and when
due and payable any and all amounts payable by the Guarantor to the Seller under
the provisions of this Guaranty or satisfy such debt with Common Stock as
provided in the Purchase Agreement; (b) the failure of the Guarantor to
perform, observe, or comply with any of the provisions of this Guaranty; (c)
the occurrence of an event of default under the Purchase Agreement; (d) the
receipt by the Seller of any false, inaccurate, or misleading information
contained in any financial statement, schedule, report, or any other document
given by the Guarantor, by the Purchaser, or by any other person in connection
with this Guaranty; (e) the inability of the Guarantor to pay debts as they
mature; (f) the filing of any petition for relief under any provision of Title
11 of the United States Code (entitled "Bankruptcy"), as amended, or under any
similar federal or state statute by or against the Guarantor; (g) an
application for the appointment of a receiver or custodian for, the making of a
general assignment for the benefit of creditors, or the insolvency of the
Guarantor; or (h) the dissolution or liquidation of the Guarantor.
Upon the occurrence of an Event of Default under the Guaranty, the Seller
may, at his option, declare an amount equal to any or all of the then unpaid
balance of the Deferred Amount (whether then due or not) to be immediately due
and payable by the Guarantor, and the Guarantor shall on demand pay the same to
the Seller in immediately available funds, in lawful money of the United States
of America, or satisfy such debt with Common Stock as provided in the Purchase
Agreement.
8. CUMULATIVE RIGHTS. All rights of the Seller hereunder or otherwise
arising under the Purchase Agreement are separate and cumulative and may be
pursued separately, successively, or concurrently, or not pursued, without
affecting or limiting any other right of the Seller and without affecting or
impairing the liability of the Guarantor.
9. ASSIGNMENT. If the Seller properly sells, assigns, or transfers to any
person or persons all or any part of the Deferred Amount, and each such person
or persons shall have the right to enforce this Guaranty as fully as the Seller,
provided that the Seller shall continue to have the unimpaired right prior and
superior to that of any such assignee, transferee, or holder to enforce this
Guaranty as to so much of the Deferred Amount that it has not sold, assigned, or
transferred.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall bind the Guarantor and
its successors and assigns and shall inure to the benefit of, and be enforceable
by, the Seller and his permitted successors and assigns.
11. NOTICES. Notices under this Guaranty shall be given in writing and
shall be deemed served at the earlier of (a) receipt or (b) three (3) days
after deposit in the United States mail, sent certified or registered mail
return receipt requested, postage prepaid, and addressed to the parties at the
following addresses, or at such other addresses as the parties shall designate
in writing.
4
<PAGE>
If to the Guarantor:
ProNet Inc.
6430 LBJ Freeway
Dallas, Texas 75240
Attention: Mark A. Solls
If to the Seller:
James H. Cobb, III
1003 East College Street
Griffin, Georgia 30223
Personal delivery to a party or to any officer, partner, agent, or employee of
such party at its address herein shall constitute receipt. Rejection or other
refusal to accept or inability to deliver because of changed address of which no
notice has been received also shall constitute receipt. Notwithstanding the
foregoing, no notice of change of address shall be effective until ten (10) days
after the date of receipt thereof. This Section shall not be construed in any
way to affect or impair any waiver of notice or demand herein provided or to
require giving of notice or demand to or upon the Guarantor in any situation or
for any reason.
12. AMENDMENT. This Guaranty may be terminated, amended, supplemented,
waived, released, or modified only by an instrument in writing signed by the
party against whom the enforcement of the termination, amendment,
supplementation, waiver, release, or modification is sought.
13. GOVERNING LAW. This Guaranty shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of Georgia.
14. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS, SEVERABILITY. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document.
The pronouns used in this instrument shall be construed as masculine, feminine,
or neuter as the occasion may require. Captions are for reference only and in
no way limit the terms of this Guaranty. Wherever possible, each provision of
this Guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but invalidation of any one or more of the provisions of
this Guaranty shall in no way affect any of the other provisions hereof, which
shall remain in full force and effect. All references herein to any document,
instrument, or agreement shall be deemed to refer to such document, instrument,
or agreement as the same may be amended, modified, restate, supplemented, or
replaced from time to time. Words that are capitalized in this Guaranty, but
not defined herein, shall have the meanings given to those words in the Purchase
Agreement.
5
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty under seal as
of the day and year first above written.
PRONET INC.
By:
----------------------------------
Its:
---------------------------------
[CORPORATE SEAL]
6
<PAGE>
EXHIBIT H-1
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is given January 5, 1996, to
WARREN K. WELLS (the "Seller") by PRONET INC., a Delaware corporation (the
"Guarantor") for the obligations of CONTACT COMMUNICATIONS INC., a Delaware
Corporation (the "Purchaser").
RECITALS
WHEREAS, the Seller has sold seventy-five (75) Shares of the common stock
of CobbWells, Inc., a Georgia corporation (the "Shares") to the Purchaser
pursuant to a Stock Purchase Agreement by and among CobbWells, Inc., the Seller,
James H. Cobb, III, the Purchaser, and the Guarantor dated November 22, 1995,
(the "Purchase Agreement"); and
WHEREAS, a portion of the Purchase Price of the Shares (the "Deferred
Amount") is to be paid in whole or in part on or before the first anniversary of
the date of the Closing of the sale of the Shares pursuant to the Purchase
Agreement; and
WHEREAS, Guarantor agreed in Section 9.22 of the Purchase Agreement to
guarantee all of the duties and obligations of the Purchaser under the Purchase
Agreement; and
WHEREAS, the Purchaser is the wholly owned subsidiary of the Guarantor; and
WHEREAS, without this Guaranty the Seller would be unwilling to enter into
the Purchase Agreement and accept the Deferred Amount from the Purchaser as a
portion of the Purchase Price for the Shares;
WHEREAS, because of the direct benefit to the Guarantor from the purchase
of the Shares by the Purchaser, the Guarantor agrees to guarantee to the Seller
the obligations of the Purchaser as set forth herein.
NOW THEREFORE, in consideration of the Seller's entering into the Purchase
Agreement, selling the Shares to the Purchaser, and accepting the Deferred
Amount as a portion of the Purchase Price, the Guarantor hereby covenants and
agrees with the Seller as follows:
1. GUARANTY OF PAYMENT. The Guarantor hereby unconditionally and
irrevocably guarantees to the Seller the full payment and performance, when due,
by acceleration or otherwise, of all past, present, and future indebtedness,
liabilities, and obligations of the Purchaser to the Seller of any kind and
description in connection with the Purchase Agreement, including but not limited
to the Deferred Amount (collectively, the "Purchaser's Obligations"). The
guaranty of the Guarantor as set forth in this section is an absolute,
continuing, primary, and unconditional guaranty of payment and performance and
not of collection. This Guaranty may be enforced by the Seller against the
Guarantor without the necessity at any time of the Seller's resorting to or
exhausting any other
<PAGE>
security or collateral now or hereafter pledged, assigned, or granted to the
Seller and without the necessity at any time of the Seller's having recourse
against the Purchaser under the Purchase Agreement. The Guarantor on demand
shall pay to the Seller in immediately available funds, in lawful money of
the United States of America, the Deferred Amount or satisfy the same with
Common Stock as provided in the Purchase Agreement. The obligation hereunder
may be considered by the Seller as either a guaranty or an agreement of
surety. If a claim is ever made upon the Seller for the repayment or any or
all of the Deferred Amount and the Seller repays all or part of such amount
by reason of (a) any judgment, decree, or order of any court or
administrative body having jurisdiction over the Seller or any of his
property or (b) any settlement or compromise of any such claim effected by
the Seller with any such claimant, including the Purchaser, then in such
event the Guarantor agrees that any such judgment, decree, order, settlement,
or compromise shall be binding upon the Guarantor, notwithstanding any
revocation hereof, and the Guarantor shall be and remain obligated to the
Seller for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Seller, such amount to be
included in the term "Purchaser's Obligations."
Nothing contained herein shall prevent the Seller from suing on the
Purchase Agreement or from exercising any other rights available to it under the
Purchase Agreement, if neither the Purchaser nor the Guarantor timely performs
the obligations of the Purchaser thereunder. The exercise of any of the
aforesaid rights shall not constitute a discharge of any of the Guarantor's
obligations hereunder. Neither the Guarantor's obligations under this Guaranty
nor any remedy for the enforcement thereof shall be impaired, modified, changed,
or released in any manner whatsoever by an impairment, modification, change,
release, or limitation of the liability of the Purchaser by reason of the
Purchaser's bankruptcy or insolvency or any subsequent reorganization, merger,
or consolidation of the Purchaser or any other change in its composition,
nature, personnel, or location.
2. NATURE OF OBLIGATIONS. The Guarantor acknowledges and agrees that no
change in the nature of terms of the Purchaser's Obligations, or other
agreements, instruments, or contracts evidencing, related to, or attendant with
the Purchaser's Obligations (including any novation), whether by operation of
law or otherwise, shall discharge all or any part of the liabilities and
obligations of the Guarantor pursuant to this Guaranty. It is the purpose and
intent of the Guarantor and the Seller that the covenants, agreements, and all
liabilities and obligations of the Guarantor hereunder are absolute,
unconditional, and irrevocable under any and all circumstances, including,
without limitation, the invalidity or unenforceability of the Purchase
Agreement. Without limiting the generality of the foregoing, the Guarantor
agrees that until each and every one of the covenants and agreements of this
Guaranty are fully performed, the Guarantor's undertakings hereunder shall not
be released, in whole or in part, by any action or thing which might, but for
this paragraph of this Guaranty, be deemed a legal or equitable discharge of a
surety or guarantor, or by reason of any waiver, omission of the Seller or his
failure to proceed promptly or otherwise, or by reason of any action taken or
omitted by the Seller, whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of, the Guarantor, or
by reason of any further dealings between the Purchaser and the Seller, or any
other guarantor or surety, and the Guarantor hereby expressly waives and
surrenders any defense to its liability hereunder based upon, and shall be
deemed to have consented
2
<PAGE>
to, any of the foregoing acts, omissions, things, agreements, or waivers.
Without limiting the generality of the foregoing the Guarantor gives its
consents for the Seller to do any one or more of the following without in any
manner affecting, impairing, limiting, modifying, or releasing any of the
obligations of the Guarantor under this Guaranty and without notice to or
consent of the Guarantor; (a) exchange, extend, or renew the time or place
of payment of the Deferred Amount in whole or in part, to a time certain or
otherwise whether or not longer than the original period; (b) extend or
change the terms of performance of any other obligations of the Purchaser
under the Purchase Agreement; (c) modify, amend, or waive any of the
provisions of the Purchase Agreement: (d) release or grant indulgences to
the Purchaser; (e) fail to exercise due diligence or omit to enforce any
right, power, or privilege under the Purchase Agreement.
3. WAIVER OF RIGHTS. The Guarantor expressly waives: (a) notice of the
execution and delivery of the Purchase Agreement and creation of the Purchaser's
Obligations; (b) notice of acceptance of this Guaranty by the Seller and of all
extensions of credit to the Purchaser by the Seller; (c) demand for payment of
any of the Deferred Amount; (d) protest and notice of dishonor or of default
or nonpayment to the Guarantor or to any other party with respect to the
Deferred Amount; (e) demand for payment under this Guaranty; (f) the
provisions of Section 10-7-24 of the Official Code of Georgia Annotated; and (g)
all rights of subrogation, indemnification, contribution, and reimbursement from
the Purchaser, all rights to enforce any remedy the Seller may have against the
Purchaser, and any benefit of, or right to participate in, any collateral or
security now or hereafter held by the Seller in respect to the Purchaser's
Obligations, even upon payment in full of the Deferred Amount.
5. TERM OF GUARANTY; WARRANTIES. This Guaranty shall continue in full
force and effect until the Deferred Amount is fully paid or Common Stock is
delivered to the Seller as provided in the Purchase Agreement, and all of the
Purchaser's Obligations are discharged. The Guarantor warrants and represents
to the Seller that (a) the Guarantor will directly benefit from the financial
accommodations being extended to the Purchaser by the Seller; (b) this
Guaranty is binding upon and enforceable against the Guarantor, in accordance
with its terms; (c) the execution and delivery of this Guaranty do not violate
or constitute a breach of any agreement to which the Guarantor is a party or of
any applicable laws; and (d) there is no litigation, claim, action, or
proceeding pending, or, to the best knowledge of the Guarantor, threatened
against the Guarantor that would materially adversely affect the financial
condition of the Guarantor or its ability to fulfill its obligations hereunder.
6. ATTORNEYS' FEES AND COSTS OF COLLECTION. If at any time or times
hereafter the Seller employs counsel to pursue collection to intervene, to sue
for enforcement of the terms hereof or of the Purchaser's Obligations, or to
file a petition, complaint, answer, motion, or other pleading in any suit or
proceeding relating to this Guaranty or the Purchaser's Obligations, then in
such event, all of the reasonable attorneys' fees and disbursements relating
thereto and any other fees and disbursements incurred by or on behalf of the
Seller, due to the failure of the Purchaser to pay the Deferred Amount when due
and payable, or to fulfill any other of the Purchaser's Obligations, shall be an
additional liability of the Guarantor to the Seller, payable on demand.
3
<PAGE>
7. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default (an "Event of Default") under this
Guaranty: (a) the failure of the Guarantor to pay to the Seller as and when
due and payable any and all amounts payable by the Guarantor to the Seller under
the provisions of this Guaranty or satisfy such debt with Common Stock as
provided in the Purchase Agreement; (b) the failure of the Guarantor to
perform, observe, or comply with any of the provisions of this Guaranty; (c)
the occurrence of an event of default under the Purchase Agreement; (d) the
receipt by the Seller of any false, inaccurate, or misleading information
contained in any financial statement, schedule, report, or any other document
given by the Guarantor, by the Purchaser, or by any other person in connection
with this Guaranty; (e) the inability of the Guarantor to pay debts as they
mature; (f) the filing of any petition for relief under any provision of Title
11 of the United States Code (entitled "Bankruptcy"), as amended, or under any
similar federal or state statute by or against the Guarantor; (g) an
application for the appointment of a receiver or custodian for, the making of a
general assignment for the benefit of creditors, or the insolvency of the
Guarantor; or (h) the dissolution or liquidation of the Guarantor.
Upon the occurrence of an Event of Default under the Guaranty, the Seller
may, at his option, declare an amount equal to any or all of the then unpaid
balance of the Deferred Amount (whether then due or not) to be immediately due
and payable by the Guarantor, and the Guarantor shall on demand pay the same to
the Seller in immediately available funds, in lawful money of the United States
of America, or satisfy such debt with Common Stock as provided in the Purchase
Agreement.
8. CUMULATIVE RIGHTS. All rights of the Seller hereunder or otherwise
arising under the Purchase Agreement are separate and cumulative and may be
pursued separately, successively, or concurrently, or not pursued, without
affecting or limiting any other right of the Seller and without affecting or
impairing the liability of the Guarantor.
9. ASSIGNMENT. If the Seller properly sells, assigns, or transfers to any
person or persons all or any part of the Deferred Amount, and each such person
or persons shall have the right to enforce this Guaranty as fully as the Seller,
provided that the Seller shall continue to have the unimpaired right prior and
superior to that of any such assignee, transferee, or holder to enforce this
Guaranty as to so much of the Deferred Amount that it has not sold, assigned, or
transferred.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall bind the Guarantor and
its successors and assigns and shall inure to the benefit of, and be enforceable
by, the Seller and his permitted successors and assigns.
11. NOTICES. Notices under this Guaranty shall be given in writing and
shall be deemed served at the earlier of (a) receipt or (b) three (3) days
after deposit in the United States mail, sent certified or registered mail
return receipt requested, postage prepaid, and addressed to the parties at the
following addresses, or at such other addresses as the parties shall designate
in writing.
4
<PAGE>
If to the Guarantor:
ProNet Inc.
6430 LBJ Freeway
Dallas, Texas 75240
Attention: Mark A. Solls
If to the Seller:
Warren K. Wells
510 Crescent Road
Griffin, Georgia 30223
Personal delivery to a party or to any officer, partner, agent, or employee of
such party at its address herein shall constitute receipt. Rejection or other
refusal to accept or inability to deliver because of changed address of which no
notice has been received also shall constitute receipt. Notwithstanding the
foregoing, no notice of change of address shall be effective until ten (10) days
after the date of receipt thereof. This Section shall not be construed in any
way to affect or impair any waiver of notice or demand herein provided or to
require giving of notice or demand to or upon the Guarantor in any situation or
for any reason.
12. AMENDMENT. This Guaranty may be terminated, amended, supplemented,
waived, released, or modified only by an instrument in writing signed by the
party against whom the enforcement of the termination, amendment,
supplementation, waiver, release, or modification is sought.
13. GOVERNING LAW. This Guaranty shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of Georgia.
14. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS, SEVERABILITY. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document.
The pronouns used in this instrument shall be construed as masculine, feminine,
or neuter as the occasion may require. Captions are for reference only and in
no way limit the terms of this Guaranty. Wherever possible, each provision of
this Guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but invalidation of any one or more of the provisions of
this Guaranty shall in no way affect any of the other provisions hereof, which
shall remain in full force and effect. All references herein to any document,
instrument, or agreement shall be deemed to refer to such document, instrument,
or agreement as the same may be amended, modified, restate, supplemented, or
replaced from time to time. Words that are capitalized in this Guaranty, but
not defined herein, shall have the meanings given to those words in the Purchase
Agreement.
5
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty under seal as
of the day and year first above written.
PRONET INC.
By:
----------------------------------
Its:
---------------------------------
[CORPORATE SEAL]
6
<PAGE>
EXHIBIT I
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 J
Inventory Valuation
Pager Prices
IN
NEW USED REPAIR
----------------------------------
Motorola Renegade $ 57.00 $ 35.00 $ 20.00
NEC Sport 2 $ 61.00 $ 40.00 $ 25.00
NEC Replay $ 61.00 $ 40.00 $ 25.00
Motorola Bravo + $ 75.00 $ 45.00 $ 30.00
Motorola Lifestyle + $ 75.00 $ 45.00 $ 30.00
Motorola Classic $ 67.50 $ 40.00 $ 25.00
Motorola Express $ 80.00 $ 50.00 $ 35.00
Motorola Ultra Express $ 77.00 $ 50.00 $ 35.00
Motorola Memo Express $125.00 $ 65.00 $ 50.00
Motorola Advisor $150.00 $ 85.00 $ 70.00
Wordsender $169.00 $100.00 $ 50.00
Alphamate $250.00 $150.00 $100.00
Other Used Units $ 25.00 $ 10.00
<PAGE>
EXHIBIT K
[LEASE TO BE PROVIDED BY SELLER]
<PAGE>
ADDITIONAL SCHEDULES
[TO BE PROVIDED BY THE PAGE ONE]
<PAGE>
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
AMONG COBBWELLS, INC., JAMES H. COBB, III,
AND WARREN K. WELLS, AND CONTACT
COMMUNICATIONS INC AND PRONET INC.
THIS IS AN AMENDMENT ("This Amendment") by and among COBBWELLS, INC. D/B/A
PAGE ONE a Georgia business corporation ("Page One"), JAMES H. COBB, III, and
WARREN K. WELLS (collectively, the "Sellers") and CONTACT COMMUNICATIONS INC., a
Delaware corporation (the "Purchaser") and PRONET INC., a Delaware corporation
and the Parent corporation of the Purchaser ("ProNet") with respect to that
certain Stock Purchase Agreement (the "Agreement") made and entered into on
November 22, 1995 by the same parties, and which the parties, in consideration
of the mutual promises therein and herein contained and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, and
with the intent to be legally bound, do hereby amend as follows:
1. AMENDMENT. (a) The first sentence of Section 1.2 of the Agreement is
amended by adding the language, "(vii) plus an amount equal to the amount by
which the value of useable, current model pagers held by Page One in inventory
for sale or rental to customers as of 11:59 p.m. on the day immediately
preceding the Closing Date valued as provided on EXHIBIT J and set forth in the
certificate provided pursuant to Section 6.1 (h) below exceeds $200,000,
PROVIDED, HOWEVER, that such increase shall not exceed $300,000, or minus an
amount equal to the amount by which the value of useable, current model pagers
held by Page One in inventory as of 11:59 p.m. on the day immediately preceding
the Closing Date for sale or rental to customers valued as provided on EXHIBIT J
and set forth in the certificate provided pursuant to Section 6.1 (h) below is
less than $200,000", so that as amended, the first sentence of Section 1.2 shall
read as follows:
(a) PURCHASE PRICE. The aggregate purchase price payable by the
Purchaser in consideration for the sale of the Shares shall be an amount
equal to the remainder of (a) the sum of (i) $11,340,000 )ii) $4,860,000
(the "Deferred Amount"), to be paid in whole or in part on or before the
first anniversary of the Closing Date (such date being referred to herein
as the "Deferred Payment Date"), (iii) an amount, payable in cash on the
Closing Date, equal to the amount of the Page One's accounts receivable in
respect of services or merchandise provided by the Page One prior to the
Closing Date as of 11:59 p.m. on the day immediately preceding the Closing
Date, (iv) $500,000 (the "Deposit") which amount has been deposited with
NationsBank of Texas, N.A., (the "Escrow Agent") as a deposit in accordance
with the terms of that certain "Depository Agreement of even date herewith,
by and among the parties herein (the "Deposit Escrow Agreement"), a copy of
which is attached hereto as EXHIBIT A, and (v) an amount payable in cash at
the Closing in respect of the Page One's Recurring Monthly
<PAGE>
Revenue (as hereinafter defined) for the last complete month prior to
the date of the Closing; provided that in the event Recurring Monthly
Revenue is less than $328,000, the Buyer shall have the option to
terminate this Agreement, with the Deposit (and any accrued interest)
payable to Buyer, and further provided that in the event the Recurring
Monthly Revenue is less than $328,000, the Buyer shall have the option
to terminate this Agreement, with the Deposit (and any accrued interest)
payable to Buyer, and further provided that in the event the Recurring
Monthly Revenue exceeds $328,000, the Purchase Price shall be increased
by $25,000 for each $1,000 over $328,000 (vi) an amount equal to the
Excess Cash (as defined in Section 1.5 below) or minus an amount equal
to the Cash Deficiency (as defined in Section 1.5 below), (vii) an
amount equal to the amount by which the value of useable, current model
pagers held by Page One in inventory for sale or rental to customers as
of 11:59 p.m. on the day immediately preceding the Closing Date valued
as provided on EXHIBIT J and set forth in the certificate provided
pursuant to Section 6.1 (h) below exceeds $200,000, PROVIDED, HOWEVER,
that such increase shall not exceed $300,000, or minus an amount equal
to the amount by which the value of useable, current model pagers held
by Page One in inventory for sale or rental to customers as of 11:59
p.m. on the day immediately preceding the Closing Date valued as
provided on EXHIBIT J and set forth in the certificate provided pursuant
to Section 6.1 (h) below is less than $200,000,minus (b) the amount of
any revenues collection by the Page One prior to the Closing Date in
respect of services of merchandise to be provided to customers of the
System after the Closing Date (collectively, the "Purchase Price").
(b) Section 1.3 (a) of the Agreement is amended by deleting the same in
its entirety and inserting in lieu thereof the following new Section 1.3 (a) to
read as follows:
1.3 Closing Date.
(a) LOCATION AND TIME. The closing of the transactions completed hereby
(the "Closing") shall take place at the offices of the Purchaser located at
6340 LBJ Freeway, Dallas, Texas 75240 at 9:00 a.m. local time on the later
of (i) January 2, 1996, or (ii) the first day of the month following the
month in which all Federal, State and local regulatory approvals for the
transactions contemplated hereby are received by Final Order as hereinafter
defined, or on such other date as may be agreed to in writing by all
parties to this Agreement. The Closing Date shall mean the date as of
which the sale of the Shares is effective. The date on which the Closing
actually occurs may be subsequent to the Closing Date if the parties so
agree in writing. If the Closing takes place subsequent to the Closing
Date, Page One shall conduct (and the Sellers shall cause Page One to
conduct) its business only in the ordinary course consistent with past
practice from the Closing Date until the Closing.
(c) Section 6.1(h) is amended by deleting the same in its entirety and
inserting in lieu thereof the following new Section 6.1(h):
(h) At the Closing, Purchaser shall have received a certificate
signed by the President of Page One stating the value of usable, current
model pagers held by Page One in inventory for sale or rental to customers
as of 11:59 p.m. on the day immediately preceding the Closing Date valued
as provided on EXHIBIT J.
<PAGE>
2. NO OTHER EFFECT ON THE AGREEMENT. Except as specifically set forth in
this Amendment, the Agreement shall remain in full force and effect.
3. MISCELLANEOUS.
(a) CONTROLLING LAW. This Amendment shall be construed and enforced in
accordance with the laws of the State of Georgia.
(b) CAPTIONS; CERTAIN DEFINITIONS. Captions of paragraphs and
subparagraphs in this Amendment are inserted only as a matter of convenience and
for reference and in no way define, limit, or extend the scope of this Amendment
for the intent of any provision of this Amendment. Capitalized terms that are
not otherwise defined in this Amendment have the same meanings given to them in
the Agreement.
(c) COUNTERPARTS. This Amendment may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Amendment to be
effective as of December 27, 1995.
CONTACT COMMUNICATIONS INC.,
PURCHASER
By: /s/ JACKIE R. KIMZEY
-----------------------------------
Name: Jackie R. Kimzey
Office: Chairman & CEO
PRONET INC.,
GUARANTOR
By: /s/ JACKIE R. KIMZEY
-----------------------------------
Name: Jackie R. Kimzey
Office: Chairman & CEO
[Signatures continued on next page]
<PAGE>
COBBWELLS, INC.,
PAGE ONE
By: /s/ JAMES H. COBB, III
-----------------------------------
JAMES H. COBB, III, President
ATTEST:
/s/ Warren K. Wells
- -------------------------------------
WARREN K. WELLS, Secretary
/s/ JAMES H. COBB, III
--------------------------------------
JAMES H. COBB, Seller
/s/ WARREN K. WELLS
--------------------------------------
WARREN K. WELLS, Seller
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Current Report on Form
8-K pertaining to ProNet Inc.'s acquisitions of Paging and Cellular of Texas,
Apple Communications, Inc., Sun Paging Communications, SigNet Paging of
Raleigh, Inc., and Cobbwells, Inc. d/b/a Page One, with respect to the
financial statements of companies acquired as follows:
WITH RESPECT TO YEAR ENDED REPORT DATE
--------------- ---------- -----------
Apple Communications, Inc. December 31, 1994 August 4, 1995
SigNet of Raleigh, Inc. December 31, 1994 August 9, 1995
Cobbwells, Inc. d/b/a Page One December 31, 1994 August 24, 1995
all such statements are included in ProNet Inc.'s Current Report on Form 8-K
dated September 14, 1995.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8, Nos. 33-18977 and 33-00000) pertaining to the 1987
Stock Option Plan of ProNet Inc. and the ProNet Inc. 1995 Long-Term Incentive
Plan, respectively, and (Form S-3, No. 33-61279) pertaining to the
registration of 2,000,000 shares of its common stock, of our reports as dated
above, with respect to the financial statements of the companies acquired,
included and incorporated by reference in the Current Report on Form 8-K for
the year ended December 31, 1994.
/s/ ERNST & YOUNG LLP
---------------------------------
Ernst & Young LLP
January 16, 1996
Dallas, Texas
<PAGE>
EXHIBIT 99.1
PAGING AND CELLULAR OF TEXAS
(A PROPRIETORSHIP)
BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash $ 27,063
Accounts receivable 904,639
Other current assets 3,299
----------
Total current assets 935,001
Fixed assets:
Office equipment 132,933
Office furniture & fixtures 47,394
Pagers 4,036,062
---------
4,216,389
Less allowance for depreciation (873,802)
---------
3,342,587
Total assets $4,277,588
----------
----------
LIABILITIES AND OWNER'S EQUITY
Current liabilities:
Accounts payables and accrued liabilities $ 92,690
Sales tax payable 57,902
Security deposits 2,872
Unearned revenue 364,862
Deferred income 373,584
Current maturities of long-term debt 1,594,086
----------
Total current liabilities 2,485,996
Long-term debt, less current maturities 1,788,686
Owner's equity 2,906
----------
Total liabilities and owner's equity $4,277,588
----------
----------
</TABLE>
<PAGE>
PAGING AND CELLULAR OF TEXAS
(A PROPRIETORSHIP)
STATEMENT OF INCOME AND OWNER'S EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Total revenues $4,177,098
Cost of goods sold 887,056
----------
3,290,042
Cost of sales and services 1,078,352
----------
2,211,690
Expenses:
Selling, general and administrative 1,121,907
Depreciation and amortization 492,042
----------
1,613,949
Interest expense (300,223)
Other income 13,500
----------
Net income 311,018
Owner's equity, beginning of period (70,128)
Owner's draws during the period (237,984)
----------
Owner's equity, end of period $ 2,906
----------
----------
</TABLE>
<PAGE>
PAGING AND CELLULAR OF TEXAS
(A PROPRIETORSHIP)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income $ 311,018
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 492,042
Changes in operating assets and liabilities:
Increase in prepaids and other assets (331,977)
Increase in accrued liabilities 52,348
---------
Net cash provided by operating activities 523,431
INVESTING ACTIVITIES
Disposals of fixed assets, net 199,704
FINANCING ACTIVITIES
Payments on long-term debt (459,743)
Distributions to owner (237,984)
---------
Net cash used in financing activities (697,727)
Net increase in cash and cash equivalents 25,408
Cash and cash equivalents at beginning of period 1,655
---------
Cash and cash equivalents at end of period $ 27,063
---------
---------
</TABLE>
<PAGE>
EXHIBIT 99.2
APPLE COMMUNICATION, INC.
BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
ASSETS
Current asset:
Cash in bank $ 742,550
Fixed assets:
Leasehold - improvements 8,026
Communication equipment 525,810
Office furniture & fixtures 58,320
Computer software 190,981
----------
783,137
Less allowance for depreciation (389,743)
----------
393,394
Other assets 80,850
----------
Total assets $1,216,794
----------
----------
LIABILITIES AND STOCKHOLDERS
Current liabilities:
Trade payables $ 117,802
Deferred revenue 154,500
Other accrued liabilities 58,040
----------
330,342
Equity:
Capital stock - common 2,000
Paid in capital in excess of par 186,000
Retained earnings 698,452
----------
886,452
----------
Total liabilities and stockholders' equity $1,216,794
----------
----------
<PAGE>
APPLE COMMUNICATION, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
Total revenues $4,248,621
Cost of sales 1,292,572
----------
2,956,049
Expenses:
Selling, general and administrative 2,224,191
Depreciation and amortization 77,074
----------
2,301,265
----------
Net income 654,784
Retained earnings, beginning 43,666
----------
Retained earnings, ending $ 698,450
----------
----------
<PAGE>
APPLE COMMUNICATION, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
OPERATING ACTIVITIES
Net income $ 654,784
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 77,074
Changes in operating assets and liabilities:
Increase in prepaids and other assets (76,500)
Decrease in accrued liabilities (172,948)
---------
Net cash provided by operating activities 482,410
INVESTING ACTIVITIES
Purchase of fixed assets (47,219)
---------
Net increase in cash and cash equivalents 435,191
Cash and cash equivalents at beginning of period 307,359
---------
Cash and cash equivalents at end of period $ 742,550
---------
---------
<PAGE>
EXHIBIT 99.3
INDEPENDENT AUDITORS' REPORT
The Partners
Sun Paging Communications:
We have audited the accompanying balance sheets of Sun Paging Communications (a
Joint Venture) as of December 31, 1994 and 1993 and the related statements of
operations, partners' equity, and cash flows for the year ended December 31,
1994 and the period August 6, 1993 (inception) to December 31, 1993. These
financial statements are the responsibility of the Joint Venture'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 Sun Paging Communications (a
Joint Venture) as of December 31, 1994 and 1993 and the results of its
operations and its cash flows for the year ended December 31, 1994 and the
period August 6, 1993 (inception) to December 31, 1993 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
May 24, 1995, except for note 5
which is as of July 26, 1995
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31, December 31,
Assets 1995 1994 1993
------------ ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash $222,843 $ 102,583 $108,840
Trade accounts receivable, net of allowance
for doubtful accounts of $34,560 in 1995,
$40,444 in 1994 and $242,812 in 1993 20,520 29,483 78,777
Accounts receivable from related party (note 3) -- 3,976 80,289
Prepaid expenses 45,726 46,106 25,122
---------- ----------- -----------
Total current assets 289,089 182,148 293,028
---------- ----------- -----------
Property and equipment:
Paging rental equipment, net of realization
reserve of $200,000 in 1995 and 1994 and $0
in 1993 659,165 1,219,621 901,336
Building and leasehold improvements 44,131 44,261 44,131
Equipment and furnishings 548,094 547,979 311,596
Paging equipment 1,428,238 1,427,937 1,499,025
---------- ----------- -----------
2,679,628 3,239,798 2,756,088
Less accumulated depreciation and amortization 1,683,521 1,925,420 1,493,533
---------- ----------- -----------
Net property and equipment 996,107 1,314,378 1,262,555
---------- ----------- -----------
Licenses and goodwill, less accumulated
amortization of $553,061 in 1995, $482,347
in 1994 and $415,470 in 1993 (note 1) 515,488 566,202 629,079
---------- ----------- -----------
$1,800,684 $2,062,728 $2,184,662
---------- ----------- -----------
---------- ----------- -----------
Liabilities and
Partners' Equity
-------------------
Current liabilities:
Trade accounts payable (note 3) $ 438 $ 41,804 $ 6,412
Accounts payable to related party (note 3) -- 142,942 218,640
Other accrued expenses (note 3) 84,726 69,632 79,043
Deferred revenue 58,744 49,096 51,804
Customer deposits 86,543 84,496 70,183
---------- ----------- -----------
Total current liabilities 230,451 387,970 426,082
Partners' equity (note 2) 1,570,233 1,674,758 1,758,580
Commitments (note 4) -- -- --
---------- ----------- -----------
$1,800,684 $2,062,728 $2,184,662
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Statements of Operations
Period from
August 6, 1993
Nine Months Ended Year Ended (inception)
September 30, December 31, to December 31,
1995 1994 1993
------------------ ------------ --------------
(unaudited)
Revenue (note 1):
Service and rental revenue $1,149,011 $1,765,021 $ 167,180
Equipment sales and
installation 186,893 287,106 15,738
---------- ---------- ---------
Total revenue 1,335,904 2,052,127 182,918
---------- ---------- ---------
Operating expenses (note 1):
Cost of service 331,255 461,279 109,153
Cost of equipment and
installation (note 4) 216,907 342,034 136,089
Sales and marketing 195,342 339,416 129,659
General and administrative
(note 3) 637,410 920,045 338,480
Depreciation and amortization 309,515 573,175 194,186
---------- ---------- ---------
Total operating expenses 1,690,429 2,635,949 907,567
---------- ---------- ---------
Net loss $ (354,525) $ (583,822) $(724,649)
---------- ---------- ---------
---------- ---------- ---------
See accompanying notes to financial statements.
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Statements of Partners' Equity
Nine Months ended September 31, 1995,
Year ended December 31, 1994 and the
period from August 6, 1993
(inception) to December 31, 1993
Palmer American
Communications Mobilphone,
Incorporated Inc. Total
-------------- ------------ ---------
Initial capital contributions
- August 6, 1993 $1,440,277 $512,297 $1,952,574
Additional capital contributions 339,619 191,036 530,655
Net loss (463,775) (260,874) (724,649)
---------- --------- ----------
Balance at December 31, 1993 1,316,121 442,459 1,758,580
Capital contributions 320,000 180,000 500,000
Net loss (373,646) (210,176) (583,822)
---------- --------- ----------
Balance at December 31, 1994 1,262,475 412,283 1,674,758
Capital contributions (unaudited) 160,000 90,000 250,000
Net loss (unaudited) (226,896) (127,629) (354,525)
---------- --------- ----------
Balance at September 30, 1995
(unaudited) $ 1,195,579 $374,654 $ 1,570,233
---------- --------- ----------
---------- --------- ----------
See accompanying notes to financial statements.
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Statements of Cash Flows
August 6, 1993
Nine Months Ended Year Ended (inception) to
September 30, December 31, December 31,
1995 1994 1993
------------- ------------ ------------
(unaudited)
Cash flows from operating
activities:
Net loss $(354,525) $ (583,822) $(724,649)
Adjustments to reconcile net
loss to net cash provided by (used
in) operating activities:
Depreciation and amortization 309,515 573,175 194,186
Decrease (increase) in trade
accounts receivable 8,963 49,294 (4,041)
Decrease (increase) in accounts
receivable from related party 3,976 76,313 (80,289)
Decrease (increase) in prepaid
expenses 380 (20,984) (25,122)
(Decrease) increase in trade
accounts payable (41,366) 35,392 6,412
(Decrease) increase in accounts
payable to related party (142,942) (75,698) 218,640
(Decrease) increase in other
accrued expenses 15,094 (9,411) 79,043
(Decrease) increase in deferred
revenue 9,648 (2,708) 2,326
Increase in customer deposits 2,047 14,313 580
---------- ---------- ----------
Net cash provided by (used in)
operating activities (189,210) 55,864 (332,914)
Cash flows from investing activities -
disposals of (additions to) property
and equipment, net 59,470 (562,121) (233,246)
Cash flows from financing activities-
capital contributions in cash 250,000 500,000 675,000
---------- ---------- ----------
Net (decrease) increase in cash 120,260 (6,257) 108,840
Cash at beginning of period 102,583 108,840 --
---------- ---------- ----------
Cash at end of period $ 222,843 $ 102,583 $ 108,840
---------- ---------- ----------
---------- ---------- ----------
Supplemental schedule of noncash
investing and financing activities:
Initial capital contributions on
August 6, 1993 (inception):
Cash contributions $ 100,000
Paging rental equipment 712,803
Other property and equipment 489,126
Licenses and goodwill 650,645
----------
$1,952,574
----------
----------
Additional capital contributions during the period
from August 6, 1993 (inception) to December 31, 1993:
Cash contributions $ 575,000
Trade accounts receivable, net 74,736
Deferred revenue (49,478)
Customer deposits (69,603)
----------
$530,655
----------
----------
See accompanying notes to financial statements.
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Notes to Financial Statements
December 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PARTNERSHIP OPERATIONS
Sun Paging Communications (the Joint Venture) was formed on August 6, 1993
by Palmer Communications Incorporated (Palmer), a 64 percent partner, and
American Mobilphone, Inc. (AMI), a 36 percent partner, to operate a
combined paging and communications business in central and southwest
Florida. The initial term of the joint venture agreement expires on
December 31, 1995, subject to a negotiated renewal by Palmer and AMI.
FINANCIAL STATEMENT BASIS
The accompanying financial statements have been prepared on the basis of
historical cost prior to the contribution of net assets by Palmer and AMI
to the Joint Venture. The 1993 statements of operations, partners'
equity, and cash flows present activity from August 6, 1993 (inception)
to December 31, 1993 and do not present operations of the businesses
prior to the joint venture agreement.
The 1993 statement of operations presents expenses of the Joint Venture from
August 6, 1993 (inception) to December 31, 1993, however revenues are
only presented from December 1, 1993 (date of regulatory approval) to
December 31, 1993.
The financial statements do not include the assets and liabilities of the
partners.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided
principally by the straight-line method over the estimated useful lives
ranging from 5 to 32 years.
LICENSES AND GOODWILL
Licenses consist of costs allocated to the FCC licenses in conjunction with
acquisitions of the paging systems, by the joint venture partners, which
occurred prior to August 6, 1993. The licenses are amortized using the
straight-line method over 10 years.
The excess of total consideration over the amounts assigned to identifiable
assets at the date of purchase of paging systems by the joint venture
partners, which occurred prior to August 6, 1993, is recorded as
goodwill. Goodwill is being amortized using the straight-line method
over primarily a 40 year period.
INCOME TAXES
The financial statements make no provisions for income taxes, as gains and
losses of the Joint Venture are included in the income tax returns of the
individual partners.
(2) PARTNERS' EQUITY
In accordance with the joint venture agreement, the partners' proportionate
share in cash distributions from current operations and net income or
loss is calculated by dividing the partners' capital contribution, as
valued in the joint venture agreement, by total partners' capital
contributions.
<PAGE>
SUN PAGING COMMUNICATIONS
(A Joint Venture)
Notes to Financial Statements, Continued
The allocation of gain or loss to the partners arising from the sale of
property will be in the same proportion as they share net income or net
loss of the Joint Venture.
(3) RELATED PARTY TRANSACTIONS
During the year ended December 31, 1994 and the period from August 6, 1993
(inception) to December 31, 1993, AMI paid certain expenses on behalf of
the Joint Venture. The accounts payable to AMI as of December 31, 1994
and 1993 was $142,942 and $218,640, respectively. In addition, the Joint
Venture had a receivable from AMI as of December 31, 1994 of $3,976 and a
receivable from Palmer as of December 31, 1993 of $80,289.
The Joint Venture has a management agreement with AMI for management of the
day-to-day operations of the Joint Venture. This agreement provides for
a monthly management fee of $5,000 through December 31, 1993 and $4,000
thereafter. A management fee of $48,000 and $24,194 was charged to
operations for the year ended December 31, 1994 and the period from
August 6, 1993 (inception) to December 31, 1993, respectively. Trade
accounts payable and other accrued expenses both include accruals of
$5,000, respectively, for unpaid management fees to AMI as of
December 31, 1993.
The Joint Venture leases certain tower space from Palmer, see note 4.
(4) LEASES
The Joint Venture, as lessee, has various noncancelable leases for certain
paging facilities, office buildings, and office equipment, all of which
are classified as operating leases. Several of the leases are with a
related party. Rent expense under noncancelable leases amounted to
approximately $250,500 and $92,300 (of which $15,800 and $9,500,
respectively, was paid to a related party) for the year ended December
31, 1994 and the period from August 6, 1993 (inception) to December 31,
1993, respectively. At December 31, 1994, the approximate minimum rental
commitments under noncancelable operating leases are as follows:
Related
Party Others
-------- --------
Year ending December 31:
1995 $15,800 $211,100
1996 15,800 55,000
1997 15,800 55,700
1998 10,500 22,000
1999 -- 8,300
-------- --------
$57,900 $352,100
-------- --------
-------- --------
(5) SUBSEQUENT EVENT
On July 26, 1995, the Joint Venture, Palmer, and AMI entered into a letter
of intent to sell substantially all of the assets of the Joint Venture
for approximately $2,600,000, subject to adjustment based on recurring
monthly revenue as defined in the agreement.
<PAGE>
EXHIBIT 99.4
SIGNET PAGING OF RALEIGH, INC.
BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Cash $ 30,693
Trade accounts receivable, less allowance
for doubtful accounts 102,894
Inventories 23,285
-------------
Total current assets 156,872
Equipment:
Pagers 1,825,429
Communications 427,345
Office and other equipment 302,627
-------------
2,555,401
Less allowance for depreciation (1,501,738)
-------------
1,053,663
-------------
Total assets $ 1,210,535
-------------
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables and accrued liabilities $ 136,424
Customer deposits 4,800
Current maturities of long-term debt 192,000
-------------
Total current liabilities 333,224
Long-term debt, less current maturities 497,357
Stockholders' equity:
Common stock, $100 par value:
Authorized shares - 1,000 50,000
Issued and outstanding shares - 500
Additional paid-in capital 923,896
Accumulated deficit (593,942)
-------------
Total stockholders' equity 379,954
-------------
Total liabilities and stockholders' equity $ 1,210,535
-------------
-------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
STATEMENT OF OPERATIONS AND STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Revenues
Recurring revenues $ 2,042,796
Product sales 250,190
-------------
Total revenues 2,292,986
Cost of products sold (96,993)
-------------
2,195,993
Cost of sales and services 517,891
-------------
Gross margin 1,678,102
Expenses:
Selling, general and administrative 1,046,953
Depreciation and amortization 318,213
-------------
1,365,166
Operating income 312,936
Other income (expense) (5,183)
-------------
Net income 307,753
Accumulated deficit, beginning (589,882)
Stockholder distributions (311,813)
-------------
Accumulated deficit, ending $ (593,942)
-------------
-------------
</TABLE>
<PAGE>
SIGNET PAGING OF RALEIGH, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income (loss) $ 307,753
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 318,213
Changes in operating assets and liabilities:
Increase in trade accounts receivable (36,836)
Increase in inventories (9,213)
Decrease in other assets 41,062
Increase in trade payables and accrued
liabilities 11,387
Decrease in customer deposits (8,550)
-------------
Net cash provided by operating activities 623,816
INVESTING ACTIVITIES
Purchase of property and equipment (183,569)
FINANCING ACTIVITIES
Stockholder distributions (311,813)
Payment on borrowings (114,369)
-------------
Net cash used in financing activities (426,182)
Net increase in cash 14,065
Cash at beginning of year 16,628
-------------
Cash at end of year $ 30,693
-------------
-------------
</TABLE>
<PAGE>
EXHIBIT 99.5
COBBWELLS, INC.
D/B/A PAGE ONE
BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
ASSETS
<S> <C>
Current assets:
Cash $ 183,712
Trade accounts receivable 23,959
Inventories 209,575
Prepaid expenses and advances 5,064
-------------
Total current assets 422,310
Property, pagers and equipment 2,087,080
Less allowance for depreciation (986,634)
-------------
1,100,446
Total assets $ 1,522,756
-------------
-------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Trade payables $ 408,682
Advances from stockholders 276,450
Customer deposits 21,367
Other accrued expenses and liabilities 26,163
Current maturities of long-term debt 1,071,909
-------------
Total current liabilities 1,804,571
Stockholders' deficit:
Common stock, $100 par value 15,300
Accumulated deficit (297,115)
-------------
Total stockholders' deficit (281,815)
-------------
Total liabilities and stockholders' deficit $ 1,522,756
-------------
-------------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Total revenues $ 3,892,316
Cost of products sold (836,841)
-------------
3,055,475
Cost of services - pager lease and
access services 392,947
-------------
2,662,528
Expenses:
Selling, general and administrative 2,258,458
Depreciation and amortization 270,000
-------------
2,528,458
-------------
Net income 134,070
Accumulated deficit, beginning (431,185)
-------------
Accumulated deficit, ending $ (297,115)
-------------
-------------
</TABLE>
<PAGE>
COBBWELLS, INC.
D/B/A PAGE ONE
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
OPERATING ACTIVITY
Net income $ 134,070
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 270,000
Changes in operating assets and liabilities:
Decrease in trade accounts receivable
Decrease (increase) inventories and other 16,428
assets (127,458)
Increase in trade payables and accrued
liabilities 303,396
-------------
Net cash provided by operating activities 596,436
INVESTING ACTIVITY
Purchase of property and equipment (411,690)
FINANCING ACTIVITY
Payments on long-term debt (76,773)
Net increase in cash 107,973
Cash at beginning of period 75,739
-------------
Cash at end of period $ 183,712
-------------
-------------
</TABLE>
<PAGE>
EXHIBIT 99.6
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Since January 1994, the Company has completed the acquisition of all of
the outstanding capital stock of Contact, Metropolitan, Apple and Page One
and substantially all of the paging assets of Radio Call, ChiComm, High Tech,
Signet, Carrier, All City, Americom, Lewis, Gold Coast, Paging & Cellular,
Sun and Signet Raleigh (collectively, the "Acquisitions"). The accompanying
unaudited pro forma condensed consolidated balance sheet of the Company
combines the historical consolidated balance sheet of the Company and the
balance sheets of Paging & Cellular, Apple, Sun, Signet Raleigh and Page One
as if the acquisitions had occurred on September 30, 1995. The accompanying
unaudited pro forma condensed statement of operations of the Company for the
year ended December 31, 1994 combines the historical consolidated statement
of operations of the Company and the statements of operations of the
Acquisitions as if the Acquisitions had occurred on January 1, 1994, and
assumes that they were funded with the proceeds of the Company's $100 million
senior subordinated notes (the "Notes") or by borrowings under the Company's
credit facility. The accompanying unaudited pro forma condensed consolidated
statement of operations of the Company for the nine months ended September
30, 1995, combines the historical statement of operations of the Company and
the statements of operations of Signet, Carrier, All City, Metropolitan,
Americom, Gold Coast, Lewis, Paging & Cellular, Apple, Sun, Signet Raleigh
and Page One (collectively, the "1995 and 1996 Acquisitions") as if the 1995
and 1996 Acquisitions had occurred on January 1, 1995, and assumes that they
were funded with the proceeds of the Notes and borrowings under the Company's
credit facility.
The pro forma condensed consolidated financial statements do not purport
to represent what the Company's results of operations would have been had the
Acquisitions occurred on the dates indicated or for any future period or
date. The pro forma adjustments give effect to available information and
assumptions that management believes are reasonable. The pro forma condensed
consolidated financial statements should be read in conjunction with the
Company's historical consolidated financial statements and the financial
statements of certain Acquisitions and the notes thereto included or
incorporated elsewhere herein.
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
PAGING & SIGNET PAGE PRO FORMA PRO FORMA
PRONET CELLULAR APPLE SUN RALEIGH ONE ADJUSTMENTS INDEX CONSOLIDATED
---------- --------- --------- --------- --------- --------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Assets................. $ 52,006 $ 935 $ 760 $ 316 $ 157 $ 423 $ (31,815) (A),(C) $ 22,782
Equipment
Pagers........................ 27,922 4,036 -- -- 1,825 623 (3,488) (A) 30,918
Communications
equipment.................... 20,887 -- 717 -- 428 1,077 (1,301) (A) 21,808
Security systems
equipment.................... 11,525 -- -- -- -- -- -- 11,525
Office and other.............. 5,845 180 66 2,654 303 387 (2,146) (A) 7,289
---------- --------- --------- --------- --------- --------- ---------- ------- ----------
66,179 4,216 783 2,654 2,556 2,087 (6,935) 71,540
Less allowance for
depreciation................. 31,089 873 544 1,684 1,502 987 (5,590) (A) 31,089
---------- --------- --------- --------- --------- --------- ---------- ------- ----------
35,090 3,343 239 970 1,054 1,100 (1,345) 40,451
Goodwill and other assets,
net........................... 96,218 -- 138 515 -- -- 47,409 (A),(B) 144,280
---------- --------- --------- --------- --------- --------- ---------- ------- ----------
TOTAL ASSETS................... $ 183,314 $ 4,278 $ 1,137 $ 1,801 $ 1,211 $ 1,523 $ 14,249 $ 207,513
---------- --------- --------- --------- --------- --------- ---------- ------- ----------
---------- --------- --------- --------- --------- --------- ---------- ------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities............ $ 14,227 2,486 $ -- $ 231 $ 333 $ 1,805 $ (4,016) (A) $ 15,066
Deferred payments.............. 18,600 -- -- -- -- -- 5,660 (C) 24,260
Long-term debt, less current
maturities.................... 99,301 1,789 -- -- 497 -- 12,214 (A),(C) 113,801
Deferred tax liabilities....... 898 -- -- -- -- -- -- 898
Shareholders' equity (deficit). 50,288 3 1,137 1,570 381 (282) 391 (A),(C) 53,488
---------- --------- --------- --------- --------- --------- ---------- ------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY.......... $ 183,314 $ 4,278 $ 1,137 $ 1,801 $ 1,211 $ 1,523 $ 14,249 $ 207,513
---------- --------- --------- --------- --------- --------- ---------- ------- ---------
---------- --------- --------- --------- --------- --------- ---------- ------- ---------
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
YEAR TWO MONTHS SEVEN MONTHS
ENDED ENDED ENDED
DEC. 31, FEB. 28, JULY 31, 1994 YEAR ENDED DECEMBER 31, 1994
1994 1994 ----------------------- -----------------------------------------
---------- ---------- RADIO HIGH
PRONET CONTACT CALL CHICOMM TECH SIGNET CARRIER
---------- ---------- ---------- ---------- ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................. $33,079 $1,599 $3,200 $2,225 $ 291 $ 4,750 $ 2,435
Product sales.................... 6,639 743 738 338 -- 1,100 900
---------- ---------- ---------- ---------- ---------- ----------- -----------
Total revenues................. 39,718 2,342 3,938 2,563 291 5,850 3,335
Cost of products sold............ (6,644) (956) (536) (296) -- (1,089) (1,185)
---------- ---------- ---------- ---------- ---------- ----------- -----------
33,074 1,386 3,402 2,267 291 4,761 2,150
COST OF SERVICES................... 9,185 202 755 486 86 1,149 203
GROSS MARGIN................... 23,889 1,184 2,647 1,781 205 3,612 1,947
EXPENSES
Sales, general and administrative 12,126 1,022 2,181 792 220 2,287 1,603
Depreciation and amortization.... 8,574 93 689 413 128 627 228
---------- ---------- ---------- ---------- ---------- ----------- -----------
20,700 1,115 2,870 1,205 348 2,914 1,831
---------- ---------- ---------- ---------- ---------- ----------- -----------
OPERATING INCOME (LOSS)........ 3,189 69 (223) 576 (143) 698 116
OTHER INCOME (EXPENSE)
Interest expense................. (1,774) (46) (44) (141) -- (292) (124)
Interest and other income........ 173 -- -- -- -- 5 --
---------- ---------- ---------- ---------- ---------- ----------- -----------
(1,601) (46) (44) (141) -- (287) (124)
INCOME (LOSS) BEFORE
INCOME TAXES.................. 1,588 23 (267) 435 (143) 411 (8)
Provision (benefit) for income taxes 895 -- (59) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------- -----------
NET INCOME (LOSS).............. $ 693 $ 23 $ (208) $ 435 $ (143) $ 411 $ (8)
---------- ---------- ---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ---------- ---------- ----------- -----------
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------------------------------------------------------
GOLD PAGING &
METROPOLITAN ALL CITY AMERICOM COAST LEWIS CELLULAR APPLE
------------ --------- --------- -------- ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................. $4,835 $ 3,257 $ 3,477 $699 $1,047 $ 3,530 $3,938
Product sales.................... 152 387 1,105 -- 803 1,187 1,459
------------ --------- --------- -------- ---------- ----------- -----------
Total revenues................. 4,987 3,644 4,582 699 1,850 4,717 5,397
Cost of products sold............ (156) (299) (1,015) -- (669) (1,055) (1,539)
------------ --------- --------- -------- ---------- ----------- -----------
4,831 3,345 3,567 699 1,181 3,662 3,858
COST OF SERVICES................... 1,517 833 856 158 70 1,118 545
GROSS MARGIN................... 3,314 2,512 2,711 541 1,111 2,544 3,313
EXPENSES
Sales, general and administrative 1,622 1,670 1,764 232 831 1,534 3,031
Depreciation and amortization.... 597 1,225 381 92 135 695 105
------------ --------- --------- -------- ---------- ----------- -----------
2,219 2,895 2,145 324 966 2,229 3,136
------------ --------- --------- -------- ---------- ----------- -----------
OPERATING INCOME (LOSS)........ 1,095 (383) 566 217 145 315 177
OTHER INCOME (EXPENSE)
Interest expense................. -- (1,595) (291) -- (9) (384) (6)
Interest and other income........ 27 -- -- -- -- -- 5
------------ --------- --------- -------- ---------- ----------- -----------
27 (1,595) (291) -- (9) (384) (1)
INCOME (LOSS) BEFORE
INCOME TAXES.................. 1,122 (1,978) 275 217 136 (69) 176
Provision (benefit) for income taxes 382 -- -- -- -- -- 93
------------ --------- --------- -------- ---------- ----------- -----------
NET INCOME (LOSS).............. $ 740 $ (1,978) $ 275 $217 $ 136 $ (69) $ 83
------------ --------- --------- -------- ---------- ----------- -----------
------------ --------- --------- -------- ---------- ----------- -----------
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------
SIGNET PAGE PRO FORMA PRO FORMA
SUN RALEIGH ONE ADJUSTMENTS INDEX CONSOLIDATED
------------ --------- --------- ----------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................. $1,765 $2,528 $2,862 $ -- $ 75,517
Product sales.................... 287 138 932 -- 16,908
------------ --------- --------- ----------- ---------- -------------
Total revenues................. 2,052 2,666 3,794 92,425
Cost of products sold............ (342) (141) (981) -- (16,903)
------------ --------- --------- ----------- ---------- -------------
1,710 2,525 2,813 -- 75,522
COST OF SERVICES................... 461 464 606 -- 18,694
GROSS MARGIN................... 1,249 2,061 2,207 -- 56,828
EXPENSES
Sales, general and administrative 1,260 1,222 1,959 (3,406) (E) 31,950
Depreciation and amortization.... 573 424 233 7,999 (F) 23,211
------------ --------- --------- ----------- ---------- -------------
1,833 1,646 2,192 4,593 55,161
------------ --------- --------- ----------- ---------- -------------
OPERATING INCOME (LOSS)........ (584) 415 15 (4,593) 1,667
OTHER INCOME (EXPENSE)
Interest expense................. -- (101) (108) (7,896) (G) (12,811)
Interest and other income........ -- -- -- -- 210
------------ --------- --------- ----------- ---------- -------------
-- (101) (108) (7,896) (12,601)
INCOME (LOSS) BEFORE
INCOME TAXES.................. (584) 314 (93) (12,489) (10,934)
Provision (benefit) for income taxes -- -- -- -- (H) 1,311
------------ --------- --------- ----------- ---------- -------------
NET INCOME (LOSS).............. $ (584) $ 314 $ (93) $ (12,489) $ (12,245)
------------ --------- --------- ----------- ---------- -------------
------------ --------- --------- ----------- ---------- -------------
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
PRONET INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NINE TWO THREE SIX
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED FOUR MONTHS ENDED EIGHT MONTHS
SEPT. 30, FEB. 28, MARCH 31, ENDED APRIL 30, JUNE 30, ENDED AUGUST 31,
1995 1995 1995 1995 1995 1995
--------- -------- --------- ------------ -------- -------- ---------- ------
PRONET SIGNET CARRIER METROPOLITAN ALL CITY AMERICOM GOLD COAST LEWIS
--------- -------- --------- ------------ -------- -------- ---------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................... $ 39,189 $ 872 $ 532 $ 1,870 $ 1,139 $ 1,810 $ 427 $ 932
Product sales...................... 7,131 109 197 50 47 430 -- 780
--------- -------- --------- ------------ -------- -------- ---------- ------
Total revenues................... 46,320 981 729 1,920 1,186 2,240 427 1,712
Cost of product sold............... (7,210) (109) (179) (54) -- (371) -- (490)
---------- ------- --------- ------------ -------- -------- ---------- ------
39,110 872 550 1,866 1,186 1,869 427 1,222
COST OF SERVICES..................... 10,039 273 59 514 272 259 99 48
GROSS MARGIN..................... 29,071 599 491 1,352 914 1,610 328 1,174
EXPENSES
Sales, general and administrative.. 16,159 367 286 592 511 782 160 650
Depreciation and amortization...... 10,941 17 54 215 292 209 51 88
--------- -------- --------- ------------ -------- -------- ---------- ------
27,100 384 340 807 803 991 211 738
--------- -------- --------- ------------ -------- -------- ---------- ------
OPERATING INCOME (LOSS).......... 1,971 215 151 545 111 619 117 436
OTHER INCOME (EXPENSE)
Interest expense................... (5,233) (54) (26) -- (528) (4) -- (4)
Interest and other income.......... 976 2 1 20 -- 97 -- 20
--------- -------- --------- ------------ -------- -------- ---------- ------
(4,257) (52) (25) 20 (528) 93 -- 16
INCOME (LOSS) BEFORE
INCOME TAXES.................... (2,286) 163 126 565 (417) 712 117 452
Provision for income taxes......... 78 -- 1 192 -- -- -- --
--------- -------- --------- ------------ -------- -------- ---------- ------
NET INCOME (LOSS)................ $ (2,364) $ 163 $ 125 $ 373 $ (417) $ 712 $ 117 $ 452
--------- -------- --------- ------------ -------- -------- ---------- ------
--------- -------- --------- ------------ -------- -------- ---------- ------
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
--------------------------------------------
PAGING & SIGNET PAGE PRO FORMA PRO FORMA
CELLULAR APPLE SUN RALEIGH ONE ADJUSTMENTS INDEX CONSOLIDATED
-------- ------- ------- ------- ------- ----------- ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Service revenues................... $ 3,016 $ 3,534 $ 1,149 $ 2,043 $ 3,414 $ (192) (D) $ 59,735
Product sales...................... 1,161 715 187 250 478 -- 11,535
-------- ------- ------- ------- ------- ----------- ------- ------------
Total revenues................... 4,177 4,249 1,336 2,293 3,892 (192) 71,270
Cost of product sold............... (887) (776) (217) (97) (837) -- (11,227)
-------- ------- ------- ------- ------- ----------- ------- ------------
3,290 3,473 1,119 2,196 3,055 (192) 60,043
COST OF SERVICES..................... 1,078 517 331 518 393 -- 14,400
GROSS MARGIN..................... 2,212 2,956 788 1,678 2,662 (192) 45,643
EXPENSES
Sales, general and administrative.. 1,122 2,224 833 1,047 2,258 (1,518) (E) 25,473
Depreciation and amortization...... 492 77 310 318 270 3,865 (F) 17,199
-------- ------- ------- ------- ------- ----------- ------- ------------
1,614 2,301 1,143 1,365 2,528 2,347 42,672
-------- ------- ------- ------- ------- ----------- ------- ------------
OPERATING INCOME (LOSS).......... 598 655 (355) 313 134 (2,539) 2,971
OTHER INCOME (EXPENSE)
Interest expense................... (300) -- -- (58) -- (4,941) (G) (11,148)
Interest and other income.......... 13 -- -- 53 -- -- 1,182
-------- ------- ------- ------- ------- ----------- ------- ------------
(287) -- -- (5) -- (4,941) (9,966)
INCOME (LOSS) BEFORE
INCOME TAXES.................... 311 655 (355) 308 134 (7,480) (6,995)
Provision for income taxes......... -- -- -- -- -- -- (H) 271
-------- ------- ------- ------- ------- ----------- ------- ------------
NET INCOME (LOSS)................ $ 311 $ 655 $ (355) $ 308 $ 134 $ (7,480) $ (7,266)
-------- ------- ------- ------- ------- ----------- ------- ------------
-------- ------- ------- ------- ------- ----------- ------- ------------
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On March 1, 1994, the Company completed the acquisition of all the
outstanding capital stock of Contact for approximately $19.0 million in cash
(including amounts paid pursuant to noncompetition agreements). On August 1,
1994, the Company completed the purchase of substantially all of the paging
assets of Radio Call and certain of its affiliates for approximately $7.8
million in cash (including amounts paid pursuant to noncompetition
agreements). On August 1, 1994, the Company also completed the purchase of
substantially all of the Chicago area paging assets of ChiComm for
approximately $8.9 million paid in cash at closing (including amounts paid
pursuant to noncompetition agreements) and a $950,000 deferred payment.
Effective December 31, 1994, the Company purchased substantially all of the
paging assets of High Tech for $900,000, comprised of $700,000 paid in cash
at closing and a $200,000 deferred payment. On March 1, 1995, the Company
purchased substantially all of the paging assets of Signet for approximately
$9.0 million, comprised of approximately $4.8 million paid in cash at closing
and a $4.2 million deferred payment. On April 1, 1995, the Company completed
the purchase of substantially all of the paging assets of Carrier for
approximately $6.5 million, comprised of approximately $3.5 million paid in
cash at closing and a deferred payment of approximately $3.0 million. On May 3,
1995, the Company completed the acquisition of all the outstanding capital
stock of Metropolitan for approximately $21.0 million paid in cash at
closing. On May 19, 1995, the Company completed the purchase 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. On July 16, 1995, the Company completed the
purchase of substantially all of the paging assets of Americom for
approximately $17.5 million, comprised of approximately $8.8 million paid in
cash at closing and a deferred payment of $8.7 million. On September 1,
1995, the Company completed the purchase of substantially all of the paging
assets of Lewis for approximately $5.6 million, comprised of approximately
$3.5 million paid in cash at closing and a $2.1 million deferred payment. On
September 1, 1995, the Company completed the purchase of substantially all of
the paging assets of Gold Coast for approximately $2.3 million paid in cash
at closing. On October 2, 1995, the Company completed the acquisition of
substantially all of the paging assets of Paging & Cellular for
approximately $9.5 million paid in cash at closing. On December 1, 1995, the
Company completed the acquisition of all of the outstanding capital stock of
Apple for approximately $13.0 million, comprised of approximately $8.5
million paid in cash and approximately $4.5 million in stock at closing. On
January 2, 1996, the Company completed the acquisition of substantially all
of the paging assets of Sun for approximately $2.3 million paid in cash at
closing. On January 3, 1996, the Company completed the purchase of
substantially all of the paging assets of Signet Raleigh for approximately
$8.7 million, comprised of approximately $4.7 million paid in cash at closing
and delivery of $3.2 million in common stock of the Company at closing and a
$800,000 deferred payment. On January 5, 1996, the Company completed the
purchase of substantially all of the outstanding capital stock of Page One
for approximately $19.7 million, comprised of approximately $14.8 million
paid in cash at closing and a $4.9 million deferred payment.
All deferred payments listed above are due one year from the closing of
the respective transactions and 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 the Acquisitions had been acquired at the beginning of
the periods presented. The Company and the Acquisitions, except for Contact
and Gold Coast, operated on a December 31 fiscal year basis. Contact
operated on a July 31 fiscal year basis. Gold Coast operated on a June 30
fiscal year basis. Gold Coast's results of operations for the six months
ended June 30, 1994, were combined with the results of operations for the six
months ended December 31, 1994, to reflect the year ended December 31, 1994.
The respective results of operations for Contact, Radio Call, ChiComm and
High Tech from January 1, 1994, to the dates of the respective acquisitions
were combined with the actual results of operations of the Company and the
1995 and 1996 Acquisitions for the year ended December 31, 1994, to determine
the pro forma results of operations for the year ended December 31, 1994.
The respective results of operations for Signet, Carrier, All City,
Metropolitan, Americom, Gold Coast and Lewis from the date of acquisition
were combined with the actual results of operations of the Company, Paging &
Cellular, Apple, Sun, Signet Raleigh and Page One for the nine months ended
September 30, 1995, to determine the pro forma results of operations for the
nine months ended September 30, 1995.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The accompanying pro forma condensed consolidated balance sheet as of
September 30, 1995, has been prepared as if the Paging & Cellular, Apple,
Sun, Signet Raleigh and Page One acquisitions had occurred on that date and
reflects the following adjustments:
(A) Pro forma adjustments are made to reflect the fair value of those
assets and liabilities that were acquired as a result of the Paging &
Cellular, Apple, Sun, Signet Raleigh and Page One acquisitions. The
Company did not acquire cash or assume certain trade payables, certain
accrued expenses or existing long-term debt. The following is a detail
of these adjustments (in thousands):
DR CR
----- -----
Long-term debt. . . . . . . . . . . . . . . . . . 2,286
Allowance for depreciation . . . . . . . . . . . 5,590
Current liabilities . . . . . . . . . . . . . . . 4,016
Shareholders' equity (deficit) . . . . . . . . . 2,809
Current Assets . . . . . . . . . . . . . . . . 1,932
Equipment . . . . . . . . . . . . . . . . . . 6,935
Goodwill and other assets . . . . . . . . . . 515
Investments in Paging & Cellular, Apple,
Sun, Signet Raleigh and Page One . . . . . 5,319
To reflect the allocation of the purchase price of Paging & Cellular,
Apple, Sun, Signet Raleigh and Page One, and to reflect reductions in certain
assets and liabilities not acquired by the Company.
(B) Pro forma adjustments are made to goodwill equal to the excess of
the applicable purchase price over the fair values assigned to assets
and liabilities acquired. A pro forma adjustment is made to other assets
to record the noncompetition agreements based on amounts stated in the
respective definitive agreements. The following is a detail of these
adjustments (in thousands):
Goodwill and other assets. . . . . . . . . . . . . 47,924
Investments in Paging & Cellular, Apple, Sun,
Signet Raleigh and Page One . . . . . . . . . 47,924
To record goodwill related to the acquisitions of Paging & Cellular,
Apple, Sun, Signet Raleigh and Page One.
(C) Pro forma adjustments are made to (i) record the use of cash, the
borrowings under the Company's credit facility and the issuance of the
Company's common stock and (ii) record the incurrence of deferred
payments of $5.7 million in connection with the acquisitions of Signet
Raleigh and Page One. All deferred payments are classified as long-term
liabilities since the Company has the option to make the deferred payments
in cash with funds available from the proceeds of the Company's credit
facility or in shares of the Company's common stock. The following is a
detail of these adjustments (in thousands):
Investments in Paging & Cellular, Apple, Sun,
Signet Raleigh and Page One . . . . . . . . . . 53,243
Deferred payments . . . . . . . . . . . . . . 5,660
Shareholders' equity (deficit) . . . . . . . . 3,200
Long-term debt . . . . . . . . . . . . . . . . 14,500
Current assets . . . . . . . . . . . . . . . . 29,883
To record the purchases of Paging & Cellular, Apple, Sun, Signet Raleigh
and Page One.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The following is a summary of the fair value assigned to the assets and
liabilities acquired from Paging & Cellular, Apple, Sun, Signet Raleigh and
Page One (in thousands):
<TABLE>
<CAPTION>
HISTORICAL COST
------------------------------------------
PAGING & SIGNET PAGE FAIR
CELLULAR APPLE SUN RALEIGH ONE SUBTOTAL ADJUSTMENTS VALUE
--------- ------ ------ ------- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets . . . . . . . . . . $ 935 $ 760 $ 316 $ 157 $ 423 $ 2,591 $(1,932) $ 659
Equipment
Pagers . . . . . . . . . . . . . 4,036 -- -- 1,825 623 6,484 (3,488) 2,996
Communications Equipment . . . . -- 717 -- 428 1,077 2,222 (1,301) 921
Office and other . . . . . . . . 180 66 2,654 303 387 3,590 (2,146) 1,444
-------- ------ ------ ------- ------ ------- ---------- -------
4,216 783 2,654 2,556 2,087 12,296 (6,935) 5,361
Less allowance for depreciation . 873 544 1,684 1,502 987 5,590 (5,590) --
-------- ------ ------ ------- ------ ------- ---------- -------
3,343 239 970 1,054 1,100 6,706 (1,345) 5,361
Goodwill, net . . . . . . . . . . -- -- -- -- -- -- 47,924 47,924
Other assets, net . . . . . . . . -- 138 515 -- -- 653 (515) 138
-------- ------ ------ ------- ------ ------- ---------- -------
Total Assets . . . . . . . . . . 4,278 1,137 1,801 1,211 1,523 9,950 44,132 54,082
Current liabilities . . . . . . . 2,486 -- 231 333 1,805 4,855 (4,016) 839
Long-term debt . . . . . . . . . 1,789 -- -- 497 -- 2,286 (2,286) --
-------- ------ ------ ------- ------ ------- ---------- -------
Net assets . . . . . . . . . . . $ 3 $1,137 $1,570 $ 381 $ (282) $ 2,809 $50,434 $53,243
-------- ------ ------ ------- ------ ------- ---------- -------
-------- ------ ------ ------- ------ ------- ---------- -------
</TABLE>
The accompanying pro forma condensed consolidated statements of
operations for the year ended December 31, 1994 and for the nine months ended
September 30, 1995, have been prepared by combining the historical results of
the Company and the Acquisitions for such respective periods and reflect the
following adjustments:
(D) A pro forma adjustment is made to reflect the effect on service
revenues and costs of sales related to the segment of the operations of
All City not acquired by the Company.
(E) The pro forma adjustment to sales, general and administrative
expenses represents expenses that either would not have been incurred had
the Acquisitions occurred at the beginning of the periods presented. For
Signet, Carrier, All City, Metropolitan, Lewis, Paging & Cellular, Apple,
Sun, Signet Raleigh and Page One, cost savings relate to decreased
salaries (primarily due to reductions in senior management of the
Acquisitions), office rent, professional fees, telephone costs and bad
debts.
(F) 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 using the straight-line method over the remaining estimated
useful lives of the assets. The noncompetition agreements are amortized
using the straight-line method over the terms of the agreements, and
goodwill is amortized using the straight-line method over a 15-year term.
(G) Interest expense is comprised of interest on long-term debt and
the deferred payments, plus the commitment fee on the Credit Facility.
Pro forma adjustments reflect (i) the reversals of interest expense of
$1.0 million for the nine months ended September 30, 1995 and $3.1
million for the year ended December 31, 1994 on debt of the
Acquisitions not assumed by the Company and (ii) the increase in
interest expense due to the sale of the Notes at an assumed annual rate
of 11.875% and $14.5 million in borrowings on the Company's credit
facility at an assumed annual rate of 90 day LIBOR plus an applicable
margin. Interest expense on the deferred payments is provided as
required by the definitive agreements or letters of intent.
<PAGE>
PRONET INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(H) At December 31, 1994, the Company had net operating loss
carryforwards of $3.9 million for income tax purposes that expire in
years 2004 through 2008. The Company anticipates that the current year
operating loss may not be realizable within the statutory time frame.
Therefore, no pro forma adjustments were made to reflect any current or
future tax benefit.
The pro forma condensed consolidated financial information presented is
not necessarily indicative of either the results of operations that would
have occurred had the acquisitions taken place at the beginning of the
periods presented or of future results of operations of the combined
operations.
