<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TELETOUCH COMMUNICATIONS, INC.
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(Name of Issuer)
Common Stock, $.001 par value
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(Title of Class of Securities)
87951V 10 7
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(CUSIP Number)
Mark A. Solls
Vice President and General Counsel
ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
(214) 687-2000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 16, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. / /
Check the following box if a fee is being paid with the statement. /X/ (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of less than five percent
of such class. See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
(Continued on following page(s))
Page 1 of 11 Pages
Exhibit Index located on page 11.
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CUSIP NO. 87951V 10 7 Page 2 of 11 Pages
----------- --- ---
- -------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
ProNet Inc.
- -------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group* (a) / /
(b) / /
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3 SEC USE ONLY
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4 Source of Funds
OO See Item 3
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5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
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6 Citizenship or Place of Organization
Delaware
- -------------------------------------------------------------------------------
Number of Shares 7 Sole Voting Power
Beneficially Owned 0
By Each Reporting --------------------------------------------------
Person With 8 Shared Voting Power
*See Item 5
--------------------------------------------------
9 Sole Dispositive Power
0
--------------------------------------------------
10 Shared Dispositive Power
0
- -------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
*See Item 5
- -------------------------------------------------------------------------------
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
/ /
- -------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11)
70.5%
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14 Type of Reporting Person
CO
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Page 2 of 11 Pages
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ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement relates is the
Common Stock, par value $.001 per share ("Teletouch Common Stock"), of
Teletouch Communications, Inc., a Delaware corporation ("Teletouch"). The
address of the principal executive offices of Teletouch is 110 North College,
Suite 200, Tyler, Texas 75202.
ITEM 2. IDENTITY AND BACKGROUND.
ProNet Inc., a Delaware corporation ("ProNet"), is filing this Statement.
ProNet provides wireless messaging services in the United States. The address
of ProNet's principal place of business and principal office is 6340 LBJ
Freeway, Dallas, Texas 75240.
(a)-(c), (f). The name, business address and present principal
occupation or employment of each executive officer and director of ProNet is
set forth on SCHEDULE I hereto, which Schedule is incorporated herein by
reference. All such persons are United States citizens. Such Schedule also
sets forth the principal business and address of each employer of such
individuals (other than ProNet).
(d) and (e). Neither ProNet nor, to the best knowledge of ProNet, any
of the persons listed on SCHEDULE I attached hereto has during the last five
years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
ProNet is filing this Schedule as a result of its entering into the
Voting Agreement described in Item 4. Under such agreement, certain Teletouch
stockholders have agreed to vote their shares of Teletouch Common Stock in
favor of a proposed merger of Teletouch into a wholly-owned subsidiary of
ProNet (the "Merger"). ProNet anticipates financing the cash amounts
(totaling approximately $106 million) payable as a result of the Merger
through borrowings under its credit agreement (which may be amended
subsequent to the date hereof) and/or consummating a debt and/or equity
financing. See Item 4 for a more complete discussion of the Voting Agreement
and the proposed Merger.
ITEM 4. PURPOSE OF TRANSACTION.
On April 16, 1995, ProNet entered into an Agreement and Plan of Merger
(the "Merger Agreement") with ProNet Subsidiary, Inc., a Delaware corporation
and a wholly-owned subsidiary of ProNet ("Merger Sub"), and Teletouch, pursuant
to which Teletouch will be merged with and into Merger Sub. The terms of the
Merger Agreement are described more fully below.
THE VOTING AGREEMENT. In connection with the execution of the Merger
Agreement, ProNet entered into a Voting Agreement on April 16, 1996 (the
"Voting Agreement") with Continental Illinois Venture Corporation, a Delaware
corporation ("CIVC"), CIVC Partners I, a Delaware general partnership, Rainbow
Resources, Inc., a Texas corporation, GM Holdings, LLC, a Tennessee limited
Page 3 of 11 Pages
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liability company, Robert M. McMurrey and G. David Higginbotham
(collectively, the "Voting Parties") pursuant to which the Voting Parties
agreed (i) to attend the Teletouch stockholders' meeting, in person or by
proxy, and to vote, or cause to be voted (or, if the stockholders of
Teletouch act by written consent, to consent in writing, or cause to consent
in writing, with respect to) all shares of Teletouch Common Stock, Teletouch
Series A 14% Cumulative Preferred Stock ("Series A Preferred"), Teletouch
Series B Preferred Stock ("Series B Preferred") and any other voting
securities of Teletouch, whether issued before or after the execution of the
Voting Agreement, that such Voting Party owns or has the right to vote or
consent with respect to (A) for approval and adoption of the Merger Agreement
and the Merger and (B) against any proposal or other matter that may
interfere or be inconsistent with the Merger, (ii) not to directly or
indirectly sell, transfer, pledge or otherwise dispose of, or grant a proxy
with respect to, any Teletouch securities to any person other than ProNet and
(iii) to exercise all of their warrants to purchase Teletouch Common Stock or
Series B Preferred prior to the record date for determining the Teletouch
stockholders entitled to vote or consent with respect to the approval and
adoption of the Merger Agreement and the Merger. In addition, each Voting
Party agreed not to initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
directly or indirectly, any inquiries or the making of any proposal or offer
relating to, or that may reasonably be expected to lead to, any competing or
alternate transaction to the Merger. The foregoing summary is qualified in its
entirety by reference to the Voting Agreement, a copy of which is attached
hereto as EXHIBIT 1.
THE MERGER AGREEMENT. Pursuant to the Merger Agreement, Teletouch will
be merged with and into Merger Sub, which shall continue as the surviving
corporation of the Merger. The name of the surviving corporation shall be
"Teletouch Communications, Inc."
MERGER CONSIDERATION. The Merger Agreement provides that upon
consummation of the Merger, (i) each share of Teletouch Common Stock shall be
converted into the right to receive a specified number of shares of ProNet
common stock, par value $.01 per share ("ProNet Common Stock"), (ii) each
share of Series B Preferred shall be converted into the right to receive a
specified number of shares of ProNet Common Stock, and (iii) each share of
Series A Preferred shall be converted into the right to receive cash in the
amount of $1,000 per share plus all accrued but unpaid dividends on such share
as of July 31, 1996.
Pursuant to the terms of the Merger Agreement, each share of Teletouch
Common Stock, other than shares of Teletouch Common Stock held by certain
specified parties, including Teletouch's principal stockholder, executive
officers and directors (the "Affiliated Stockholders"), will be converted
into the right to receive shares of ProNet Common Stock having a value equal
to the greater of (i) the number of shares of ProNet Common Stock to be
received by the Affiliated Stockholders (as provided below) or (ii) $5.50.
The Merger Agreement provides that each share of Teletouch Common Stock held
by the Affiliated Stockholders shall be converted into the right to receive
that fraction of one share of ProNet Common Stock equal to the quotient (the
"Affiliated Stockholder Common Stock Exchange Ratio") obtained by dividing
$5.00 by the average closing price of the ProNet Common Stock for the 20
trading days beginning 22 trading days prior to the
Page 4 of 11 Pages
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scheduled closing of the Merger (the "Average Closing Price"); PROVIDED,
HOWEVER, that if the Average Closing Price is greater than $26.94, then the
Affiliated Stockholder Common Stock Exchange Ratio shall be 0.1856; and PROVIDED
FURTHER, that if the Average Closing Price is less than $24.37, then the
Affiliated Stockholder Common Stock Exchange Ratio shall be 0.20517. The
Merger Agreement also provides that Teletouch has the right to terminate the
Merger Agreement if the Average Closing Price is less than $20.75; PROVIDED,
HOWEVER, that ProNet shall have the option to prevent such termination by
providing additional shares of ProNet Common Stock so that the Affiliated
Stockholder Common Stock Exchange Ratio shall be equal to the quotient
obtained by dividing $4.26 by the Average Closing Price.
Pursuant to the terms of the Merger Agreement, upon the closing of the
Merger, each share of Series B Preferred will be converted into the right to
receive shares of ProNet Common Stock having a value equal to six times the
number of shares of ProNet Common Stock issuable upon the conversion of a
share of Teletouch Common Stock held by an Affiliated Stockholder.
TELETOUCH COVENANTS. Pursuant to the Merger Agreement, Teletouch has
agreed to take or perform certain actions during the period between the signing
of the Merger Agreement and the earlier to occur of the closing of the Merger or
the termination of the Merger Agreement including, without limitation, (i)
operating its business in the usual and ordinary course, (ii) preserving its
business organization substantially intact, (iii) maintaining its properties
and assets, (iv) keeping its insurance and bonds in full force and effect,
(v) promptly notifying ProNet of any material change in the condition of
Teletouch's business, properties, assets or liabilities and (vi) terminating
any negotiations with any third parties regarding a merger or consolidation with
Teletouch. In addition, Teletouch has agreed not to (i) change the level of
compensation to its directors, officers and employees, other than in the
ordinary course, (ii) declare or pay any dividend or make any other
distribution in respect of outstanding shares of capital stock, (iii) redeem,
purchase or otherwise acquire any shares of its capital stock, (iv) sell,
grant, award, deliver or limit the voting rights of any of its capital stock,
(v) acquire or agree to acquire any business, except as previously disclosed
to ProNet, (vi) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of any of its assets except in the ordinary course of
business, (vii) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, directly or indirectly, any inquiries or the making of any
proposal or offer relating to, or that may reasonably be expected to lead to,
a merger, consolidation or similar transaction with Teletouch, (viii) release
any third party from its obligations under any existing standstill agreement
relating to a merger or consolidation with Teletouch, (ix) amend its
Certificate of Incorporation or its bylaws, (x) change any of its significant
accounting policies or (xi) incur any obligation for borrowed money which
would, when aggregated with the Company's other indebtedness then outstanding
(including the liquidation preference of and accrued dividends on the Series
A Preferred and the principal of and accrued interest on Teletouch's 14%
Junior Subordinated Notes and the amount of any prepayment penalties to be
paid in respect of such indebtedness as a result of the completion of the
transactions contemplated by the Merger Agreement), exceed $110 million.
Page 5 of 11 Pages
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PRONET COVENANTS. Pursuant to the Merger Agreement, ProNet has agreed to
take or perform certain actions during the period between the signing of the
Merger Agreement and the earlier to occur of the closing of the Merger or the
termination of the Merger Agreement including, without limitation, (i)
operating its business in the usual and ordinary course, (ii) preserving its
business organization substantially intact, (iii) maintaining its properties
and assets, (iv) keeping its insurance and bonds in full force and effect,
(v) promptly notifying Teletouch of any material change in the condition of
its business, properties, assets or liabilities, (vi) furnishing Teletouch
with a firm commitment letter or letters regarding the financing necessary to
consummate the transactions contemplated by the Merger Agreement, (vii)
consummating the transactions contemplated by the commitment letters, to the
extent necessary to consummate the Merger, (viii) filing all tax returns
required to be filed prior to the closing date and (ix) paying in full the
principal amounts then outstanding with respect to the $10,000,000 in
aggregate principal amount of Teletouch's 14% Junior Subordinated Notes. In
addition, ProNet has covenanted not to (i) knowingly take any action that would
result in a failure to maintain the eligibility of the ProNet Common Stock
for quotation on the Nasdaq National Market, (ii) amend its Certificate of
Incorporation or bylaws in a manner inconsistent with the terms of the Merger
Agreement or that is likely to delay the completion of the transactions
contemplated thereby, (iii) declare or pay any dividend or make any other
distribution in respect of outstanding shares of capital stock, (iv) redeem,
purchase or otherwise acquire any shares of its capital stock, (v) sell,
lease, exchange, mortgage, pledge, transfer or otherwise dispose of any of
its assets except in the ordinary course of business or (vi) acquire or agree
to acquire any business, except as previously disclosed to Teletouch.
CLOSING CONDITIONS. The obligations of ProNet and Teletouch to
consummate the Merger are subject to the satisfaction or waiver of certain
conditions, including without limitation, (i) declaration of effectiveness of
the registration statement relating to the Merger Agreement (the "Registration
Statement") by the Securities and Exchange Commission, (ii) approval of the
Merger and the Merger Agreement by Teletouch's and ProNet's stockholders,
(iii) the absence of any governmental order prohibiting consummation of the
Merger, (iv) expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (v) approval
of the applications for transfer to ProNet of the Federal Communications
Commission licenses held by Teletouch and (vi) approval for quotation on the
Nasdaq Stock Market of the shares of ProNet Common Stock to be issued in
the Merger.
TERMINATION. The Merger Agreement may be terminated under certain
circumstances, including without limitation, (i) by mutual written consent of
the parties, (ii) by ProNet, if any representation or warranty of Teletouch
was not correct in any material respect at the time it was made or upon a
material breach of any covenant or agreement on the part of Teletouch, (iii)
by Teletouch, if any representation or warranty of ProNet was not correct in
any material respect at the time it was made or upon a material breach of any
covenant or agreement on the part of ProNet, (iv) by either party if there
exists a final and nonappealable governmental order preventing consummation
of the Merger, (v) by Teletouch, if the ProNet stockholders do not approve
the Merger and the Merger Agreement, (vi) by either party if the Teletouch
stockholders do not approve
Page 6 of 11 Pages
<PAGE>
the Merger and the Merger Agreement, (vii) by ProNet, if the board of
directors of Teletouch changes its recommendation of the Merger or if a
tender offer or exchange offer for outstanding shares of Teletouch Common
Stock is commenced and the board of directors of Teletouch does not recommend
that the stockholders not tender their shares in such tender offer, (viii) by
Teletouch, if the board of directors of ProNet changes its recommendation of
the Merger, (ix) by Teletouch, if ProNet Common Stock is trading below a
certain level, as specified in the Merger Agreement (provided, however, that
in such event ProNet has the option to block Teletouch's termination of the
Merger Agreement by providing additional shares of ProNet Common Stock so
that the Affiliated Stockholder Common Stock Exchange Ratio shall be equal to
the quotient obtained by dividing $4.26 by the Average Closing Price), (x) by
Teletouch, if ProNet fails to file the Registration Statement by June 15, 1996,
(xi) by Teletouch, if ProNet fails to mail the proxy statement/prospectus
relating to the Merger Agreement to Teletouch's and ProNet's stockholders
within five days after the Securities and Exchange Commission declares the
Registration Statement effective, (xii) by Teletouch before such proxy
statement/prospectus is placed in the mail, if there occurs a material
adverse change in the business of ProNet, (xiii) by ProNet before such proxy
statement/prospectus is placed in the mail, if there occurs a material
adverse change in the business of Teletouch, (xiv) by Teletouch, if ProNet
refuses to consummate the Merger on the second business day after all of the
closing conditions set forth in the Merger Agreement have been satisfied or
waived or (xv) by ProNet, if Teletouch refuses to consummate the Merger on
the second business day after all of the closing conditions set forth in the
Merger Agreement have been satisfied or waived. The foregoing summary is
qualified in its entirety by reference to the Merger Agreement, a copy of
which is attached hereto as EXHIBIT 2.
Upon the closing of the Merger, Teletouch Common Stock will cease to be
authorized to be quoted on the SmallCap Market of the Nasdaq Stock Market and
will be eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a)(b) The Voting Parties have agreed with ProNet to vote an aggregate
of 7,292,647 shares of Teletouch Common Stock (representing approximately
70.5% of Teletouch Common Stock assuming exercise of all Teletouch Common
Stock warrants held by the Voting Parties) in favor of the Merger Agreement.
3,991,260 of such shares of Teletouch Common Stock are not currently outstanding
but are issuable upon the exercise of Warrants that certain of the Voting
Parties have agreed to exercise prior to the record date for determining
Teletouch stockholders entitled to vote or consent with respect to approval and
doption of the Merger Agreement and the Merger. The following table sets forth
the number of shares of Teletouch Common Stock, and warrants exercisable for
Teletouch Common Stock, held by the Voting Parties:
Page 7 of 11 Pages
<PAGE>
TELETOUCH COMMON
TELETOUCH COMMON STOCK STOCK WARRANTS
---------------------- --------------
CIVC -- 3,991,260
CIVC Partners I 443,473 --
GM Holdings, L.L.C. 607,914 --
Rainbow Resources, Inc. 1,800,000 --
Robert M. McMurrey -- --
G. David Higginbotham 450,000 --
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3,301,387 3,991,260
--------- ---------
--------- ---------
ProNet disclaims beneficial ownership of all of the shares of Teletouch
Common Stock that are subject to the Voting Agreement.
(c) Except as set forth herein, ProNet has not engaged in any
transaction with respect to Teletouch Common Stock during the past 60 days.
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
VOTING AGREEMENT. See the description set forth in Item 4 above.
MERGER AGREEMENT. See the description set forth in Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 1 Voting Agreement by and among ProNet Inc. and Continental
Illinois Venture Corporation, CIVC Partners I, GM Holdings,
LLC, Rainbow Resources, Inc., Robert M. McMurrey and
G. David Higginbotham, dated as of April 15, 1996
EXHIBIT 2 Agreement and Plan of Merger by and among ProNet Inc.,
ProNet Subsidiary, Inc. and Teletouch Communications, Inc.,
dated as of April 15, 1996
EXHIBIT 3 Amended and Restated Credit Agreement dated February 9,
1995, by and among ProNet Inc., The First National Bank of
Chicago, as Agent and the Lenders party thereto (filed
as an exhibit to ProNet Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference)
EXHIBIT 4 Waiver, Consent and Amendment No. 1 dated as of June 12,
1995, by and among ProNet Inc., The First National Bank of
Chicago, as Agent, and the Lenders party thereto (filed
as an exhibit to ProNet Inc.'s Registration Statement on
Form S-4 (File No. 33-60925) Filed July 7, 1995, and
incorporated herein by reference)
Page 8 of 11 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: April 26, 1996 PRONET INC.
By: /s/ Mark A. Solls
-------------------------------------
Mark A. Solls
Vice President and General Counsel
Page 9 of 11 Pages
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SCHEDULE 1
CERTAIN INFORMATION REGARDING EXECUTIVE OFFICERS
AND DIRECTORS OF PRONET INC.
<TABLE>
<CAPTION>
NAME AND POSITION BUSINESS ADDRESS PRESENT OCCUPATION
----------------- ---------------- ------------------
<S> <C> <C>
Jackie R. Kimzey, Chairman, Chief Executive 6340 LBJ Freeway
Officer and Director Dallas, Texas 75240
David J. Vucina, President, Chief Operating 6340 LBJ Freeway
Officer and Director Dallas, Texas 75240
Jan E. Gaulding, Senior Vice President, 6340 LBJ Freeway
Treasurer and Chief Financial Officer Dallas, Texas 75240
Jeffery A. Owens, Senior Vice President and 6340 LBJ Freeway
Chief Technology Officer Dallas, Texas 75240
Mark A. Solls, Vice President, Secretary and 6340 LBJ Freeway
General Counsel Dallas, Texas 75240
Bo Bernard, Executive Vice President 6340 LBJ Freeway
Dallas, Texas 75240
Thomas V. Bruns, Director 300 Technology Park Chairman of the Board,
Lake Mary, Florida 32746 Zaun Equipment Company,
a power equipment distribution
company
Harvey B. Cash, Director 13455 Noel Road General Partner, Berry
Suite 1670 Cash Southwest
Dallas, Texas 75240 Partnership, a venture
capital partnership
Edward E. Jungerman, Director 12221 Merit Drive President, Impulse
Suite 1150 Telecommunications
Dallas, Texas 75251 Corporation, a strategic
telecommunications consulting
firm
Mark C. Masur, Director 5949 Sherry Lane General Partner,
Suite 1755 O'Donnell & Masur, a
Dallas, Texas 75225 venture capital partnership
</TABLE>
Page 10 of 11 Pages
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EXHIBIT INDEX
Page
No.
---
EXHIBIT 1 Voting Agreement by and among ProNet Inc. and Continental
Illinois Venture Corporation, CIVC Partners I, GM Holdings,
LLC, Rainbow Resources, Inc., Robert M. McMurrey and G.
David Higginbotham, dated as of April 15, 1996
EXHIBIT 2 Agreement and Plan of Merger by and among ProNet Inc.,
ProNet Subsidiary, Inc. and Teletouch Communications, Inc.,
dated as of April 15, 1996
EXHIBIT 3 Amended and Restated Credit Agreement dated February 9,
1995, by and among ProNet Inc., The First National Bank of
Chicago, as Agent and the Lenders party thereto (filed
as an exhibit to ProNet Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1994, and incorporated
herein by reference)
EXHIBIT 4 Waiver, Consent and Amendment No. 1 dated as of June 12,
1995, by and among ProNet Inc., The First National Bank of
Chicago, as Agent, and the Lenders party thereto (filed
as an exhibit to ProNet Inc.'s Registration Statement on
Form S-4 (File No. 33-60925) Filed July 7, 1995, and
incorporated herein by reference)
Page 11 of 11 Pages
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VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 15, 1996 (this "AGREEMENT"), by and
among ProNet Inc., a Delaware corporation ("PRONET"), on the one hand, and
Continental Illinois Venture Corporation, a Delaware corporation, CIVC
Partners I, a Delaware partnership, GM Holdings, LLC, a Tennessee limited
liability company, Rainbow Resources, Inc., a Texas corporation ("RAINBOW"),
Robert M. McMurrey ("MCMURREY") and G. David Higginbotham (collectively, the
"STOCKHOLDERS"), on the other hand.
WHEREAS, concurrently herewith, ProNet, ProNet Subsidiary, Inc., a
Delaware corporation and a wholly-owned subsidiary of ProNet ("MERGER SUB"),
and Teletouch Communications, Inc., a Delaware corporation (the "COMPANY"),
are entering into that certain Agreement and Plan of Merger of even date
herewith (the "MERGER AGREEMENT"), providing for the merger (the "MERGER") of
the Company with and into Merger Sub (capitalized terms used without
definition herein having the meanings ascribed thereto in the Merger
Agreement);
WHEREAS, the Stockholders are the beneficial owners of the number of (a)
shares of Company Common Stock, Company Series A Preferred Stock and Company
Series B Preferred Stock (the "COMPANY SHARES") set forth in Schedule I
hereto and (b) Common Stock Warrants and Series B Preferred Stock Warrants
(together with the Company Shares, the "Company Securities") set forth in
Schedule I hereto;
WHEREAS, approval of the Merger Agreement by the Company's stockholders
is a condition to the consummation of the Merger; and
WHEREAS, the Stockholders fully support the Merger and, in order to
encourage ProNet to enter into the Merger Agreement with the Company, the
Stockholders are willing to enter into certain arrangements with respect to
the Company Securities owned by them.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
VOTING
SECTION 1.1 AGREEMENT TO VOTE OR CONSENT. Each Stockholder hereby
agrees to attend the Company Stockholders' Meeting, in person or by proxy,
and to vote, or cause to be voted (or, if the stockholders of the Company act
by written consent, to consent in writing, or cause to consent in writing,
with respect to) all Company Securities, and any other voting securities of
the Company, whether issued heretofore or hereafter, that such Stockholder
owns or has the right to vote or consent with respect to (a) for approval
and adoption of the Merger Agreement and the Merger, such Agreement to vote
to apply also to any adjournment or adjournments of the Company Stockholders'
<PAGE>
Meeting, and (b) against any proposal or other matter that may interfere or
be inconsistent with the Merger (including, without limitation, a Competing
Transaction).
SECTION 1.2 REVOCATION OF PROXIES AND CONSENTS. To the extent
inconsistent with Section 1.1 hereof, each Stockholder hereby revokes any and
all previous proxies or written consents with respect to such Stockholder's
Company Shares or any other voting securities of the Company.
SECTION 1.3 STOCKHOLDERS' SUPPORT OF THE MERGER. From the date hereof
until the first to occur of the Closing or the termination of the Merger
Agreement:
(a) No Stockholder or affiliate or associate thereof, other than the
Company and its subsidiaries (collectively with respect to each
Stockholder, a "STOCKHOLDER GROUP"), will, directly or indirectly, sell,
transfer, pledge or otherwise dispose of, or grant a proxy with respect to,
any Company Securities to any person other than ProNet or its designee, or
grant an option with respect to any of the foregoing, or enter into any
other agreement or arrangement with respect to any of the foregoing (it
being understood that Rainbow has previously pledged 175,000 shares of
Company Common Stock to secure certain indebtedness (the "McMurrey
Pledge")).
(b) Each Stockholder agrees to exercise (i) all of such Stockholder's
Series B Preferred Stock Warrants prior to the Closing of the Merger and
(ii) that number of Common Stock Warrants set forth opposite such
Stockholder's name on Schedule I hereto prior to the record date for
determining the Company Stockholders entitled to vote or consent with
respect to the approval and adoption of the Merger Agreement and the
Merger. The Stockholders each represent, warrant and agree that the number
of shares of Company Common Stock subject to this Agreement together with
the number of shares of Company Common Stock issuable upon the exercise of
the Common Stock Warrants identified in clause (ii) of the preceding
sentence shall represent at least a majority of the outstanding shares of
Company Common Stock that are or may become entitled to vote or consent on
the Merger Agreement and the Merger.
(c) No Stockholder or any other member of any Stockholder Group will
initiate, solicit or encourage (including by way of furnishing information
or assistance), or take any other action to facilitate, directly or
indirectly, any inquiries or the making of any proposal or offer relating
to, or that may reasonably be expected to lead to, any Competing
Transaction, or enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to, or endorse, any Competing Transaction, or
authorize or permit any of the officers, directors, employees or agents of
any Stockholder or any member of any Stockholder Group or any investment
banker, financial advisor, attorney, accountant or other representative
retained by any Stockholder or any other member of any Stockholder Group to
take any such action. Each Stockholder shall immediately notify ProNet of
all relevant terms of any such inquiries or proposals received by such
Stockholder or any other member of any Stockholder Group or by any such
officer, director, employee, agent, investment banker, financial advisor,
attorney, accountant or other representative relating to any of such
matters and, if such inquiry or proposal is in writing, such Stockholder
shall immediately deliver or cause to be delivered
2
<PAGE>
to ProNet a copy of such inquiry or proposal; provided, however, that
nothing contained in this subsection (c) shall prohibit any Stockholder or
any officer, director, employee or agent of any Stockholder who is a member
of the Company's Board of Directors in such capacity from complying with
Rule 14e-2 or Rule 14d-9 promulgated under the Exchange Act.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
STOCKHOLDERS. Each Stockholder hereby represents and warrants to, and
covenants and agrees with, ProNet as follows:
(a) other than the Company Securities set forth by such Stockholder's
name in Schedule I hereto and options granted to McMurrey and G. David
Higginbotham under the Option Plan and to be assumed by ProNet under the
Merger Agreement, such Stockholder does not own of record or beneficially,
or have any interest in, any shares of capital stock of the Company, any
securities exercisable for, convertible into or exchangeable for capital
stock of the Company, or any other right to acquire any such capital stock
or other securities;
(b) such Stockholder has good and marketable title to all Company
Securities, free and clear of all liens, claims, charges and encumbrances
other than those that arise under the McMurrey Pledge;
(c) such Stockholder will execute and deliver to ProNet a letter in
the form of Exhibit A to the Merger Agreement;
(d) this Agreement has been duly authorized by all necessary action
on the part of such Stockholder, has been duly executed by such Stockholder
and constitutes a valid and binding agreement of such Stockholder
enforceable against such stockholder in accordance with its 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; and
(e) neither the execution and delivery of this Agreement by such
Stockholder nor the consummation of the transactions contemplated hereby
will (i) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
other person, except in connection with the HSR Act, the Exchange Act or
the Communications Act, or (ii) conflict with or result in any breach or
violation of any provision of any charter, by-law or agreement to which
such stockholder is a party or by which it or he is bound.
3
<PAGE>
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF PRONET. ProNet
represents and warrants to each Stockholder as follows:
(a) this Agreement has been duly authorized by all necessary
corporate action on the part of ProNet, has been duly executed by a duly
authorized officer of ProNet, and constitutes a valid and binding agreement
of ProNet enforceable against ProNet in accordance with its terms; and
(b) neither the execution and delivery of this Agreement by ProNet
nor the consummation of the transactions contemplated hereby will (i)
require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority except in
connection with the HSR Act, the Exchange Act or the Communications Act, or
(ii) conflict with the Certificate of Incorporation or By-laws of ProNet or
any material agreement to which it is a party or by which it is bound.
SECTION 2.3 WAIVERS OF APPRAISAL RIGHTS. Each Stockholder hereby
irrevocably waives any appraisal rights such Stockholder may have pursuant to
Section 262 of Delaware Law by reason of the Merger and agrees that such
Stockholder shall not attempt to perfect any such appraisal right pursuant to
such Section 262.
SECTION 2.4 FURTHER ASSURANCES. Each party hereto shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out
and comply with all of such party's obligations under this Agreement,
including without limitation any actions reasonably requested by ProNet in
connection with obtaining any required consents or approvals to the actions
contemplated hereby under the HSR Act, the Exchange Act or the Communications
Act. Without limiting the generality of the foregoing, none of the parties
hereto shall enter into any agreement or arrangement (or alter, amend or
terminate any existing agreement or arrangement) if such action would
materially impair the ability of any party to effectuate, carry out or comply
with all of the terms of this Agreement.
ARTICLE III
GENERAL
SECTION 3.1 EFFECTIVENESS; EXPIRATION. The performance of the
obligations of the parties contained herein shall be subject to the prior
receipt of any required consent or approval under the Communications Act or
the HSR Act, except for the obligations set forth in Section 1.3 (other than
clause (b) thereof) and Section 2.4 hereof which Sections shall be effective
upon the execution of this Agreement.
SECTION 3.2 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, mailed by, nationally
recognized overnight courier service, registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like changes
of address) or sent by electronic transmission to the telecopier number
specified below:
4
<PAGE>
(a) If to either of the ProNet Companies, to:
ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Chief Executive Officer
Telecopier No.: (214) 774-0651
with a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attention: Jeffrey A. Chapman
Telecopier No.: (214) 220-7716
(b) If to the Stockholders, to the address set forth opposite such
Stockholder's name on the signature pages hereto:
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C.
Telecopier No.: (312) 861-2200
SECTION 3.3 AMENDMENTS. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by ProNet and each Stockholder.
SECTION 3.4 SUCCESSORS AND ASSIGNS. Subject in all respects to
Section 3.1 hereof, this Agreement shall be binding upon and shall inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns, including without limitation in the case of any
corporate party hereto any corporate successor by merger or otherwise, and in
the case of any individual party hereto any trustee, executor, heir, legatee
or personal representative succeeding to the ownership of such party's shares
of Company Common Stock, Company Series A Preferred Stock, Company Series B
Preferred Stock or other securities subject to this Agreement.
Notwithstanding any transfer of such shares, the transferor shall remain
liable for the performance of all obligations of the transferor under this
Agreement.
SECTION 3.5 ENTIRE AGREEMENT. This Agreement embodies the entire
Agreement and understanding among the parties hereto relating to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter. There are no representations,
5
<PAGE>
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement.
SECTION 3.6 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 3.7 SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the failure of any party to this Agreement to perform such party's
agreement and covenants hereunder will cause irreparable injury to the other
parties to this Agreement for which damages, even if available, will not be
an adequate remedy. Accordingly, each of the parties hereto hereby consents
to the issuance of injunctive relief by any court of competent jurisdiction
to compel performance of any party's obligations and to the granting by any
such court of the remedy of specific performance of such party's obligations
hereunder.
SECTION 3.8 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are in addition to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 3.9 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of and shall not be enforceable by any person
or entity who or which is not a party hereto.
SECTION 3.10 GOVERNING LAW. This Agreement and all disputes hereunder
shall be governed by and construed and enforced in accordance with the laws
of the State of Delaware.
SECTION 3.11 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 3.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
SECTION 3.13 EXPENSES. ProNet and each Stockholder shall bear their
own expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
6
<PAGE>
SECTION 3.14 CAPACITY. The parties hereto acknowledge and agree that
the obligations of McMurrey and G. David Higginbotham hereunder are
obligations of such Stockholders in their respective capacities as
stockholders of the Company and shall not obligate such Stockholders with
respect to actions to be taken by any of such Stockholders as a director or
officer of the Company.
SECTION 3.15 TERMINATION. This Agreement shall terminate upon
termination of the Merger Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
PRONET INC.
By: /s/ Jackie R. Kimzey
Name: Jackie R. Kimzey
Title: Chairman and Chief Executive Officer
8
<PAGE>
STOCKHOLDERS:
CONTINENTAL ILLINOIS VENTURE
CORPORATION
Address: 231 S. LaSalle St. By: /s/ Marcus Wedner
Chicago, IL 60697 Name: Marcus Wedner
Attn: Marcus D. Wedner Its: Managing Director
Telecopier No.: (312) 987-0887
CIVC PARTNERS I
Address: 231 S. LaSalle St. By: /s/ Marcus Wedner
Chicago, IL 60697 Name: Marcus Wedner
Attn: Marcus D. Wedner Its: General Partner
Telecopier No.: (312) 987-0887
RAINBOW RESOURCES, INC.
Address: c/o Robert M. McMurrey By: /s/ Robert M. McMurrey
4034 Piping Rock Name: Robert M. McMurrey
Houston, Texas 77027 Its: President
Telecopier No.: (713) 877-1935
GM HOLDINGS, LLC
Address: ______________________________ By: ______________________________
______________________________ Name:______________________________
______________________________ Its: ______________________________
Telecopier No.:_______________
Address: 4034 Piping Rock /s/ Robert M. McMurrey
Houston, Texas 77027 Robert M. McMurrey
Telecopier No.: (713) 877-1935
9
<PAGE>
STOCKHOLDERS:
CONTINENTAL ILLINOIS VENTURE
CORPORATION
Address: ______________________________ By: ______________________________
______________________________ Name:______________________________
______________________________ Its: ______________________________
Telecopier No.:_______________
CIVC PARTNERS I
Address: ______________________________ By: ______________________________
______________________________ Name:______________________________
______________________________ Its: ______________________________
Telecopier No.:_______________
RAINBOW RESOURCES, INC.
Address: ______________________________ By: ______________________________
______________________________ Name:______________________________
______________________________ Its: ______________________________
Telecopier No.:_______________
GM HOLDINGS, LLC
Address: 201 Fourth Ave. No. By: /s/ Carl Grimstad
Nashville, TN 37219 Name: Carl Grimstad
Telecopier No.: 615-244-7646 Its: Manager
Address: ______________________________ ___________________________________
______________________________ Robert M. McMurrey
______________________________
Telecopier No.:_______________
9
<PAGE>
Address: 3122 Oleander Street /s/ G. David Higginbotham
Tyler, Texas 75707 G. David Higginbotham
Telecopier No.: (903) 561-7832
10
<PAGE>
SPOUSAL CONSENT
By executing this Agreement, Dianne Higginbotham, G. David Higginbotham's
spouse agrees (i) to be bound in all respects by the terms hereof with
respect to the Company Shares to the same extent as G. David Higginbotham and
(ii) to bind her community property interest, if any, in such Company Shares.
/s/ Dianne Higginbotham
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Company Company
Company Company Company Series B
Company Series A Series B Common Preferred
Common Preferred Preferred Stock Stock
Stock Stock Stock Warrants Warrants
------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
CIVC -- 11,818 -- 3,991,260 486,259
CIVC Partners I 443,473 1,313 54,029 -- --
GM Holdings, L.L.C. 607,914 1,800 -- -- 74,063
Rainbow Resources, Inc. 1,800,000 -- -- -- --
Robert M. McMurrey -- -- -- -- --
G. David Higginbotham 450,000 -- -- -- --
--------- ------ ------ --------- -------
3,301,387 14,931 54,029 3,991,260 560,322
--------- ------ ------ --------- -------
--------- ------ ------ --------- -------
</TABLE>
12
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PRONET INC.,
PRONET SUBSIDIARY, INC.
AND
TELETOUCH COMMUNICATIONS, INC.
DATED AS OF APRIL 15, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I. THE MERGER................................................ 1
SECTION 1.01. The Merger......................................... 1
SECTION 1.02. The Closing........................................ 2
SECTION 1.03. Effective Time..................................... 2
SECTION 1.04. Effect of the Merger............................... 2
SECTION 1.05. Certificate of Incorporation; Bylaws............... 2
SECTION 1.06. Directors and Officers............................. 2
ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES........ 2
SECTION 2.01. Merger Consideration; Conversion and Cancellation
of Securities..................................... 2
SECTION 2.02. Payment for Company Common Stock; Surrender of
Certificates...................................... 5
SECTION 2.03. Stock Transfer Books............................... 8
SECTION 2.04. Dissenters' Rights................................. 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 9
SECTION 3.01. Organization and Qualification; Subsidiaries....... 9
SECTION 3.02. Certificate of Incorporation and Bylaws............ 9
SECTION 3.03. Capitalization..................................... 10
SECTION 3.04. Authority.......................................... 12
SECTION 3.05. No Conflict; Required Filings and Consents......... 12
SECTION 3.06. Permits; Compliance................................ 13
SECTION 3.07. Reports; Financial Statements...................... 14
SECTION 3.08. Absence of Certain Changes or Events............... 15
SECTION 3.09. Absence of Litigation.............................. 16
SECTION 3.10. Employee Benefit Plans; Labor Matters.............. 16
SECTION 3.11. Taxes.............................................. 17
SECTION 3.12. Affiliates......................................... 18
SECTION 3.13. Certain Business Practices......................... 18
SECTION 3.14. Properties......................................... 18
SECTION 3.15. Intellectual Rights................................ 19
SECTION 3.16. Pagers............................................. 19
SECTION 3.17. Insider Interests.................................. 19
SECTION 3.18. Contracts and Agreements........................... 19
SECTION 3.19. Vote Required...................................... 20
SECTION 3.20. Brokers............................................ 20
SECTION 3.21. Opinion of Financial Advisor....................... 20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PRONET COMPANIES.... 20
SECTION 4.01. Organization and Qualification; Subsidiaries....... 20
-i-
<PAGE>
PAGE
----
SECTION 4.02. Certificate of Incorporation and Bylaws............ 21
SECTION 4.03. Capitalization..................................... 21
SECTION 4.04. Authority.......................................... 23
SECTION 4.05. No Conflict; Required Filings and Consents......... 23
SECTION 4.06. Permits; Compliance................................ 24
SECTION 4.07. Reports; Financial Statements...................... 25
SECTION 4.08. Absence of Certain Changes or Events............... 26
SECTION 4.09. Absence of Litigation.............................. 26
SECTION 4.10. Employee Benefit Plans; Labor Matters.............. 26
SECTION 4.11. Taxes.............................................. 27
SECTION 4.12. Properties......................................... 28
SECTION 4.13. Pagers............................................. 29
SECTION 4.14. Vote Required...................................... 29
SECTION 4.15. Brokers............................................ 29
SECTION 4.16. Opinion of Financial Advisor....................... 29
ARTICLE V. COVENANTS.................................................. 29
SECTION 5.01. Affirmative Covenants of the Company............... 29
SECTION 5.02. Affirmative Covenants of ProNet.................... 30
SECTION 5.03. Negative Covenants of the Company.................. 32
SECTION 5.04. Negative Covenants of ProNet....................... 35
SECTION 5.05. Access and Information............................. 36
ARTICLE VI. ADDITIONAL AGREEMENTS...................................... 37
SECTION 6.01. Presentation to Stockholders....................... 37
SECTION 6.02. Registration Statement; Proxy Statement/Prospectus. 38
SECTION 6.03. Appropriate Action; Consents; Filings.............. 39
SECTION 6.04. Affiliates; Tax Treatment.......................... 41
SECTION 6.05. Public Announcements............................... 41
SECTION 6.06. NASDAQ Listing..................................... 41
SECTION 6.07. State Takeover Statutes............................ 41
SECTION 6.08. Assumption of Obligations to Issue Stock........... 42
SECTION 6.09. Merger Sub......................................... 43
SECTION 6.10. Indemnification and Insurance...................... 43
SECTION 6.11. Comfort Letters.................................... 46
ARTICLE VII. CLOSING CONDITIONS......................................... 47
SECTION 7.01. Conditions to Obligations of Each Party Under
This Agreement.................................... 47
SECTION 7.02. Additional Conditions to Obligations of the
ProNet Companies.................................. 48
SECTION 7.03. Additional Conditions to Obligations of the
Company........................................... 48
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER......................... 49
SECTION 8.01. Termination........................................ 49
SECTION 8.02. Effect of Termination.............................. 52
SECTION 8.03. Amendment.......................................... 52
-ii-
<PAGE>
PAGE
----
SECTION 8.04. Waiver............................................. 52
SECTION 8.05. Fees, Expenses and Other Payments.................. 52
ARTICLE IX. GENERAL PROVISIONS......................................... 54
SECTION 9.01. Effectiveness of Representations, Warranties
and Agreements.................................... 54
SECTION 9.02. Notices............................................ 55
SECTION 9.03. Certain Definitions................................ 56
SECTION 9.04. Headings........................................... 57
SECTION 9.05. Severability....................................... 57
SECTION 9.06. Entire Agreement................................... 58
SECTION 9.07. Assignment......................................... 58
SECTION 9.08. Parties in Interest................................ 58
SECTION 9.09. Failure or Indulgence Not Waiver; Remedies
Cumulative........................................ 58
SECTION 9.10. Governing Law...................................... 58
SECTION 9.11. Counterparts....................................... 58
SECTION 9.12. Specific Performance............................... 58
EXHIBITS
Exhibit A Form of Company Affiliate Letter
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 15, 1996 (this
"AGREEMENT"), is by and among PRONET INC., a Delaware corporation ("PRONET"),
PRONET SUBSIDIARY, INC., a Delaware corporation and direct wholly owned
subsidiary of ProNet ("MERGER SUB"), and TELETOUCH COMMUNICATIONS, INC., a
Delaware corporation (the "COMPANY"). ProNet and Merger Sub are sometimes
collectively referred to herein as the "PRONET COMPANIES."
WHEREAS, the Company, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the
State of Delaware ("DELAWARE LAW"), will merge with and into Merger Sub (the
"MERGER");
WHEREAS, the Board of Directors of the Company has determined that the
Merger is consistent with and in furtherance of the long-term business
strategy of the Company and is fair to, and in the best interests of, the
Company and its stockholders, has approved and adopted this Agreement and the
transactions contemplated hereby, and has recommended approval and adoption
of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of ProNet has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
ProNet and is fair to, and in the best interests of, ProNet and its
stockholders, has approved and adopted this Agreement and the transactions
contemplated hereby, and has recommended approval and adoption of this
Agreement by the stockholders of ProNet;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted
this Agreement and the transactions contemplated hereby, and has recommended
approval and adoption of this Agreement by its stockholder; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization under the provisions of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined in Section 1.03 of this Agreement), the Company
shall be merged with and into Merger Sub. As a result of the Merger, the
separate corporate existence of the Company shall cease and Merger Sub shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). The name of the Surviving Corporation shall be "TELETOUCH
COMMUNICATIONS, INC."
<PAGE>
SECTION 1.02. THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "CLOSING") shall take place (a) at
the offices of Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas, at 9:00 a.m., local time, on the second business day
immediately following the day on which the last to be fulfilled or waived of
the conditions set forth in Article VII shall be fulfilled or waived in
accordance herewith (other than conditions with respect to actions the
respective parties hereto will take at the Closing), subject to the
provisions of Section 8.01(i) hereof, or (b) at such other time, date or
place as ProNet and the Company may agree. The date on which the Closing
occurs is hereinafter referred to as the "CLOSING DATE."
SECTION 1.03. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in
Article VII of this Agreement, the parties hereto shall cause the Merger to
be consummated by filing a Certificate of Merger with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time
of the completion of such filing being the "EFFECTIVE TIME").
SECTION 1.04. EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, obligations, liabilities and duties of each of
Merger Sub and the Company shall become the debts, obligations, liabilities
and duties of the Surviving Corporation.
SECTION 1.05. CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
Time, the Certificate of Incorporation and the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation.
SECTION 1.06. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and Bylaws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE II.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF
SECURITIES. At the Effective Time, by virtue of the Merger and without any
action on the part of the ProNet Companies, the Company or the holders of any
of the Company's securities:
2
<PAGE>
(a) Subject to the other provisions of this Article II, each share
of common stock, par value $.001 per share, of the Company ("COMPANY COMMON
STOCK") issued and outstanding immediately prior to the Effective Time
(excluding any Company Common Stock described in Section 2.01(g) of this
Agreement) and held of record or beneficially by the entities and
individuals listed on Annex A attached hereto (the "AFFILIATED
STOCKHOLDERS") shall be converted into the right to receive that fraction
of one fully paid and nonassessable share of common stock, par value $.01
per share, of ProNet ("PRONET COMMON STOCK") equal to the quotient obtained
by dividing $5.00 by the Average Closing Price (as hereinafter defined)
(such quotient referred to herein as the "AFFILIATED STOCKHOLDER COMMON
STOCK EXCHANGE RATIO"); PROVIDED, HOWEVER, that if the Average Closing
Price is greater than $26.94, then the Affiliated Stockholder Common Stock
Exchange Ratio shall be 0.1856; PROVIDED FURTHER, that if the Average
Closing Price is less than $24.37 then the Affiliated Stockholder Common
Stock Exchange Ratio shall be 0.20517; and PROVIDED FURTHER, that if ProNet
exercises its Termination Blocking Option (as defined in Section 8.01(i)
hereof), then the Affiliated Stockholder Common Stock Exchange Ratio shall
be determined as provided in Section 8.01(i) hereof. "AVERAGE CLOSING
PRICE" means the average closing transaction price of the ProNet Common
Stock on The Nasdaq Stock Market (or such other quotation system or
securities exchange on which the ProNet Common Stock is then quoted or
listed) as reported by the Wall Street Journal for the 20 consecutive
trading days beginning 22 trading days prior to the scheduled Closing Date
as provided in Section 1.02 hereof. Holders of the shares of ProNet Common
Stock issued in the Merger shall also have the right to receive for each
share of ProNet Common Stock so issued one associated Series A Junior
Participating Preferred Stock purchase right (a "RIGHT") in accordance with
the Rights Agreement, dated as of April 5, 1995, between ProNet and
Chemical Shareholder Services Group, Inc. References herein to the shares
of ProNet Common Stock issuable in the Merger shall be deemed to include
the associated Rights.
(b) Subject to the other provisions of this Article II, each share of
Company Common Stock (excluding any Company Common Stock described in
Section 2.01(g) of this Agreement), other than shares of Company Common
Stock held of record or beneficially by the Affiliated Stockholders, issued
and outstanding immediately prior to the Effective Time shall be converted
into that number of shares of ProNet Common Stock equal to the greater of
(i) the number of shares of ProNet Common Stock payable to the Affiliated
Stockholders for each share of Company Common Stock under Section 2.01(a)
hereof and (ii) that fraction of one fully paid and nonassessable share of
ProNet Common Stock equal to the quotient obtained by dividing $5.50 by the
Average Closing Price (collectively, the "PUBLIC STOCKHOLDER COMMON STOCK
EXCHANGE RATIO").
(c) Subject to the other provisions of this Article II, each share of
Series A 14% Cumulative Preferred Stock, par value $.001 per share, of the
Company ("COMPANY SERIES A PREFERRED STOCK") issued and outstanding
immediately prior to the Effective Time (excluding any Company Series A
Preferred Stock described in Section 2.01(g) of this Agreement and any
Dissenting Shares as defined in Section 2.04 of this Agreement) shall be
converted into the right to receive cash in the amount of $1,000 per share
plus all accrued
3
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but unpaid dividends on such share as of July 31, 1996 (the "SERIES A
PREFERRED STOCK CONSIDERATION"), without any interest thereon.
(d) Subject to the other provisions of this Article II, each share of
Series B Preferred Stock, par value $.001 per share, of the Company
("COMPANY SERIES B PREFERRED STOCK") issued and outstanding immediately
prior to the Effective Time (excluding any Company Series B Preferred Stock
described in Section 2.01(g) of this Agreement and any Dissenting Shares)
shall be converted into the right to receive that number of fully paid and
nonassessable shares of ProNet Common Stock equal to six times the number
of shares of ProNet Common Stock issuable upon the conversion of a share of
Company Common Stock as provided in Section 2.01(a) of this Agreement (the
"SERIES B PREFERRED STOCK EXCHANGE RATIO").
(e) Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of ProNet Common
Stock, Company Common Stock, Company Series A Preferred Stock or Company
Series B Preferred Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, the Affiliated Stockholder Common Stock Exchange Ratio, the Public
Stockholder Common Stock Exchange Ratio, the Series A Preferred Stock
Consideration and the Series B Preferred Stock Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
(f) As a result of their conversion pursuant to subsections 2.01(a),
(b), (c) and (d) all shares of Company Common Stock, Company Series A
Preferred Stock and Company Series B Preferred Stock shall cease to be
outstanding and shall automatically be canceled and retired. Each
certificate previously evidencing Company Common Stock outstanding
immediately prior to the Effective Time (other than Company Common Stock
described in Section 2.01(g) of this Agreement) ("CONVERTED COMMON SHARES")
shall thereafter represent, subject to Section 2.02(d) of this Agreement,
the right to receive that number of shares of ProNet Common Stock
determined pursuant to the Affiliated Stockholder Common Stock Exchange
Ratio or the Public Stockholder Common Stock Exchange Ratio, as applicable,
and, if applicable, the right to receive cash pursuant to Section 2.02(d)
of this Agreement (the "AFFILIATED STOCKHOLDER COMMON STOCK CONSIDERATION"
and the "PUBLIC STOCKHOLDER COMMON STOCKHOLDER CONSIDERATION,"
respectively, and together, the "COMMON STOCK CONSIDERATION" and, together
with the Series A Preferred Stock Consideration and the Series B Preferred
Stock Consideration (as hereinafter defined), the "MERGER CONSIDERATION").
Each certificate previously evidencing Company Series A Preferred Stock
outstanding immediately prior to the Effective Time (other than Company
Series A Preferred Stock described in Section 2.01(g) of this Agreement and
any Dissenting Shares) (the "CONVERTED SERIES A PREFERRED SHARES") shall
thereafter represent the right to receive cash in an amount equal to the
product obtained by multiplying the number of shares of Company Series A
Preferred Stock represented by such certificate by the Series A Preferred
Stock Consideration. Each certificate previously evidencing Company Series
B Preferred Stock outstanding
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immediately prior to the Effective Time (other than Company Series B
Preferred Stock described in Section 2.01(g) of this Agreement and any
Dissenting Shares) (the "CONVERTED SERIES B PREFERRED SHARES" and,
together with the Converted Common Shares and the Converted Series A
Preferred Shares, the "CONVERTED SHARES") shall thereafter represent,
subject to Section 2.02(d) of this Agreement, the right to receive that
number of shares of ProNet Common Stock determined pursuant to the
Series B Preferred Stock Exchange Ratio and, if applicable, the right
to receive cash pursuant to Section 2.02(d) of this Agreement
(the "SERIES B PREFERRED STOCK CONSIDERATION"). The holders of
certificates previously evidencing Converted Shares shall cease to have any
rights with respect to such Converted Shares except the right to receive
the Merger Consideration applicable thereto and as otherwise provided
herein or by law. Such certificates previously evidencing Converted Common
Shares or Converted Series B Preferred Shares shall be exchanged for
certificates evidencing whole shares of ProNet Common Stock, and
certificates representing Converted Series A Preferred Shares shall be
exchanged for cash, in each case upon the surrender of such certificates in
accordance with the provisions of Section 2.02 of this Agreement. No
fractional shares of ProNet Common Stock shall be issued and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.02(d) of this
Agreement.
(g) Notwithstanding any provision of this Agreement to the contrary,
each share of Company Common Stock, Company Series A Preferred Stock or
Company Series B Preferred Stock held in the treasury of the Company and
each share of Company Common Stock owned by ProNet or any direct or
indirect wholly owned subsidiary of ProNet or of the Company immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(h) Each share of common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding.
SECTION 2.02. PAYMENT FOR COMPANY COMMON STOCK; SURRENDER OF CERTIFICATES.
(a) EXCHANGE FUND. At or prior to the Effective Time, ProNet shall
deposit, or cause to be deposited, with a bank or trust company designated
by ProNet (the "EXCHANGE AGENT"), for the benefit of the holders of
Converted Shares, for exchange in accordance with this Article II, through
the Exchange Agent, (i) certificates evidencing a number of shares of
ProNet Common Stock equal to the product of the Affiliated Stockholder
Common Stock Exchange Ratio multiplied by the number of Converted Common
Shares held of record or beneficially by the Affiliated Stockholders, (ii)
certificates evidencing a number of shares of ProNet Common Stock equal to
the product of the Public Stockholder Common Stock Exchange Ratio
multiplied by the number of Converted Common Shares held of record or
beneficially by stockholders other than the Affiliated Stockholders,
(iii) certificates evidencing a number of shares of ProNet Common Stock
equal to the product of Series B Preferred Stock Exchange Ratio multiplied
by the number of Converted Series B Preferred Shares, (iv) cash in an
amount equal to the product of the Series A Preferred Stock Consideration
multiplied by the number of Converted Series A Preferred Shares, and
(v) cash in an amount sufficient to provide for the payments to be made in
lieu of issuing any
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fractional shares of ProNet Common Stock as provided in Section 2.02(d)
of this Agreement. Additionally, subject to the provisions of subsection
(e) of this Section 2.02, ProNet shall, if and when a payment date has
occurred with respect to a dividend or distribution that has been declared
subsequent to the Effective Time, deposit with the Exchange Agent an amount
in cash (or property of like kind to that which is the subject of such
dividend or distribution) equal to the dividend or distribution per share
of ProNet Common Stock times the number of shares of ProNet Common Stock
evidenced by certificates theretofore representing Converted Common Shares
and certificates theretofore representing Converted Series B Preferred
Shares that have not theretofore been surrendered for exchange in accordance
with this Section 2.02. The certificates and cash (and property, if any)
deposited with the Exchange Agent in accordance with this subsection 2.02(a)
are hereinafter referred to as the "EXCHANGE FUND." The Exchange Agent
shall, pursuant to irrevocable instructions, deliver ProNet Common Stock
(and any dividends or distribution related thereto) and/or cash, as
described above, in exchange for surrendered certificates pursuant to the
terms of this Agreement out of the Exchange Fund.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, ProNet shall cause the Exchange Agent to send to each record holder
of Company Common Stock, Company Series A Preferred Stock and Company
Series B Preferred Stock at the Effective Time (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the certificates theretofore representing Company Common Stock,
Company Series A Preferred Stock or Company Series B Preferred Stock
(collectively, the "CERTIFICATES") shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and contain
such other provisions as ProNet and the Company shall reasonably
determine), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for, in the case of Certificates theretofore
representing shares of Company Common Stock or Certificates theretofore
representing shares of Company Series B Preferred Stock, certificates
representing shares of ProNet Common Stock and, in the case of Certificates
theretofore representing shares of Company Series A Preferred Stock, cash.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, in the case
of Certificates theretofore representing shares of Company Common Stock or
Company Series B Preferred Stock, as the case may be, a certificate
representing that number of whole shares of ProNet Common Stock which such
holder has the right to receive pursuant to the provisions of this Article
II and, in the case of Certificates theretofore representing shares of
Company Series A Preferred Stock, cash in the amount such holder has the
right to receive pursuant to such provisions, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock or Company Series B Preferred Stock which
is not registered in the transfer records of the Company, a certificate
evidencing the proper number of shares of ProNet Common Stock may be issued
to the transferee if the certificate evidencing the Company Common Stock or
Company Series B Preferred Stock, as the case may be, shall be surrendered
to the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered for exchange in accordance with
the provisions of Section 2.02 of this
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Agreement, each Certificate theretofore representing Converted Shares
(other than shares of Company Common Stock, Company Series A Preferred
Stock or Company Series B Preferred Stock to be canceled pursuant to
Section 2.01(g) of this Agreement and any Dissenting Shares) shall from
and after the Effective Time represent for all purposes only the right
to receive the applicable Merger Consideration as set forth in this
Agreement. If any holder of Converted Shares shall be unable to surrender
such holder's Certificates because such Certificates have been lost or
destroyed, such holder may deliver in lieu thereof an affidavit and
indemnity bond in form and substance and with surety reasonably satisfactory
to ProNet. No interest shall be paid on any Merger Consideration payable to
former holders of Converted Shares.
(c) DISTRIBUTIONS WITH RESPECT TO PRONET COMMON STOCK. No dividends
or other distributions declared or made after the Effective Time with
respect to ProNet Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered certificate theretofore
representing shares of Company Common Stock or shares of Company Series B
Preferred Stock with respect to any shares of ProNet Common Stock evidenced
thereby, and no Merger Consideration shall be paid to any such holders
until the holder of such certificate shall surrender such certificate
theretofore representing shares of Company Common Stock or shares of
Company Series B Preferred Stock. Subject to applicable laws, following
surrender of any such certificate, there shall be paid to the holder of the
certificates evidencing whole shares of ProNet Common Stock issued in
exchange therefor, without interest, (i) promptly following the surrender
of such certificate and in addition to the amount of any cash payable with
respect to a fractional share of ProNet Common Stock to which such holder
is entitled pursuant to Section 2.02(d) of this Agreement, the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of ProNet Common
Stock and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to surrender and a payment date occurring after surrender payable with
respect to such whole shares of ProNet Common Stock.
(d) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of ProNet Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests shall not
entitle the owner thereof to any rights of a stockholder of ProNet. In
lieu of any such fractional shares, (i) each holder of a Certificate
previously evidencing Company Common Stock and each holder of a Certificate
previously evidencing Company Series B Preferred Stock, upon surrender of
such Certificate for exchange pursuant to this Article II, shall be paid an
amount in cash (without interest), rounded to the nearest cent, determined
by multiplying (A) the Average Closing Price by (B) the fractional interest
to which such holder would otherwise be entitled (after taking into account
all shares of Company Common Stock or Company Series B Preferred Stock held
of record by such holder at the Effective Time).
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains unclaimed by the former holders of Converted Shares on the
first anniversary of the Closing Date shall be delivered to ProNet, upon
demand, and any former holders of
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<PAGE>
Converted Shares who have not theretofore complied with this Article II
shall thereafter look only to ProNet for the Merger Consideration and
dividends or distributions to which they are entitled, without any interest
thereon. Neither ProNet nor the Company shall be liable to any former
holder of Converted Shares for any Merger Consideration (or dividends or
distributions with respect thereto) or cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) WITHHOLDING. ProNet (or any affiliate thereof) shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any former holder of Converted Shares such amounts as
ProNet (or any affiliate thereof) is required to deduct and withhold with
respect to the making of such payment under the Code or any other provision
of federal, state, local or foreign tax law and ProNet agrees to remit to
the proper taxing authority such amounts so withheld. To the extent that
amounts are so withheld by ProNet, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the former holder
of the Converted Shares in respect of which such deduction and withholding
was made by ProNet. ProNet shall, within a reasonable period of time prior
to the Closing Date, inform the Company of its intent to deduct and
withhold any amounts pursuant to this Section 2.02(f) and will cooperate
with the Company in taking any actions necessary to avoid and/or minimize
the amounts required to be deducted and withheld from the consideration
payable pursuant to this Agreement. ProNet agrees to promptly pay to the
former holders of Converted Shares any refunded amounts received by ProNet
that are attributable to such withholding.
SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock, Company Series A
Preferred Stock or Company Series B Preferred Stock thereafter on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration, deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article II. Certificates
surrendered for exchange by any person constituting an "AFFILIATE" of the
Company for purposes of Rule 145(c) under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), shall not be exchanged until ProNet has received a
written agreement from such person as provided in Section 6.04.
SECTION 2.04. DISSENTERS' RIGHTS. The holders of shares of ProNet Common
Stock shall not be entitled to appraisal rights. Notwithstanding anything in
this Agreement to the contrary, each share of Company Series A Preferred Stock
and Company Series B Preferred Stock issued and outstanding immediately prior to
the Effective Time and held by stockholders who have not voted such shares in
favor of the Merger or consented thereto in writing and qualify under and have
complied with all of the provisions of Section 262 of Delaware Law ("DISSENTING
SHARES") shall not, by virtue of the Merger, be converted into the right to
receive the Series A Preferred Stock Consideration or Series B Preferred Stock
Consideration but such stockholders shall be entitled to receive payment of the
appraised value of such shares of Company Series A Preferred Stock or Company
Series B Preferred Stock held by them in accordance with the provisions of
Section 262 of the Delaware Law; provided, however, that if any holder of
Dissenting Shares (a) subsequently
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<PAGE>
delivers a written withdrawal of his demand for appraisal rights (with the
written consent of ProNet if such written withdrawal is not made within 60
days after the Effective Time), or (b) fails to perfect dissenter's rights as
provided in Section 262 of Delaware Law, or (c) if neither any holder of
Dissenting Shares nor the Surviving Corporation has filed a petition
demanding a determination of the value of Dissenting Shares within the time
provided in Section 262 of Delaware Law, the Dissenting Shares held by such
holder or holders (as the case may be) shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive the Series A Preferred Stock Consideration or Series B
Preferred Stock Consideration, as applicable, as provided in Section 2.01(c)
or 2.01(d) of this Agreement, without any interest thereon.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ProNet that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company
is a corporation, and each of the Company's subsidiaries (as such term in
defined in Section 9.03 herein) is a corporation or partnership, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, and each of the Company
and its subsidiaries has all requisite power and authority to own, lease and
operate its properties and to conduct its business as it is now being
conducted and, except as set forth in Section 3.01 of the Company Disclosure
Schedule (as defined below), is qualified to do business and in good standing
in each jurisdiction in which the nature of the business conducted by it or
the ownership or leasing of its properties makes such qualification
necessary, other than where the failure to be so qualified and in good
standing could not reasonably be expected to have a Company Material Adverse
Effect. The term "COMPANY MATERIAL ADVERSE EFFECT" as used in this Agreement
shall mean any change or effect that would be materially adverse to the
financial condition, results of operations or business of the Company and its
subsidiaries, taken as a whole, at the time of such change or effect. Section
3.01 of the Disclosure Schedule delivered by the Company to the ProNet
Companies concurrently with the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") sets forth, as of the date of this Agreement, a true
and complete list of all the Company's directly or indirectly owned
subsidiaries, together with (a) the jurisdiction of incorporation or
organization of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock or other equity interests owned by the
Company or another subsidiary of the Company and (b) an indication of whether
each such subsidiary is a "SIGNIFICANT SUBSIDIARY" as defined in Section 9.03
of this Agreement.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
heretofore furnished or made available to ProNet complete and correct copies
of the Certificate of Incorporation and the Bylaws or the equivalent
organizational documents, in each case as amended or restated to the date
hereof, of the Company and each of its subsidiaries. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws (or equivalent organizational
documents).
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SECTION 3.03. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
25,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.001 per share, of which the Company has designated
15,000 shares as Series A 14% Cumulative Preferred Stock, 617,189 shares
as Series B Preferred Stock, and the balance of which are undesignated.
At the close of business on March 31, 1996, 6,347,416 shares of Company
Common Stock were issued and outstanding, no shares of Company Common Stock
were held by the Company in its treasury or by the Company's subsidiaries
and 15,655,109 shares of Company Common Stock were reserved for issuance as
follows: (i) 400,000 shares were reserved for issuance upon exercise of
stock options heretofore granted or available for grant pursuant to the
Company's 1994 Stock Option and Appreciation Rights Plan (the "OPTION
PLAN"); (ii) 7,266,260 shares were reserved for issuance upon the exercise
of the warrants (the "COMMON STOCK WARRANTS") listed and described in
Section 3.03(a) of the Company Disclosure Schedule; (iii) 3,708,134 shares
were reserved for issuance upon exercise of the Series B Preferred Stock
Warrants and conversion of the resulting and other shares of Company Series
B Preferred Stock; and (iv) 4,285,715 shares were reserved for issuance
upon conversion of the Company Series A Preferred Stock. At the close of
business on March 31, 1996, 15,000 shares of Company Series A Preferred
Stock were issued and outstanding and no shares of Company Series A
Preferred Stock were held by the Company in its treasury or by the
Company's subsidiaries. As of the close of business on March 31, 1996,
130,930 shares of Company Series B Preferred Stock were issued and
outstanding, no shares of Company Series B Preferred Stock were held by the
Company in its treasury or by the Company's subsidiaries and 486,259 shares
of Company Series B Preferred Stock were reserved for issuance upon the
exercise of the Series B Preferred Stock Warrants (HEREIN SO CALLED).
Except as described in this Section 3.03 or in Section 3.03(a) of the
Company Disclosure Schedule, no shares of capital stock of the Company are
issued and outstanding or reserved for issuance for any other purpose.
Since March 31, 1996, no shares of capital stock have been issued by the
Company or any of its subsidiaries except pursuant to agreements for which
shares were adequately reserved at such date as described in this
subsection (a). Since March 31, 1996, neither the Company nor any of its
subsidiaries has granted any options for, or other rights to purchase, any
shares of capital stock of the Company or any of its subsidiaries. Each of
the issued shares of capital stock of each of the Company and its
subsidiaries is duly authorized, validly issued and fully paid and
nonassessable, and has not been issued in violation of (nor are any of the
authorized shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries subject to) any preemptive or similar
rights created by statute, the Certificate of Incorporation or Bylaws (or
the equivalent organizational documents) of the Company or any of its
subsidiaries, or any agreement to which the Company or any of its
subsidiaries is a party or is bound. Except as set forth in
Section 3.03(a) of the Company Disclosure Schedule, all issued shares or
other equity interests in the subsidiaries of the Company owned by the
Company or a subsidiary of the Company are owned free and clear of all
security interests, liens, claims, pledges, agreements, limitations on the
Company's or such subsidiaries' voting rights, charges or other
encumbrances of any nature whatsoever.
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(b) No bonds, debentures, notes or other indebtedness of the Company
or its subsidiaries having the right to vote (or convertible into or
exchangeable or exercisable for securities having the right to vote) on any
matters on which stockholders may vote ("COMPANY VOTING DEBT") are issued
or outstanding. All shares of Company Common Stock which may be issued
upon exercise of stock options granted pursuant to the Option Plans or
Common Stock Warrants and all shares of Company Series B Preferred Stock
which may be issued upon the exercise of the Series B Preferred Stock
Warrants will, when issued in accordance with the terms of such stock
options, warrants and the related Option Plans, be validly issued, fully
paid and nonassessable and not subject to preemptive rights.
(c) Except as set forth in Section 3.03(a) above or in Section
3.03(c) of the Company Disclosure Schedule, there are no options, warrants
or other rights (including registration rights), agreements, arrangements
or commitments of any character to which the Company or any of its
subsidiaries is a party relating to the issued or unissued capital stock of
the Company or any of its subsidiaries or obligating the Company or any of
its subsidiaries to grant, issue or sell any shares of capital stock,
Company Voting Debt or other equity interests of the Company or any of its
subsidiaries. Except as set forth in Section 3.03(c) of the Company
Disclosure Schedule, there are no obligations, contingent or otherwise, of
the Company or any of its subsidiaries (i) to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or other capital stock
of the Company or the capital stock of any subsidiary of the Company or
(ii) other than advances to wholly owned subsidiaries in the ordinary
course of business, to provide funds to, or to make any investment in (in
the form of a loan, capital contribution or otherwise), or to provide any
guarantee with respect to the obligations of, any subsidiary of the Company
or any other person. Except (i) as set forth in Section 3.03(c) of the
Company Disclosure Schedule or (ii) for subsidiaries of the Company set
forth in Section 3.01 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries (x) directly or indirectly owns,
(y) has agreed to purchase or otherwise acquire or (z) holds any interest
convertible into or exchangeable or exercisable for the capital stock or
other equity interests of any corporation, partnership, joint venture or
other business association or entity. Except as set forth in Section
3.03(c) of the Company Disclosure Schedule or for any agreements,
arrangements or commitments between the Company and its wholly owned
subsidiaries or between such wholly owned subsidiaries, there are no
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may be entitled to receive
any payment based on, or calculated in accordance with, the revenues or
earnings of the Company or any of its subsidiaries. Except as set forth in
Section 3.03(c) of the Company Disclosure Schedule, there are no voting
trusts, proxies or other agreements or understandings to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound with respect to the voting of any shares of capital
stock or other equity interests of the Company or any of its subsidiaries.
(d) Section 3.03(d) of the Company Disclosure Schedule sets forth a
complete and correct list as of March 31, 1996, of (i) the number of
options to purchase Company Common Stock outstanding, (ii) the number of
Common Stock Warrants and Series B Preferred Stock Warrants outstanding,
(iii) the exercise price of each such outstanding stock
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option and warrant and (iv) the number of stock options then exercisable.
Complete and correct copies of the Option Plans, all forms of stock options
issued pursuant to the Option Plans or otherwise, all forms of Common Stock
Warrants and a form of Series B Preferred Stock Warrant, including all
amendments thereto, have been delivered to ProNet.
SECTION 3.04. AUTHORITY. The Company has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (subject to,
with respect to the Merger, the approval and adoption of this Agreement by the
stockholders of the Company as described in Section 6.01 of this Agreement).
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (subject to, with respect to the Merger, the
approval and adoption of this Agreement by the stockholders of the Company as
described in Section 6.01 of this Agreement). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the ProNet Companies, constitutes the legal,
valid and binding obligation of the Company, 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.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated
by the exceptions to Section 3.05(b) are obtained or made and except as
disclosed in Section 3.05(a) of the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company does not, and the
performance by the Company of its obligations hereunder, including
consummation of the transactions contemplated hereby, will not (i) conflict
with or violate the Certificate of Incorporation or Bylaws, or the
equivalent organizational documents, in each case as amended or restated,
of the Company or any of its subsidiaries, (ii) conflict with or violate
any federal, state, foreign or local law, statute, ordinance, rule or
regulation (collectively, "LAWS") in effect as of the date of this
Agreement or any judgment, order or decree to which the Company or any of
its subsidiaries is a party or by or to which any of their respective
properties are bound or subject or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or
result in the creation of a lien or encumbrance on any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by or to which the Company or any of its
subsidiaries or any of their respective properties are bound or subject
except for any such conflicts, violations, breaches, defaults, events,
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rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or encumbrances that could not reasonably be expected
to have a Company Material Adverse Effect. The Board of Directors of the
Company has taken all actions necessary under Delaware Law, including
approving the transactions contemplated by this Agreement and approving the
voting agreement of even date herewith to be entered into by and among
ProNet and certain stockholders of the Company (the "VOTING AGREEMENT"), to
ensure that the prohibitions on business combinations set forth in Section
203 of Delaware Law do not, and will not, apply to the transactions
contemplated by this Agreement.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance by the Company of its obligations hereunder,
including consummation of the transactions contemplated hereby, will not,
require the Company to obtain any consent, license, permit, waiver,
approval, authorization or order of, or to make any filing with or
notification to, any governmental or regulatory authority, federal, state,
local or foreign (collectively, "GOVERNMENTAL ENTITIES"), except (i) for
(A) applicable requirements, if any, of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and state securities
or blue sky laws ("BLUE SKY LAWS"), (B) the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), and (C) applicable approvals of the Federal
Communications Commission (the "FCC") pursuant to the Communications Act of
1934, as amended, and any regulations promulgated thereunder (the
"COMMUNICATIONS ACT"), (ii) the filing and recordation of appropriate
merger documents as required by Delaware Law, (iii) where the failure to
obtain such consents, licenses, permits, waivers, approvals, authorizations
or orders, or to make such filings or notifications could not, individually
or in the aggregate reasonably be expected to cause a Company Material
Adverse Effect or to prevent the Company from performing its obligations
under this Agreement and (iv) as disclosed in Section 3.05(b) of the
Company Disclosure Schedule.
SECTION 3.06. PERMITS; COMPLIANCE.
(a) Except as disclosed in Section 3.06(a) of the Company Disclosure
Schedule, each of the Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, identification and
registration numbers, approvals and orders (collectively, the "PERMITS")
necessary to own, lease and operate their radio common carrier and private
carrier radio paging system businesses (the "SYSTEM") and their other
properties and to carry on their businesses as they are now being
conducted, except where the failure to possess such Permits could not
reasonably be expected to have a Company Material Adverse Effect. Section
3.06(a) of the Company Disclosure Schedule sets forth, to the best of the
Company's knowledge, (i) a list of the FCC Licenses (as defined in Section
3.06(b)) and (ii) all other Permits (other than Permits that the failure to
possess could not reasonably be expected to have a Company Material Adverse
Effect) held by the Company or a subsidiary of the Company and the
jurisdiction issuing the same, all of which are now and as of the Effective
Time shall be in good standing and not subject to meritorious challenge.
Section 3.06(a) of the Company Disclosure Schedule also sets forth, as of
the date of this Agreement, all
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actions, proceedings, or investigations, pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries
(excluding any action or proceeding of the FCC that is of general
applicability to the paging industry) that could reasonably be expected
to result in the loss, revocation, suspension or cancellation of a
Permit held by the Company or a subsidiary of the Company, except for
any suspension, loss or revocation that could not reasonably be expected
to have a Company Material Adverse Effect. Except as set forth in
Section 3.06(a) of the Company Disclosure Schedule, neither
the Company nor any of its subsidiaries is in conflict with, in default
under or in violation of, and none of them has received, since December 31,
1993, from any Governmental Entity any written notice with respect to any
conflict with, default under or violation of, (A) any Law applicable to the
Company or any of its subsidiaries or by or to which any of their
respective properties are bound or subject, (B) any judgment, order or
decree applicable to the Company or any of its subsidiaries or (C) any of
the Permits held by the Company or a subsidiary of the Company, except for
any such conflicts, defaults or violations that could not reasonably be
expected to have a Company Material Adverse Effect.
(b) Without limiting the generality of the foregoing and except as
disclosed in Section 3.06(b) of the Company Disclosure Schedule, the
Company and its subsidiaries (i) have all Permits issued by the FCC (the
"FCC LICENSES") required for the operation of the System and related
facilities being operated on the date hereof by the Company and its
subsidiaries and (ii) have duly and currently filed all reports and other
information required to be filed by the Company and its subsidiaries with
the FCC in connection with such FCC Licenses, except where the failure to
file could not reasonably be expected to have a Company Material Adverse
Effect. The Company and its subsidiaries that are FCC licensees are
financially qualified, and to the best of the Company's knowledge, are
otherwise qualified to be FCC licensees. The Company is not aware of any
facts or circumstances that might prevent or delay any necessary FCC
approval of the transactions contemplated hereby. The Company and its
subsidiaries have complied in all material respects with and, prior to the
Closing, will comply in all material respects with, all rules, regulations,
policies, precedents, and orders of the FCC with respect to the
obstruction, marking and lighting of each and every tower that is owned by
the Company.
SECTION 3.07. REPORTS; FINANCIAL STATEMENTS.
(a) Since December 21, 1994, the Company has filed all forms,
reports, statements and other documents required to be filed with (i) the
Securities and Exchange Commission (the "SEC"), including without
limitation (A) all Annual Reports on Form 10-K, (B) all Quarterly Reports
on Form 10-Q, (C) all proxy statements relating to meetings of stockholders
(whether annual or special), (D) all Current Reports on Form 8-K and
(E) all other reports, schedules, registration statements or other
documents (collectively referred to as the "COMPANY SEC REPORTS"), and (ii)
any applicable state securities authorities (all such forms, reports,
statements and other documents being referred to herein, collectively, as
the "COMPANY REPORTS"), except where the failure to file any Company
Reports could not reasonably be expected to have a Company Material Adverse
Effect. The Company Reports were prepared in all material respects in
accordance with the requirements
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of applicable Laws (including, with respect to the Company SEC Reports, the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports)
and the Company SEC Reports, other than the historical financial statements
of businesses acquired by the Company, contained therein (the "Historical
Financials"), and, to the knowledge of the Company, the Historical
Financials did not at the time they were filed contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports (i) have
been prepared in accordance with the published rules and regulations of the
SEC and generally accepted accounting principles (other than any departures
from generally accepted accounting principles consistent with prior
periods) applied on a consistent basis throughout the periods involved
(except (A) to the extent disclosed therein or required by changes in
generally accepted accounting principles, (B) with respect to Company SEC
Reports, as may be indicated in the notes thereto and (C) in the case of
the unaudited financial statements, as permitted by the rules and
regulations of the SEC) and (ii) fairly present the consolidated financial
position of the Company and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated (except, in the case of unaudited consolidated financial
statements for interim periods, for the absence of footnotes and subject to
adjustments, consisting only of normal, recurring accruals, necessary to
present fairly such results of operations and cash flows), except that any
pro forma financial statements contained in such consolidated financial
statements are not necessarily indicative of the consolidated financial
position of the Company and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement or as set
forth in Section 3.08 of the Company Disclosure Schedule, since November 30,
1995 the Company and its subsidiaries have conducted their respective businesses
only in the ordinary course and in a manner consistent with past practice and
there has not been (a) any damage, destruction or loss with respect to any
assets of the Company or any of its subsidiaries that, whether or not covered by
insurance, would constitute a Company Material Adverse Effect, (b) any change by
the Company or its subsidiaries in their significant accounting policies,
(c) except for dividends by a subsidiary of the Company to the Company or
another wholly owned subsidiary of the Company, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of Company
Common Stock or the shares of stock of, or other equity interests in, any
subsidiary of the Company or any redemption, purchase or other acquisition of
any of the Company's securities or any of the securities of any subsidiary of
the Company, (d) any material increase in the benefits under, or the
establishment or amendment of, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, performance awards
(including, without limitation, the granting of stock appreciation rights or
restricted stock awards), stock purchase or other employee benefit plan, or any
increase in the compensation payable or to become payable to any of the
directors or officers of the Company or
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the employees of the Company or its subsidiaries as a group, except for (i)
increase in salaries or wages payable or to become payable in the ordinary
course of business and consistent with past practice or (ii) the granting of
stock options in the ordinary course of business to employees of the Company
or its subsidiaries who are not directors or executive officers of the
Company, or (e) any other Company Material Adverse Effect.
SECTION 3.09. ABSENCE OF LITIGATION. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or as set forth in Section
3.09 of the Company Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of the Company,
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries or any properties or
rights of the Company or any of its subsidiaries (except for claims, actions,
suits, litigation, proceedings, arbitrations or investigations that could not
reasonably be expected to have a Company Material Adverse Effect), and neither
the Company nor any of its subsidiaries is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with,
or, to the knowledge of the Company, continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including without limitation
cease-and-desist or other orders, except for matters that could not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 3.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) With respect to each employee benefit plan, program, arrangement,
contract, employment agreement, stock option, bonus, incentive or similar
plan (including, without limitation, any "EMPLOYEE BENEFIT PLAN" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained or contributed to by the Company or any of
its subsidiaries, or with respect to which the Company or any of its
subsidiaries could reasonably be expected to incur liability under ERISA
(the "COMPANY BENEFIT PLANS"), the Company has delivered or made available
to ProNet a true and correct copy of (i) such Company Benefit Plan,
(ii) each trust agreement, if any, relating to such Company Benefit Plan,
(iii) the most recent summary plan description of each Company Benefit Plan
for which a summary plan description is required, and (iv) the most recent
determination letter issued by the IRS with respect to any Company Benefit
Plan that is intended to be qualified under Section 401 of the Code.
Section 3.10 of the Company Disclosure Schedule contains a complete list of
all Company Benefit Plans.
(b) With respect to the Company Benefit Plans, no event has occurred
and, to the knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company or any of its
subsidiaries could be subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law that
could reasonably be expected to have a Company Material Adverse Effect.
(c) There are no collective bargaining or other labor union contracts
to which the Company or its subsidiaries is a party and no collective
bargaining agreement is being
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negotiated by the Company or any of its subsidiaries. There is no pending
or, to the knowledge of the Company, threatened labor dispute, strike or
work stoppage against the Company or any of its subsidiaries that could
materially interfere with the respective business activities of the Company
or any of its subsidiaries.
(d) No Company Benefit Plan provides retiree medical or retiree life
insurance benefits that could reasonably be expected to have a Company
Material Adverse Effect and neither the Company nor any of its subsidiaries
is contractually or otherwise obligated to provide life insurance and
medical benefits upon retirement or termination of employment of employees
that could reasonably be expected to have a Company Material Adverse
Effect.
(e) Neither the Company nor any of its subsidiaries contributes to or
has an obligation to contribute to, or has within six years prior to the
date of this Agreement contributed to or had an obligation to contribute
to, an employee benefit plan that is or was subject to Title IV of ERISA or
Section 412 of the Code.
SECTION 3.11. TAXES. Except as set forth in Section 3.11 of the Company
Disclosure Statement:
(a) (i) all returns and reports ("TAX RETURNS") of or with respect to
any Tax which is required to be filed on or before the date hereof by or
with respect to the Company or any of its subsidiaries have been duly and
timely filed except to the extent that a failure to file any such Tax
Returns, individually or in the aggregate, could not reasonably be expected
to have a Company Material Adverse Effect, (ii) all items of income, gain,
loss, deduction and credit or other items required to be included in each
such Tax Return have been so included and all information provided in each
such Tax Return is true, correct and complete in all material respects
except to the extent that a failure to include any such items, individually
or in the aggregate, could not reasonably be expected to have a Company
Material Adverse Effect, (iii) all material Taxes which have become due
with respect to the period covered by each such Tax Return have been or
will be timely paid in full except to the extent that the failure to make
any such payments, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect, (iv) all withholding
Tax requirements imposed on or with respect to the Company or any of its
subsidiaries have been satisfied in all respects except where the failure
to satisfy any such requirements, individually or in the aggregate, could
not reasonably be expected to have a Company Material Adverse Effect, and
(v) no material penalty, interest or other charge is due with respect to
the late filing of any such Tax Return or late payment of any such Tax
except for any such penalties, interest, or other charges which,
individually or in the aggregate, could not reasonably be expected to have
a Company Material Adverse Effect.
(b) There is no claim against the Company or any of its subsidiaries
for any amount of Taxes, and no assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with respect
to the Company or any of its subsidiaries, other than those disclosed (and
to which are attached true and complete copies of all audit or similar
reports) in Section 3.11 of the Company Disclosure Schedule and other than
any
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such claims, assessments, deficiencies or adjustments which could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(c) To the best knowledge of the Company after inquiry, the total
amounts set up as liabilities for current and deferred Taxes in the
financial statements referred to in Section 3.07 of this Agreement are
sufficient to cover the payment of all Taxes, whether or not assessed or
disputed, which are, or are hereafter found to be, or to have been, due by
or with respect to the Company and any of its subsidiaries up to and
through the periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due and for
Taxes being contested in good faith, no material liens for Taxes exist upon
the assets of any of the Company or any of its subsidiaries.
(e) Neither the Company nor any of its subsidiaries has made an
election under section 341(f) of the Code.
(f) Neither the Company nor, to the knowledge of the Company, any of
its affiliates has taken or agreed to take any action that would prevent
the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
SECTION 3.12. AFFILIATES. Section 3.12 of the Company Disclosure Schedule
identifies all persons who, to the knowledge of the Company, may be deemed to be
affiliates of the Company within the meaning of that term as used in Rule 145
promulgated pursuant to the Securities Act, including, without limitation, all
directors and executive officers of the Company.
SECTION 3.13. CERTAIN BUSINESS PRACTICES. To the Company's knowledge,
except as set forth in Section 3.13 of the Company Disclosure Schedule, none of
the Company, any of its subsidiaries or any directors, officers, agents or
employees of the Company or any of its subsidiaries (in their capacities as
such) has (a) used any funds for unlawful contributions, gifts, entertainment or
other unlawful purposes relating to political activity, (b) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other
unlawful payment.
SECTION 3.14. PROPERTIES. Except as set forth in Section 3.14 of the
Company Disclosure Schedule or specifically described in the Company SEC
Reports, at August 3, 1995, the Company had, and as of the date hereof to the
knowledge of the Company, the Company and its subsidiaries have, good and
marketable title, free and clear of all liens, the existence of which could
reasonably be expected to have a Company Material Adverse Effect, to all their
properties and assets whether tangible or intangible, real, personal or mixed,
reflected in the Company's consolidated financial statements contained in the
Company's most recent SEC Report on Form 10-Q as being owned by the Company and
its subsidiaries as of the date thereof, other than (a) any properties or assets
that have been sold or otherwise disposed of in the ordinary course of business
since the date of such financial statements, (b) liens disclosed in the notes to
such financial statements and (c) liens
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arising in the ordinary course of business after the date of such financial
statements. All buildings, and all fixtures, equipment and other property
and assets that are material to the business of the Company and its
subsidiaries, taken as a whole, held under leases or sub-leases by the
Company or any of its subsidiaries (excluding any leases or sub-leases that
are terminable by the lessor upon 30 or fewer days notice) are held under
valid instruments enforceable against the Company in accordance with their
respective terms, subject to applicable laws of bankruptcy, insolvency or
similar laws relating to creditors' rights generally and to general
principles of equity (whether applied in a proceeding in law or equity).
SECTION 3.15. INTELLECTUAL RIGHTS. To the knowledge of the Company,
Section 3.15 of the Company Disclosure Schedule sets forth a true and complete
list and description of all registered patents, trademarks, servicemarks,
tradenames, copyrights, and applications therefor owned by or registered in the
name of the Company or a subsidiary of the Company, or in which the Company or a
subsidiary of the Company has any right, license or interest (the "COMPANY
INTELLECTUAL PROPERTY RIGHTS"). To the knowledge of the Company, neither the
Company nor any subsidiary of the Company is a party to any license agreement,
whether written or oral, either as licensor or licensee, with respect to any
Company Intellectual Property Rights. To the knowledge of the Company, the
Company or a subsidiary of the Company has good and marketable title to or the
right to use all Company Intellectual Property Rights and all inventions,
processes, designs, formulae, trade secrets, and know-how necessary for the
operation of the System and any other business activity conducted by the Company
or any of its subsidiaries, without the payment of any royalty or similar
payment. To the knowledge of the Company, neither the Company nor any
subsidiary of the Company is infringing any patent, trademark, servicemark,
tradename or copyright of others, and neither the Company nor any subsidiary of
the Company is aware of any infringement by others of any such rights owned by
the Company or a subsidiary of the Company.
SECTION 3.16. PAGERS. Section 3.16 of the Company Disclosure Schedule
sets forth the number of pagers in service in the System as of March 31, 1996.
Prior to the execution of this Agreement, the Company has delivered a list of
such pagers in service to ProNet.
SECTION 3.17. INSIDER INTERESTS. Except as set forth in Section 3.17 of
the Company Disclosure Schedule, no officer or director of the Company or holder
of more than five percent of the Company Common Stock currently outstanding has
any interest in any material property, real or personal, tangible or intangible,
including without limitation, any computer software or Company Intellectual
Property Rights, used in or pertaining to the business of the Company or any
subsidiary of the Company, except for the ordinary rights of a stockholder or
employee stock optionholder.
SECTION 3.18. CONTRACTS AND AGREEMENTS. The contracts and agreements
listed in Section 3.18 of the Company Disclosure Schedule constitute all of the
written and material 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 Company or any of its subsidiaries is a party or by
which any of their properties are bound with respect to which the obligations of
or the benefits to be received by the Company or any of its subsidiaries,
individually or in the aggregate, could reasonably be expected to have a value
in excess of $125,000 in any consecutive 12-month period (each a
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"MATERIAL CONTRACT"). The Company has also furnished to ProNet the standard
form rental agreement and agreement with resellers used in the ordinary
course of business of the Company and its subsidiaries. Neither the Company
nor any of its subsidiaries are and, to the best knowledge of the Company, 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 Contract, and neither the Company nor any of its
subsidiaries have waived any right under any Material Contract. Neither the
Company nor any of its subsidiaries have received any notice of default or
termination under any Material Contract and neither the Company nor any of
its subsidiaries has assigned or otherwise transferred any rights under any
Material Contract.
SECTION 3.19. VOTE REQUIRED. The only votes of the holders of any class
or series of Company capital stock necessary to approve the Merger and this
Agreement are (a) the affirmative votes of the holders of at least two-thirds of
the outstanding shares of the Company Series A Preferred Stock voting as a
separate class and (b) the affirmative votes of the holders of at least a
majority of the outstanding shares of each of the Company Common Stock and the
Company Series B Preferred Stock, in each case voting as a separate class.
SECTION 3.20. BROKERS. No broker, finder or investment banker (other than
Bear, Stearns & Co. Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. Prior to the date
of this Agreement, the Company has made available to ProNet a complete and
correct copy of all agreements between the Company and Bear, Stearns & Co. Inc.
pursuant to which such firm will be entitled to any payment relating to the
transactions contemplated by this Agreement.
SECTION 3.21. OPINION OF FINANCIAL ADVISOR. The special committee of the
Board of Directors of the Company has received the written opinion of Bear,
Stearns & Co. Inc. to the effect that, as of the date of this Agreement, the
Merger Consideration to be paid to the holders of the Company Common Stock,
other than the Affiliated Stockholders, is fair, from a financial point of view,
to such holders. The Company will promptly deliver a copy of such opinion to
ProNet.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PRONET COMPANIES
The ProNet Companies hereby, jointly and severally, represent and warrant
to the Company that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
ProNet Companies is a corporation, and each of ProNet's other subsidiaries is a
corporation, duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and each of the ProNet Companies and
each of ProNet's other subsidiaries has all requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification
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necessary, other than where the failure to be so duly qualified and in good
standing could not reasonably be expected to have a ProNet Material Adverse
Effect. The term "PRONET MATERIAL ADVERSE EFFECT" as used in this Agreement
shall mean any change or effect that would be materially adverse to the
financial condition, results of operations or business of ProNet and its
subsidiaries, taken as a whole, at the time of such change or effect.
Section 4.01 of the Disclosure Schedule delivered by ProNet to the Company
concurrently with the execution of this Agreement (the "PRONET DISCLOSURE
SCHEDULE") sets forth, as of the date of this Agreement, a true and complete
list of all of ProNet's directly or indirectly owned subsidiaries, together
with (a) the jurisdiction of incorporation or organization of each such
subsidiary and the percentage of each such subsidiary's outstanding capital
stock or other equity interests owned by ProNet or another subsidiary of
ProNet and (b) an indication of whether each such subsidiary is a
"SIGNIFICANT SUBSIDIARY" as defined in Section 9.03 of this Agreement.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS. ProNet has
heretofore furnished or made available to the Company complete and correct
copies of the Certificate of Incorporation and Bylaws, in each case as amended
or restated to the date hereof, of ProNet and Merger Sub. Neither ProNet nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws.
SECTION 4.03. CAPITALIZATION.
(a) The authorized capital stock of ProNet consists of 20,000,000
shares of ProNet Common Stock and 5,000,000 shares of preferred stock, par
value $.01 per share ("PRONET PREFERRED STOCK"). At the close of business
on March 31, 1996, 7,069,328 shares of ProNet Common Stock were issued and
outstanding, 424,853 shares of ProNet Common Stock were held by ProNet in
its treasury and 1,943,042 shares of ProNet Common Stock were reserved for
issuance as follows: (i) 814,327 shares were reserved for issuance upon
exercise of stock options heretofore granted or available for grant
pursuant to ProNet's 1987 Stock Option Plan; (ii) 37,500 shares were
reserved for issuance upon exercise of stock options heretofore granted or
available for grant pursuant to the ProNet's Non-Employee Director Stock
Option Plan; (iii) 1,000,000 shares were reserved for issuance upon
exercise of stock options heretofore granted or available for grant
pursuant to the ProNet 1995 Long-Term Incentive Plan; (iv) 83,715 shares
were reserved for issuance upon the purchase of shares under the ProNet
1995 Employee Stock Purchase Plan; and (v) 7,500 shares were reserved for
issuance upon exercise of a stock option heretofore granted to a
non-employee director pursuant to a separate agreement (the stock option
plans referenced in clauses (i) through (v) of this Section being herein
collectively called the "OPTION PLANS"). In addition, ProNet is obligated
and/or has the option to issue and deliver an indeterminate number of
shares of ProNet Common Stock (A) pursuant to the Pinnacle Reseller Program
and the related Performance Award Agreements described in Section 4.03(a)
of the ProNet Disclosure Schedule and (B) in connection with acquisitions
of businesses by ProNet or its subsidiaries pursuant to the acquisition
agreements described in Schedule 4.03(a) of the ProNet Disclosure Schedule.
No shares of ProNet Preferred Stock are issued or outstanding. Except as
described in this Section 4.03 or in Section 4.03(a) of the ProNet
Disclosure Schedule and except for shares of Series A Junior Participating
Preferred Stock issuable upon
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exercise of the Rights, no shares of capital stock of ProNet are reserved
for issuance for any other purpose. Since March 31, 1996, no shares of
capital stock have been issued by ProNet or any of its subsidiaries except
pursuant to agreements for which shares were adequately reserved at such
date as described in this subsection (a). Since March 31, 1996, neither
ProNet nor any of its subsidiaries have granted any options for, or other
rights to purchase, any shares of capital stock of ProNet or any of its
subsidiaries. Each of the issued shares of capital stock of, or other
equity interests in, each of ProNet and its subsidiaries is duly authorized,
validly issued and, in the case of shares of capital stock, fully paid and
nonassessable, and have not been issued in violation of (nor are any of the
authorized shares of capital stock of, or other equity interests in, ProNet
or any of its subsidiaries subject to) any preemptive or similar rights
created by statute, the Certificate of Incorporation or Bylaws (or the
equivalent organizational documents) of ProNet or any of its subsidiaries,
or any agreement to which ProNet or any of its subsidiaries is a party or
is bound, and, except as set forth in Section 4.03(a) of the ProNet
Disclosure Schedule, all issued shares or other equity interests in the
subsidiaries of ProNet owned by ProNet or a subsidiary of ProNet are owned
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on ProNet's or such subsidiary's voting rights,
charges or other encumbrances of any nature whatsoever.
(b) No bonds, debentures, notes or other indebtedness of ProNet
having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on
which stockholders may vote ("PRONET VOTING DEBT") are issued or
outstanding.
(c) Except as set forth in Section 4.03(a) above or in Section
4.03(c) of the ProNet Disclosure Schedule, there are no options, warrants
or other rights (including registration rights), agreements, arrangements
or commitments of any character to which ProNet or any of its subsidiaries
is a party relating to the issued or unissued capital stock of ProNet or
any of its subsidiaries or obligating ProNet or any of its subsidiaries to
grant, issue or sell any shares of capital stock, ProNet Voting Debt or
other equity interests of ProNet or any of its subsidiaries. Except as set
forth in Section 4.03(c) of the ProNet Disclosure Schedule, there are no
obligations, contingent or otherwise, of ProNet or any of its subsidiaries
(i) to repurchase, redeem or otherwise acquire any shares of ProNet Common
Stock or other capital stock of ProNet or the capital stock of any
subsidiary of ProNet or (ii) other than advances to wholly owned
subsidiaries in the ordinary course of business, to provide funds to, or to
make any investment in (in the form of a loan, capital contribution or
otherwise), or to provide any guarantee with respect to the obligations of,
any subsidiary of ProNet or any other person. Except as set forth in
Section 4.03(c) of the ProNet Disclosure Schedule, neither ProNet nor any
of its subsidiaries (x) directly or indirectly owns, (y) has agreed to
purchase or otherwise acquire or (z) holds any interest convertible into or
exchangeable or exercisable for the capital stock or other equity interests
of any corporation, partnership, joint venture or other business
association or entity. Except as set forth in Section 4.03(c) of the
ProNet Disclosure Schedule or for any agreements, arrangements or
commitments between ProNet and its wholly owned subsidiaries or between
such wholly owned subsidiaries, there are no agreements, arrangements or
commitments of any character
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(contingent or otherwise) pursuant to which any person is or may be entitled
to receive any payment based on, or calculated in accordance with, the
revenues or earnings of ProNet or any of its subsidiaries. Except as set
forth in Section 4.03(c) of the ProNet Disclosure Schedule, there are no
voting trusts, proxies or other agreements or understandings to which ProNet
or any of its subsidiaries is a party or by which ProNet or any of its
subsidiaries is bound with respect to the voting of any shares of capital
stock or other equity interests of ProNet or any of its subsidiaries.
(d) The authorized capital stock of Merger Sub consists of 10,000
shares of common stock, par value $.01 per share ("MERGER SUB COMMON
STOCK"). An aggregate of 1,000 shares of Merger Sub Common Stock are
issued and outstanding and held by ProNet, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, Merger Sub's Certificate of
Incorporation or Bylaws or any agreement to which Merger Sub is a party or
is bound.
(e) The shares of ProNet Common Stock to be issued pursuant to the
Merger will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
ProNet's Certificate of Incorporation or Bylaws or any agreement to which
ProNet is a party or is bound.
SECTION 4.04. AUTHORITY. Each of the ProNet Companies has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of the ProNet
Companies and the performance by each of the ProNet Companies of its obligations
hereunder, including the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of either of the ProNet Companies are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (subject to, with respect to the Merger, the approval and
adoption of this Agreement by the stockholders of ProNet as set forth in Section
6.01 of this Agreement). This Agreement has been duly executed and delivered by
each of the ProNet Companies and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes the legal, valid and binding
obligation of each of the ProNet Companies, 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.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming that all consents, licenses, permits, waivers,
approvals, authorizations, orders, filings and notifications contemplated
by the exceptions to Section 4.05(b) are obtained or made and except as
otherwise disclosed in Section 4.05(a) of the ProNet Disclosure Schedule,
the execution and delivery of this Agreement by each of the ProNet
Companies does not, and performance by each of them of its obligations
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hereunder, including the consummation of the transactions contemplated
hereby, will not (i) conflict with or violate the Certificate of
Incorporation or Bylaws, or the equivalent organizational documents, in
each case as amended or restated, of ProNet or any of ProNet's
subsidiaries, (ii) conflict with or violate any Laws in effect as of the
date of this Agreement or any judgment, order or decree to which ProNet or
any of ProNet's subsidiaries is a party or by or to which any of their
properties are bound or subject or (iii) result in any breach of or
constitute a default (or an event that with or without notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or encumbrance on any of the
properties or assets of ProNet or any of ProNet's subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which ProNet or any
of ProNet's subsidiaries is a party or by or to which ProNet or any of
ProNet's subsidiaries or any of their respective properties is bound or
subject, except for any such conflicts, violations, breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation,
payment obligations or liens or encumbrances that could not reasonably be
expected to have a ProNet Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of the
ProNet Companies does not, and the performance by each of the ProNet
Companies of its respective obligations hereunder, including consummation
of the transactions contemplated hereby, will not, require either of the
ProNet Companies to obtain any consent, license, permit, waiver, approval,
authorization or order of, or to make any filing with or notification to,
any Governmental Entity, except (i) for (A) applicable requirements, if
any, of the Securities Act, the Exchange Act, and Blue Sky Laws, (B) the
pre-merger notification requirements of the HSR Act, and (C) applicable
approvals of the FCC pursuant to the Communications Act, (ii) the filing
and recordation of appropriate merger documents as required by Delaware
Law, (iii) where the failure to obtain such consents, licenses, permits,
waivers, approvals, authorizations or orders, or to make such filings or
notifications could not, individually or in the aggregate, reasonably be
expected to cause a ProNet Material Adverse Effect or to prevent either of
the ProNet Companies from performing its obligations under this Agreement
and (iv) as disclosed in Section 4.05(b) of the ProNet Disclosure Schedule.
SECTION 4.06. PERMITS; COMPLIANCE.
(a) Each of ProNet and its subsidiaries is in possession of all
Permits necessary to own, lease and operate their properties and to carry
on their businesses as they are now being conducted except where the
failure to possess such ProNet Permits could not reasonably be expected to
have a ProNet Material Adverse Effect. As of the date of this Agreement,
there are no actions, proceedings, or investigations pending or, to the
knowledge of ProNet, threatened against ProNet or any of its subsidiaries
(excluding any action or proceeding of the FCC that is of general
applicability to the paging industry) that could reasonably be expected to
result in the loss, revocation, suspension or cancellation of a Permit held
by ProNet or a subsidiary of ProNet, except for any suspension, loss or
revocation that could not reasonably be expected to have a ProNet Material
Adverse Effect.
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Neither ProNet nor any of its subsidiaries is in conflict with, or in
default under or violation of, nor has it received, since December 31,
1993, from any Governmental Entity any written notice with respect to
possible conflicts with, defaults under or violations of (i) any Law
applicable to ProNet or any of its subsidiaries or by or to which any of
their respective properties are bound or subject, (ii) any judgment,
order or decree applicable to ProNet or any of its subsidiaries or
(iii) any Permits held by ProNet or a subsidiary of ProNet, except for any
such conflicts, defaults or violations that could not reasonably be
expected to have a ProNet Material Adverse Effect.
(b) Without limiting the generality of the foregoing, ProNet and its
subsidiaries (i) have all Permits issued by the FCC (the "PRONET FCC
LICENSES") required for the operation of their businesses as being
operated on the date hereof, and (ii) have duly and currently filed all
reports and other information required to be filed by ProNet and its
subsidiaries with the FCC or in connection with such ProNet FCC Licenses,
except where the failure to file could not reasonably be expected to have a
ProNet Material Adverse Effect. ProNet and its subsidiaries that are FCC
licensees are financially qualified, and to the best of ProNet's knowledge,
are otherwise qualified to be FCC licensees. ProNet is not aware of any
facts or circumstances that might prevent or delay any necessary FCC
approval of the transactions contemplated hereby. ProNet and its
subsidiaries have complied in all material respects with and, prior to the
Closing, will comply in all material respects with, all rules, regulations,
policies, precedents, and orders of the FCC with respect to the
obstruction, marking, and lighting of each and every tower owned by ProNet
or any of its subsidiaries.
SECTION 4.07. REPORTS; FINANCIAL STATEMENTS.
(a) Since December 31, 1993, ProNet and its subsidiaries have filed
all forms, reports, statements and other documents required to be filed
with (i) the SEC, including without limitation (A) all Annual Reports on
Form 10-K, (B) all Quarterly Reports on Form 10-Q, (C) all proxy statements
relating to meetings of stockholders (whether annual or special), (D) all
Current Reports on Form 8-K and (E) all other reports, schedules,
registration statements or other documents (collectively referred to as the
"PRONET SEC REPORTS"), and (ii) any applicable state securities authorities
(all such forms, reports, statements and other documents being referred to
herein, collectively, as the "PRONET REPORTS"), except where the failure to
file any such ProNet Reports could not reasonably be expected to have a
ProNet Material Adverse Effect. The ProNet Reports were prepared in all
material respects in accordance with the requirements of applicable Law
(including, with respect to the ProNet SEC Reports, the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to the ProNet SEC Reports) and the ProNet SEC
Reports did not at the time they were filed contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including, in each case,
any related notes thereto) contained in the ProNet SEC Reports (i) have
been prepared in accordance
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with the published rules and regulations of the SEC and generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except (A) to the extent disclosed therein or required by changes
in generally accepted accounting principles, (B) with respect to the ProNet
SEC Reports filed prior to the date of this Agreement, as may be indicated
in the notes thereto and (C) in the case of the unaudited financial
statements, as permitted by the rules and regulations of the SEC) and (ii)
fairly present the consolidated financial position of ProNet and its
subsidiaries as of the respective dates thereof and the consolidated results
of operations and cash flows for the periods indicated (except, in the case
of unaudited consolidated financial statements for interim periods, for the
absence of footnotes and subject to adjustments, consisting only of normal,
recurring accruals, necessary to present fairly such results of operations
and cash flows), except that any pro forma financial statements contained in
such consolidated financial statements are not necessarily indicative of the
consolidated financial position of ProNet and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the ProNet SEC Reports filed prior to the date of this Agreement or as set
forth in Section 4.08 of the ProNet Disclosure Schedule, since December 31,
1995, ProNet and its subsidiaries have conducted their respective businesses
only in the ordinary course and in a manner consistent with past practice and
there has not been (a) any damage, destruction or loss with respect to any
assets of ProNet or any of its subsidiaries that, whether or not covered by
insurance, would constitute a ProNet Material Adverse Effect, (b) any change
by ProNet or its subsidiaries in their significant accounting policies or (c)
any other ProNet Material Adverse Effect.
SECTION 4.09. ABSENCE OF LITIGATION. Except as disclosed in the ProNet
SEC Reports filed prior to the date of this Agreement and as set forth in
Section 4.09 of the ProNet Disclosure Schedule, there is no claim, action,
suit, litigation, proceeding, arbitration or, to the knowledge of ProNet,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge of
ProNet, threatened against ProNet or any of its subsidiaries or any
properties or rights of ProNet or any of its subsidiaries (except for claims,
actions, suits, litigation, proceedings, arbitrations, or investigations that
could not reasonably be expected to have a ProNet Material Adverse Effect),
and neither ProNet nor any of its subsidiaries is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of ProNet, continuing investigation by,
any Governmental Entity, or any judgment, order, writ, injunction, decree or
award of any Governmental Entity or arbitrator, including without limitation
cease-and-desist or other orders, except for matters that could not
reasonably be expected to have a ProNet Material Adverse Effect.
SECTION 4.10. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) With respect to each employee benefit plan, program, arrangement,
contract, employment agreement, stock option, bonus, incentive or similar
plan (including, without limitation, any "EMPLOYEE BENEFIT PLAN" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained or contributed
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to by ProNet or any of its subsidiaries, or with respect to which ProNet
or any of its subsidiaries could reasonable be expected to incur liability
under ERISA (the "PRONET BENEFIT PLANS"), ProNet has delivered or made
available to the Company a true and correct copy of (i) such ProNet Benefit
Plan, (ii) each trust agreement, if any, relating to such ProNet Benefit
Plan, (iii) the most recent summary plan description of each ProNet Benefit
Plan for which a summary plan description is required, and (iv) the most
recent determination letter issued by the IRS with respect to any ProNet
Benefit Plan that is intended to be qualified under Section 401 of the Code.
Section 4.10 of the ProNet Disclosure Schedule contains a complete list of
all ProNet Benefit Plans.
(b) With respect to the ProNet Benefit Plans, no event has occurred
and, to the knowledge of ProNet, there exists no condition or set of
circumstances, in connection with which ProNet or any of its subsidiaries
could be subject to any liability under the terms of such ProNet Benefit
Plans, ERISA, the Code or any other applicable Law that could reasonably be
expected to have a ProNet Material Adverse Effect.
(c) There are no collective bargaining or other labor union contracts
to which ProNet or its subsidiaries is a party and no collective bargaining
agreement is being negotiated by ProNet or any of its subsidiaries. There
is no pending or, to the knowledge of ProNet, threatened labor dispute,
strike or work stoppage against ProNet or any of its subsidiaries that
could materially interfere with the respective business activities of
ProNet or any of its subsidiaries.
(d) No ProNet Benefit Plan provides retiree medical or retiree life
insurance benefits that could reasonably be expected to have a ProNet
Material Adverse Effect and neither ProNet nor any of its subsidiaries is
contractually or otherwise obligated to provide life insurance and medical
benefits upon retirement or termination of employment of employees that
could reasonably be expected to have a ProNet Material Adverse Effect.
(e) Neither ProNet nor any of its subsidiaries contributes to or has
an obligation to contribute to, or has within six years prior to the date
of this Agreement contributed to or had an obligation to contribute to, an
employee benefit plan that is or was subject to Title IV of ERISA or
Section 412 of the Code.
SECTION 4.11. TAXES. Except as set forth in Section 4.11 of the ProNet
Disclosure Schedule:
(a) (i) all Tax Returns of or with respect to any Tax which is
required to be filed on or before the date hereof by or with respect to
ProNet or any its subsidiaries have been duly and timely filed except to
the extent that a failure to file any such Tax Returns, individually or in
the aggregate, could not reasonably be expected to have a ProNet Material
Adverse Effect, (ii) all items of income, gain, loss, deduction and credit
or other items required to be included in each such Tax Return have been so
included and all information provided in each such Tax Return is true,
correct and complete in all material respects except to the extent that a
failure to include any such items, individually or in the aggregate, could
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not reasonably be expected to have a ProNet Material Adverse Effect,
(iii) all Taxes which have become due with respect to the period covered by
each such Tax Return have been or will be timely paid in full except to the
extent that the failure to make any such payments, individually or in the
aggregate, could not reasonably be expected to have a ProNet Material
Adverse Effect, (iv) all withholding Tax requirements imposed on or with
respect to ProNet or any of its subsidiaries have been satisfied in full in
all respects except where the failure to satisfy any such requirements,
individually or in the aggregate, could not reasonably be expected to have
a ProNet Material Adverse Effect, and (v) no penalty, interest or other
charge is or will become due with respect to the late filing of any such
Tax Return or late payment of any such Tax except for any such penalties,
interest, or other charges which, individually or in the aggregate, could
not reasonably be expected to have a ProNet Material Adverse Effect.
(b) There is no claim against ProNet or any of its subsidiaries for
any amount of Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to
ProNet or any of its subsidiaries other than those disclosed (and to which
are attached true and complete copies of all audit or similar reports) in
Section 4.11 of the ProNet Disclosure Schedule and other than any such
claims, assessments, deficiencies, or adjustments which individually or in
the aggregate could not reasonably be expected to have a ProNet Material
Adverse Effect.
(c) To the best knowledge of ProNet after inquiry, the total amounts
set up as liabilities for current and deferred Taxes in the financial
statements referred to in Section 4.07 of this Agreement are sufficient to
cover the payment of all Taxes, whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due by or with respect
to ProNet and any of its subsidiaries up to and through the periods covered
thereby.
(d) Except for statutory liens for current Taxes not yet due and for
Taxes being contested in good faith, no material liens for Taxes exist upon
the assets of any of ProNet or its subsidiaries.
(e) Neither ProNet nor, to the knowledge of ProNet, any of its
affiliates has taken or agreed to take any action that would prevent the
Merger from constituting a reorganization qualifying under the provisions
of Section 368(a) of the Code.
SECTION 4.12. PROPERTIES. Except as set forth in Section 4.12 of the
ProNet Disclosure Schedule or as specifically described in the ProNet SEC
Reports, ProNet and its subsidiaries have good and marketable title, free and
clear of all liens, the existence of which could reasonably be expected to
have a ProNet Material Adverse Effect, to all their properties and assets
whether tangible or intangible, real, personal or mixed, reflected in
ProNet's consolidated financial statements contained in ProNet's most recent
SEC Report on Form 10-Q as being owned by ProNet and its subsidiaries as of
the date thereof, other than (a) any properties or assets that have been sold
or otherwise disposed of since the date of such financial statements, (b)
liens disclosed in the notes to such financial statements and (c) liens
arising in the ordinary course of business after the date of
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such financial statements. All buildings, and all fixtures, equipment and
other property and assets that are material to its business on a consolidated
basis and are held under leases or sub-leases by ProNet or any of its
subsidiaries (excluding any leases or sub-leases that are terminable by the
lessor on 30 or fewer days notice) are held under valid instruments
enforceable in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a
proceeding in law or equity).
SECTION 4.13. PAGERS. Section 4.13 of the ProNet Disclosure Schedule
sets forth the aggregate number of pagers in service in the paging systems of
ProNet and its subsidiaries as of December 31, 1995.
SECTION 4.14. VOTE REQUIRED. The only votes of the holders of any class
or series of ProNet capital stock necessary to approve the Merger and this
Agreement are the affirmative votes of the holders of not less than a
majority of the outstanding shares of ProNet Common Stock.
SECTION 4.15. BROKERS. No broker, finder or investment banker (other
than Lehman Brothers) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of ProNet. Prior to the date of
this Agreement, ProNet has made available to the Company a complete and
correct copy of all agreements between ProNet and Lehman Brothers pursuant to
which such firm will be entitled to any payment relating to the transactions
contemplated by this Agreement.
SECTION 4.16. OPINION OF FINANCIAL ADVISOR. ProNet has received the
written opinion of Lehman Brothers to the effect that, as of the date of this
Agreement, the Merger Consideration to be paid by ProNet is fair, from a
financial point of view, to the holders of ProNet Common Stock. ProNet will
promptly deliver a copy of such opinion to the Company.
ARTICLE V.
COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by
ProNet, the Company will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices except as contemplated by this Agreement or as provided
in or contemplated by the Company Disclosure Schedule;
(b) use all reasonable efforts to preserve substantially intact its
business organization, maintain its rights and franchises, retain the
services of its respective officers and key employees and maintain its
relationships with its respective customers and suppliers;
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(c) maintain and keep its properties and assets in as good a repair
and condition as at present, ordinary wear and tear excepted, and use
commercially reasonable efforts to maintain supplies and inventories in
quantities consistent with its customary business practices;
(d) use all reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that
currently maintained;
(e) promptly notify ProNet of any material change in the condition
(financial or otherwise), business, properties, assets or liabilities of
the Company and its subsidiaries or in the operation of the business or the
properties of the Company and its subsidiaries, any material litigation or
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) involving the
Company or any of its subsidiaries, any material breach of any
representation or warranty of the Company contained herein, any material
change in the status of any of the transactions listed on Section 5.03(e)
of the Company Disclosure Schedule or any other event that could reasonably
be expected to result in a Company Material Adverse Effect;
(f) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any Competing Transaction (as defined in Section
5.03(g)) and take the necessary steps to inform such parties of the
obligations undertaken in Section 5.03(g); and
(g) (i) file all Tax Returns required to be filed on or before the
Closing Date by or with respect to the Company or any of its subsidiaries
except to the extent that a failure to file any such Tax Returns,
individually or in the aggregate, could not reasonably be expected to have
a Company Material Adverse Effect, (ii) include in each such Tax Return all
items of income, gain, loss, deduction and credit or other items required
to be included in each such Tax Return except to the extent that a failure
to include any such items, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect, (iii)
timely pay in full all material Taxes which become due pursuant to such Tax
Returns except to the extent that the failure to make any such payments,
individually or in the aggregate, could not reasonably be expected to have
a Company Material Adverse Effect, and (iv) satisfy all withholding
requirements imposed on or with respect to the Company except where the
failure to satisfy any such withholding requirements, individually or in
the aggregate, could not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 5.02. AFFIRMATIVE COVENANTS OF PRONET. ProNet hereby covenants
and agrees that, unless otherwise expressly contemplated by this Agreement or
consented to in writing by the Company, ProNet will and will cause each of
its subsidiaries to:
(a) prior to the Effective Time, operate its business in the usual
and ordinary course consistent with past practices except as contemplated
by this Agreement or as provided in or contemplated by the ProNet
Disclosure Schedule;
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(b) prior to the Effective Time, use all reasonable efforts to
preserve substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective officers and
key employees and maintain its relationships with its respective customers
and suppliers;
(c) prior to the Effective Time, maintain and keep its properties and
assets in as good a repair and condition as at present, ordinary wear and
tear excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice;
(d) prior to the Effective Time, use all reasonable efforts to keep
in full force and effect insurance and bonds comparable in amount and scope
of coverage to that currently maintained;
(e) prior to the Effective Time, promptly notify the Company of any
material change in the condition (financial or otherwise), business,
properties, assets or liabilities of ProNet and its subsidiaries or in the
operation of the business or the properties of ProNet and its subsidiaries,
any material litigation or material governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated) involving ProNet or its subsidiaries, the breach of any
representation or warranty of the ProNet Companies contained herein, any
material change in the status of any of the transactions listed on
Section 5.04(f) of the ProNet Disclosure Schedule, or any other event that
could reasonably be expected to result in a ProNet Material Adverse Effect;
(f) on or before June 15, 1996, furnish to the Company a firm
commitment letter or letters from reputable banks or other financing
sources, which letter or letters have been accepted by ProNet, committing,
subject to standard terms and conditions of such letters, to provide to
ProNet the financing necessary to enable ProNet to consummate the
transactions contemplated by this Agreement;
(g) consummate the transactions contemplated by the commitment letter
or letters referred to in Section 5.02(f) so as to permit ProNet and Merger
Sub to consummate the transactions contemplated hereby; provided that if
ProNet shall have raised the funds necessary to consummate the transactions
contemplated by this Agreement from one or more other sources it shall not
be obligated to consummate the transactions contemplated by the firm
commitment letter or letters referred to in Section 5.02(f); it being
understood that ProNet's obligations hereunder and under Section 5.02(f)
are independent of and not contingent or conditioned upon ProNet's ability
to obtain any financing or commitments therefor;
(h) (i) file all Tax Returns required to be filed on or before the
Closing Date by or with respect to ProNet or any of its subsidiaries except
to the extent that a failure to file any such Tax Return, individually or
in the aggregate, could not reasonably be expected to have a ProNet
Material Adverse Effect, (ii) include in each such Tax Return all items of
income, gain, loss, deduction and credit or other items required to be
included in each such Tax Return except to the extent that a failure to
include any such items, individually or in the
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aggregate, could not reasonably be expected to have a ProNet Material
Adverse Effect, (iii) timely pay in full all material Taxes which become
due pursuant to such Tax Returns except to the extent that the failure to
make any such payments, individually or in the aggregate, could not
reasonably be expected to have a ProNet Material Adverse Effect, and (iv)
satisfy all withholding requirements imposed on or with respect to ProNet
except where the failure to satisfy any such withholding requirements,
individually or in the aggregate, could not reasonably be expected to have
a ProNet Material Adverse Effect; and
(i) immediately after the Effective Time, pay in full the principal
amounts then outstanding with respect to the $10,000,000 in aggregate
principal amount of the Company's 14% Junior Subordinated Notes issued
pursuant to the terms of that certain Amended and Restated Subordinated
Note, Preferred Stock and Warrant Purchase Agreement dated as of August 3,
1995, together with any accrued and unpaid interest thereon through July
31, 1996.
SECTION 5.03. NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by
ProNet, from the date of this Agreement until the Effective Time, the Company
shall not do, and shall not permit any of its subsidiaries to do, any of the
following:
(a) (i) except as set forth on Section 5.03(a) of the Company
Disclosure Schedule, increase the compensation payable to or to become
payable to any director; (ii) except with respect to stay bonuses listed on
Section 5.03(a) of the Company Disclosure Schedule, increase the
compensation payable or pay bonuses to officers or employees of the Company
other than in the ordinary course of business; (iii) except as set forth in
Section 5.03(a) of the Company Disclosure Schedule, grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any director, officer or employee; (iv) except as set forth in
Section 3.10(d) of the Company Disclosure Schedule, establish, adopt or
enter into any employee benefit plan or arrangement; or (v) except as may
be required by applicable law, as set forth in Section 3.10(d) of the
Company Disclosure Schedule, for actions that are required to comply with
the provisions of Section 6.08 of this Agreement, or such amendments or
actions that do not materially increase the obligations of the Company and
its subsidiaries thereunder, amend, or take any other actions (including,
without limitation, the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions permitted upon a
"CHANGE IN CONTROL" (as defined in the respective plans) of the Company or
a filing under Section 13(d) or 14(d) of the Exchange Act with respect to
the Company) with respect to any of the Benefit Plans or any of the plans,
programs, agreements, policies or other arrangements described in Section
3.10(d) of this Agreement;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock or other equity interests,
except dividends by a wholly owned subsidiary of the Company to the Company
or another wholly owned subsidiary of the Company;
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(c) (i) except as described in Section 3.03(c) of the Company
Disclosure Schedule, redeem, purchase or otherwise acquire any shares of
its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or its
subsidiaries' capital stock (other than any such acquisition directly from
any wholly owned subsidiary of the Company in exchange for capital
contributions or loans to such subsidiary), or any options, warrants or
conversion or other rights to acquire any shares of its or its
subsidiaries' capital stock or any such securities or obligations (except
in connection with the exercise of outstanding stock options or warrants in
accordance with their terms), (ii) effect any reorganization or
recapitalization of the Company or any of its subsidiaries, or (iii) split,
combine or reclassify any of its or its subsidiaries' capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its or its
subsidiaries' capital stock;
(d) (i) except as set forth in Section 3.03(a) herein or as described
in Section 3.03(c) of the Company Disclosure Schedule, issue (whether upon
original issue or out of treasury), sell, grant, award, deliver or limit
the voting rights of any shares of any class of its or its subsidiaries'
capital stock, any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to
acquire any such shares (except for the issuance of shares upon the
exercise of outstanding stock options or warrants in accordance with their
terms), (ii) amend or otherwise modify the terms of any such rights,
warrants or options, or (iii) take any action to accelerate the vesting of
any stock options;
(e) except as set forth on Section 5.03(e) to the Company Disclosure
Schedule, acquire or agree to acquire (whether pursuant to a definitive
agreement, a non-binding letter of intent or otherwise), by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any other
person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past practice);
(f) except as set forth on Section 5.03(f) of the Company Disclosure
Schedule, sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its assets or any assets of any of its
subsidiaries, except for pledges or dispositions of assets in the ordinary
course of business and consistent with past practice;
(g) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate,
directly or indirectly, any inquiries or the making of any proposal or
offer relating to, or that may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to, or endorse, any Competing
Transaction, or authorize or permit any of the officers, directors,
employees or agents of the Company or any of its subsidiaries or any
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investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of the Company's subsidiaries
to take any such action, and the Company shall immediately notify ProNet of
all relevant terms of any such inquiries or proposals received by the
Company or any of its subsidiaries or by any such officer, director,
employee, agent, investment banker, financial advisor, attorney, accountant
or other representative relating to any proposed Competing Transaction and
if such inquiry or proposal is in writing, the Company shall immediately
deliver or cause to be delivered to ProNet a copy of such inquiry or
proposal; PROVIDED, HOWEVER, that nothing contained in this subsection (g)
shall prohibit the Board of Directors of the Company from complying with
Rule 14e-2 or Rule 14d-9 promulgated under the Exchange Act with regard to
a Competing Transaction. For purposes of this Agreement, "COMPETING
TRANSACTION" shall mean any sale or lease of a material portion of the
Company's assets, merger, consolidation, share exchange, business
combination or similar transaction involving the Company or any of its
subsidiaries or the acquisition in any manner, directly or indirectly, of a
material interest in any voting securities of, or a material portion of the
assets of, the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement;
(h) release any third party from its obligations under any existing
standstill agreement or arrangement relating to a Competing Transaction or
otherwise under any confidentiality or other similar agreement relating to
information material to the Company or any of its subsidiaries;
(i) except as set forth on Section 5.03(i) of the Company Disclosure
Schedule adopt or propose to adopt any amendments to its Certificate of
Incorporation or its Bylaws;
(j) (i) except as set forth on Section 5.03(j) to the Company's
Disclosure Schedule change any of its significant accounting policies or
(ii) make or rescind any express or deemed election relating to taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or
change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending December 31, 1994, except,
in the case of clause (i) or clause (ii), as may be required by Law or
generally accepted accounting principles;
(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise, which, together with any fees
or expenses incurred (whether or not the obligation for payment thereof
remains outstanding, including prepayment penalties but excluding any
Expenses the payment for which is provided for in Section 8.05(a) of this
Agreement) in connection with the transactions contemplated by this
Agreement and any contemplated acquisitions, would, when aggregated with
the Company's other indebtedness then outstanding (including the
liquidation preference of and accrued dividends on the Company's Series A
Preferred Stock and the principal of and accrued interest on the Company's
14% Junior Subordinated Notes
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and the amount of any prepayment penalties to be paid in respect of such
indebtedness as a result of the completion of the transactions contemplated
hereby), exceed $110 million; or
(l) agree in writing or otherwise to do any of the foregoing.
SECTION 5.04. NEGATIVE COVENANTS OF PRONET. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Company, from the date of this Agreement until the Effective Time, ProNet
shall not do, and shall not permit any of its subsidiaries to do, any of the
following:
(a) knowingly take any action that would result in a failure to
maintain the eligibility of the ProNet Common Stock for quotation on the
NASDAQ National Market;
(b) propose to adopt any amendments to its Certificate of
Incorporation or its Bylaws that could reasonably be expected to delay or
have an adverse effect on the consummation of the transactions contemplated
by this Agreement or would otherwise be inconsistent in any material
respect with the terms and conditions of this Agreement or the other
agreements or transactions contemplated hereby (it being understood that
this clause (b) shall not in any respect limit the right and power of
ProNet to amend its Certificate of Incorporation to increase the authorized
number of shares of any class of capital stock of ProNet);
(c) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of its or its subsidiaries capital stock or
other equity interests, except dividends by a wholly owned subsidiary of
ProNet to ProNet or another wholly owned subsidiary of ProNet;
(d) (i) except as described in Section 4.03(c) of the ProNet
Disclosure Schedule, redeem, purchase or otherwise acquire any shares of
its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or its
subsidiaries' capital stock (other than any such acquisition directly from
any wholly owned subsidiary of ProNet in exchange for capital contributions
or loans to such subsidiary), or any options, warrants or conversion or
other rights to acquire any shares of its or its subsidiaries' capital
stock or any such securities or obligations (except in connection with the
exercise of outstanding stock options or warrants in accordance with their
terms), (ii) effect any reorganization or recapitalization of ProNet or any
of its subsidiaries, or (iii) split, combine or reclassify any of its or
its subsidiaries' capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock;
(e) except as set forth on Section 5.04(e) of the ProNet Disclosure
Schedule, sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its assets or any assets of any of its
subsidiaries, except for pledges or dispositions of assets in the ordinary
course of business and consistent with past practice;
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(f) except as set forth in Section 5.04(f) of the ProNet Disclosure
Schedule, (i) prior to the filing of the Registration Statement, acquire or
agree to acquire (other than pursuant to the terms of a non-binding letter
of intent the execution by ProNet of which would not cause a delay in the
declaration of effectiveness of the Registration Statement), by merging or
consolidating with, by purchasing an equity interest in all or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, and (ii) after the filing of the Registration Statement and prior
to the Effective Time, acquire or agree to acquire by merging or
consolidating with, by purchasing an equity interest in all or a portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
(A) the principal operations of which are not connected with the paging,
enhanced paging ( personal communications services) or tracking businesses,
or (B) with respect to any such corporation, partnership, association or
other business organization or division thereof the principal operations of
which are connected with paging, enhanced paging (personal communications
services) or tracking businesses, (1) for which the aggregate consideration
to be paid by ProNet or any subsidiary thereof exceeds $20 million with
respect to any individual transaction or $40 million in the aggregate and
(2) that would cause a delay in the declaration of effectiveness of the
Registration Statement; or
(g) agree in writing or otherwise to do any of the foregoing.
SECTION 5.05. ACCESS AND INFORMATION.
(a) The Company shall, and shall cause its subsidiaries to,
(i) afford to ProNet and ProNet's officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, the "PRONET REPRESENTATIVES") access during ordinary
business hours and at other reasonable times, upon reasonable prior notice,
to the officers, employees, accountants, agents, properties, offices and
other facilities of the Company and its subsidiaries and to the books and
records thereof and (ii) furnish promptly to ProNet and the ProNet
Representatives such information concerning the business, properties,
contracts, records and personnel of the Company and its subsidiaries
(including, without limitation, financial, operating and other data and
information) as may be reasonably requested, from time to time, by ProNet.
(b) ProNet shall, and shall cause its subsidiaries to, (i) afford to
the Company and the Company's officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively,
the "COMPANY REPRESENTATIVES") access during ordinary business hours and at
other reasonable times, upon reasonable prior notice, to the officers,
employees, accountants, agents, properties, offices and other facilities of
ProNet and its subsidiaries and to the books and records thereof and
(ii) furnish promptly to the Company and the Company Representatives such
information concerning the business, properties, contracts, records and
personnel of ProNet and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be reasonably
requested, from time to time, by the Company.
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(c) No investigation by the parties hereto made heretofore or
hereafter shall affect the representations and warranties of the parties
that are contained herein and each such representation and warranty shall
survive such investigation.
(d) Each party to this Agreement (the ProNet Companies being
considered one party for purposes of this Section 5.05(d)) shall hold in
confidence all nonpublic information received from the other party to this
Agreement unless required to be disclosed by law or until such time as such
information is otherwise publicly available and, if this Agreement is
terminated, each party will deliver to the other party all documents, work
papers and other materials (including copies) obtained by such party or on
its behalf from the other party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution
hereof.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01. PRESENTATION TO STOCKHOLDERS. The Company shall, promptly
after the date of this Agreement, take all actions necessary in accordance
with Delaware Law and its Certificate of Incorporation and Bylaws to present
the Merger and this Agreement to the holders of Company Series A Preferred
Stock, Company Series B Preferred Stock and Company Common Stock for their
consideration and approval either pursuant to the consent of the requisite
percentage of holders of Company Series A Preferred Stock, Company Series B
Preferred Stock and Company Common Stock or by the vote thereof at a meeting
of the Company's stockholders duly called and convened to act on the Merger
and this Agreement (the "COMPANY STOCKHOLDERS' MEETING"). In like manner,
ProNet shall, promptly after the date of this Agreement, take all actions
necessary in accordance with Delaware Law, ProNet's Certificate of
Incorporation and Bylaws and the rules of The Nasdaq Stock Market to present
the Merger and this Agreement to the holders of ProNet Common Stock for their
consideration and approval either pursuant to the consent of the requisite
percentage of holders of ProNet Common Stock or by the vote thereof at a
meeting of ProNet's stockholders duly called and convened to act on the
Merger and this Agreement (the "PRONET STOCKHOLDERS' MEETING"). The Company
and ProNet shall consult with each other in connection with such meetings.
The Company and ProNet shall use their reasonable best efforts to solicit
from their respective stockholders proxies in favor of the approval and
adoption of this Agreement and to secure the vote or consent of stockholders
required by Delaware Law and their respective Certificates of Incorporation
and Bylaws and by the rules of the NASDAQ National Market to approve and
adopt the Merger and this Agreement. The Company and ProNet shall cause
their respective Boards of Directors (a) not to withdraw, modify or change
their recommendations of this Agreement or the Merger and (b) to continue to
recommend to the respective stockholders of the Company and ProNet the
approval and adoption of this Agreement and the Merger on the terms and
conditions set forth in this Agreement.
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SECTION 6.02. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
(a) As promptly as practicable after the execution of this Agreement,
ProNet shall prepare and file with the SEC a Registration Statement
containing a joint Proxy Statement/Prospectus (the "PROXY
STATEMENT/PROSPECTUS") for stockholders of the Company and ProNet in
connection with (i) the registration under the Securities Act of the offer,
sale and delivery of ProNet Common Stock and, if required by the Securities
Act, the Assumed Warrants that have been previously registered by Company
under the Securities Act to be issued in the Merger and (ii) the vote of
the requisite percentage of the stockholders of the Company and ProNet with
respect to the Merger and this Agreement. ProNet and the Company shall
each use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and shall take any action
required to be taken in order to comply with any applicable federal or
state securities laws in connection with the issuance of shares of ProNet
Common Stock in the Merger. ProNet and the Company shall each furnish all
information concerning itself, its subsidiaries and the holders of its
capital stock as the other may reasonably request in connection with such
actions. As promptly as practicable after the Registration Statement shall
have become effective, the Company and ProNet shall mail (the "MAILING
DATE") the Proxy Statement/Prospectus to the holders of Company Common
Stock, Company Series A Preferred Stock, Common Stock Warrants, or ProNet
Common Stock, as the case may be, of record at least 20 calendar days prior
to the Company Stockholders' Meeting and the ProNet Stockholders' Meeting.
It shall be a condition to the mailing of the Proxy Statement/Prospectus
that ProNet and the Company shall have received the comfort letters
described in Section 6.11 of this Agreement. The Proxy
Statement/Prospectus shall include the recommendation of the Board of
Directors of the Company and ProNet in favor of the Merger.
(b) None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement is filed with the
SEC and at the time it becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements made
therein not misleading and (ii) the Proxy Statement/Prospectus will, at the
Mailing Date and at the time of the Company Stockholders' Meeting and the
ProNet Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. If at any time
prior to the Company Stockholders' Meeting or the ProNet Stockholders'
Meeting any event or circumstance relating to the Company or any of its
affiliates, or its or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus,
the Company shall promptly inform ProNet. All documents that the Company
is responsible for filing with any Governmental Entity in connection with
the transactions contemplated hereby, including without limitation the
Proxy Statement/Prospectus to the extent that the information contained
therein relates to the Company and its subsidiaries or the transactions
contemplated hereby, will comply as to form in all material respects with
the provisions of
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applicable law, including applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder, and each such
document required to be filed with any Governmental Entity other than the
SEC will comply with the provisions of applicable law as to the information
required to be contained therein.
(c) None of the information supplied or to be supplied by ProNet for
inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement is filed with the SEC and at
the time it becomes effective under the Securities Act, contain any 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 (ii) the Proxy Statement/Prospectus will, at the Mailing
Date and at the time of the Company Stockholders' Meeting and the ProNet
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in
which they were made, not misleading. If at any time prior to the Company
Stockholders' Meeting or the ProNet Stockholders' Meeting any event or
circumstance relating to ProNet or any of its affiliates, or its or their
respective officers or directors, should be discovered by ProNet that
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, ProNet shall promptly inform
the Company. All documents that ProNet is responsible for filing with any
Governmental Entity in connection with the transactions contemplated
hereby, including without limitation the Registration Statement to the
extent that the information contained therein relates to ProNet and its
subsidiaries or the transactions contemplated hereby, will comply as to
form in all material respects with the provisions of applicable law,
including applicable provisions of the Securities Act, the Exchange Act and
the rules and regulations thereunder, and each such document required to be
filed with any Governmental Entity other than the SEC will comply with the
provisions of applicable law as to the information required to be contained
therein.
SECTION 6.03. APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) The Company and ProNet shall each use, and shall cause each of
their respective subsidiaries to use, all reasonable efforts promptly
(i) to take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the transactions contemplated
by this Agreement, (ii) to obtain from any Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained by the Company or ProNet, respectively, or any of
their respective subsidiaries in connection with the authorization,
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, including, without limitation, the
Merger, and (iii) to make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the Merger
required under (A) the Securities Act and the Exchange Act and the rules
and regulations thereunder, and any other applicable federal or state
securities laws, (B) the HSR Act, (C) the Communications Act and (D) any
other applicable Law; and ProNet and the Company shall cooperate with each
other in connection with the making of all such filings, including
providing copies of all such
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documents to the nonfiling party and its advisors prior to filing and,
if requested, shall accept all reasonable additions, deletions or changes
suggested in connection therewith. The Company and ProNet shall furnish
all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law in connection
with the transactions contemplated by this Agreement.
(b) ProNet and the Company agree, and shall cause each of their
respective subsidiaries, to cooperate and to use all reasonable efforts to
contest and resist any action, including legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary
or permanent) (an "ORDER") that is in effect and that restricts, prevents
or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial
appeal and all available legislative action. ProNet and the Company also
agree to take any and all reasonable actions, including, without
limitation, the disposition of assets or the withdrawal from doing business
in particular jurisdictions, required by regulatory authorities as a
condition to the granting of any approvals required in order to permit the
consummation of the Merger or as may be required to avoid, lift, vacate or
reverse any legislative or judicial action that would otherwise cause any
condition to Closing not to be satisfied; PROVIDED, HOWEVER, that in no
event shall either party take, or be required to take, any action that
could reasonably be expected to have a Company Material Adverse Effect or a
ProNet Material Adverse Effect.
(c) The Company and ProNet shall each promptly give (or shall cause
their respective subsidiaries to give) any notices regarding the Merger,
this Agreement or the transactions contemplated hereby to third parties
required by Law or by any material contract, license, lease or other
material agreement to which it is a party or by which it is bound, and use,
and cause its subsidiaries to use, all reasonable efforts to obtain any
third party consents (i) necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, (ii) otherwise required under
any contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated by this Agreement or
(iii) required to prevent a Company Material Adverse Effect or a ProNet
Material Adverse Effect, respectively, from occurring.
(d) If any party shall fail to obtain any third party consent
described in subsection (c) above, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and ProNet, their
respective subsidiaries, and their respective businesses resulting, or
which could reasonably be expected to result, from the failure to obtain
such consent.
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SECTION 6.04. AFFILIATES; TAX TREATMENT.
(a) The Company shall use all reasonable efforts to obtain and
deliver to ProNet an executed letter agreement, substantially in the form
of EXHIBIT A hereto, (i) by the earlier of August 31, 1996 and the Closing
Date, from each person identified as an affiliate of the Company in Section
3.12 of the Company Disclosure Schedule, and (ii) by the Closing Date, from
any other person who is an affiliate of the Company on the Closing Date;
provided that no such letter agreement shall be required from any such
person who does not own any capital stock of the Company on the Closing
Date.
(b) ProNet shall be entitled to place legends as specified in such
letter agreement on the certificates evidencing any ProNet Common Stock to
be received by such affiliates pursuant to the terms of this Agreement, and
to issue appropriate stop transfer instructions to the transfer agent of
the ProNet Common Stock, consistent with the terms of such letter
agreements.
(c) Neither the Company nor ProNet nor any of their respective
subsidiaries or other affiliates shall (i) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the
Code or (ii) knowingly enter into any contract, agreement, commitment or
arrangement with respect to the foregoing.
(d) At or before the Closing, ProNet shall provide an officer's
certificate, in form and substance reasonably acceptable to ProNet, to
Kirkland & Ellis to assist such counsel in rendering the written opinion
provided for in Section 7.01(g) of this Agreement and the Company shall
provide an officer's certificate, in form and substance reasonably
satisfactory to the Company, to Vinson & Elkins L.L.P. to assist such
counsel in rendering the written opinion provided for in Section 7.01(f) of
this Agreement.
SECTION 6.05. PUBLIC ANNOUNCEMENTS. The initial press release relating
to this Agreement shall be a joint press release and thereafter, to the
extent practicable, ProNet and the Company shall consult with each other
before issuing any press release or otherwise making any written or
electronic public statements with respect to this Agreement or the Merger and
shall not issue any such press release or make any such written or electronic
public statement prior to such consultation.
SECTION 6.06. NASDAQ LISTING. ProNet shall use all reasonable efforts
to cause the shares of ProNet Common Stock to be issued in the Merger to be
approved for quotation on The Nasdaq Stock Market prior to the Effective Time.
SECTION 6.07. STATE TAKEOVER STATUTES. The Company will take all steps
necessary to exempt the transactions contemplated by this Agreement from, and
if necessary challenge the validity of, any applicable state takeover law,
including, without limitation, Section 203 of Delaware Law. The Company
shall take all actions necessary under Delaware Law, including approving the
transactions contemplated by this Agreement and the Voting Agreement, to
ensure that the
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prohibitions on business combinations set forth in Section 203 of Delaware
Law do not, or will not, apply to the transactions contemplated by this
Agreement.
SECTION 6.08. ASSUMPTION OF OBLIGATIONS TO ISSUE STOCK.
(a) At the Effective Time, automatically and without any action on
the part of the holder thereof, (i) each then outstanding stock option
(other than options under which an Affiliated Stockholder is an optionee)
shall be assumed by ProNet and shall become an option to purchase that
number of shares of ProNet Common Stock obtained by multiplying the number
of shares of Company Common Stock issuable upon the exercise of such option
by the Public Stockholder Common Stock Exchange Ratio at an exercise price
per share equal to the per share exercise price of such option divided by
the Public Stockholder Common Stock Exchange Ratio and otherwise upon the
same terms and conditions as such outstanding options to purchase Company
Common Stock, and (ii) each then outstanding stock option under which an
Affiliated Stockholder is an optionee shall be assumed by ProNet and shall
become an option to purchase that number of shares of ProNet Common Stock
obtained by multiplying the number of shares of Company Common Stock
issuable upon the exercise of such option by the Affiliated Stockholder
Common Stock Exchange Ratio at an exercise price per share equal to the per
share exercise price of such option divided by the Affiliated Stockholder
Common Stock Exchange Ratio and otherwise upon the same terms and
conditions as such outstanding options to purchase Company Common Stock;
provided, however, that in the case of any option to which Section 421 of
the Code applies by reason of the qualifications under Section 422 or 423
of such Code, the exercise price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option
shall be determined in order to comply with Section 424(a) of the Code.
(b) At the Effective Time, automatically and without any action on
the part of the holder thereof, (i) each then outstanding Common Stock
Warrant (other than Common Stock Warrants held of record or beneficially by
the Affiliated Stockholders) shall be assumed by ProNet and shall become a
warrant to purchase that number of shares of ProNet Common Stock obtained
by multiplying the number of shares of Company Common Stock issuable upon
the exercise of such Common Stock Warrant by the Public Stockholder Common
Stock Exchange Ratio at an exercise price per share equal to the per share
exercise price of the Common Stock Warrant divided by the Public
Stockholder Common Stock Exchange Ratio and otherwise upon the same terms
and conditions as such outstanding Common Stock Warrant and (ii) each then
outstanding Common Stock Warrant held of record or beneficially by an
Affiliated Stockholder shall be assumed by ProNet and shall become a
warrant to purchase that number of shares of ProNet Common Stock obtained
by multiplying the number of shares of Company Common Stock issuable upon
the exercise of such Common Stock Warrant by the Affiliated Stockholder
Common Stock Exchange Ratio at an exercise price per share equal to the per
share exercise price of the Common Stock Warrant divided by the Affiliated
Stockholder Common Stock Exchange Ratio and otherwise upon the same terms
and conditions as such outstanding Common Stock Warrant.
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(c) ProNet shall take all corporate actions necessary to reserve for
issuance a sufficient number of shares of ProNet Common Stock for delivery
upon exercise of the stock options assumed by ProNet pursuant to Section
6.08(a) above (the "ASSUMED STOCK OPTIONS") and any warrants assumed by
ProNet pursuant to Section 6.08(b) (the "ASSUMED WARRANTS").
(d) As promptly as practicable after the Effective Time, but in no
event later than 90 days after the Effective Time, ProNet shall file a
Registration Statement on Form S-8 (or any successor or other appropriate
forms) with respect to the shares of ProNet Common Stock subject to the
Assumed Stock Options and shall use its best efforts to maintain the
effectiveness of such registration statement for so long as such Assumed
Stock Options remain outstanding.
(e) Each of the Stock Option Plans and Common Stock Warrants
providing for the issuance or grant of Assumed Stock Options or Assumed
Warrants shall be assumed as of the Effective Time by ProNet with such
amendments thereto as may be required to reflect the Merger.
SECTION 6.09. MERGER SUB. Prior to the Effective Time, Merger Sub shall
not conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a DE
MINIMIS amount of cash paid to Merger Sub for the issuance of its stock to
ProNet) or liabilities.
SECTION 6.10. INDEMNIFICATION AND INSURANCE.
(a) The Company hereby indemnifies and holds harmless ProNet and its
directors and officers who sign the Registration Statement, from and
against any loss, claim, damage, cost, liability, obligation or expense
(including reasonable attorneys' fees and costs of investigation) to which
any such indemnified party may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, claim, damage, cost,
liability, obligation or expense or actions in respect thereof arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact supplied by such indemnifying party and contained or
incorporated by reference in the Registration Statement or Proxy
Statement/Prospectus or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein with respect to such
indemnifying party not misleading or, in the case of the Proxy
Statement/Prospectus, necessary to make the statements therein with respect
to such indemnifying party, in light of the circumstances under which they
were made, not misleading.
(b) ProNet hereby indemnifies and holds harmless the Company and its
directors and officers from and against any loss, claim, damage, cost,
liability, obligation or expense (including reasonable attorneys' fees and
costs of investigation) to which any such indemnified party may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such loss, claim, damage, cost, liability, obligation or expense or
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actions in respect thereof arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact relating supplied
by such indemnifying party and contained or incorporated by reference in the
Registration Statement or the Proxy Statement/Prospectus or arises out of
or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein with respect to such indemnifying party not misleading
or, in the case of the Proxy Statement/Prospectus, necessary to make the
statements therein with respect to such indemnifying party, in light of the
circumstances under which they were made, not misleading.
(c) The Company and ProNet agree that, for a period of four years
after the Closing Date:
(i) ProNet shall cause the Surviving Corporation to keep in
effect provisions in the Surviving Corporation's Certificate of
Incorporation and Bylaws providing for exculpation of director and
officer liability and indemnification of officers and directors to the
fullest extent permitted under Delaware Law, which provisions shall be
acceptable to the Company, and which provisions shall not be amended
except as required by applicable law or except to make changes
permitted by law that would enlarge the right of indemnification or
exculpation. ProNet hereby guarantees the performance by the
Surviving Corporation of all of the Surviving Corporation's
obligations to provide indemnification.
(ii) Prior to the Effective Time, the Company shall be entitled
to purchase officers' and directors' liability insurance policies,
provided that the amount of liabilities covered thereby shall not
exceed $5,000,000 and provided further that the initial annual premium
with respect to such policies shall not exceed $210,000. ProNet shall
cause the Surviving Corporation to, at the Effective Time, purchase a
six year run-off policy from the same carrier as the carrier in effect
at the Effective Time (which price for such run-off policy shall not
exceed $400,000) and to not terminate such policy prior to the sixth
anniversary of the Effective Time;
(iii) In addition to and without limiting the foregoing
provisions of this Section 6.10(c), but subject in all respects of the
remaining provisions of this Section 6.10(c)(iii), ProNet shall, to
the fullest extent permitted under Delaware Law, indemnify, pay on
behalf of, defend and hold harmless the current officers and directors
of the Company (collectively, the "INDEMNIFIED PARTIES") against all
losses, expenses, claims, damages, liabilities or amounts (including
without limitation costs of defense, enforcement of rights hereunder
and reasonable legal fees and expenses) that are paid in settlement
of, or otherwise incurred in connection with, any claim, action, suit,
proceeding or investigation by reason of the fact that such
Indemnified Party was a director or officer of the Company prior to
the Effective Time and arising out of or in any way relating to the
transactions contemplated hereby (a "CLAIM") and shall pay expenses in
advance of the final disposition of any such Claim to each Indemnified
Party upon receipt from the Indemnified Party to whom expenses are
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advanced of an undertaking as required by Delaware Law to repay such
advances if legally required to do so. Notwithstanding the foregoing,
as a condition to such indemnification and payment of expenses, each
Indemnified Party shall, prior to any such indemnification or payment
by ProNet, use reasonable efforts (A) to be indemnified, defended and
held harmless, and receive payment for such expenses, with respect to
such Claims by (1) the Company and (2) any other entity that
reasonably could be expected to provide such indemnification and
payment of expenses (the Company and such other entities being called
herein the "OTHER INDEMNIFYING PARTIES") and (B) to be reimbursed or
otherwise paid for any such amounts pursuant to (1) the policy or
policies of insurance currently maintained by the Company or purchased
by the Company pursuant to Section 6.10(c)(ii) hereof or (2) any other
policies of insurance that reasonably could be expected to provide
such coverage. In the event and to the extent that an Indemnified
Party is so indemnified and held harmless, and/or receives payment for
such expenses, by an Other Indemnifying Party or is reimbursed or is
otherwise paid by the issuer of any such policies, ProNet shall not be
obligated hereunder, and no third party (including, without
limitation, any Other Indemnifying Party or insurer) shall be entitled
to any subrogation or other rights against ProNet. For purposes of
this Section 6.10(c)(iii), in the event any Claim is brought against
any Indemnified Party, ProNet shall be entitled to participate therein
at its own expense. In such event, the Indemnified Parties shall
cooperate with and provide all information reasonably requested by
ProNet. In the event that the defense of such Claim is not assumed by
an Other Indemnifying Party, ProNet may, at its option (provided that
(i) such Claim does not involve a criminal matter and (ii) ProNet
acknowledges to the Indemnified Party in writing that it will
indemnify the Indemnified Party without reservation of rights other
than subrogation rights against third parties), assume the defense of
any Claim, with counsel reasonably satisfactory to the Indemnified
Party. After notice from ProNet to the Indemnified Party of the
election by ProNet to assume the defense thereof, ProNet shall not be
liable to the Indemnified Party under this Section 6.10(c)(iii) for
any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. The
Indemnified Party shall have the right to employ separate counsel in
connection with such Claim, but the fees and expenses of such counsel
incurred after notice from ProNet of its assumption of the defense
thereof shall be at the expense of the Indemnified Party unless
(a) the employment of counsel by the Indemnified Party has been
authorized by ProNet, (b) the Indemnified Party shall have reasonably
concluded that there is, under applicable standards of professional
conduct, an actual conflict between the interests of ProNet and the
Indemnified Party in the conduct of the defense of such action, (c)
ProNet shall not have employed counsel to assume the defense of such
action, or (d) ProNet shall not be vigorously defending such claims,
in each of which cases the reasonable fees and expenses of the
Indemnified Party's separate counsel shall be at the expense of
ProNet. In any case where the expense of defending a Claim is to be
borne by ProNet, the Indemnified Parties as a group shall be entitled
to no more than one law firm (in addition to local counsel) to
represent them with respect to such
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Claim unless there are, under applicable standards of professional
conduct (as reasonably determined by counsel to the Indemnified
Parties), separate and distinct interests or legal positions of any two
or more Indemnified Parties, in which event such additional counsel as
may be reasonably required by reason of such separate or distinct
interests or legal positions may be retained by the Indemnified
Parties. ProNet shall not be liable to indemnify the Indemnified
Parties under this Section 6.10(c)(iii) for any amounts paid in any
settlement of any Claim if such settlement is effected without ProNet's
written consent, which consent shall not be unreasonably withheld.
ProNet shall be permitted to settle any Claim, except that ProNet shall
not settle any Claim (i) without first acknowledging to the Indemnified
Party in writing that it will indemnify the Indemnified Party without
reservation of rights other than subrogation rights against third
parties and (ii) in any manner which would impose any non-monetary
penalty or material limitation (or any monetary penalty with respect to
which the Indemnified Party is not entitled to indemnification pursuant
to this Section 6.10(c)(iii)) on the Indemnified Party without the
Indemnified Party's consent. Any Indemnified Party wishing to claim
indemnification under this Section 6.10(c)(iii) upon learning of any
such Claim shall promptly notify ProNet (although the failure so to
notify ProNet shall not relieve ProNet from any liability that ProNet
may have under Section 6.10(c)(iii), except to the extent such failure
materially prejudices ProNet's position with respect to such Claim),
and shall deliver to ProNet the undertaking specified above in this
Section 6.10(c)(iii).
(iv) The provisions of this Section 6.10(c) are intended to be in
addition to the rights otherwise available to the current officers and
directors of the Company by law, charter, statute or bylaw, and shall
operate for the benefit of, and shall be enforceable by, each party
entitled to indemnification hereunder, his heirs and his
representatives.
SECTION 6.11. COMFORT LETTERS.
(a) The Company shall use all reasonable commercial efforts to cause
Ernst & Young, L.L.P. to deliver a letter, dated as of the date of the
Proxy Statement/Prospectus, and addressed to the Company and ProNet and
their respective Boards of Directors, in form and substance reasonably
satisfactory to ProNet and customary in scope and substance for agreed upon
procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Proxy Statement/Prospectus.
(b) ProNet shall use all reasonable commercial efforts to cause Ernst
& Young, L.L.P. to deliver a letter dated as of the date of the Proxy
Statement/Prospectus, and addressed to ProNet and the Company and their
respective Boards of Directors, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for agreed
upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Proxy Statement/Prospectus.
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ARTICLE VII.
CLOSING CONDITIONS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions
(any or all of which may be waived by the parties hereto in writing, in whole
or in part, to the extent permitted by applicable Law):
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated by the SEC.
(b) STOCKHOLDER APPROVAL. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the stockholders of the
Company and of ProNet.
(c) NO ORDER. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(d) HSR ACT. The applicable waiting period under the HSR Act with
respect to the transactions contemplated by this Agreement shall have
expired or been terminated.
(e) COMMUNICATIONS ACT. The applications for transfer of the FCC
Licenses and the other transactions contemplated herein shall have been
approved by Final Order of the FCC pursuant to Section 3.10(d) of the
Communications Act.
(f) PRONET TAX OPINION. ProNet shall have received from Vinson &
Elkins L.L.P. a written opinion, dated as of the Mailing Date, to the
effect that the Merger, when effected in accordance with this Agreement,
will qualify as a reorganization under Section 368(a) of the Code and
ProNet, Merger Sub and the Company will constitute parties to such
reorganization, and a copy of such opinion shall have been delivered to the
Company.
(g) COMPANY TAX OPINION. The Company shall have received from
Kirkland & Ellis a written opinion, dated as of the Mailing Date, to the
effect that the Merger, when effected in accordance with this Agreement,
will qualify as a reorganization under Section 368(a) of the Code and
ProNet, Merger Sub and the Company will constitute parties to such
reorganization, and a copy of such opinion shall have been delivered to
ProNet.
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(h) NASDAQ APPROVAL. The shares of ProNet Common Stock to be issued
in the Merger shall have been approved for quotation on The Nasdaq Stock
Market.
SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE PRONET
COMPANIES. The obligations of the ProNet Companies to effect the Merger and
the other transactions contemplated by this Agreement are also subject to the
following conditions (any or all of which may be waived by ProNet in writing,
in whole or in part):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company contained in this Agreement shall have been true
and correct in all material respects as of the date made. The ProNet
Companies shall have received a certificate of the President and the Chief
Executive Officer of the Company, in their capacities as such, dated the
Closing Date, to the effect that each of the representations and warranties
of the Company contained in this Agreement were true and correct in all
material respects as of the date made.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time. The ProNet Companies shall have received a
certificate of the President and the Chief Executive Officer of the
Company, in their capacities as such, dated the Closing Date, to such
effect.
(c) CONSENTS. All consents, authorizations, orders and approvals of,
or filings or registrations with, any governmental commission, board or
other regulatory body required in connection with the execution, delivery
and performance of this Agreement shall have been obtained or made, except
for filings in connection with the Merger and any other documents required
to be filed after the Effective Time and except where the failure to have
obtained or made any such consent, authorization, order, approval, filing
or registration would not have a material adverse effect on either (i) the
business of ProNet and its subsidiaries, taken as a whole, following the
Effective Time or (ii) the business of the Company and its subsidiaries,
taken as a whole.
(d) EXERCISE OF SERIES B PREFERRED STOCK WARRANTS. All of the
Series B Preferred Stock Warrants shall have been exercised in full.
SECTION 7.03. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby are also subject to the following conditions (any or all
of which may be waived by the Company in writing, in whole or in part):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the ProNet Companies contained in this Agreement shall have
been true and correct in all material respects as of the date made. The
Company shall have received a certificate of the President and the Chief
Financial Officer of each of the ProNet Companies, in their capacities as
such, dated as of the Effective Time, to the effect that each of the
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representations and warranties of the Company contained in this Agreement
were true and correct in all material respects as of the date made.
(b) AGREEMENTS AND COVENANTS. The ProNet Companies shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time. The Company shall have received a
certificate of the President and the Chief Financial Officer of each of the
ProNet Companies, in their capacities as such, dated the date of the
Effective Time, to that effect.
(c) CONSENTS. All consents, authorizations, orders and approvals of,
or filings or registrations with, any governmental commission, board or
other regulatory body required in connection with the execution, delivery
and performance of this Agreement shall have been obtained or made, except
for filings in connection with the Merger and any other documents required
to be filed after the Effective Time and except where the failure to have
obtained or made any such consent, authorization, order, approval, filing
or registration would not have a material adverse effect on the business of
ProNet and its subsidiaries, taken as a whole, following the Effective
Time.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of the Company and/or ProNet:
(a) by mutual written consent of ProNet and the Company;
(b) by ProNet, if any representation or warranty of the Company
contained in this Agreement was not true and correct in all material
respects as of the date made or upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement, in either
case such that the conditions set forth in Section 7.02(a) or Section
7.02(b) of this Agreement would not be satisfied (a "TERMINATING COMPANY
BREACH");
(c) by the Company, if any representation or warranty of ProNet
contained in this Agreement was not true and correct in all material
respects as of the date made or upon a material breach of any covenant or
agreement on the part of the ProNet Companies set forth in this Agreement,
in either case such that the conditions set forth in Section 7.03(a) or
Section 7.03(b) of this Agreement would not be satisfied (a "TERMINATING
PRONET BREACH");
(d) by either ProNet or the Company, if there shall be any Order
which is final and nonappealable preventing the consummation of the Merger,
unless the party seeking to terminate this Agreement has not complied with
its obligations under Section 6.03(b) of this Agreement;
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(e) by the Company, if the stockholders of ProNet shall not have
approved the Merger and this Agreement on or before the last day of a
period that is 20 business days and seven calendar days following the date
on which ProNet places in the mail the Proxy Statement/Prospectus for
delivery to the stockholders of ProNet and the Company, and by either
ProNet or the Company, if the Merger shall not have been consummated before
September 15, 1996; provided, however, that this Agreement may be extended
by ProNet to a date not later than November 15, 1996, if the failure to
consummate the Merger by September 15, 1996 shall have resulted from (i)
the failure to receive any consents or approvals required under the
Communications Act on or before September 14, 1996, or (ii) the failure of
the SEC to declare the Registration Statement effective on or before
August 9, 1996, by ProNet's giving written notice of such extension to the
Company by September 15, 1996, and, upon execution of the escrow agreement
described below, depositing the sum of $2,000,000 (the "Deposit") into an
escrow account to be established with NationsBank Texas, N.A., as escrow
agent (the "Escrow Agent"), pursuant to the terms of an escrow agreement on
the Escrow Agent's standard form to be entered into by and among ProNet,
the Company and the Escrow Agent, which escrow agreement shall provide that
(i) ProNet shall be entitled to receive the Deposit and all accrued
interest thereon if either (A) the Merger is consummated on or before
November 15, 1996 or (B) ProNet terminates this Agreement pursuant to
Section 8.01(b) as a result of a Terminating Company Breach occurring after
ProNet's giving such written notice of extension and there shall not have
occurred a Terminating ProNet Breach and (ii) the Company shall be entitled
to receive the Deposit and all accrued interest thereon if this Agreement
is terminated for any reason other than as set forth in clause (i)(B)
above;
(f) by either ProNet or the Company, if the Merger and this
Agreement, when presented to the holders of Company Common Stock, Company
Series A Preferred Stock or the Company Series B Preferred Stock or the
holders of the ProNet Common Stock for their consideration, whether by vote
or by consent, shall fail to receive the requisite vote or consent for
approval and adoption by the stockholders of the Company or ProNet;
(g) by ProNet, if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to the ProNet Companies or shall have resolved
to do any of the foregoing or the Board of Directors of the Company shall
have recommended to the stockholders of the Company any Competing
Transaction or resolved to do so; or (ii) a tender offer or exchange offer
for outstanding shares of Company Common Stock is commenced, and the Board
of Directors of the Company does not recommend that stockholders not tender
their shares into such tender or exchange offer;
(h) by the Company, if the Board of Directors of ProNet withdraws,
modifies or changes its recommendation of this Agreement or the Merger in a
manner adverse to the Company or shall have resolved to do any of the
foregoing;
(i) by the Company if all of the following conditions are met: (i)
the Average Closing Price is less than $20.75; (ii) the Company notifies
ProNet in writing prior to 5:00
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p.m. Dallas, Texas time on the business day immediately preceding the
scheduled Closing Date (as provided in Section 1.02 hereof) that the
Company elects to terminate this Agreement pursuant to this Section
8.01(i); and (iii) by 5:00 p.m. Dallas, Texas time on the second
business day following ProNet's receipt of the written notice described
in the immediately preceding clause (ii), ProNet does not notify the
Company in writing that ProNet elects to exercise its Termination
Blocking Option. As used herein, "TERMINATION BLOCKING OPTION" means
ProNet's option to provide additional shares of ProNet Common Stock so
that the Affiliated Stockholder Common Stock Exchange Ratio shall be
equal to the quotient obtained by dividing $4.26 by the Average Closing
Price;
(j) by the Company if ProNet shall not have filed the Registration
Statement with the SEC by June 15, 1996, unless there shall have occurred a
Terminating Company Breach which breach shall have caused ProNet's failure
to file the Registration Statement by such date;
(k) by the Company if ProNet shall not have mailed to the
stockholders of ProNet and the Company the Proxy Statement/Prospectus
within five calendar days of the SEC's declaration of the effectiveness of
the Registration Statement unless there shall have occurred a Terminating
Company Breach which breach shall have caused ProNet's failure to mail the
Proxy Statement/Prospectus by such date;
(l) by the Company, if both Jackie R. Kimzey and David J. Vucina
shall have ceased to be employed by ProNet for any reason (whether
voluntary or involuntary) other than their death or disability;
(m) by the Company, if prior to the date that ProNet places in the
mail the Proxy Statement/Prospectus for delivery to the stockholders of
ProNet and the Company (the "Mailing Date"), there shall have been a
material adverse change in the financial condition, results of operation or
business of ProNet and its subsidiaries taken as a whole; provided however,
that the foregoing right to terminate this Agreement shall be deemed waived
if it is not exercised by written notice to ProNet prior to the Mailing
Date;
(n) by ProNet, if prior to the Mailing Date there shall have been a
material adverse change in the financial condition, results of operation or
business of the Company and its subsidiaries taken as a whole; provided
however, that the foregoing right to terminate this Agreement shall be
deemed waived if it is not exercised by written notice to the Company prior
to the Mailing Date;
(o) by the Company, if ProNet shall refuse to consummate the Merger
on the second business day following the day on which the last to be
fulfilled or waived of the conditions set forth in Article VII shall be
fulfilled or waived in accordance herewith (other than the conditions with
respect to actions the respective parties hereto will take at the Closing);
or
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(p) by ProNet, if the Company shall refuse to consummate the Merger
on the second business day following the day on which the last to be
fulfilled or waived of the conditions set forth in Article VII shall be
fulfilled or waived in accordance herewith (other than the conditions with
respect to actions the respective parties hereto will take at the Closing).
SECTION 8.02. EFFECT OF TERMINATION. Except as provided in Section
5.05(d), Section 8.05 and Section 9.01 of this Agreement, in the event of the
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void, there shall be no liability on the part of the ProNet
Companies or the Company or any of their respective officers or directors to the
other and all rights and obligations of any party hereto shall cease, except
that nothing herein shall relieve any party from its obligations with respect to
any breach of this Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the Company and
ProNet by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED, HOWEVER, that, after approval
of the Merger by the stockholders of the Company or the stockholders of ProNet,
any such amendment shall be subject to the provisions of Section 251 of Delaware
Law. This Agreement may not be amended except by an instrument in writing
signed by the Company and ProNet.
SECTION 8.04. WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party or parties hereto, (b) waive any inaccuracies in
the representations and warranties of the other party or parties contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
the other party or parties with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound thereby. For
purposes of this Section 8.04, the ProNet Companies as a group shall be deemed
to be one party.
SECTION 8.05. FEES, EXPENSES AND OTHER PAYMENTS.
(a) All Expenses (as defined in paragraph (b) of this Section 8.05)
incurred by the parties hereto shall be borne solely and entirely by the
party which has incurred such Expenses; PROVIDED, HOWEVER, that the ProNet
Companies as a group shall each be responsible for paying two-thirds of all
Expenses related to printing, filing (including FCC filing fees) and
mailing the Registration Statement and the Proxy Statement/Prospectus and
all SEC, HSR Act and other regulatory filing fees incurred in connection
with the Registration Statement and the Proxy Statement/Prospectus (other
than fees and disbursements of counsel, accountants and investment bankers)
and the Company shall be responsible for paying one-third of all such
Expenses.
(b) "EXPENSES" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all reasonable fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on
its behalf in connection with or related to the authorization,
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preparation, negotiation, execution and performance of this Agreement,
the preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement/Prospectus, the solicitation of
stockholder approvals and all other matters related to the consummation
of the transactions contemplated hereby.
(c) The Company agrees that if:
(i) this Agreement is terminated pursuant to Section 8.01(f) and
prior to such termination the Company's stockholders have not voted
not to adopt this Agreement either by written consent or at the
Company Stockholders' Meeting and, prior to the presentment of the
Merger and this Agreement to the holders of Company Common Stock
pursuant to Section 6.01 herein, the Company after the date hereof
shall have furnished information to, or entered into discussions or
negotiations with, any person or entity with respect to a Competing
Transaction and the Board of Directors of the Company shall not have
reaffirmed its recommendation to the stockholders of the Company with
respect to the transactions contemplated by this Agreement by the time
of such presentment;
(ii) (A) prior to the Effective Time, a court of competent
jurisdiction, pursuant to any order, decree, injunction or other
action, enjoins or otherwise prohibits ProNet's enforcement of its
rights to enforce the Voting Agreement or this Agreement and/or
determines that the covenants of the Company contained in Section
5.03(g) hereof are invalid, illegal or unenforceable in any respect,
(B) there has not occurred a Terminating ProNet Breach as determined
by the court referenced in the immediately preceding clause (A)
concurrently with the issuance of the injunction or prohibition or the
rendering of the determination referenced in such clause (A) (which
determination shall be based upon the party seeking such determination
having sustained the burden of proof with respect to such issue) and
(C) within 275 days after the issuance, rendering or taking of such
order, decree, injunction or other such action, a Competing
Transaction is consummated pursuant to which the per share
consideration to be received by the holders of any class of
outstanding capital stock of the Company is higher than the per share
consideration to be received by such stockholders pursuant to the
terms of this Agreement (it being understood that the per share
consideration being paid to the holders of the Company Common Stock
shall be deemed to be $5.50 for purposes of this paragraph) or any
person shall have acquired beneficial ownership or the right to
acquire beneficial ownership of, or any "GROUP" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder), shall have been formed which
beneficially owns, or has the right to acquire beneficial ownership
of, outstanding shares of capital stock of the Company then
representing more than 30% of the combined power to vote generally for
the election of directors;
(iii) ProNet terminates this Agreement pursuant to
Section 8.01(g) hereof; or
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(iv) (A) ProNet terminates this Agreement pursuant to Section
8.01(b) (provided that at the time of such termination ProNet is not
in material breach of any material term hereof) and (B) within 275
days after such termination (1) a Competing Transaction is consummated
pursuant to which the per share consideration to be received by the
holders of any class of outstanding capital stock of the Company is
higher than the per share consideration to be received by such
stockholders pursuant to the terms of this Agreement (it being
understood that the per share consideration being paid to the holders
of the Company Common Stock shall be deemed to be $5.50 for purposes
of this paragraph) or (2) any person shall have acquired beneficial
ownership or the right to acquire beneficial ownership of, or any
"GROUP" (as such term is defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder), shall have
been formed which beneficially owns, or has the right to acquire
beneficial ownership of, outstanding shares of capital stock of the
Company then representing more than 30% of the combined power to vote
generally for the election of directors;
then in any such case the Company shall pay to ProNet $3,500,000.
(d) Any payment required to be made pursuant to Section 8.05(c) of
this Agreement shall be made as promptly as practicable but not later than
20 business days after termination of this Agreement, and shall be made by
wire transfer of immediately available funds to an account designated by
ProNet. Such payment shall not relieve the Company of the obligation it
may have if the agreement is terminated because of a Terminating Company
Breach.
(e) The parties hereto agree and acknowledge that upon a termination
of this Agreement by the Company pursuant to any of Sections 8.01(c), (h),
(j), (k) or (o) hereof, or upon any Terminating ProNet Breach the Company
shall be entitled to any damages whether at law or at equity as a court of
competent jurisdiction may determine.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Except as set forth in Section 9.01(b) of this Agreement, the
representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
(b) The representations, warranties, covenants and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Article VIII, except that the agreements set
forth in Articles I and II and Sections 6.08 and
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6.10 shall survive the Effective Time and those set forth in Sections
5.05(d), 8.02 and 8.05 and Article IX hereof shall survive termination.
SECTION 9.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally, sent by nationally recognized overnight
courier service, mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses ( or at such other
address for a party as shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
(a) If to either of the ProNet Companies, to:
ProNet Inc.
6340 LBJ Freeway
Dallas, Texas 75240
Attention: Chief Executive Officer
General Counsel
Telecopier No.: (214) 774-0651
with copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attention: Jeffrey A. Chapman
Telecopier No.: (214) 220-7716
Gurman, Blask & Freedman
Suite 500
1400 Sixteenth Street, N.W.
Washington, D.C.
Attention: Jerome K. Blask
Telecopier No.: (202) 462-1784
(b) If to the Company, to:
Teletouch Inc.
110 North College, Suite 200
Tyler, Texas 75202
Attention: Chief Executive Officer
Telecopier No.: (903) 595-8853
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with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C.
Telecopier No.: (312) 861-2200
Bracewell & Patterson, L.L.P.
711 Louisiana Street
Suite 2900
Houston, Texas 77002
Attention: Thomas D. Manford, III
Telecopier No.: (713) 221-1212
DeMartino, Finkelstein, Rosen & Virga
1818 N. Street, N. W., Suite 400
Washington, D.C. 20036
Attention: Ralph DeMartino
Telecopier No.: (202) 659-1290
Blooston, Mordofsky, Jackson & Dickens
2120 L Street, N.W., Suite 300
Washington, D.C. 20037
Attention: Harold Mordofsky
Telecopier No.: (202) 828-5520
SECTION 9.03. CERTAIN DEFINITIONS. For the purposes of this Agreement,
the term:
(a) "AFFILIATE" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which banks in
the State of New York or the State of Texas are authorized or obligated to
be closed;
(c) "CONTROL" (including the terms "CONTROLLED," "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock or as trustee or executor, by contract or credit arrangement or
otherwise;
(d) "KNOWLEDGE" or "KNOWN" shall mean, with respect to any matter in
question, if an executive officer of the Company or ProNet, as the case may
be, has actual knowledge of such matter;
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(e) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(f) "PROXY STATEMENT/PROSPECTUS" or "JOINT PROXY
STATEMENT/PROSPECTUS" shall mean a joint proxy statement/prospectus or
joint information statement/prospectus included in the Registration
Statement at the time the Registration Statement is declared effective
under the Securities Act and meeting the requirements of Schedule 14A or
Schedule 14C of the SEC's Proxy Rules promulgated pursuant to the Exchange
Act:
(g) "REGISTRATION STATEMENT" shall mean a registration statement of
ProNet on Form S-4 filed with the SEC pursuant to the Securities Act for
the purpose of registering thereunder the offering and sale of the ProNet
Common Stock to be issued pursuant to the Merger;
(h) "SIGNIFICANT SUBSIDIARY" means any subsidiary of the Company or
ProNet, as the case may be, that would constitute a Significant Subsidiary
of such party within the meaning of Rule 1-02 of Regulation S-X of the SEC;
(i) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, ProNet, the
Surviving Corporation or any other person, means any corporation,
partnership, joint venture or other legal entity of which the Company,
ProNet, the Surviving Corporation or any such other person, as the case may
be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity; and
(j) "TAX" or "TAXES" shall mean any and all taxes, charges, fees,
levies, assessments, duties or other amounts payable to any federal, state,
local or foreign taxing authority or agency, including, without limitation,
(i) income, franchise, profits, gross receipts, minimum, alternative
minimum, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding,
disability, employment, social security, workers compensation, unemployment
compensation, utility, severance, excise, stamp, windfall profits, transfer
and gains taxes, (ii) customs, duties, imposts, charges, levies or other
similar assessments of any kind, and (iii) interest, penalties and
additions to tax imposed with respect thereto.
SECTION 9.04. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid,
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illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06. ENTIRE AGREEMENT. This Agreement (together with the
Exhibits, the Company Disclosure Schedule and the ProNet Disclosure Schedule),
constitute the entire agreement of the parties, and supersede all prior
agreements and undertakings, both written and oral, among the parties, with
respect to the subject matter of this Agreement.
SECTION 9.07. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.08. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and the beneficiaries of
the provisions of Section 6.10 herein, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are in addition to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 9.10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12. SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the failure of any party to this Agreement to perform the provisions
in accordance with their specific terms or to otherwise breach such provisions,
including its failure to take all actions as are necessary on its part to the
consummation of the Merger, will cause irreparable injury to the other parties
to this Agreement for which damages, even if available, will not be an adequate
remedy. Accordingly, each of the parties hereto hereby consents to the issuance
of injunctive relief by any court of competent jurisdiction to compel
performance of any party's obligations, including an injunction to prevent
breaches, and to the granting by any such court of the remedy of specific
performance of the terms and conditions hereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
PRONET INC.
By: /s/ Jackie R. Kimzey
Name: Jackie R. Kimzey
Title: Chairman and Chief Executive Officer
PRONET SUBSIDIARY, INC.
By: /s/ Jackie R. Kimzey
Name: Jackie R. Kimzey
Title: Chairman and Chief Executive Officer
TELETOUCH COMMUNICATIONS, INC.
By: /s/ Robert M. McMurrey
Name: Robery M. McMurrey
Title: Chief Executive Officer
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ANNEX A
Affiliated Stockholders
Continental Illinois Venture Corporation, a Delaware corporation
CIVC Partners I, a Delaware general partnership
GM Holdings, LLC, a Tennessee limited liability company
Rainbow Resources, Inc., a Texas corporation
Robert M. McMurrey
G. David Higginbotham
Marcus D. Wedner
Christopher J. Perry
V. William Archer
Charles C. Green
Clifford E. McFarland
Michael Rosen
Smith Barney Individual Retirement Account FBO: Bruce C. Stevens
Smith Barney Individual Retirement Account FBO: Celeste G. Stevens
Patricia K. Fleming Trust
Mark D. Fleming
Leonard G. Friedel
Andrew J. Bahnfleth
60
