<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
A+ NETWORK, INC.
(NAME OF SUBJECT COMPANY)
METROCALL, INC.
(BIDDER)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
002033-10-8
(CUSIP NUMBER OF CLASS OF SECURITIES)
GEORGE P. STAMAS, ESQ.
WILMER, CUTLER & PICKERING
2445 M STREET, N.W.
WASHINGTON, D.C. 20037
(202) 663-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
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CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION VALUATION*: AMOUNT OF FILING FEE**:
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$45,165,099 $9,034
</TABLE>
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* For purposes of calculating fee only. This amount is based upon (a) the
maximum number of Shares to be purchased pursuant to the Offer and (b) the
price offered per share.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50
of one percent of the Transaction Valuation.
------------------------
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
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Amount Previously Paid: Not applicable
Form or Registration No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
</TABLE>
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CUSIP NO. 002033-10-8
14D-1
<TABLE>
<S> <C> <C>
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1. NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
METROCALL, INC.
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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*
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS / /
2(e) or 2(f)
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 shares
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* / /
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
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10. TYPE OF REPORTING PERSON*
CO
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</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule 13D
relates to the offer by Metrocall, Inc., a Delaware corporation (the
"Purchaser"), to purchase 2,140,526 outstanding shares of Common Stock, par
value $0.01 per share, and the related share purchase rights issued pursuant to
the Rights Agreement dated February 16, 1995 by and between the Company (as
defined below) and First Union National Bank of North Carolina, as Rights Agent
(collectively, the "Shares"), of A+ Network, Inc., a Tennessee corporation (the
"Company"), at a purchase price of $21.10 per share net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase"), a copy of
which is attached hereto as Exhibit 11(a)(1), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), a copy of which is attached hereto as Exhibit 11 (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is A+ Network, Inc. and the address of
its principal executive offices is 40 South Palafox Street, Pensacola, Florida
32501.
(b) The equity securities being sought in the Offer are Common Stock, par
value $0.01 per share, of the Company together with the related share purchase
rights.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Purchaser. The information
set forth in Section 8 ("Certain Information Concerning the Purchaser") of the
Offer to Purchase and in Schedule I ("Directors and Executive Officers of the
Purchaser") thereto is incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor, to the
best knowledge of the Purchaser, any of the persons listed in Schedule I to the
Offer to Purchase (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) was 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 activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning the Purchaser") and in Section 10 ("Background of the Offer and the
Merger; Contacts with the Company") of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Sources and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction, Section 10
("Background of the Offer and the Merger; Contacts with the Company"), Section
11 ("Purpose of the Offer and the Merger; The Merger Agreement; Shareholders'
Agreement; Other Agreements; Plans for the Company after the Merger; SEC
Regulations"), and Section 12 ("Possible Effects of the Offer on the Market for
Shares, NNM Quotation and Exchange and Exchange Act Registration") of the Offer
to Purchase is incorporated herein by reference.
<PAGE> 4
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 8
("Certain Information Concerning the Purchaser") of, and Schedule I ("Directors
and Executive Officers of the Purchaser") to, the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser"), Section 10 ("Background of the Offer and
the Merger; Contacts with the Company") and Section 11 ("Purpose of the Offer
and the Merger; The Merger Agreement; Shareholders' Agreement; Other Agreements;
Plans for the Company after the Merger; SEC Regulations") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser") of the Offer to Purchase is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction and Section 11 ("Purpose
of the Offer and the Merger; The Merger Agreement; Shareholders' Agreement;
Other Agreements; Plans for the Company after the Merger; SEC Regulations") of
the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in the Introduction, Section 2
("Acceptance for Payment and Payment for Shares") and Section 14 ("Certain Legal
Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 12 ("Possible Effects of the Offer
on the Market for Shares, NNM Quotation and Exchange Act Registration") and
Section 14 ("Certain Legal Matters; Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
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(a)(1) Offer to Purchase dated May 22, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(7) Summary Advertisement as published on May 22, 1996.
(a)(8) Press Release issued by the Purchaser on May 16, 1996.
(b) Not applicable.
</TABLE>
2
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<TABLE>
<S> <C>
(c)(1) Agreement and Plan of Merger dated as of May 16, 1996 between Metrocall, Inc. and
A+ Network, Inc.
(c)(2) Shareholders' Option and Sale Agreement dated as of May 16, 1996 between
Metrocall, Inc. and certain shareholders of A+ Network, Inc. listed therein.
(c)(3) Metrocall Stockholders' Voting Agreement dated as of May 16, 1996 between A+
Network, Inc. and certain stockholders of Metrocall, Inc. listed therein.
(c)(4) Agreement dated May 16, 1996 among Metrocall, Inc. and Ray D. Russenberger and
Elliot H. Singer regarding voting for director.
(c)(5) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc.
and Ray D. Russenberger.
(c)(6) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall, Inc.
and Elliot H. Singer.
(c)(7) Employment Agreement dated May 16, 1996 between Metrocall, Inc. and Charles A.
Emling III.
(c)(8) Opinion of Wheat, First Securities, Inc. dated May 14, 1996.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
3
<PAGE> 6
SIGNATURE
After due 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.
METROCALL, INC.
By: /s/ VINCENT D. KELLY
------------------------------------
Name: Vincent D. Kelly
Title: Chief Financial Officer and
Vice President
Date: May 22, 1996
4
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
11(a)(1) Offer to Purchase dated May 22, 1996.
11(a)(2) Letter of Transmittal.
11(a)(3) Notice of Guaranteed Delivery.
11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
11(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
11(a)(7) Summary Advertisement as published on May 22, 1996.
11(a)(8) Press Release issued by the Purchaser and the Company on May 16, 1996.
11(b) Not applicable.
11(c)(1) Agreement and Plan of Merger dated as of May 16, 1996 between Metrocall,
Inc. and A+ Network, Inc.
11(c)(2) Shareholders' Option and Sale Agreement dated as of May 16, 1996 between
Metrocall, Inc. and certain shareholders of A+Network, Inc. listed therein.
11(c)(3) Metrocall Stockholders' Voting Agreement dated as of May 16, 1996 between
A+ Network, Inc. and certain stockholders of Metrocall, Inc. listed
therein.
11(c)(4) Agreement dated May 16, 1996 among Metrocall, Inc. and Ray D. Russenberger
and Elliott H. Singer regarding voting for director.
11(c)(5) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall,
Inc. and Ray D. Russenberger.
11(c)(6) Non-disclosure/No Conflict Agreement dated May 16, 1996 between Metrocall,
Inc. and Elliot H. Singer.
11(c)(7) Employment Agreement dated May 16, 1996 between Metrocall, Inc. and Charles
A. Emling, III.
11(c)(8) Opinion of Wheat, First Securities, Inc. dated May 14, 1996.
</TABLE>
5
<PAGE> 1
OFFER TO PURCHASE
FOR CASH
2,140,526 SHARES
OF
COMMON STOCK
(TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS)
OF
A+ NETWORK, INC.
AT
$21.10 NET PER SHARE
BY
METROCALL, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
2,140,526 SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. THE OFFER IS NOT
CONDITIONED UPON THE PURCHASER OBTAINING FINANCING OR UPON RECEIPT OF FEDERAL
COMMUNICATIONS COMMISSION APPROVAL.
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER DATED
AS OF MAY 16, 1996 (THE "MERGER AGREEMENT") BETWEEN METROCALL, INC. (THE
"PURCHASER") AND A+ NETWORK, INC. (THE "COMPANY"). IN ACCORDANCE WITH THE MERGER
AGREEMENT, FOLLOWING CONSUMMATION OF THE OFFER, THE COMPANY AND THE PURCHASER
INTEND TO SEEK THE APPROVAL OF THEIR RESPECTIVE SHAREHOLDERS OF THE MERGER OF
THE COMPANY WITH AND INTO THE PURCHASER (THE "MERGER").
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE PURCHASER HAVE APPROVED THE
OFFER AND THE MERGER, AND HAVE DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THEIR RESPECTIVE SHAREHOLDERS. THE BOARD OF
DIRECTORS OF THE COMPANY RECOMMENDS ACCEPTANCE OF THE OFFER BY THOSE COMPANY
SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES.
------------------------
IMPORTANT
Any shareholder desiring to tender shares of common stock, par value $0.01
per share, of the Company (the "Common Stock") and the related share purchase
rights (the "Rights" and, together with the shares of Common Stock, the
"Shares") should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
the Instructions to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) and any other required documents to the
Depositary (as defined below), and either deliver the certificates representing
such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 or (2) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Shareholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominees if they desire to
tender Shares.
A shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply in
a timely manner with the procedures for book-entry transfer, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Information Agent or the Dealer Manager, at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase. Holders of Shares may also contact brokers, dealers, commercial banks
or trust companies for assistance concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
May 22, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION........................................................................... 1
THE TENDER OFFER....................................................................... 4
1. Terms of the Offer; Prorations............................................... 4
2. Acceptance for Payment and Payment for Shares................................ 6
3. Procedures for Accepting the Offer and Tendering Shares...................... 7
4. Withdrawal Rights............................................................ 10
5. Certain Federal Income Tax Consequences...................................... 10
6. Price Range of Shares; Dividends............................................. 13
7. Certain Information Concerning the Company................................... 13
8. Certain Information Concerning the Purchaser................................. 16
9. Sources and Amount of Funds.................................................. 19
10. Background of the Offer and the Merger; Contacts with the Company............ 19
11. Purpose of the Offer and the Merger; The Merger Agreement; Shareholders'
Agreement; Other Agreements; Plans for the Company after the Merger; SEC
Regulations.................................................................. 20
12. Possible Effects of the Offer on the Market for Shares, NNM Quotation and
Exchange Act Registration.................................................... 34
13. Certain Conditions of the Offer.............................................. 34
14. Certain Legal Matters; Regulatory Approvals.................................. 36
15. Dividends and Distributions.................................................. 40
16. Fees and Expenses............................................................ 40
17. Miscellaneous................................................................ 41
Schedule I. Directors and Executive Officers of the Purchaser.......................... 42
Annex A. Agreement and Plan of Merger, dated May 16, 1996, between Metrocall, Inc. and
A+ Network, Inc.............................................................. A-1
</TABLE>
i
<PAGE> 3
To the Holders of Shares
of A+ Network, Inc.:
INTRODUCTION
Metrocall, Inc., a Delaware corporation (the "Purchaser"), hereby offers to
purchase 2,140,526 shares of common stock, par value $0.01 per share (the
"Common Stock"), and the related share purchase rights issued pursuant to the
Rights Agreement dated February 16, 1995 by and between the Company (as defined
below) and First Union National Bank of North Carolina, as Rights Agent (the
"Rights" and, together with shares of Common Stock, the "Shares") of A+ Network,
Inc., a Tennessee corporation (the "Company"), at $21.10 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase by the Purchaser
of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of
Wheat First Butcher Singer (the "Dealer Manager"), The Bank of New York (the
"Depositary"), and Georgeson & Company Inc. (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE PURCHASER HAVE APPROVED THE
OFFER AND THE MERGER, AND HAVE DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF THEIR RESPECTIVE SHAREHOLDERS. THE BOARD OF
DIRECTORS OF THE COMPANY RECOMMENDS ACCEPTANCE OF THE OFFER BY THOSE COMPANY
SHAREHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
2,140,526 SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. THE OFFER IS NOT
CONDITIONED UPON THE PURCHASER OBTAINING FINANCING OR UPON RECEIPT OF FEDERAL
COMMUNICATIONS COMMISSION ("FCC") APPROVAL. SEE "CERTAIN CONDITIONS OF THE
OFFER."
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of May 16, 1996 (the "Merger Agreement"), between the Purchaser and the
Company. The Merger Agreement provides, among other things, that following the
consummation of the Offer, upon the terms and subject to the conditions
contained in the Merger Agreement, including approval of the Merger by the
shareholders of the Purchaser and the Company in accordance with the relevant
provisions of the Delaware General Corporation Law (the "Delaware Law") and of
the Tennessee Business Corporation Act (the "Tennessee Law") and receipt of FCC
approval, the Company will be merged with and into the Purchaser (the "Merger")
and the Purchaser will be the surviving corporation (the "Surviving
Corporation"). Upon the effective time of the Merger (the "Effective Time"),
each outstanding share of Common Stock and related rights (other than Shares
held by the Purchaser or any of its subsidiaries, which will be cancelled) will
be converted into the right to receive: (i) that number of shares of Common
Stock, par value $.01 of the Purchaser ("Purchaser Shares") equal to the
Conversion Ratio, (ii) the same number of Variable Common Rights ("VCRs" and,
together with the Purchaser Shares, "Purchaser Securities"), plus (iii) cash in
respect of fractional Purchaser Securities, if any. The Conversion Ratio shall
be determined by dividing $21.10 by the average of the last bid prices for the
Purchaser Shares on the Nasdaq National Market (the "NNM") for the 50
consecutive trading days ending on the trading day that is five days prior to
the Closing Date (the "Average Purchaser Share Price"), except that if the
Average Purchaser Share Price is greater than $21.88 or less than $17.90, then
the Conversion Ratio shall be .96435 or 1.17877, respectively. A copy of the
Merger Agreement is attached hereto as Annex A. Each VCR will entitle the holder
to receive the amount, not to exceed $5.00 per VCR (unless increased as
described below), by which the market value of Purchaser Shares determined as of
the first anniversary of the Effective Time (the "Maturity Date"), is less than
the "Target Price" of $21.10 per share, adjusted downward, but not upward, based
on changes in an index composed of average closing bid prices of
1
<PAGE> 4
three other companies in the paging industry. If the Purchaser extends the
Maturity Date by one year (the "Extended Maturity Date"), the Target Price will
increase to $25.10, adjusted as previously described, and the maximum amount
which the holder may receive will be $7.00 per VCR. The market value of the
Purchaser Shares for this purpose will be the median of the averages of the last
bid price for the Purchaser Shares on each trading day during each 20
trading-day period within the 60 trading days prior to the Maturity Date. In
addition, if the last bid price of the Purchaser Shares exceeds $21.10 for any
consecutive 50-day period after the Effective Time and before the Maturity Date,
or, if the Maturity Date is extended, $25.10 for any 50-day period after the
Maturity Date and before the Extended Maturity Date, then the right to receive
payments under the VCR will terminate. Any amounts payable under the VCRs will
be in cash, Purchaser Shares or common stock equivalents, as determined by the
Purchaser. The terms of the VCRs are described in Annex C to the Merger
Agreement. The purpose of the Offer is to acquire Shares and to facilitate the
Merger. The Purchaser is required to vote all Shares acquired by it pursuant to
the Offer in favor of the Merger.
Prudential Securities Incorporated ("Prudential Securities"), financial
advisor to the Company, has delivered to the Company's Board of Directors a
written opinion, dated May 15, 1996, to the effect that, as of such date and
based upon and subject to certain matters stated therein, the consideration to
be received by holders of Shares (other than the Purchaser and its affiliates)
pursuant to the Offer and the Merger taken together, is fair to such holders
from a financial point of view (the "Company Fairness Opinion"). A copy of the
Company Fairness Opinion, which sets forth the assumptions made, matters
considered and limitations on the review undertaken by Prudential Securities, is
contained in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders herewith.
Wheat, First Securities, Inc. ("Wheat"), financial advisor to the
Purchaser, has delivered to the Purchaser's Board of Directors a written
opinion, dated May 14, 1996, to the effect that, as of such date and based upon
and subject to certain matters stated therein, taken together, the consideration
to be paid (i) to the holders of Shares pursuant to the Offer, and (ii) to the
holders of Shares pursuant to the Merger is fair to the holders of Purchaser
Shares from a financial point of view (the "Purchaser Fairness Opinion"). A copy
of the Purchaser Fairness Opinion, which sets forth the assumptions made,
matters considered and limitations on the review undertaken by Wheat, is
contained in the Purchaser's Tender Offer Statement on Schedule 14D-1 ("Schedule
14D-1") filed with the Securities and Exchange Commission (the "Commission" or
"SEC") in connection with the Offer.
The Company has advised the Purchaser that, as of May 16, 1996 there were
10,263,255 Shares outstanding, and that there were 736,794 shares of Common
Stock reserved for issuance pursuant to options (the "Company Options")
outstanding under the Company's option plans and otherwise. In addition, up to
1,021,622 Shares may be issued as consideration in pending acquisitions subject
to definitive agreements.
In connection with the Merger Agreement, the Purchaser also entered into a
Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with
certain shareholders of the Company (the "Principal Shareholders") who hold, in
the aggregate, approximately 53.8% of the currently outstanding Shares (the
"Owned Shares"). Pursuant to the Shareholders' Agreement, each Principal
Shareholder agreed, subject to and conditioned upon the consummation of the
Offer, to sell to the Company for cash 40% of his or its Owned Shares (the "Cash
Purchase Shares") at a price of $21.10 per Share, or such higher price as shall
be paid for Shares tendered pursuant to the Offer. The Cash Purchase Shares
constitute 2,210,217 Shares, or approximately 21.5% of the outstanding Shares as
of May 16, 1996.
The Principal Shareholders also agreed to vote the Owned Shares in favor of
the Merger and against any other extraordinary corporate transaction such as a
merger or acquisition proposal, and any sale of a material amount of the
Company's assets. In addition, the Principal Shareholders granted the Purchaser
an irrevocable proxy, subject to certain conditions, including receipt of FCC
approvals, to vote the Shares then owned by the Principal Shareholders as set
forth in the preceding sentence. The Principal Shareholders also granted the
Purchaser options to purchase the Owned Shares, subject to certain conditions,
in certain circumstances, as described under the heading "Shareholders'
Agreement" in Section 11.
2
<PAGE> 5
IN ORDER TO VOTE FOR THE MERGER, SHAREHOLDERS OF THE COMPANY AND THE
PURCHASER WILL BE REQUIRED TO SUBMIT A PROXY OR VOTE IN PERSON AT THEIR
RESPECTIVE SHAREHOLDER MEETINGS, AND ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
The Offer does not constitute a solicitation of proxies for any meeting of the
Company's or the Purchaser's Shareholders. Such solicitations will be made only
pursuant to separate proxy materials complying with the requirements of Section
14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, the Offer is neither an offer to sell nor a solicitation of offers
to buy any securities that may be issued in the Merger. The issuance of such
securities is subject to registration under the Securities Act of 1933, as
amended (the "Securities Act"), and such securities would be offered only by
means of a prospectus complying with the requirements of the Securities Act. The
Company and the Purchaser expect to distribute a joint proxy statement and
prospectus relating to the Merger and the transactions in connection therewith
following consummation of the Offer.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION, WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
3
<PAGE> 6
THE TENDER OFFER
1. TERMS OF THE OFFER; PRORATION
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for 2,140,526
Shares validly tendered on or prior to the Expiration Date (as defined below)
and not properly withdrawn as provided in Section 4. The term "Expiration Date"
means 12:00 midnight, New York City time, on Wednesday, June 19, 1996, unless
and until the Purchaser, in its sole discretion (but subject to the terms and
conditions of the Merger Agreement), shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" will
mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
If more than 2,140,526 Shares are validly tendered on or prior to the
Expiration Date and not properly withdrawn, the Purchaser will, upon the terms
and subject to the conditions of the Offer, purchase 2,140,526 Shares on a pro
rata basis (with adjustments to avoid purchases of fractional Shares) based on
the number of Shares validly tendered on or prior to the Expiration Date and not
properly withdrawn. In the event that proration of tendered Shares is required,
because of the time required to determine the precise number of Shares validly
tendered and not properly withdrawn, the Purchaser does not expect to be able to
announce the final results of proration or to pay for any Shares until
approximately seven NNM trading days after the Expiration Date. Preliminary
results of such proration will be announced by press release as promptly as
practicable after the Expiration Date. Holders of Shares may obtain such
preliminary information from the Information Agent or the Dealer Manager and may
be able to obtain such information from their brokers.
The Purchaser expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement which, as described
below, limit the Purchaser's right to extend), at any time or from time to time,
to extend the period of time during which the Offer is open for any reason,
including the failure to satisfy any of the conditions specified in Section 13,
and thereby delay acceptance for payment of, and payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and making a
public announcement, as described below. There can be no assurance that the
Purchaser will exercise its right to extend the Offer. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to the Offer, subject to the rights of a tendering shareholder to
withdraw such shareholder's Shares. See Section 4.
Subject to the applicable regulations of the Commission, the Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, to
(i) delay acceptance for payment of or, regardless of whether the Shares were
theretofore accepted for payment, payment for any Shares pending receipt of any
regulatory approvals specified in Section 14, (ii) terminate the Offer and not
accept for payment or pay for any Shares if any of the conditions referred to in
Section 13 have not been satisfied or upon the occurrence and during the
continuance of any of the events specified in Section 13, and (iii) in
accordance with and subject to the limitations imposed by the Merger Agreement,
waive any condition or amend the Offer in any respect, in each case, by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Purchaser
acknowledges (x) that Rule 14e-l(c) under the Exchange Act requires the
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (y) that the
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the preceding sentence), any Shares upon the
occurrence of any of the events specified in Section 13 without extending the
period of time during which the Offer is open.
If the Minimum Condition or any other condition specified in Section 13 is
not fulfilled by the Expiration Date, the Purchaser reserves the right (but
shall not be obligated) to (i) decline to purchase any of the Shares tendered,
return all tendered Shares to tendering shareholders and terminate the Offer,
(ii) subject to the terms and conditions of the Merger Agreement, extend the
Offer and retain all tendered Shares until the expiration of the Offer, as
extended, subject to the terms and conditions of the Offer (including any rights
of shareholders to withdraw their Shares) or (iii) subject to the following
paragraph, waive or reduce the
4
<PAGE> 7
condition and, subject to complying with applicable rules and regulations of the
Commission, accept for payment and purchase all Shares validly tendered.
The Merger Agreement provides that the Purchaser may not amend or waive the
Minimum Condition and may not decrease the offer price or amend any other
material condition of the Offer in any manner adverse to the holders of the
Shares without the prior written consent of the Company (such consent to be
authorized by the Board of Directors of the Company or a duly authorized
committee thereof). Notwithstanding the foregoing, (i) if on the Expiration Date
(A) there exists an "AN Acquisition Proposal" (as defined in the Merger
Agreement) involving a tender offer, the Purchaser may extend the Offer to a
date two business days after the date the position of the Company with respect
to the tender offer is first published or sent pursuant to Rule 14e-2 under the
Exchange Act, or (B) there exists an AN Acquisition Proposal other than a tender
offer, the Purchaser may extend the Offer to a date two business days after the
first date on which the Company's failure to reject such AN Acquisition Proposal
would permit the Purchaser to terminate the Merger Agreement in accordance with
its terms, (ii) the Purchaser may extend the Offer at any time when the Minimum
Condition or the other conditions set forth in Section 13 are not satisfied for
such period of time, not to exceed up to 20 business days in the aggregate, as
is reasonably expected to be necessary in order to satisfy the Minimum Condition
or the other conditions to the Offer, and (iii) the offer price may be increased
in good faith and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company.
See Section 11.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by a public announcement thereof, such announcement, in
the case of an extension, to be made no later than 9:00 am., New York City time,
on the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, except as provided by applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares) the Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If, as permitted by the Merger Agreement, the Purchaser makes a material
change in the terms of the Offer or the information concerning the Offer, or
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer materials (including by public announcement as set forth
above) and extend the Offer to the extent required by Rules 14d-4(c) and
14d-6(d) under the Exchange Act. The minimum period during which an offer must
remain open following material changes to the terms of the offer or information
concerning the offer, other than a change in price or a change in percentage of
securities sought or a change in any dealer's soliciting fee, will depend upon
the facts and circumstances, including the relative materiality of the changes.
With respect to a change in price or, subject to certain limitations, a change
in the percentage of securities sought or a change in any dealer's soliciting
fee, a minimum ten business day period from the day of such change is generally
required to allow for adequate dissemination to shareholders. Accordingly, if,
prior to the Expiration Date, the Purchaser decreases the number of Shares being
sought, increases the consideration offered pursuant to the Offer or adds a
dealer's soliciting fee, and if the Offer is scheduled to expire at any time
earlier than the period ending on the tenth business day from the date that
notice of such increase, decrease or addition is first published, sent or given
to shareholders, the Offer will be extended at least until the expiration of
such ten business day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or a federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
and, if required, other relevant material will be mailed to record holders of
Shares and will be furnished to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees appear on the
Company's shareholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
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<PAGE> 8
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will purchase by accepting for payment, and will
pay for, 2,140,526 Shares validly tendered on or prior to the Expiration Date
and not properly withdrawn (including Shares validly tendered and not withdrawn
during any extension of the Offer, if the Offer is extended, subject to the
terms and conditions of such extension), promptly after the later of (i) the
Expiration Date and (ii) the expiration or termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), applicable to the Purchaser's purchase of Shares pursuant to the
Offer, subject to possible delay in the event of proration. In addition, subject
to complying with Rule 14e-1 under the Exchange Act, the Purchaser expressly
reserves the right, in its sole discretion (but subject to the terms and
conditions of the Merger Agreement), to delay the acceptance for payment of, or
payment for, Shares in order to comply, in whole or in part, with any other
applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares ("Share Certificates") or timely
confirmation of book-entry transfer of such Shares ("Book-Entry Confirmation")
into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer and (iii) any other documents required by the Letter
of Transmittal. Accordingly, payment may be made to tendering shareholders at
different times if delivery of the Shares and other required documents occurs at
different times.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
The Company and the Purchaser anticipate filing, as promptly as practicable
after the date hereof, with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") a
Premerger Notification and Report Form under the HSR Act with respect to the
Offer. Accordingly, it is anticipated that the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day following the date of such filing. However, prior to the
expiration or termination of the waiting period, the FTC or the Antitrust
Division may extend the waiting period applicable to the Offer by requesting
additional information from the Purchaser. If such a request is made, the
waiting period applicable to the Offer will expire on the tenth calendar day
after the date of substantial compliance by the Purchaser with such request.
Thereafter, the waiting period may only be extended by court order or with the
agreement of the Purchaser. The waiting period under the HSR Act may be
terminated by the FTC and the Antitrust Division prior to its expiration. The
Purchaser will request early termination of the waiting period applicable to the
Offer, although there can be no assurance that this request will be granted. See
Section 14 for additional information regarding the HSR Act.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares so accepted for payment pursuant to the Offer will be made by deposit
of the aggregate purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering shareholders whose Shares have
been accepted for payment. Under no circumstances will interest on the purchase
price of the Shares be paid by the Purchaser, regardless of any delay in making
such payment. Upon the deposit of funds with the Depositary for the purpose of
making
6
<PAGE> 9
payment to validly tendering shareholders, the Purchaser's obligation to make
such payment shall be satisfied and such tendering shareholders must thereafter
look solely to the Depositary for payment of the amounts owed to them by reason
of the acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason (including proration), or if Share
Certificates are submitted for more Shares than are tendered, Share Certificates
representing Shares not purchased or not tendered will be returned, without
expense to the tendering shareholder (or, in the case of Shares tendered by
book-entry transfer of such Shares into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures for book-entry transfer set forth
in Section 3, such Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
If, on or prior to the Expiration Date, the Purchaser increases the
consideration to be paid per Share, the Purchaser will pay such increased
consideration for all Shares purchased pursuant to the Offer, whether or not
such Shares have been tendered or purchased prior to such increase in
consideration.
Subject to the terms and conditions of the Merger Agreement, the Purchaser
reserves the right to transfer or assign, in whole or in part from time to time,
to one or more of its affiliates, the right to purchase the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer, nor will any such transfer or
assignment in any way prejudice the rights of tendering shareholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
General. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date, and either (i) Share Certificates representing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedures for book-entry transfer set forth below (and a Book-
Entry Confirmation must be received by the Depositary), in each case on or prior
to the Expiration Date, or (ii) the guaranteed delivery procedures set forth
below must be complied with.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
the Letter of Transmittal (or facsimile thereof) waive any right to receive any
notice of the acceptance of their Shares for payment.
The method of delivery of Share Certificates, the Letter of Transmittal and
all other required documents, including delivery through any Book-Entry Transfer
Facility, is at the option and sole risk of each tendering shareholder and,
except as otherwise provided in this Section 3, the delivery will be deemed made
only when actually received by the Depositary. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
In all cases, sufficient time should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at each of the Book-Entry Transfer
Facilities for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of any Book-Entry Transfer Facility may make book-entry delivery of
Shares by causing such Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at such Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedure for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by the
Letter of Transmittal, must, in any case, be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date in order for
7
<PAGE> 10
such shares to be validly tendered pursuant to the Offer, or the tendering
shareholder must comply with the guaranteed delivery procedure described below.
Delivery of documents to a Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures does not constitute delivery to
the Depositary.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program, the Stock Exchanges' Medallion Program or the
New York Stock Exchange, Inc. Medallion Signature Program (an "Eligible
Institution"), unless the Shares tendered thereby are tendered (i) by a
registered holder of Shares who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates for unpurchased Shares are to be returned, to a person other than
the registered holder(s), then the tendered Share Certificates must be endorsed
or accompanied by appropriate stock powers signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificates with the signature(s) on
such Share Certificates or stock powers guaranteed by an Eligible Institution as
provided above and in the Letter of Transmittal. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all of the required documents to reach the
Depositary on or prior to the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(c) the Share Certificates (or a Book-Entry Confirmation) for all
tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees or, in the case of a
book-entry transfer, an Agent's Message and any other documents required by
the Letter of Transmittal are received by the Depositary within three NNM
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the shareholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of the Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates therefor (or Book-Entry
Confirmation of the transfer of such Shares into the Depositary's account at a
Book-Entry Transfer Facility), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and any
other documents required by the Letter of Transmittal. Accordingly, payment
might not be made to all tendering shareholders at the same time, and will
depend upon when Share Certificates or Book-Entry Confirmations of such Shares
are received into the Depositary's account at a Book-Entry Transfer Facility.
Backup Federal Tax Withholding. Under the federal income tax laws, the
Depositary may, under certain circumstances, be required to withhold 31% of the
amount of any payments made to certain
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<PAGE> 11
shareholders pursuant to the Offer. To prevent such backup federal income tax
withholding with respect to payments made to certain shareholders of the
purchase price of Shares purchased pursuant to the Offer, each such shareholder
must provide the Depositary with such shareholder's correct taxpayer
identification number and certify that such shareholder is not subject to backup
federal income tax withholding by completing the Substitute Form W-9 included in
the Letter of Transmittal. See Instruction 9 of the Letter of Transmittal.
Appointment as Proxy. A tender of Shares does not constitute a vote, or
the appointment of a proxy, in connection with the Merger. In order to vote for
the Merger, Company Shareholders will be required to submit a proxy or vote in
person at the shareholders meeting of the Company held for purposes of approving
the Merger, or any postponement or adjournment thereof. By executing the Letter
of Transmittal, a tendering shareholder irrevocably appoints designees of the
Purchaser, and each of them, as the shareholder's attorneys-in-fact and proxies
in the manner set forth in the Letter of Transmittal, each with full power of
substitution with respect to any Shares tendered thereby (and with respect to
any and all other Shares or other securities issued or issuable in respect of
such Shares on or after May 16, 1996), effective when, if and to the extent the
Purchaser accepts for payment and pays for such Shares. All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered shares. This appointment will be effective when, and only to the
extent that, the Purchaser accepts such Shares for payment and deposits the
purchase price therefor with the Depositary. Upon such payment, all prior powers
of attorney and proxies given by such shareholder with respect to such Shares
(and other Shares and securities) will, without further action, be revoked, and
no subsequent powers of attorney and proxies may be given nor any subsequent
written consents executed by such shareholder (and, if given or executed, will
not be deemed effective). The designees of the Purchaser will, with respect to
such Shares and other securities, be empowered to exercise all voting and other
rights of such shareholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's Shareholders, or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon the Purchaser's payment for such
Shares, the Purchaser must be able to exercise full voting and other rights of a
record and beneficial holder, including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including the time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, which determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any and all tenders of any particular Shares determined by it not to be
in appropriate form or the acceptance of or payment for which may, in the
opinion of its counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any of the conditions of the Offer (subject to the terms and
conditions of the Merger Agreement) or any defect or irregularities in the
tender of any particular Shares, whether or not similar defects or
irregularities are waived in the case of any other Shares. The Purchaser's
interpretations of the terms and conditions of the Offer (including the Letter
of Transmittal and Instructions thereto) will be final and binding. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of the Purchaser, any of its
affiliates or assigns, the Dealer Manager, the Information Agent, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in tenders or incur any liability for failure to
give any such notification.
Other Requirements. It is a violation of Section 14(e) of the Exchange
Act and Rule 14e-4 promulgated thereunder for a person, directly or indirectly,
to tender Shares for his own account unless the person so tendering (i) has a
net long position equal to or greater than his amount of (x) Shares tendered or
(y) other securities immediately convertible into, exercisable, or exchangeable
for the amount of Shares tendered and will acquire such Shares for tender by
conversion, exercise or exchange of such other securities and (ii) will cause
such Shares to be delivered in accordance with the terms of the Offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person.
A tender of Shares made pursuant to any one of the procedures set forth
above will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer, including the tendering
9
<PAGE> 12
shareholder's representation and warranty that (i) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4 and
(ii) the tender of such Shares complies with Rule 14e-4.
THE PURCHASER'S ACCEPTANCE FOR PAYMENT OF SHARES TENDERED PURSUANT TO THE
OFFER WILL CONSTITUTE A BINDING AGREEMENT BETWEEN THE TENDERING SHAREHOLDER AND
THE PURCHASER UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn after
July 20, 1996.
If the Purchaser extends the Offer, is delayed in, or delays, its
acceptance for payment or payment for Shares or is unable to accept for payment
or pay for Shares for any reason, then, without prejudice to the Purchaser's
other rights under the Offer, tendered Shares may nevertheless be retained by
the Depositary, on behalf of the Purchaser, and may not be withdrawn except to
the extent tendering shareholders are entitled to and duly exercise withdrawal
rights as described in this Section 4. Any such delay will be accompanied by an
extension of the Offer to the extent required by law.
In order for a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses or numbers set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and (if Share Certificates have been delivered or otherwise identified
to the Depositary) the name of the registered holder of the Shares to be
withdrawn, if different from that of the tendering shareholder. If Share
Certificates to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Share Certificates, the
tendering shareholder must also submit the serial numbers shown on such Share
Certificates to be withdrawn and the signature(s) on the notice for withdrawal
must be guaranteed by an Eligible Institution, except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry transfer, as set forth in
Section 3, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and must otherwise comply with the procedure of such Book-Entry Transfer
Facility, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of this
paragraph.
Withdrawals may not be revoked and any Shares properly withdrawn will
thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time on or prior to
the Expiration Date by following one of the procedures described in Section 3.
All questions as to the form and validity (including the time of receipt)
of any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, any of its affiliates or assigns, the Dealer Manager, the Information
Agent, the Depositary or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failing to give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the material federal income tax consequences
of the Offer and the Merger to the holders of Shares. This summary is based upon
the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations thereunder, judicial decisions and current
administrative rulings. The discussion does not address all aspects of federal
income taxation that may be relevant to particular taxpayers in light of their
personal investment circumstances or to taxpayers subject to special treatment
under the Code (for example, life insurance companies, foreign corporations,
qualified retirement plans, individuals who are not citizens or residents of the
United States, and holders whose Shares were
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<PAGE> 13
acquired pursuant to the exercise of employee stock options or otherwise as
compensation) and does not address any aspect of state, local or foreign
taxation. This summary also assumes that the Shares are held as capital assets
at the time of the Offer. EACH HOLDER OF SHARES IS URGED TO CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OFFER AND THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX
LAWS.
Consequences of Sale of Shares in the Offer
A shareholder who sells Shares for cash in the Offer will recognize gain or
loss measured by the difference between the amount of cash received and the tax
basis in the Shares tendered and sold by such shareholder pursuant to the Offer.
Such gain or loss will constitute capital gain or loss, and will be long-term
capital gain or loss if the holding period for such Shares is greater than one
year at the time such Shares are tendered. The tax basis and the holding period
of Shares must be calculated separately for Shares acquired at different times.
A shareholder will be treated as having sold particular shares to the extent the
particular shares are adequately identified. Adequate identification may occur
through specification, at the time of the tender and sale, to a broker or other
agent having custody of the particular Shares to be tendered and sold, and
written confirmation of such specification within a reasonable time from such
broker or agent. In the absence of adequate identification, the Shares tendered
and sold will be charged against the earliest lots acquired by the shareholder.
Under a pending legislative proposal made by the President, basis of Shares sold
would be determined by averaging the basis of all Shares held by the
shareholder; however, if enacted in the form proposed by the President, this
proposal would not become effective until 30 days after its enactment.
Consequences of the Merger
The Merger Agreement provides that it is the intention of the parties that
the Merger will qualify as a tax-free reorganization under Section 368(a)(1)(A)
of the Code. However, no opinion of counsel or IRS ruling is being obtained
concerning the tax effects of the Merger. Except where otherwise indicated, the
following summary assumes that the Merger will qualify as a tax-free
reorganization.
If the Merger is a tax-free reorganization, a shareholder will receive
Purchaser Shares without recognition of taxable gain or loss, but will be
potentially taxable on the receipt of VCRs and cash in lieu of fractional
Purchaser Securities. VCRs do not qualify as consideration that may be received
tax free in the Merger. VCRs will be taken into account as taxable merger
consideration in the computation of gain and of the basis of Purchaser Shares,
in the manner described below. A shareholder who owns Shares at the time of the
Merger will not recognize loss, but will recognize gain to the extent of the
lesser of (i) the "shareholder's gain" (as defined below) and (ii) the fair
market value of the VCRs and the amount of any cash received in lieu of
fractional Purchaser Securities (the VCRs and cash in lieu of fractional
Purchaser Securities are referred to herein as the "taxable merger
consideration"). The "shareholder's gain" is the excess, if any, of (x) the fair
market value of the Purchaser Shares and the taxable merger consideration, over
(y) the shareholder's basis in his or her Shares exchanged in the Merger.
A shareholder's basis in the Purchaser Shares received in the Merger will
be equal to the shareholder's basis in the Shares exchanged in the Merger,
increased by the amount of any gain recognized in the Merger and reduced by the
amount of taxable merger consideration.
A shareholder's holding period for the Purchaser Shares received in the
merger will include the shareholder's holding period for the Shares. See the
discussion below, however, concerning delay in beginning the holding period for
Purchaser Shares under certain circumstances with respect to the simultaneous
holding of VCRs.
11
<PAGE> 14
Except in the case of a shareholder who owns more than a minimal interest
in Purchaser after the Merger, any gain from the receipt of taxable merger
consideration will be capital gain, and will be long-term capital gain or loss
if the holding period for such Shares is greater than one year. See Rev. Rul.
76-385, 1976-2 C.B. 92. If a shareholder holds more than a minimal interest in
Purchaser after the merger, any gain from the receipt of taxable merger
consideration will either be capital gain or dividend income depending on the
applicability of the provisions of Code Section 302. Shareholders are urged to
consult their tax advisors to determine whether they should be considered as
holding a minimal interest for this purpose; and, if not, the proper
characterization of their taxable merger consideration.
Tax Consequences of VCRs; Consequences of Straddle Treatment
VCRs do not qualify as consideration that may be received tax free in the
Merger. VCRs will be taken into account as taxable merger consideration in the
computation of gain and of the basis of Purchaser Shares, in the manner
described above under "Consequences of the Merger." VCRs are treated for federal
income tax purposes as cash settlement options to sell Purchaser stock. See
Revenue Ruling 88-31, 1988-1 C.B. 302. Gain or loss from the disposition, lapse,
or receipt of payments with respect to the VCRs will be capital gain or loss,
measured by the difference between the basis of the VCRs and the amount received
(if any) in the disposition, lapse, or payment; the recognition of loss may be
deferred under the "straddle" rules discussed below. The gain or loss will be
long-term capital gain or loss if the holding period for the VCR is greater than
one year. A shareholder's basis in a VCR will be its fair market value upon
issuance.
A shareholder who owns Purchaser Shares and VCRs will be treated as owning
a "straddle," as defined in section 1092(c)(1) of the Code, for each pair of one
Purchaser Share and one VCR (securities within such a pair are referred to
herein as "offsetting" securities). Under the rules applicable to straddles:
- Any loss from one offsetting security may not be taken into account
except to the extent that the loss exceeds the unrecognized gain (if any)
from the other offsetting security as of the last day of the taxable year;
- Any loss so deferred may be carried into the succeeding taxable year, and
either taken into account or deferred under the same rules;
- If the shareholder has held Shares for one year or less as of the date of
the Merger, the holding period for the Purchaser Shares received in the
Merger will not begin until the shareholder no longer holds offsetting
VCRs. The holding period for a VCR will not begin until the shareholder no
longer holds offsetting Purchaser Shares.
For example, if a shareholder has a loss from the disposition or expiration
of VCRs for which the holding period is one year or less, the loss will be a
short term capital loss that will be deferred until the following year, to the
extent of the shareholder's unrealized gain as of the last day of the year in
the corresponding number of Purchaser Shares held on such day. The loss will
again be deferred in succeeding years to the extent of the shareholder's
unrealized gain as of the last day of each succeeding year in the corresponding
number of Purchaser Shares held on such day. Gain on VCRs or Purchaser Shares
will not be deferred under the straddle rules.
Consequences if No Tax-Free Reorganization
The Purchaser and the Company do not intend to seek an opinion of counsel
or a ruling from the Internal Revenue Service concerning the federal income tax
consequences of the Merger. No assurance can be given that the IRS will not
challenge the qualification of the Merger as a tax-free reorganization. If such
a challenge were sustained by a court, each shareholder at the time of the
Merger would recognize capital gain or loss measured by the difference between
the fair market value of all the consideration received in the Merger and the
shareholder's basis in the Shares exchanged in the Merger. Each shareholder's
holding period in any Purchaser Share or VCR received in the Merger would begin
on the later of the date of the Merger or the date on which the shareholder no
longer holds an offsetting security. The basis of the Purchaser Shares and VCRs
received in the Merger would be their respective fair market values on the date
of the Merger.
12
<PAGE> 15
Any acquisition of Shares that does not occur by reason of the Merger,
including any acquisition from a Principal Shareholder pursuant to the exercise
of the Purchaser's options to purchase Shares in certain circumstances, will be
a fully taxable disposition to the seller, even if the seller receives Purchaser
Shares in the acquisition.
Other Tax Considerations
In addition to the federal income tax consequences described above,
shareholders may be subject to state, local, and foreign tax consequences as a
result of the Offer and the Merger. Shareholders should consult their tax
advisors concerning such other tax consequences as well as the matters described
herein.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Common Stock is traded in the over-the-counter market and is included
on the NNM under the symbol "ACOM." The following table sets forth the high and
low closing sales prices per Share of Common Stock on the NNM, as reported in
publicly available sources for each of the quarters indicated since January 1,
1994.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
First Quarter.......................................... $14 $ 9 1/2
Second Quarter......................................... 11 3/4 7 1/2
Third Quarter.......................................... 13 3/4 9 1/4
Fourth Quarter......................................... 15 3/8 11 3/4
YEAR ENDED DECEMBER 31, 1995:
First Quarter.......................................... 14 3/4 12 1/4
Second Quarter......................................... 15 1/2 11 3/4
Third Quarter.......................................... 16 1/4 12 1/4
Fourth Quarter......................................... 16 11 1/4
YEAR ENDED DECEMBER 31, 1996:
First Quarter.......................................... 12 1/2 10 1/4
Second Quarter (through May 21, 1996).................. 20 7/16 10 3/4
</TABLE>
As of May 16, 1996, there were 181 holders of record of the Common Stock
and in excess of 3,000 beneficial owners of the Common Stock.
On May 15, 1996, the last full trading day prior to the public announcement
of the execution of the Merger Agreement and of the Purchaser's intention to
commence the Offer, the closing sale price per share of Common Stock as reported
on the NNM was $15 1/2. On May 21, 1996, the last full trading day prior to the
commencement of the Offer, the closing sale price per Share of Common Stock as
reported on the NNM was $20 7/16. Shareholders are urged to obtain current
market quotations for the Common Stock.
The Company has advised the Purchaser that the Company has never declared
or paid any cash dividends in respect of the Shares. The Company has agreed in
the Merger Agreement that prior to the Merger it will not declare, set aside for
payment or pay any dividends.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company set forth in this Section 7 and elsewhere in this Offer to Purchase has
been furnished by the Company or has been taken from, or is based upon, publicly
available documents on file with the Commission and other public sources.
Shareholders are urged to review the publicly available information concerning
the Company before acting on the Offer. Although the Purchaser has no knowledge
of any facts that would indicate that any statements contained herein which are
based on such documents are untrue, the Purchaser takes no responsibility for
the accuracy
13
<PAGE> 16
or completeness of the information concerning the Company furnished by the
Company or contained in such documents or herein or for any failure by the
Company to disclose events which may have occurred and which may have affected
or may affect the significance or accuracy of any such information but that are
unknown to the Purchaser.
General. The Company is a leading provider of paging services, operating
primarily in the southeastern United States. On October 24, 1995, the Company
consummated the merger of Network Paging Corporation ("Network") into the
Company, resulting in an increase in the number of pagers and voicemail units in
service from approximately 248,000 to approximately 495,000. At December 31,
1995, the Company had 529,450 pagers and voicemail units in service, serviced by
a network of approximately 485 transmitters located in Alabama, Florida,
Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and
Texas. Through an interconnected network (the "USA Network") of approximately
120 independent local and regional paging companies (the "Network Affiliates")
throughout the United States, the Company augments its paging coverage in areas
where direct service through the Company's own transmission network facilities
is not available.
The Company is engaged in two principal business segments, mobile network
services and telemessaging services. The Company's mobile network services
business segment provides paging, voicemail and other mobile communication
services and equipment and represents several cellular service providers for
sale and distribution of cellular phones and services. The Company's
telemessaging services business segment provides a variety of message management
services over the telephone to a diverse client base.
The Company was incorporated under the laws of Tennessee in 1985 as A+
Communications Inc. Simultaneous with the merger with Network, the name was
changed to A+ Network, Inc. The Company maintains executive offices at 40 South
Palafox Street, Pensacola, Florida 32501 where its telephone number is (904)
438-1653 and at 2416 Hillsboro Road, Nashville, Tennessee 37212 where its
telephone number is (615) 385-4500.
The Company is subject to the disclosure requirements of the Exchange Act
and in accordance therewith is required to file reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. In addition, the Company has filed a statement on
Schedule 14D-9 regarding its recommendation to the Company's Shareholders with
respect to the Offer. Such reports, proxy statements, Schedule 14D-9 and other
information are available for inspection at the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20349 and should also be
available for inspection at the regional offices of the Commission located at 1
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be
obtained at prescribed rates from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, certain material filed by the
Company should also be available for inspection at the offices of the NASD,
Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
Financial Information. Set forth below is certain selected consolidated
financial data with respect to the Company and its subsidiaries excerpted or
derived from the audited consolidated financial statements contained in the
Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1995
(the "Company 10-K") and the unaudited financial statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
(the "Company 10-Q"). More comprehensive financial information is included in
the Company 10-K, the Company 10-Q and in other documents filed by the Company
with the Commission (which may be inspected or obtained in the manner set forth
above), and the following data is qualified in its entirety by reference to such
report and other documents and all of the financial information (including any
related notes) contained herein or incorporated by reference.
14
<PAGE> 17
A+ NETWORK, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT UNIT, PER SHARE AND PER UNIT DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
1993 1994 1995 1995 1996
------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Mobile communications.............................. $26,838 $38,659 $ 47,083 $10,049 $19,547
Telemessaging...................................... 10,065 11,227 11,359 2,757 2,887
------- ------- -------- ------- -------
Total revenues................................ 36,903 49,886 58,442 12,806 22,434
Costs of equipment sales........................... (4,563) (8,525) (6,490) (2,086) (2,219)
------- ------- -------- ------- -------
32,340 41,361 51,952 10,720 20,215
Costs and expenses:
Operating expenses................................. 16,796 20,723 26,943 2,460 4,595
Depreciation and amortization...................... 4,318 7,476 14,835 3,111 6,552
Selling............................................ 7,064 11,594 12,467 2,733 3,601
General and administrative......................... 4,625 5,096 7,175 4,693 7,680
Restructuring charges.............................. -- -- 669 -- 396
------- ------- -------- ------- -------
Total costs and expenses...................... 32,803 44,889 62,089 12,997 22,824
Operating loss......................................... (463) (3,528) (10,137) (2,277) (2,609)
Interest expense, net.................................. 816 547 3,708 373 3,106
Loss before extraordinary item......................... (1,280) (4,075) (13,845) (2,650) (5,715)
Extraordinary item..................................... (236) -- (607) -- --
------- ------- -------- ------- -------
Net loss............................................... $(1,516) $(4,075) $(14,452) $(2,650) $(5,715)
======== ======== ========= ======== ========
Loss before extraordinary item per share............... $ (.35) $ (.68) $ (2.03) $ (.44) $ (.56)
Extraordinary item per share........................... (.07) -- (.09) -- --
------- ------- -------- ------- -------
Loss per share......................................... $ (.42) $ (.68) $ (2.12) $ (.44) $ (.56)
======== ======== ========= ======== ========
Weighted average shares outstanding.................... 3,648 5,966 6,822 5,972 10,263
OTHER DATA:
Pager and voicemail units in service (at period
end)............................................. 126,976 216,199 529,450 228,733 569,841
EBITDA(1).......................................... 3,855 3,947 4,697 835 3,943
Cash provided by operating activities.............. 1,935 1,043 2,347 269 946
Capital expenditures............................... 7,302 19,098 12,396 1,815 7,668
Acquisition expenditures........................... 10,751 1,411 20,595 1,333 --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
1996
---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Current assets...................................... $14,559 $10,287 $ 72,147 $ 67,896
Total assets........................................ 45,256 54,611 211,013 208,234
Total debt.......................................... 2,721 15,158 124,101 124,114
Shareholders' equity................................ 36,052 32,225 69,464 63,749
</TABLE>
- ---------------
(1) EBITDA consists of operating income plus depreciation and amortization.
EBITDA is a financial measure commonly used in the Company's industry and
should not be construed as an alternative to operating income (as determined
in accordance with generally accepted accounting principles ("GAAP")), as an
indicator of operating performance or as an alternative to cash flows from
operating activities (as determined in accordance with GAAP) or as a measure
of liquidity. EBITDA is also the primary financial measure by which the
Company's covenants are calculated under its bond indenture and bank loan
agreements. EBITDA does not represent funds available for dividends,
reinvestment or other discretionary activities.
Certain Projections. During the course of discussions between the
Purchaser and the Company that led to the execution of the Merger Agreement (see
Section 10), the Company provided the Purchaser with
15
<PAGE> 18
certain non-public business and financial information about the Company
including projections of earnings before interest, taxes, depreciation and
amortization ("EBITDA") for 1996 (on a pro forma basis, assuming that certain
acquisitions were completed as of January 1, 1996) and for 1997. These
projections indicated EBITDA of $23,910,000 (on a pro forma basis) in 1996 and
of $30,910,000 in 1997. The Company does not as a matter of course make public
any projections as to future performance or earnings, and the projections set
forth above are included in this Offer to Purchase only because the information
was provided to the Purchaser. These projections were not prepared with a view
to public disclosure or compliance with published guidelines of the Commission
or the guidelines established by the American Institute of Certified Public
Accountants regarding projections. The projections constitute forward-looking
statements within the meaning of Section 27A of the Securities Act, and Section
21E of the Exchange Act, and are intended to be covered by the safe harbors
created thereby. Neither the Purchaser nor the Company, nor either of their
financial advisors, assumes any responsibility for the accuracy of these
projections. While presented with numerical specificity, these projections are
based upon a variety of assumptions relating to the business of the Company
which may not be realized and are subject to significant uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond the control of the Company. These uncertainties include, without
limitation, the Company's ability to continue to realize historical internal
growth rates, to close and integrate acquisitions that are currently under
definitive agreements and to realize operating margin improvements. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could be inaccurate and the uncertainties
and contingencies referred to above may arise. Therefore there can be no
assurance that the forward-looking statements will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company, the Purchaser or any other person
that the objectives and plans of the Company will be achieved. There can be no
assurance that the projections will be realized, and actual results may vary
materially and adversely from those shown.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER.
General. The Purchaser, a Delaware corporation, is currently the sixth
largest paging company in the United States, based on 1,009,548 pagers in
service at March 31, 1996, providing local, regional and nationwide paging and
other wireless messaging services. The Purchaser currently operates regional and
nationwide paging networks throughout the United States and has historically
concentrated its selling efforts in four operating regions: (i) the Northeast
(Massachusetts through Delaware); (ii) the Mid-Atlantic (Maryland and the
Washington, D.C. metropolitan area); (iii) the Southeast (Virginia and Florida);
and (iv) the West (California, Nevada and Arizona). Through the Metrocall
Nationwide Wireless Network, the Purchaser can provide paging services in
approximately 864 U.S. cities which include the top 100 Standard Metropolitan
Statistical Areas ("SMSAs").
In February and April 1996, the Purchaser announced five separate
acquisitions which, when consummated, will add approximately 770,000 subscribers
to its base of pagers in service. Through these acquisitions the Purchaser will
expand its operations into the Midwest, Southwest and Southeast, while
strengthening its existing customer base in the Northeast. On a pro forma basis
taking into account these acquisitions, the Purchaser believes it would be the
fifth largest paging company in the United States. On a combined basis (pro
forma for all acquisitions), the Company and the Purchaser would service a total
subscriber base consisting of approximately 2.5 million units in service, and
would constitute the fourth largest paging company in the United States.
The Purchaser Shares are traded on the NNM under the symbol "MCLL." The
principal executive offices of the Purchaser are located at 6677 Richmond
Highway, Alexandria, Virginia, 22306.
The Purchaser is subject to the disclosure requirements of the Exchange Act
and in accordance therewith is required to file reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Such reports, proxy statements and other
information are available for inspection and copying at prescribed rates at the
offices of the Commission and the NASD as set forth in Section 7.
16
<PAGE> 19
The name, business address, principal occupation, five-year employment
history and citizenship of each of the directors and executive officers of the
Purchaser are set forth in Schedule I hereto.
Certain Transactions. Except for the Merger Agreement and as otherwise set
forth in this Offer to Purchase, neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I to this
Offer to Purchase, nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire, directly or indirectly,
any Shares; and neither the Purchaser nor, to the best knowledge of the
Purchaser, any of the persons or entities referred to above, nor any of the
respective executive officers, directors, or subsidiaries of any of the
foregoing, beneficially owns or has a right to acquire, directly or indirectly,
any Shares; and neither the Purchaser nor, to the best knowledge of the
Purchaser, any of the persons or entities referred to above, nor any of the
respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise set forth in
this Offer to Purchaser, neither the Purchaser nor, to the best knowledge of the
Purchaser, any of the persons listed on Schedule I hereto, has any contract,
arrangement, understanding or relationship with any other person with respect to
any Shares or other securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the transfer
or voting of any such Shares or other securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies.
Except as set forth in this Offer to Purchase, since January 1, 1993, there
have been no contracts, negotiations or transactions between the Purchaser, any
subsidiary of the Purchaser or, to the best knowledge of the Purchaser, any of
the persons listed on Schedule I hereto, on the one hand, and the Company or any
of its officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisitions, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets.
Except as set forth in this Offer to Purchase, neither the Purchaser nor,
to the best knowledge of the Purchaser, any of the persons listed on Schedule I
hereto has, since January 1, 1993, had any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that would require disclosure herein under the rules and regulations
of the Commission applicable to the Offer.
Financial Information. Set forth below is certain selected consolidated
financial data with respect to the Purchaser and its subsidiaries excerpted or
derived from the audited consolidated financial statements contained in the
Purchaser's Report on Form 10-K for the year ended December 31, 1995 (the
"Purchaser 10-K") and the unaudited financial statements contained in the
Purchaser's Report on Form 10-Q for the quarter ended March 31, 1996 (the
"Purchaser 10-Q"). More comprehensive financial information is included in the
Purchaser 10-K, the Purchaser 10-Q and in other documents filed by the Purchaser
with the Commission (which may be inspected and copies thereof obtained at the
offices of the Commission as set forth in Section 7), and the following data is
qualified in its entirety by reference to such reports and other documents and
all of the financial information and related notes contained therein or
incorporated by reference.
17
<PAGE> 20
METROCALL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT UNIT, PER SHARE AND PER UNIT DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, 1996
------------------------------- --------------------
1993 1994(1) 1995 1995 1996
------- -------- -------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Service, rent and maintenance revenues......................... $33,111 $ 49,716 $ 92,160 $22,109 $ 23,750
Product sales.................................................. 4,549 8,139 18,699 3,698 6,189
------- -------- -------- ------- ---------
Total revenues............................................. 37,660 57,855 110,859 25,797 29,939
Net book value of products sold................................ (4,130) (6,962) (15,527) (3,153) (4,650)
------- -------- -------- ------- ---------
Net revenues............................................... 33,530 50,893 95,332 22,644 25,289
Operating expenses before depreciation and amortization(2)..... 27,438 34,741 69,611 16,109 18,568
Depreciation and amortization.................................. 6,525 13,829 31,504 5,769 11,491
------- -------- -------- ------- ---------
Income (loss) from operations.................................. (433) 2,323 (5,783) 766 (4,770)
Interest and other income...................................... 77 161 2,011 (17) 1,354
Interest expense............................................... (1,331) (3,726) (12,533) (2,579) (4,209)
------- -------- -------- ------- ---------
Loss before income tax benefit (provision) and extraordinary
item......................................................... (1,687) (1,242) (16,305) (1,830) (7,625)
Income tax benefit (provision)................................. (59) 152 595 140 (64)
------- -------- -------- ------- ---------
Loss before extraordinary item................................. (1,746) (1,090) (15,710) (1,690) (7,689)
Extraordinary item(3).......................................... (439) (1,309) (4,392) -- --
------- -------- -------- ------- ---------
Net income (loss).......................................... $(2,185) $ (2,399) $(20,102) $(1,690) $ (7,689)
======= ======== ======== ======= ========
Net loss per common share:
Loss per common share before extraordinary item............ $ (0.14) $ (1.34) $ (0.16) $ (0.53)
Extraordinary item, net of income tax benefit.............. (0.16) (0.38) -- --
-------- -------- ------- ---------
Net loss per common share.................................. $ (0.30) $ (1.72) $ (0.16) $ (0.53)
======== ======== ======= ========
OPERATING AND OTHER DATA:
Units in service (end of period)............................... 247,716 755,546 944,013 787,920 1,009,548
EBITDA(4)...................................................... $10,923 $ 16,152 $ 27,771 $ 6,535 $ 6,721
EBITDA margin(5)............................................... 32.6% 31.7% 29.1% 28.9% 26.6%
ARPU(6)........................................................ $ 12.29 $ 10.53 $ 9.15 $ 9.55 $ 8.11
Average monthly operating expense per unit(7).................. $ 8.39 $ 7.36 $ 6.71 $ 6.96 $ 6.34
Units in service per employee (end of period).................. 716 1,007 1,047 1,018 1,188
Capital expenditures........................................... $13,561 $ 19,091 $ 44,058 $ 8,727 $ 16,889
<CAPTION>
DECEMBER 31,
------------------------------- MARCH 31,
1993 1994 1995 1996
------- -------- -------- --------------------
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................................... $ 1,014 $ 2,773 $123,574 $115,150
Total assets................................................... 33,857 200,580 340,614 337,294
Total long-term debt........................................... 12,102 104,846 154,055 153,995
Total shareholders' equity..................................... 13,729 68,136 155,238 147,549
</TABLE>
- ---------------
(1) 1994 includes the results of operations of acquired companies from their
respective acquisition dates.
(2) Includes the impact of non-recurring charges for the forgiveness of certain
shareholder notes receivable of approximately $4.8 million in 1993, and
severance and other compensation costs incurred as part of a management
reorganization charge of approximately $2.0 million in 1995.
(3) In 1993, 1994, and 1995 the Purchaser refinanced balances outstanding under
its then existing credit facilities. As a result of these refinancings the
Purchaser recorded extraordinary items of approximately $439,000, $1.3
million and $4.4 million, respectively, representing charges to expense
unamortized deferred financing costs and other costs, net of any income tax
benefits, related to those credit facilities.
(4) EBITDA (earnings before interest, taxes, depreciation and amortization) is a
standard measure of financial performance in the paging industry, but should
not be considered in isolation or as an alternative to net income (loss),
income (loss) from operations, cash flows from operating activities, or any
other measure of performance under GAAP. EBITDA excludes non-recurring
charges for the forgiveness of certain shareholder notes receivable of
approximately $4.8 million in 1993 and approximately $2.0 million incurred
as part of a management reorganization charge in 1995.
(5) EBITDA margin is calculated by dividing (a) EBITDA by (b) net revenues.
(6) ARPU (average monthly recurring revenue per unit) is calculated by dividing
(a) monthly service, rent and maintenance revenues for the period by (b) the
average number of units in service for the period.
(7) Average monthly operating expense per unit is calculated by dividing (a)
total operating expenses before depreciation and amortization for the period
by (b) the average number of units in service for the period. Operating
expenses exclude non-recurring charges for the forgiveness of certain
shareholder notes receivable of approximately $4.8 million in 1993 and
approximately $2.0 million incurred as part of a management reorganization
charge in 1995.
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<PAGE> 21
9. SOURCES AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase 2,140,526
Shares pursuant to the Offer and to pay related fees and expenses is estimated
to be approximately $45.5 million. The Purchaser intends to obtain such funds
from existing cash on hand. The cost of purchasing the Cash Purchase Shares
pursuant to the Shareholders' Agreement is estimated to be approximately $46.6
million. At May 20, 1996, cash balances totaled approximately $103.1 million. Of
the total, approximately $3 million represented escrowed funds for pending
acquisition transactions with approximately $100.1 million available for
completion of this Offer and the purchase of the Cash Purchase Shares.
10. BACKGROUND OF THE OFFER AND THE MERGER; CONTACTS WITH THE COMPANY.
Strategic business combinations and acquisitions have been a major
component of the Purchaser's long term strategy since completion of its initial
public offering in July 1993. At that time, the Purchaser actively began to seek
out acquisition candidates in the paging and wireless messaging industry with
operations either complementary to its own or which provide opportunities for
geographic expansion. In August and November 1994, the Purchaser completed the
acquisitions of FirstPAGE USA, Inc. and MetroPaging, Inc. (formerly AllCity
Paging, Inc.), respectively. In late September and early October 1995, the
Purchaser completed a secondary equity offering and a senior subordinated notes
offering, respectively, with combined net proceeds of approximately $252.0
million, to fund expansion of its local, regional and nationwide transmission
networks and future acquisitions. To assist in the acquisition portion of its
strategy, the Purchaser engaged financial advisors to provide it strategic
advice and assist in identifying and analyzing possible business combinations or
acquisitions. The Company was one company identified as a candidate for possible
merger or acquisition.
On or about November 16, 1995, representatives of the Company and the
Purchaser, along with the Purchaser's financial advisor, had an introductory
meeting in Chicago. The Purchaser indicated at the meeting that it might be
interested in pursuing a business combination of the two companies. The Company
responded that consideration of such a transaction might be premature, since the
Company had only recently completed the merger of A+ Communications, Inc. and
Network. Thereafter, the parties executed a confidentiality agreement, and, from
time to time, met and exchanged financial and business information. During this
time, no proposals regarding a transaction were made.
On March 14, 1996, the parties met in Atlanta, Georgia, with their
respective financial advisors. At that meeting, the parties began to explore the
terms of a possible business combination of the two companies. Thereafter, and
throughout April 1996, the parties conducted preliminary due diligence and from
time to time had discussions regarding the possible terms of a proposed
transaction.
On May 1, 1996, the Purchaser's Board authorized its management and
advisors to proceed to negotiate a merger with the Company, subject to board
approval. On May 6, 1996, the parties' senior management, including members of
their respective boards, and their professional advisors, met in New York City
to discuss the financial terms and structure of the possible combination.
Beginning on May 8, the parties and their advisors met in Washington, D.C. and
began to negotiate the terms of the Merger Agreement, the Shareholders'
Agreement, and related documents. The Purchaser's Board held telephonic board
meetings on Monday, May 13, and Tuesday, May 14, and approved the proposed
Merger and related transactions, subject to satisfactory finalization of the
documents, on May 14. The parties continued to negotiate final documentation
through May 15.
The Purchaser conditioned its willingness to enter into the transactions
contemplated by the Merger Agreement upon the Principal Shareholders' entering
into the Shareholders' Agreement. The Purchaser was unwilling to commence the
Offer or to agree to the Merger unless the Purchaser received assurances from
the Principal Shareholders that would, as a practical matter, commit the
Principal Shareholders to vote all of their Shares for the Merger and, if
necessary, to sell their Shares to the Purchaser to the extent legally
permissible in circumstances where there was a competing offer for the Company.
The Company, for its part, conditioned its willingness to enter into the
proposed combination on receiving assurances that a substantial block of
stockholders of the Company would vote in favor of the Merger. Accordingly, as
described below, stockholders
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<PAGE> 22
holding approximately 30% of the outstanding Purchaser Shares have granted
proxies to the Company to vote in favor of the Merger.
The negotiations leading up to the Merger Agreement also included
discussions about the structure and membership of the Surviving Corporation's
Board of Directors. The parties' agreements on these matters are described under
the headings "The Merger Agreement -- The Merger" and "Other
Agreements -- Purchaser Stockholders Voting Agreement" in Section 11, below.
The parties executed the definitive agreement effective May 16, 1996. The
agreement was announced on May 16, 1996.
11. PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT; SHAREHOLDERS'
AGREEMENT; OTHER AGREEMENTS; PLANS FOR THE COMPANY AFTER THE MERGER; SEC
REGULATIONS.
Purpose of the Offer and the Merger
The Offer, the purchase of the Shares pursuant to the Shareholders'
Agreement and the Merger are intended to permit the business combination of the
Purchaser and the Company.
The purpose of the Offer is to acquire 2,140,526 Shares and to facilitate
the Merger. The number of Shares for which Purchaser is tendering is equal to
40% of the outstanding Shares held by persons other than the Principal
Shareholders plus 40% of the Shares to be issued in an acquisition by the
Company that is expected to close in the immediate future. Based on the
information supplied by the Company, if the Purchaser purchases 2,140,526 Shares
pursuant to the Offer, and purchases an additional 2,210,217 Shares from the
Principal Shareholders pursuant to the Shareholders' Agreement, the Purchaser
will beneficially own approximately 42% of the voting power of the Company as of
May 16, 1996 (36% if all Shares issuable pursuant to outstanding options and in
connection with pending acquisitions are included). In addition, pursuant to the
Shareholders' Agreement, the Principal Shareholders of the Company have agreed
to vote all Shares owned by them in favor of the Merger. Together with the 42%
to be purchased by the Purchaser pursuant to the Offer and from the Principal
Shareholders, approximately 75% of the Shares issued and outstanding on May 16,
1996 (64% including Shares issuable pursuant to outstanding options and in
connection with pending acquisitions) will effectively be committed to vote for
the Merger. The Shareholders' Agreement also grants the Purchaser options to
acquire additional Shares from the Principal Shareholders in certain
circumstances described under "The Shareholders' Agreement," below, which Shares
may be owned and voted by the Purchaser at the time the Merger is voted on by
the Shareholders of the Company. The purchase of Shares pursuant to the Offer,
together with the rights granted to the Purchaser under the Shareholders'
Agreement, will substantially increase the likelihood that the Merger will be
effected. The Offer provides a means for Shareholders of the Company who wish to
do so to receive cash for at least a portion of their Shares.
The purpose of the Merger is to effect a business combination of the
Purchaser and the Company. Following (i) the completion of the Offer, (ii)
approval of the Merger by the respective shareholders of the Company and the
Purchaser and (iii) the satisfaction of the other conditions described in the
Merger Agreement, including without limitation the receipt of FCC approval, the
Company and the Purchaser intend to consummate the Merger.
Although the Purchaser and the Company have agreed to use all reasonable
efforts to consummate the Merger, and the rights granted by the Shareholders'
Agreement may, as a practical matter, provide the Purchaser with the ability to
cause the consummation of the Merger on the terms set forth in the Merger
Agreement, there can be no assurance that the Merger will be consummated or as
to the timing of the Merger because the Merger is subject to certain conditions,
some of which are beyond the control of the Purchaser and the Company. See
"Conditions to the Merger" in this Section 11. If the Merger does not take
place, the Purchaser and the Company have agreed in the Merger Agreement that
under certain circumstances the Company may repurchase the Shares acquired in
the Offer or such Shares will be sold by Purchaser in a distribution as
described below under the heading "The Merger Agreement -- Repurchase Option."
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<PAGE> 23
The Merger Agreement
The following is a brief summary of certain provisions of the Merger
Agreement, a copy of which is included as Annex A to this Offer to Purchase and
is incorporated herein by reference. This summary does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement.
All shareholders of the Company are urged to read the Merger Agreement in its
entirety. Capitalized terms used herein and not otherwise defined have the same
meaning as in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable and in any event within five business days of the
announcement of the Offer. The obligation of the Purchaser to consummate the
Offer and accept for payment any Shares tendered is subject to the satisfaction
of certain conditions (including the Minimum Condition) which are described in
Section 13. The Merger Agreement provides that the Purchaser may not amend or
waive the Minimum Condition and may not decrease the offer price or decrease the
Minimum Condition or amend any other material condition of the Offer in any
manner adverse to the holders of the Shares without the prior written consent of
the Company (such consent to be authorized by the Board of Directors of the
Company or a duly authorized committee thereof). Notwithstanding the foregoing,
(i) if on the Expiration Date (A) there exists an AN Acquisition Proposal (as
defined below) involving a tender offer, the Purchaser may extend the Offer to a
date two business days after the date the position of the Company with respect
to the tender offer is first published or sent pursuant to Rule 14e-2 under the
Exchange Act, or (B) there exists an Acquisition Proposal other than a tender
offer, the Purchaser may extend the Offer to a date two business days after the
first date on which the Company's failure to reject such Acquisition Proposal
would permit the Purchaser to terminate the Merger Agreement as described below
under "Termination"; (ii) the Purchaser may extend the Offer at any time when
the Minimum Condition or the other conditions set forth in Section 13 are not
satisfied for such period of time, not to exceed 20 business days in the
aggregate, as is reasonably expected to be necessary in order to satisfy the
Minimum Condition or the other conditions to the Offer; and (iii) the offer
price may be increased in good faith and the Offer may be extended to the extent
required by law in connection with such increase, in each case without the
consent of the Company.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and the satisfaction or waiver of the other conditions to the
Merger, including FCC approval, and in accordance with the Delaware Law and the
Tennessee Law, the Company will be merged with and into the Purchaser, the
separate existence of the Company will cease, and the Purchaser will continue
its existence as the surviving corporation (the "Surviving Corporation").
In the Merger, each outstanding Share (other than Shares held by the
Purchaser, which will be canceled) will be converted into the right to receive:
(i) that number of Purchaser Shares equal to the Conversion Ratio, (ii) the same
number of VCRs, plus (iii) cash in respect of fractional Purchaser Securities,
if any. The Conversion Ratio shall be determined by dividing $21.10 by the
Average Purchaser Share Price, except that if the Average Purchaser Share Price
is greater than $21.88 or less than $17.90, then the Conversion Ratio shall be
.96435 or 1.17877, respectively. Each VCR will entitle the holder to receive the
amount, not to exceed $5.00 per VCR (unless increased as described below), by
which the market value of Purchaser Shares determined as of the first
anniversary of the Effective Time (the "Maturity Date"), is less than the
"Target Price" of $21.10 per share, adjusted downward, but not upward, based on
changes in an index composed of average closing bid prices of three other
companies in the paging industry. If the Purchaser extends the Maturity Date by
one year (the "Extended Maturity Date"), the Target Price will increase to
$25.10, adjusted as previously described, and the maximum amount which the
holder may receive will be $7.00 per VCR. The market value of the Purchaser
Shares for this purpose will be the median of the averages of the last bid price
for the Purchaser Shares on each trading day during each twenty trading day
period within the 60 trading days prior to the Maturity Date. In addition, if
the last bid price of the Purchaser Shares exceeds $21.10 for any consecutive
50-day period after the Effective Time and before the Maturity Date or, if the
Maturity Date is extended, $25.10 for any 50-day period after the Maturity Date
and before the Extended Maturity Date, then the right to receive payments under
the VCR will terminate. Any amounts payable under the VCRs will be in cash,
Purchaser Shares or common stock equivalents, as determined by the Purchaser.
The terms of the VCRs are described in Annex C to the Merger Agreement.
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<PAGE> 24
The Surviving Corporation will not issue fractional Purchaser Securities.
In lieu of any fractional Purchaser Securities, the holder of a Share converted
in the Merger will be entitled to receive a cash payment determined by
multiplying (i) $21.10 by (ii) the fractional Purchaser Security to which such
holder would be entitled.
The Merger Agreement provides that the Certificate of Incorporation and
By-Laws of the Purchaser will become the Certificate of Incorporation and
By-Laws of the Surviving Corporation. In addition, under the Merger Agreement
the directors of the Purchaser immediately prior to the Effective Time, which
shall include Elliott H. Singer and Ray D. Russenberger (who are currently
directors of the Company), will become the directors of the Surviving
Corporation following the Merger as set forth in Annex B to the Merger
Agreement, and the officers of the Purchaser immediately prior to the Effective
Time will become the officers of the Surviving Corporation following the Merger,
in each case until their successors are elected and qualified. Two of the
current directors of the Purchaser, Steven D. Jacoby and Vincent D. Kelly, will
resign as directors immediately prior to the Effective Time.
The Merger Agreement also contains special provisions that will come into
effect if, pursuant to the rights granted to the Purchaser under the
Shareholders' Agreement, the Purchaser is required to purchase Shares when,
among other conditions, the Offer has expired without Shares being purchased and
no other Shares have been acquired pursuant to a subsequent tender offer by the
Purchaser. In that event, the aggregate merger consideration to shareholders of
the Company other than the Purchaser will consist of 40% cash and 60% Purchaser
Securities. If the Merger is consummated pursuant to this provision, holders of
Shares will have the right to elect the number of Shares for which they wish to
receive cash at $21.10 per Share and the number of Shares for which they wish to
receive Purchaser Securities. The amount payable in either type of consideration
will be pro-rated as necessary if either the amount of cash or Purchaser
Securities elected by the shareholders exceeds the percentages set forth above.
Treatment of Stock Options. Each outstanding option (a "Company Option")
to purchase Common Stock granted pursuant to the Company's 1987 Stock Incentive
Plan, 1992 Key Employee Incentive Stock Plan, 1992 Non-Qualified Stock Option
Plan for Non-Employee Directors or the 1992 Employee Stock Purchase Plan
(collectively, the "Company Option Plans") and certain options granted to a
former employee that has not or have not vested prior to the Effective Time will
become fully exercisable and vested as of the Effective Time of the Merger. Each
Company Option that is not an "incentive stock option" under Section 422 of the
Code, shall, at the option of the holder thereof, either (i) be converted
automatically into an option to purchase such number of Purchaser Securities
equal to the number of Shares subject to such Company Option immediately prior
to the Effective Time multiplied by the Conversion Ratio, with the exercise
price adjusted accordingly, but otherwise on the same terms and conditions as
were applicable under any applicable Company Option Plan and the underlying
stock option agreement, or (ii) up to a maximum of 40% of the Shares subject to
the Company Options held by each option holder (which percentage will be
determined by such holder) shall be cancelled and the holder shall be entitled
to receive with respect to each such Share, a cash payment equal to the amount
per Share paid upon purchase of Shares pursuant to this Offer less the exercise
price relating to such Shares, with the remaining Company Options converted as
described pursuant to clause (i). Company Options that are incentive stock
options will be adjusted in accordance with Section 424(a) of the Code. The
Surviving Corporation will notify option holders regarding their rights under
the Company Option Plans as soon as practicable after the Effective Time.
Currently exercisable options may be exercised and the Shares received thereby
tendered into the Offer or be subject to exchange in the Merger.
Employee Arrangements. The Merger Agreement provides that for a period of
not less than three years following the Effective Time of the Merger, Purchaser
will use its best efforts to maintain a Southeast/ Southwest regional operations
center in Pensacola, Florida, but such center may be closed in the event of a
sale or merger of Purchaser after the Effective Time. The Merger agreement also
provides that the Company's current executive officers, managers, salespeople
and staff will continue to participate in the Company's benefit plans and
employee agreements as in effect on the date of the Merger Agreement until the
Effective Time. In addition, the Merger Agreement contains certain provisions
with respect to the integration, after the
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<PAGE> 25
Effective Time, of the Company's executive officers, managers, salespeople and
staff into the operations of the Purchaser, including provisions for such
employees' compensation, bonuses, benefits and severance.
Indemnification. The Merger Agreement provides that the Purchaser shall,
or shall cause the Surviving Corporation to, from and after the Effective Time,
to the fullest extent permitted by the Delaware Law, the Company's Certificate
of Incorporation, By-laws or indemnification agreements in effect on the date of
the Merger Agreement, including provisions relating to advancement of expenses
incurred in the defense of any action or suit, indemnify, defend and hold
harmless all persons who are on the date of the Merger Agreement, or have been
at any time prior to the date of the Merger Agreement, or who become prior to
the Effective Time, an officer, director, employee or agent of the Company or
its subsidiaries, or who are or were serving at the request of the Company or
any of its subsidiaries as a director, officer, employee or agent of another
corporation, partnership, trust, limited liability company or other business
enterprise (each, an "Indemnified Party") against all losses, claims, damages,
liabilities, costs and expenses, judgments, fines, losses and amounts paid in
settlement in connection with any actual or threatened claim, proceedings or
investigations that are based upon or arise out of such person's service as a
director, officer, employee or agent of the Company or any subsidiaries or the
Merger Agreement or any transactions contemplated thereby.
The Merger Agreement also provides for the preservation of all rights to
indemnification, advancement of expenses, exculpation, limitation of liability
and any and all similar rights now existing in favor of the employees, agents,
directors or officers of the Company and its subsidiaries under their respective
charters or by-laws, under indemnification agreements or otherwise, for six
years after the Effective Time, and for the Surviving Corporation to use all
reasonable efforts to maintain directors' and officers' liability insurance
maintained by the Company (or substantially similar coverage) for six years
after the Effective Time.
Representations and Warranties. The Merger Agreement contains certain
customary representations and warranties of the parties. The Company has
represented that its Board of Directors has (a) duly adopted and approved the
Offer, the Merger Agreement and the Merger, (b) determined that each of the
Offer and the Merger is fair to and in the best interests of its shareholders,
(c) resolved to recommend acceptance of the Offer by those shareholders of the
Company who wish to receive cash for a portion of their Shares, and (d) resolved
to recommend approval of the Merger by its shareholders. The Purchaser has
represented that its Board of Directors has taken comparable actions as set
forth in clauses (a), (b) and (d) above and has represented that it has
sufficient funds available to purchase Shares pursuant to the Offer and to pay
all fees and expenses related to the transactions contemplated by the Merger
Agreement and that neither the Purchaser nor any of its affiliates beneficially
owns any Shares. Each of the Company and the Purchaser has made certain other
representations and warranties to the other regarding, among other things: (i)
their respective organization, subsidiaries and capitalization; (ii) their
respective authority to enter into and perform their respective obligations
under the Merger Agreement; (iii) the compliance of the transactions
contemplated by the Merger Agreement with their respective Certificates of
Incorporation and By-laws, certain agreements and applicable laws; (iv) the
accuracy and completeness of their respective Exchange Act filings with the
Commission, including for the Company the Schedule 14D-9 filed in connection
with the Offer and for the Purchaser the Schedule 14D-1 filed in connection with
the Offer, as well as the proxy statement to be filed in connection with the
Merger, (v) the absence of undisclosed liabilities, (vi) the absence of material
adverse changes in the condition, results of operations, business and assets of
each and their respective subsidiaries, taken as a whole, since December 31,
1995; (vii) litigation; (viii) transactions with their respective affiliates;
(ix) environmental matters; (x) employee benefit plans and contracts; (xi)
taxes; and (xii) brokers' fees. The representations and warranties contained in
the Merger Agreement do not survive beyond the Effective Time.
Conduct of Business Pending the Merger.
Conduct of Business by the Company. The Merger Agreement provides that,
prior to the Effective Time, except (x) as otherwise contemplated therein, (y)
as agreed in writing by the Purchaser or (z) for the consummation of pending
acquisitions disclosed by the Company to the Purchaser, (i) the business of the
Company and its subsidiaries shall be conducted only in, and the Company and its
subsidiaries will not take any action except in, the ordinary and usual course
of business and consistent with past practice, and the
23
<PAGE> 26
Company and its subsidiaries will use all reasonable efforts, consistent with
past practice, to maintain and preserve their respective business organizations,
assets, employees and advantageous business relationships; (ii) the Company will
not, directly or indirectly, (A) sell, transfer or pledge or agree to sell,
transfer or pledge any Shares, preferred stock or capital stock of any of its
subsidiaries beneficially owned by it, or (B) split, combine or reclassify the
outstanding Shares, or any outstanding capital stock of any of the subsidiaries
of the Company; (iii) neither the Company nor any of its subsidiaries will (A)
amend its certificate of incorporation or bylaws, (B) issue, grant, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
subsidiaries or any other ownership interests (including but not limited to
stock appreciation rights or phantom stock), other than Shares reserved for
issuance on the date of the Merger Agreement pursuant to the exercise of Company
Options outstanding on the date of the Merger Agreement, and options
automatically granted pursuant to the 1992 Non-Qualified Stock Option Plan for
Non-Employee Directors, (C) with the exception of existing liens in favor of the
Company's bank lender, transfer, lease, license, sell, mortgage, pledge, dispose
of, or encumber any material assets other than in the ordinary and usual course
of business and consistent with past practice, (D) modify the terms of any
indebtedness or incur any indebtedness other than borrowings under existing
agreements, (E) incur any material liability, other than borrowings permitted by
clause (D) above of money under existing agreements or incurrence of other
liabilities in the ordinary and usual course of business and consistent with
past practice, or (F) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock; (iv) the Company will not declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (v) neither the Company nor any of
its subsidiaries shall modify, amend or terminate certain specified agreements
or waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice; (vi) each of the
Company and its subsidiaries shall maintain in full force and effect such types
and amounts of insurance issued by insurers of recognized responsibility
insuring it with respect to its respective business and properties, in such
amount and against such losses and risk as is usually carried by persons engaged
in the same or similar business; (vii) neither the Company nor any of its
subsidiaries will (A) except for or on behalf of subsidiaries, assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, (B) make any
loans, advances or capital contributions to, or investments in, any other person
(other than to subsidiaries of the Company pursuant to the Company's written
obligations on the date of the Merger Agreement), other than in the ordinary
course of business and consistent with past practice, or (C) enter into any
commitment or transaction with respect to any of the foregoing (including, but
not limited to, any borrowing, capital expenditure or purchase, sale or lease of
assets); (viii) neither the Company nor any of its subsidiaries will change any
of the accounting methods used by it unless required by generally accepted
accounting principles; (ix) neither the Company nor any of its subsidiaries will
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger and transactions
permitted by the Merger Agreement); (x) neither the Company nor any of its
subsidiaries will take, or agree to take, any action that would result in any of
the conditions set forth in the Merger Agreement or to the Offer not being
satisfied, unless the Company's directors make a Fiduciary Determination (as
defined below); (xi) neither the Company nor any of its subsidiaries will
acquire (by merger, consolidation, or acquisition of stock or assets or
otherwise) any corporation, partnership or other business organization or
division of any such entity; provided, that the Company may engage in such a
transaction if (A) the Company notifies the Purchaser prior to entering into any
such transaction, (B) the purchase price for each such transaction is payable
only in cash and such price does not exceed $5,000,000, and (C) the purchase
price for each such transaction does not exceed eight times annualized EBITDA
for the most recently ended calendar quarter; (xii) neither the Company nor any
of its subsidiaries will increase the compensation or fringe benefits of any of
its directors, officers or employees, except for increases in salary or wages of
employees of the Company or its subsidiaries who are not officers or directors
of the Company in the ordinary course of business and consistent with past
practice and may not establish or alter other employee benefit plans or employee
agreements; (xiii) neither the Company nor any of its subsidiaries will make any
material tax election or settle or compromise any material federal, state, local
or foreign tax liability except for settlements that would not be material to
the Company or do not otherwise materially impair the business of the Company;
(xiv) neither the Company nor
24
<PAGE> 27
any of its subsidiaries will settle or compromise any pending or threatened
suit, action or claim that is material to the transactions contemplated by the
Merger Agreement; (xv) neither the Company nor any of its subsidiaries will pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities (A) reflected or reserved against in the financial
statements of the Company, (B) incurred in the ordinary course of business and
consistent with past practice, or (C) incurred in a manner not otherwise
prohibited under the Merger Agreement; (xvi) the Company shall not effect a
registration under the Securities Act with respect to Shares held by any person
and entity, other than the registration on a Registration Statement on Form S-8
of Shares to be issued pursuant to Company Options and the registration of
Shares pursuant to registration rights agreements in effect on the date of the
Merger Agreement or pursuant to the Shareholders' Agreement; (xvii) neither the
Company nor any of its subsidiaries will modify or amend any of the acquisitions
disclosed by it to the Purchaser in any manner that would increase the
consideration payable pursuant to such transaction; and (xviii) neither the
Company nor any of its subsidiaries will authorize or enter into an agreement to
do any of the foregoing.
Conduct of Business by the Purchaser. The Merger Agreement also provides
that, prior to the Effective Time, except (x) as contemplated by the Merger
Agreement or the Shareholders' Agreement, (y) as agreed in writing by the
Company, or (z) for the consummation of certain pending acquisitions disclosed
by the Purchaser to the Company, (i) the Purchaser will not (A) amend its
certificate of incorporation or by-laws, or (B) redeem, purchase or otherwise
acquire directly or indirectly any of its capital stock, provided, that the
Purchaser may amend its Certificate of Incorporation to increase the number of
authorized Purchaser Shares by 7,500,000 shares contemporaneously with approval
of the Merger; (ii) the Purchaser will not declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock; (iii) the Purchaser will not, directly or indirectly,
split, combine or reclassify the outstanding Purchaser Shares; (iv) with the
exception of the existing liens in favor of the Purchaser's bank lenders,
neither the Purchaser nor any of its subsidiaries will issue, grant, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Purchaser or its subsidiaries, other than (A) issuances of Purchaser Shares
reserved for issuance on the date of the Merger Agreement upon exercise of
employee stock options outstanding on the date of the Merger Agreement, (B)
issuance by the Purchaser of Purchaser Shares or other Purchaser securities for
the fair market value thereof, and (C) the granting (and issuance of shares upon
exercise) of options pursuant to the existing option plans with an exercise
price equal to the fair market value thereof on the date of grant; (v) the
Purchaser will not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Purchaser or any subsidiary; (vi) neither the Purchaser nor any of its
subsidiaries will take, or agree to take, any action that would result in any of
the conditions set forth in the Merger Agreement or to the Offer not being
satisfied; (vii) neither the Purchaser nor any of its subsidiaries will acquire
(by merger, consolidation, or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division of any such
entity, provided, that the Purchaser may make acquisitions to the extent that
they (A) comply with the requirement that any issuance of Purchaser Shares must
be for fair market value, (B) do not involve businesses that would be considered
"significant subsidiaries" within the meaning of Rule 1-02(v) of Regulation S-X,
and (C) do not result in the issuance of more than 3,000,000 Purchaser Shares in
the aggregate; (viii) neither the Purchaser nor any of its subsidiaries shall
engage in any business other than that conducted in the telecommunications
industry; and (ix) neither the Purchaser nor any of its subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
Response to Other Offers. Pursuant to the Merger Agreement, each of the
Purchaser, the Company and their respective affiliates are required to
immediately cease all existing discussions or negotiations, if any, with any
parties (other than each other) conducted with respect to proposal relating to
(i) a possible acquisition of the Purchaser or the Company, as the case may be,
whether by merger, purchase of all or substantially all of the assets of the
Purchaser or the Company, as the case may be, or any similar transaction, or
(ii) a tender offer for more than 5% of the common stock of the Purchaser or the
Company (excluding any transaction otherwise permitted by the Merger Agreement)
(any such proposal with respect to the Company being
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referred to herein as an "AN Acquisition Proposal" and with respect to either
the Purchaser or the Company, an "Acquisition Proposal").
The Merger Agreement provides that each of the Purchaser and the Company
may furnish information and access (in each case only in response to a request
made after the date of the Merger Agreement which was not encouraged, solicited
or initiated by Purchaser, the Company or their affiliates) pursuant to
appropriate confidentiality agreements, and may participate in discussions and
negotiate with such party concerning any Acquisition Proposal, but only if (i)
with respect to the Company, such party has submitted a written proposal to the
Board of Directors of the Company relating to any such transaction involving
economic consideration per share that such Board of Directors reasonably
believes is economically superior to the consideration to be paid pursuant to
the Merger Agreement and which does not include or contemplate any condition
relating to the obtaining of funds for such Acquisition Proposal, and (ii) with
respect to both the Company and the Purchaser, such Board of Directors has made
a Fiduciary Determination. Each of the Purchaser and the Company must provide
the Company or the Purchaser, respectively, notice of and copies or summaries of
all written or oral Acquisition Proposals and will keep the Company or the
Purchaser, respectively, advised of all such Acquisition Proposals.
Except as permitted by the Merger Agreement, neither the Purchaser, Company
nor any of their affiliates will, directly or indirectly, encourage, or solicit
submission of any inquiries, proposals or offers by; participate in or initiate
any discussions or negotiations with; disclose any information about the Company
or the Purchaser, respectively, or their respective subsidiaries to, or
otherwise assist, facilitate or encourage, or enter into any agreement or
understanding with any third party in connection with any Acquisition Proposal,
except that the Board of Directors of each of the Purchaser and the Company will
not recommend that the shareholders of the Purchaser or the Company,
respectively, tender their shares in connection with any tender offer unless
such Board of Directors makes a Fiduciary Determination.
Neither the Purchaser nor the Company will release any third party from, or
waive any provisions of, any confidentiality or standstill agreement unless its
Board of Directors makes a Fiduciary Determination.
A "Fiduciary Determination" means the directors constituting a majority of
all directors then in office of the Company or the Purchaser, as the case may be
(other than the designees of the Purchaser to the Board of Directors of the
Company), reasonably determine in good faith, after consultation with and based
upon the advice of independent legal counsel, that the taking of action or the
failure to take action (or withdraw or modify any recommendation) would
constitute a breach of such directors' fiduciary duties to shareholders of the
Company or the Purchaser, as the case may be, under applicable law.
Registration Statement: Shareholders' Meetings. The Merger Agreement
provides that the Company and the Purchaser will prepare and file with, and use
their best efforts to have cleared by, the Commission, and thereafter promptly
mail to their shareholders, a proxy statement for the meetings of the
shareholders of the Company and the Purchaser, which will also constitute the
prospectus to be filed by the Company pursuant to the Securities Act relating to
the issuance of Purchaser Securities in the Merger. The Merger Agreement further
provides that the Purchaser will take any action required to be taken under
foreign or state securities or Blue Sky laws in connection with the issuance of
Purchaser Securities in the Merger.
The Merger Agreement further provides that, subject to the fiduciary duties
of the Company's Board of Directors and the Purchaser's Board of Directors under
applicable law, as the case may be, each of the Company and the Purchaser will
take all action necessary to convene a meeting of its shareholders as promptly
as practicable after consummation of the Offer to consider and vote upon the
Merger. Subject to a Fiduciary Determination, each of the Company and the
Purchaser will (i) recommend that their respective shareholders vote in favor of
adoption of the Merger Agreement and (ii) use their respective best efforts to
cause to be solicited proxies from shareholders of the Company or the Purchaser,
as the case may be, to be voted at their respective shareholder meetings in
favor of the adoption of the Merger Agreement and to take all other actions
necessary or advisable to secure the vote or consent of shareholders required to
effect the Merger. The Purchaser is required to vote all Shares purchased in the
Offer or pursuant to the Shareholders' Agreement in favor of the adoption of the
Merger Agreement and the Merger.
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Repurchase Option. The Merger Agreement contains certain provisions
regarding repurchase or disposition of Shares acquired by the Purchaser in the
event the Merger is not consummated. The Merger Agreement provides that in the
event of an Interest Payment Event (as defined below), the Company will have the
right (which right may be assigned) to repurchase all Shares purchased by the
Purchaser pursuant to the Offer or the Shareholders' Agreement (the "Repurchase
Shares") at a price per Share equal to the price paid for such Shares plus an
interest factor of 10.125% per annum; provided that such repurchase shall not
occur any earlier than six months and one day after the Shares were acquired by
the Purchaser. In the event of a Repurchase Event (as defined below) which is
not an Interest Payment Event, the Company will have the right (which right may
be assigned) to repurchase the Repurchase Shares at a price per Share equal to
the price paid for such Shares. The Company's rights to repurchase the
Repurchase Shares under either event described in this paragraph is referred to
herein as the "Repurchase Option."
If (a) a Repurchase Event occurs and the Company has not elected to
purchase any Repurchase Shares as described above or (b) upon request by the
Purchaser within 90 days after termination of the Merger Agreement for (i)
material breach of any of its obligations by the Company, (ii) failure of the
Company's shareholders to approve the Merger, or (iii) withdrawal, modification
or change by the Board of Directors of the Company of its approval or
recommendation of the Merger Agreement, the Offer or the Merger, or failure by
such Board of Directors to recommend against an Acquisition Proposal, then the
Company and the Purchaser shall cooperate in good faith to sell all of the
Repurchase Shares in an orderly and reasonably widespread distribution. (Clauses
(ii) and (iii) above are hereinafter referred to as a "Company Termination
Event.")
The Merger Agreement provides that in the event of a Repurchase Event and
until the earlier of one year after the occurrence of such event or the sale or
distribution of all Repurchase Shares, the Purchaser agrees not to (a) acquire
any additional Shares or voting stock of the Company, (b) solicit proxies or
participate in a proxy contest or propose or advise any other entity to propose
any Acquisition Proposal, or (c) participate in a voting trust or act in concert
with any person for the purpose of holding any voting stock of the Company, and
agrees to vote the Repurchase Shares pro rata with the other shareholders of the
Company with respect to all matters. Notwithstanding the foregoing, the
Purchaser may (x) tender or exchange Repurchase Shares into any tender offer or
Acquisition Proposal recommended by the Board of Directors of the Company or (y)
pledge the Repurchase Shares pursuant to a bona fide pledge to secure
indebtedness of the Company or any of its subsidiaries, provided that such
Repurchase Shares will remain subject to the Repurchase Option.
A "Repurchase Event" shall occur automatically if (i) either (A) the Offer
has been consummated or (B) a Scenario II Trigger Event (as defined in the
Shareholders' Agreement and as described under "The Shareholders' Agreement,"
below) shall have occurred, (ii) the Company is not in material breach of any of
its obligations under the Merger Agreement entitling the Purchaser to terminate
the Merger Agreement, (iii) there has been no Company Termination Event, and
(iv) the Merger Agreement has been terminated in accordance with its terms.
An "Interest Payment Event" shall mean, in the case of a Repurchase Event,
the occurrence of any of the following (i) a final regulatory order by the FCC
or any state authority has been entered prohibiting the transfer of the
Company's licenses to the Purchaser, (ii) the entry of a non-appealable final
order by a court of competent jurisdiction prohibiting the consummation of the
Merger, or (iii) November 16, 1996 (provided that, if at November 16, 1996 the
sole reason the Merger shall not have occurred is the failure to obtain a final
regulatory order permitting the consummation of the Merger from the FCC, such
date shall be February 16, 1997).
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of the Purchaser and the Company to effect the Merger are
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions: (i) the Purchaser has purchased Shares pursuant to the
Offer or pursuant to the Shareholders' Agreement; (ii) the Merger Agreement has
been approved and adopted by the shareholders of the Company and the Purchaser;
(iii) no statute, rule, order, decree or regulation has been enacted or
promulgated by any foreign or domestic governmental entity which prohibits the
consummation of the Merger and all foreign or domestic governmental consents,
orders and approvals required for the
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consummation of the Merger and all foreign or domestic governmental consents,
orders and approvals required for the consummation of the Merger have been
obtained and are in effect at the Effective Time; (iv) there is no order or
injunction of a court or other governmental authority in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; (v) an order
permitting the Merger to be consummated has been received from the FCC (or at
the election of the Purchaser and the Company, approval has been received from
the FCC), and orders permitting the Merger to be consummated has been received
from requisite State Authorities; (vi) the expiration or early termination of
any waiting period under the HSR Act has occurred; (vii) the registration
statement for the Purchaser Securities to be issued in the Merger has been
declared effective and no stop order is in effect with respect thereto; and
(vii) the Purchaser Shares to be issued in the Merger have been admitted for
quotation on NNM.
The obligation of the Company to effect the Merger is subject to the
satisfaction on or prior to the Closing Date of the following additional
conditions: (i) the Purchaser has performed and complied in all material
respects with all obligations and agreements under the Merger Agreement; (ii)
the representations and warranties of the Purchaser contained in the Merger
Agreement were true and correct in all material respects at the time when made
and shall be true in all material respects on the Closing Date, except for
representations made as of a certain date and changes specifically permitted by
the Merger Agreement; (iii) except for the transactions contemplated by the
Merger Agreement and the Shareholders' Agreements, and except for matters which
affect generally the economy or the industry in which the Purchaser and its
subsidiaries are engaged, as of the Closing Date, there has not occurred any
change in the business, properties, assets, liabilities, financial condition,
cash flows, operations, licenses, franchises or results of operations of the
Purchaser or its subsidiaries which has a material adverse effect on the
Purchaser and its subsidiaries, taken as a whole; (iv) receipt by the Company of
a certificate from the Purchaser attesting to compliance with the conditions set
forth in clauses (i), (ii) and (iii) above; and (vi) receipt by the Company of
the opinion of the Purchaser's legal counsel with respect to the due
authorization and issuance of the Purchaser Securities to be issued in the
Merger.
The obligation of the Purchaser to effect the Merger is subject to the
satisfaction or prior to the Closing Date of the following additional
conditions; (i) the Company has performed or complied in all material respects
with all obligations and agreements under the Merger Agreement; (ii) the
representations and warranties of the Company contained in the Merger Agreement
were true and correct in all material respects at the time when made and shall
be true in all material respects on the Closing Date, except for representations
made as of a certain date and changes specifically permitted by the Merger
Agreement; (iii) except for the transactions contemplated by the Merger
Agreement and the Shareholders' Agreement, and except for matters which affect
generally the economy or the industry in which the Company and its subsidiaries
are engaged, as of the Closing Date, there has not occurred any change in the
business, properties, assets, liabilities, financial condition, cash flows,
operations, licenses, franchises or results of operations of the Company or its
subsidiaries which has a material adverse effect on the Company and its
subsidiaries, taken as a whole; and (iv) receipt by the Purchaser of a
certificate from the Company attesting to compliance with the conditions set
forth in clauses (i), (ii) and (iii) above.
Termination. The Merger Agreement provides that it may be terminated prior
to the Effective Time, whether before or after shareholder approval, by the
mutual written consent of the Purchaser and the Company. The Merger Agreement
may also be terminated prior to the Effective Time, whether before or after
shareholder approval, by either the Company or the Purchaser (i) if any
governmental entity has issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; or (ii) if the Merger
has not occurred by November 16, 1996, except that if at November 16, 1996, the
sole reason the Merger has not occurred is the failure to obtain a final order
permitting the consummation of the Merger from the FCC, the Purchaser may extend
this date to February 16, 1997, provided that the foregoing date may be extended
for an additional 60 days at the Purchaser's option following a Scenario II
Option or a Scenario II Mandatory Share Purchase (as defined in the
Shareholders' Agreement and described below) if necessary to allow time to
convene a meeting of the shareholders of the Purchaser or the Company.
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The Merger Agreement may also be terminated prior to the Effective Time,
whether before or after shareholder approval, by the Company (i) if the
Purchaser has terminated the Offer, or the Offer has expired, without the
Purchaser purchasing any Shares pursuant thereto, or the Purchaser has not
commenced the Offer within five business days of its public announcement (except
if the Company is in material breach of any of its covenants or agreements in
the Merger Agreement or the Shareholder's Agreement); (ii) if the Purchaser has
failed to perform and comply in all material respects with all material
obligations and agreements under the Merger Agreement and the Shareholders'
Agreement (and such failure has not been cured); or (iii) if the Merger
Agreement and the transactions contemplated thereby shall not have been approved
and adopted by the requisite vote of the holders of the capital stock of the
Purchaser; or (iv) if the Board of Directors of the Purchaser shall have (A)
withdrawn or modified or changed in any manner adverse to the Company its
approval or recommendation of the Merger Agreement, the Offer or the Merger or
(B) shall have failed to recommend against an Acquisition Proposal involving a
tender offer or failed to reject any other Acquisition Proposal within ten
business days of receipt by the Board of Director of the Purchaser of such
proposal or shall have executed an agreement in principle or definitive
agreement relating to an Acquisition Proposal or similar business combination
with a person or entity other than the Company (or the Board of Directors of the
Purchaser resolves to do any of the foregoing).
The Merger Agreement may also be terminated prior to the Effective Time,
whether before or after shareholder approval, by the Purchaser (i) if, prior to
the Effective Time, the Board of Directors of the Company has (A) withdrawn, or
modified or changed in any manner adverse to the Purchaser its approval or
recommendation of the Merger Agreement, the Offer or the Merger or (B) has
failed to recommend against an Acquisition Proposal involving a tender offer or
failed to reject any other Acquisition Proposal within ten business days of
receipt by the Board of Directors of the Company of such proposal or has
executed an agreement relating to an Acquisition Proposal with a person or
entity other than the Purchaser (or the Board of Directors of the Company
resolves to do any of the foregoing); (ii) if the Purchaser has terminated the
Offer, or the Offer shall have expired without the Purchaser purchasing any
Shares thereunder, or the Purchaser has not consummated the Offer within five
business days of its public announcement (except if the Purchaser has failed to
purchase Shares in the Offer in violation of the material terms of the Merger
Agreement); (iii) if the Company has failed to perform and comply in all
material respects with all material obligations and agreements under the Merger
Agreement (and such failure has not been cured); or (iv) if the Merger Agreement
and transactions contemplated thereby shall not have been adopted by the
requisite vote of the holders of the capital stock of the Company, provided that
all Shares then owned by the Purchaser are voted in favor of the such proposal.
Termination Fees. The Merger Agreement provides that if, prior to the
Effective Time, it is terminated by the Purchaser and (i) the Board of Directors
of the Company has (A) withdrawn, modified or changed in any manner adverse to
the Purchaser its approval or recommendation of the Merger Agreement, the Offer
or the Merger or (B) has failed to recommend against an Acquisition Proposal
involving a tender offer or failed to reject any other Acquisition Proposal
within ten business days of receipt by the Board of Directors of the Company of
such proposal or has executed an agreement in principle (or similar agreement)
or definitive agreement relating to an Acquisition Proposal or similar business
combination with a person or entity other than the Purchaser (or the Board of
Directors of the Company resolves to do any of the foregoing) or (ii) the Merger
Agreement and the transactions contemplated thereby have not been adopted by the
requisite vote of the holders of the capital stock of the Company and the
Purchaser has voted all Shares owned by it in favor of the Merger, then the
Company will immediately pay to the Purchaser a termination fee equal to
$10,000,000 in cash.
The Merger Agreement also provides that if, prior to the Effective Time, it
is terminated by the Company and (i) the Board of Directors of the Purchaser has
(A) withdrawn, modified or changed in any manner adverse to the Company its
approval or recommendation of the Merger Agreement, the Offer or the Merger or
(B) has failed to recommend against an Acquisition Proposal involving a tender
offer or failed to reject any other Acquisition Proposal within ten business
days of receipt by the Board of Directors of the Purchaser of such proposal or
has executed an agreement in principle (or similar agreement) or definitive
agreement relating to an Acquisition Proposal or similar business combination
with a person or entity other than the
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Company (or the Board of Directors of the Purchaser resolves to do any of the
foregoing) or (ii) the Merger Agreement and the transactions contemplated
thereby have not been adopted by the requisite vote of the holders of the
capital stock of the Purchaser, then the Purchaser will immediately pay to the
Company a termination fee equal to $10,000,000 in cash.
Amendment and Modification. The Merger Agreement provides that the Merger
Agreement may be amended or modified, whether before or after any vote of the
shareholders of the Company and the Purchaser, except that after the approval of
the Merger Agreement by the shareholders of the Company, no such amendment or
modification may change the Conversion Ratio.
The Shareholders' Agreement
The following is a summary of the Shareholders' Agreement. Such summary is
qualified in its entirety by reference to the text of the Shareholders'
Agreement, a copy of which is filed as Exhibit 11(c)(2) to the Schedule 14D-1
and is incorporated herein by reference.
The Shareholders' Agreement is by and among the Purchaser and certain
shareholders of the Company: Brownlee O. Currey, Jr., Charles A. Emling III, Ray
Russenberger, Irby C. Simpkins, Elliott H. Singer, Summit Investors II, L.P.,
and Summit Ventures III, L.P., (the "Principal Shareholders"). It grants the
Purchaser certain rights with respect to the Shares owned by each Principal
Shareholder (the "Owned Shares"). The Owned Shares subject to the Shareholders'
Agreement aggregate 5,525,543 shares of voting common stock, representing
approximately 53.8% of the Shares outstanding on the date of the Merger
Agreement. The principal terms of the Shareholders' Agreement are as follows.
Sale of Shares. The Shareholders' Agreement provides that, subject to and
conditioned upon the consummation of the Offer, each of the Principal
Shareholders will sell to the Purchaser a number of Shares equal to 40% of each
of their Owned Shares (the "Cash Purchase Shares") for a cash purchase price of
$21.10 per Share, or such higher price as shall be paid for Shares tendered
pursuant to the Offer. The Cash Purchase Shares constitute 2,210,217 Shares or
approximately 21.5% of outstanding Shares as of May 16, 1996.
Voting Agreement and Proxy. Pursuant to the Shareholders' Agreement, each
Principal Shareholder has agreed during the term of the Shareholders' Agreement
to vote in favor of the transactions contemplated by the Merger Agreement and
against (i) any extraordinary corporate transaction, such as a merger, rights
offering, reorganization, recapitalization or liquidation involving the Company
or any of its subsidiaries, or (ii) any sale or transfer of a material amount of
assets of the Company or any of its subsidiaries or the issuance of any
securities of the Company or any subsidiary. The Shareholders' Agreement also
appoints the Purchaser or its officers as each Principal Shareholder's proxy
during the Option Period (defined below) to vote all Owned Shares (other than
Shares purchased by the Purchaser) as specified above. The Proxy is exercisable
only during the Option Period.
The Principal Shareholders also granted the Purchaser certain options to
purchase Shares, each subject to a separate set of conditions, as described
below.
Scenario I Option. Pursuant to the Shareholders' Agreement, each Principal
Shareholder granted the Purchaser an irrevocable option (the "Scenario I
Option") to purchase all, but not less than all, of the Owned Shares (the
"Scenario I Option Shares") other than the Cash Purchase Shares previously
purchased by Purchaser and certain Owned Shares of Mr. Ray Russenberger which
are subject to previous options in favor of certain employees of the Company
(the "RR Option Shares").
The Scenario I Option may be exercised by Purchaser following satisfaction
of the Exercise Conditions (defined below) for a period commencing upon the
later to occur of (i) 61 days after Purchaser has delivered evidence of
financing enabling the Company to finance an offer to repurchase the Company's
11 7/8% Subordinated Notes in accordance with the terms of the change in control
provisions of the indenture governing such notes, and (ii) the receipt by
Purchaser of an FCC order approving the license transfer resulting from the
Merger, and ending on the earlier of six months after the closing of the
purchase by
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Purchaser of the Cash Purchase Shares or the termination of Shareholders'
Agreement in accordance with its terms (the "Option Period").
The Exercise Conditions, each of which is required to be satisfied prior to
the exercise of the Scenario I Option, are: (i) the occurrence of the closing of
the purchase by Purchaser of the Cash Purchase Shares; (ii) approval of the
Merger Agreement by the shareholders of the Purchaser; and (iii) the absence of
any material breach by Purchaser of its obligations and agreements in the Merger
Agreement.
The consideration to be paid to each shareholder upon exercise by Purchaser
of the Scenario I Option will equal: (i) such number of Purchaser Shares equal
to the Conversion Ratio as of the date of the closing of the Scenario I Option,
multiplied by the number of Scenario I Option Shares owned by such shareholder,
(ii) a number of VCRs to become effective upon the Effective Time, in an amount
equal to the number of Purchaser Shares to be received pursuant to clause (i),
plus cash, if any, for fractional Purchaser Securities calculated pursuant to
the formula in Section 2.3(f) of the Merger Agreement. The consideration for the
Scenario I Option Shares is subject to upward adjustment such that Purchaser
will pay each Principal Shareholder such additional Purchaser Securities,
together with cash for fractional Shares and VCRs, as are necessary to provide
each Principal Shareholder the same Merger consideration per Share as all
shareholders of the Company receive in the Merger.
Scenario II Transactions. The Shareholders' Agreement provides that the
Purchaser shall be granted an option to purchase from the Principal Shareholders
certain Owned Shares equal to more than 40% and less than 49.9% (or such lesser
percentage required by applicable law) of the outstanding Shares, as specified
by the Purchaser, upon the occurrence of a "Scenario II Trigger Event". A
Scenario II Trigger Event shall have occurred if (i) prior to expiration of the
Offer, the Company receives an AN Acquisition Proposal or if the proposal to
adopt the Merger Agreement shall not have been adopted by the shareholders of
the Company and all Shares owned by Purchaser are voted in favor of the
proposal, (ii) the Offer expires in accordance with its terms without any Shares
accepted for payment in circumstances in which all conditions to the Offer other
than the Minimum Condition (as defined in the Merger Agreement) or a condition
relating to an injunction enjoining the Merger shall have been satisfied, and
(iii) within two business days after the expiration of the Offer, Purchaser
gives notice to the Company and the Principal Shareholders of its election not
to terminate the Merger Agreement in accordance with its terms. By giving such
notice, Purchaser shall have elected to exercise its rights under Section 3.3 of
the Shareholders' Agreement relating to Scenario II transactions.
The consideration for Shares purchased under this option will be (i) for a
number of Shares equal to the Cash Purchase Shares, $21.10 per Share in cash,
or, if higher, the highest price per Share as had been offered by Purchaser
pursuant to the Offer prior to its termination or expiration; and (ii) for each
remaining Share (the "Scenario II Trigger Shares"), (a) such number of Purchaser
Shares equal to the Conversion Ratio as of the date of the closing of the
purchase of the Scenario II Trigger Shares, multiplied by the number of Scenario
II Trigger Shares, (b) a number of VCRs to become effective upon the Effective
Time, in an amount equal to the number of Purchaser Shares to be received
pursuant to clause (a), plus cash, if any, for fractional Purchaser Shares and
VCRs calculated pursuant to the formula in Section 2.3(f) of the Merger
Agreement. The consideration shall be adjusted upward in the same manner as
specified in connection with the Scenario I Option.
Scenario II Option. Subject to the Closing of the sale of the Shares as
described in the previous section, the Purchaser is obligated under the
Shareholders' Agreement to use its reasonable best efforts to commence a new
tender offer, to the extent permitted by applicable law, including the receipt
of requisite FCC regulatory approvals, pursuant to which Purchaser shall offer
to purchase no less than the number of Shares constituting the Minimum Condition
for the Offer at a price no less than the highest price offered in the Offer
("Scenario II Tender Offer"). In such event, and subject to and conditioned upon
the purchase of Shares pursuant to the Scenario II Tender Offer, Purchaser has
an exclusive and irrevocable option during the Option Period, to purchase all,
but not less than all, of the Owned Shares other than Shares previously
purchased by Purchaser and the RR Option Shares (the "Scenario II Option
Shares"), which option (the "Scenario II Option") shall have the same terms and
conditions (other than the number of shares to be purchased) as the Scenario I
Option.
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Scenario II Mandatory Share Purchase. In the event that a Scenario II
Tender Offer as described above expires without Purchaser purchasing any shares,
the Shareholders' Agreement obligates the Purchaser to use its reasonable best
efforts to acquire as soon as practicable the remainder of the Scenario II
Option Shares. In such event, the Purchaser shall have an exclusive and
irrevocable option during the Option Period ("Mandatory Option") to purchase
all, but not less than all, of the remainder of the Scenario II Option Shares
and the Purchaser shall be required to exercise such option as promptly as
possible. The Purchaser is also prohibited from effecting the Merger unless
prior to the Effective Time, the Purchaser shall have exercised the Mandatory
Option, which shall have the same terms and conditions (other than the number of
shares to be purchased) as the Scenario I Option. In such circumstance, the
consideration in the Merger to the shareholders other than the Purchaser would
be 40% cash and 60% Purchaser Securities.
Other Provisions. The Shareholders' Agreement contains certain
representations and warranties, and restricts the Principal Shareholders'
ability to transfer or encumber the Owned Shares, including tendering into the
Offer or any other tender offer. The Shareholders' Agreement also provides for a
"shelf" registration of any Purchaser Securities received by the Principal
Shareholders pursuant to the Shareholders' Agreement that are not otherwise
registered in connection with the Merger.
Termination. The Shareholders' Agreement shall terminate on the earliest
of (i) the expiration of the Option Period, (ii) the purchase by the Purchaser
of all Owned Shares (other than the RR Option Shares) pursuant to Shareholders'
Agreement, (iii) the agreement of the parties to the Shareholders' Agreement to
terminate the Shareholders' Agreement, (iv) consummation of the Merger, (v) two
business days after termination or expiration of the Offer without the purchase
of any Shares pursuant thereto unless Purchaser shall have purchased Shares
following a Scenario II Trigger Event in accordance with the Shareholders'
Agreement, and (vi) termination of the Merger Agreement pursuant to its terms,
and in any event the Shareholders' Agreement shall terminate on March 16, 1997,
except as to certain provisions on expenses, fees, registration rights and
indemnification which shall survive termination of the Shareholders' Agreement.
Other Agreements
Purchaser Stockholders Voting Agreement. In connection with the execution
of the Merger Agreement, certain stockholders of the Purchaser owning in the
aggregate approximately 30% of the outstanding common stock of the Purchaser
executed an agreement (the "Purchaser Stockholders Voting Agreement") with the
Company pursuant to which each such stockholder appointed the Company or its
officers, his or her proxy to vote all the Purchaser Shares then beneficially
owned by such stockholder (i) in favor of the transactions contemplated by the
Merger Agreement; and (ii) against any extraordinary corporate transaction, such
as a merger, rights offering, reorganization, recapitalization or liquidation
involving the Purchaser or any of its subsidiaries, or the issuance of any
securities of the Purchaser or any subsidiary, in each case, to the extent
prohibited by the Merger Agreement. The foregoing is a summary of the Purchaser
Stockholders Voting Agreement and is qualified in its entirety by reference to
the text of the agreement, a copy of which is filed as Exhibit 11(c)(3) to the
schedule 14D-1 and is incorporated herein by reference.
Non-Competition Agreements. Pursuant to Nondisclosure/No Conflict
Agreements, each of Ray D. Russenberger and Elliott H. Singer have agreed,
effective as of the Effective Time, in exchange for a payment of $325,000 per
year for three years (and the extension of certain fringe benefit programs to
them), to refrain from competing in the business of (for Singer) one-way or
two-way paging and of (for Russenberger) the paging, voicemail, telemessaging,
or cellular operations of the Purchaser, and to refrain from disclosing
confidential information about the Company and the Purchaser. The obligation not
to compete will continue only for so long as Messrs. Russenberger and Singer
serve as members of the Board of Directors of the Surviving Corporation, and the
obligation of nondisclosure continues indefinitely. Pursuant to the
Nondisclosure/No Conflict Agreements, Messrs. Russenberger and Singer have
agreed to resign voluntarily under the terms of their current employment
agreements with the Company, effective upon the consummation of the Merger. The
foregoing is a summary of the Nondisclosure/No Conflict Agreements and is
qualified in its entirety by reference to the text of the Nondisclosure/No
Conflict Agreements, copies of which are filed as Exhibits 11(c)(5) and 11(c)(6)
to the Schedule 14D-1 and are incorporated herein by reference.
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Employment Agreement. Pursuant to an Employment Agreement, Charles A.
Emling III, currently President and Chief Executive Officer of the Company, has
agreed, effective as of the Effective Time, to serve as President, Southeast
Region of the Surviving Corporation, with salary of $200,000 per year (and
customary employee benefits). The term of the Employment Agreement will begin at
the Effective Time and run for one year, subject to automatic annual extension
unless either party notifies the other that the contract should be terminated
and such notice is given at least 90 days before an anniversary of the effective
date of the Merger. If Mr. Emling is terminated without "cause" (as defined in
the Employment Agreement) or resigns with "good reason" (as defined therein), he
will be paid his then current salary for a period of one year after such
termination. Mr. Emling has agreed to refrain from competing, directly or
indirectly, with the Surviving Corporation and its affiliates, while employed
and for one year thereafter, in the one-way and two-way paging and telemessaging
business in any "market area" (where "market areas" are generally locations in
which the Company or its predecessors have conducted business and those in which
the Surviving Corporation conducts business during the term of the Employment
Agreement). During employment and for a year after, Mr. Emling will not solicit
away employees or customers of the Company or the Purchaser. The Employment
Agreement will replace Mr. Emling's current employment agreement with the
Company. The foregoing is a summary of the Employment Agreement and is qualified
in its entirety by reference to the text of the Employment Agreement, a copy of
which is filed as Exhibit 11(c)(7) to the Schedule 14D-1 and incorporated herein
by reference.
Agreement to Vote. In connection with the execution of the Merger
Agreement, Elliott H. Singer and Ray D. Russenberger, shareholders of the
Company who are expected to become stockholders of the Surviving Corporation at
the Effective Time, executed an agreement with the Purchaser pursuant to which
they are obligated, provided that they are directors of the Surviving
Corporation at the time of election of directors at the first annual meeting of
the Surviving Corporation occurring after the date of the voting agreement, to
vote all shares of common stock of the Surviving Corporation they own at the
time of election in favor of Suzanne S. Brock as a director. The foregoing is a
summary of the agreement and is qualified in its entirety by reference to the
text of the agreement, a copy of which is filed as Exhibit 11(c)(4) to the
Schedule 14D-1 and incorporated herein by reference.
Plans for the Company After the Merger
Except as described in this Offer to Purchase, based on its current
knowledge of the Company, the Purchaser has no present plans or proposals which
relate to or would result in any extraordinary corporate transaction, such as a
merger, reorganization, liquidation, or sale or transfer of a material amount of
assets involving the Company or any of its subsidiaries, or any material changes
in the Company's capitalization, dividend policy, corporate structure or
business or the composition of its board of directors or management. However,
the Purchaser is continuing its review of the Company and its assets, corporate
structure, capitalization, operations, properties, policies, management and
personnel. After the completion of such review (subject to the provisions of the
Merger Agreement), the Purchaser may propose or develop alternative plans or
proposals, including mergers, transfers of a material amount of assets or other
transactions or changes of the nature described above. The Purchaser reserves
the right, subject to the terms and conditions of the Merger Agreement, to
effect any such plans and proposals.
SEC Regulations
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable
to certain "going private" transactions. The Purchaser believes that Rule 13e-3
will not be applicable to the Merger if it is consummated within one year after
termination of the Offer and the consideration offered in the Merger is not less
than the consideration offered to purchase Shares pursuant to the Offer.
However, if the Purchaser is deemed to have become an affiliate of the Company
pursuant to the Offer and if the Merger is consummated more than one year after
completion of the Offer or an alternative acquisition transaction is effected
whereby shareholders of the Company receive consideration less than that paid
pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, the Purchaser may be required to comply with
Rule 13e-3, unless the Shares are being exchanged for an equity security, having
substantially the same rights as the
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Shares, that is registered under Section 12 of the Exchange Act and is quoted on
the NNM or listed on any exchange. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning the Company
and certain information relating to the fairness of the Merger and the
consideration offered to minority shareholders be filed with the SEC and
distributed to minority shareholders prior to the consummation of the Merger.
12. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR SHARES, NNM QUOTATION AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares by the Purchaser pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and may reduce the
number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public.
The consummation of the Offer is not expected to have any effect on the
continued quotation of the Common Stock on the NNM or the registration of the
Common Stock under the Exchange Act. The Common Stock is expected to continue to
qualify as "margin securities" under the rules of the Board of Governors of the
Federal Reserve System.
13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligations to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred above, the payment for, any tendered Shares, and may amend
the Offer consistent with the terms of the Merger Agreement or terminate the
Offer if (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to the expiration of the Offer, (ii) the Minimum Condition has
not been satisfied, or (iii) at any time on or after May 16, 1996 and before the
time of acceptance of Shares for payment pursuant to the Offer, any of the
following events shall occur:
(a) the affirmative vote of the holders of more than a majority of the
outstanding Shares is required to consummate the Merger or the Purchaser is
not entitled to vote Shares, including any Shares acquired pursuant to the
Shareholders' Agreement, for the Merger;
(b) any change shall have occurred in the business, properties,
assets, liabilities, capitalization, shareholder's equity, financial
condition, cash flows, operations, licenses, franchises or results of
operations of the Company or its subsidiaries which has a Material Adverse
Effect (as defined in the Merger Agreement) on the Company and its
subsidiaries taken as a whole, except for matters which affect generally
the economy or industry in which the Company and its subsidiaries are
engaged;
(c) (I) there shall have been instituted or pending any, or there is
threatened any, action, proceeding, application or counterclaim by any
government or governmental authority or agency, or by the Company or an
affiliate of the Company, which (i) challenges or seeks to challenge the
acquisition by the Purchaser (or any affiliate of the Purchaser) of the
Shares, restrain or prohibit the making or consummation of the Offer or the
Merger, prohibits the performance by the Purchaser of the Offer, the
Merger, the Shareholders' Agreement or any agreements contemplated thereby,
or seeks to obtain any material damages directly or indirectly relating to
the transactions contemplated by the Offer, the Merger, or Shareholders'
Agreement, (ii) seeks to make the purchase of, or payment for, some or all
of the Shares pursuant to the Offer or the Merger or Shareholders'
Agreement illegal or results in a material delay in the ability of the
Purchaser to accept for payment or pay for some or all of the Shares, (iii)
seeks to prohibit or limit the ownership or operation by the Purchaser (or
any affiliate of the Purchaser) of all or any material portion of the
business or assets of the Company and its subsidiaries or of the Purchaser
and its affiliates or to compel the Purchaser (or any affiliate of the
Purchaser) to dispose of or to hold separately all or any material portion
of the business or assets of the Purchaser or any of its affiliates or of
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the Company or any of its subsidiaries or seeks to impose any material
limitation on the ability of the Purchaser, or any other affiliate of the
Purchaser, to conduct the Company's or any of its subsidiary's business or
own such assets, (iv) seeks to impose or confirm material limitations on
the ability of the Purchaser (or any affiliate of the Purchaser) to acquire
or hold or to exercise full rights of ownership of the Shares, including
but not limited to, the right to vote the Shares purchased by them on all
matters properly presented to the shareholders of the Company, or (v) seeks
to require divestiture by the Purchaser of any of its Subsidiaries or
affiliates of all or any of the Shares, or (II) there shall have been
instituted any action, proceeding, application or counterclaim by any
person (other than a governmental entity or the Company, or an affiliate of
the Company), before any court or governmental regulatory or administrative
agency, authority or tribunal, with respect to the matters set forth in
subsections (i)-(v) above, which has resulted in the issuance of a
temporary restraining order ("TRO"), preliminary injunction or permanent
injunction enjoining the Merger, this Agreement or the transactions
contemplated hereby if such TRO, preliminary injunction or permanent
injunction has not been removed or rescinded within 20 business days after
the original expiration date of the Offer;
(d) there shall be any action taken, or any statute, rule, regulation
shall be enacted, promulgated, entered, enforced or deemed applicable to,
or any order shall be entered or enforced with respect to, the Offer, the
Merger or the Shareholders' Agreement by any government, governmental
authority or court, domestic, foreign or supranational, other than the
routine application to the Offer, the Merger or other subsequent business
combination of waiting periods under the HSR Act or approval of license
transfers under the Communications Act of 1934, as amended (the
"Communications Act") or by state regulatory agencies that is reasonably
likely to, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (v) of subsection (c)(I) above;
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not have been true and correct in all material
respects on the date of the Merger Agreement or shall not be true and
correct as of the date of consummation of the Offer as though made on or as
of such date or the Company shall have breached or failed to perform or
comply with any obligation, agreement or covenant required by the Merger
Agreement to be performed or complied with by it except, in such cases, (i)
for changes specifically permitted by the Merger Agreement and (ii) those
representations and warranties that address matters only as of a particular
date which are true and correct as of such date;
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
(g) (i) it shall have been publicly disclosed that any person, entity
or "group" (as defined in Section 13(d) (3) of the Exchange Act), other
than the Purchaser, shall have acquired beneficial ownership (determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 25%
of any class or series of capital stock of the Company (including the
Shares) through the acquisition of stock, formation of a group or
otherwise, other than any person or group existing on the date hereof which
beneficially owns more than 25% of any class or series of capital stock of
the Company, or (ii) the Company shall have entered into or announced its
intention to enter into a definitive agreement or agreement in principle
with any person with respect to an acquisition proposal or similar business
combination;
(h) the Company's Board of Directors shall have withdrawn, or modified
or changed in any manner adverse to the Purchaser (including by amendment
of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, or recommended an acquisition proposal, or shall
have resolved to do any of the foregoing; or
(i) any party to the Shareholders' Agreement other than the Purchaser
shall have breached or failed to perform, in each case in any material
respect, any of its agreements under such agreement or any of the
representations and warranties of any such party set forth in such
agreement shall not be true in any material respect, in each case, when
made or at any time prior to the consummation of the Offer as if made at
and as of such time, or the Shareholders' Agreement shall have been
invalidated or terminated with respect to any Shares subject thereto;
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which in the reasonable judgment of the Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of any circumstances giving rise to any
condition and may be waived by the Purchaser, in whole or in part at any time
and from time to time in the sole discretion of the Purchaser. The failure by
the Purchaser (or any affiliate of the Purchaser) at any time to exercise any of
the foregoing rights will not be deemed a waiver of any right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
14. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Based on a review of publicly available Commission filings by the
Company and other publicly available information concerning the Company and
representations of the Company in the Merger Agreement, except as described
below, the Purchaser is not aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries that
might be adversely affected by the Purchaser's acquisition of Shares as
contemplated herein.
Except as described in this Section 14, the Purchaser is not aware of any
other material filing, approval or other action by any federal or state
governmental or administrative authority that would be required for the
acquisition of Shares by the Purchaser as contemplated herein. Should any such
other approval or action be required, it is currently contemplated that such
approval or other action would be sought. Except as described below under
"Antitrust", there is, however, no present intention to delay the purchase of
Shares tendered pursuant to the Offer pending the outcome of any such other
approval or action. There can be no assurance that any such other approval or
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the Purchaser's or the Company's
business in the event that such other approvals were not obtained or such other
actions were not taken. The Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 14.
Antitrust. Under the HSR Act and the rules promulgated thereunder by the
FTC, certain acquisition transactions may not be consummated unless certain
information has been furnished to the FTC and the Antitrust Division and certain
waiting period requirements have been satisfied. The acquisition of Shares
pursuant to the Offer is subject to such requirements. See Section 2.
The Company and the Purchaser anticipate filing, as soon as practicable
after the date hereof, with the Antitrust Division and the FTC a Premerger
Notification and Report Form, in connection with the purchase of Shares pursuant
to the Offer. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares pursuant to the Offer may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by the
Purchaser. Accordingly, it is anticipated that the waiting period under the HSR
Act applicable to the Offer will expire at 11:59 p.m., Eastern time, on the
fifteenth calendar day following such filing, unless such waiting period is
earlier terminated by the FTC or the Antitrust Division or extended by a request
from the FTC or the Antitrust Division for additional information or documentary
material prior to the expiration of the waiting period.
Pursuant to the HSR Act, the Purchaser will request early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the 15-day HSR Act waiting period will be terminated early. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from the Purchaser, the waiting period would expire at
11:59 p.m., Eastern time, on the tenth calendar day after the date of
substantial compliance by the Purchaser with such request. Thereafter, the
waiting period could be extended again only by court order or with the consent
of the Purchaser.
If the acquisition of Shares is delayed pursuant to a request by the FTC or
the Antitrust Division for additional information or documentary material
pursuant to the HSR Act, the Offer may, at the discretion of the Purchaser,
subject to the terms and conditions of the Merger Agreement, be extended and, in
any event
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the purchase of and payment for Shares will be deferred until the applicable
waiting period expires or is terminated. Unless the Offer is extended, any
extension of the waiting period will not give rise to any additional withdrawal
rights. See Section 4. Although the Company is required to file certain
information and documentary material with the Antitrust Division and the FTC in
connection with the Offer, neither the Company's failure to make such filings
nor a request from the Antitrust Division or the FTC for additional information
or documentary material made to the Company will extend the waiting period
applicable to the Offer.
The FTC and the Antitrust Division as well as state antitrust enforcement
agencies frequently scrutinize the legality under the antitrust laws of
transactions such as the proposed acquisitions of Shares pursuant to the Offer
and the Merger. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, any such agency could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the acquisition of Shares pursuant to the Offer or
the Merger or seeking divestiture of Shares acquired by the Purchaser or
divestiture of substantial assets of the Purchaser, the Company or their
respective subsidiaries. Private parties may also bring legal action under
federal and state antitrust laws under certain circumstances. If any such action
by the FTC, the Antitrust Division or any other person should be threatened or
commenced, the Purchaser may extend, terminate or amend the Offer. See Section
13. There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or if such challenge is made that the result will be favorable.
Based upon an examination of information available to it relating to the
businesses in which the Purchaser and its subsidiaries and the Company and its
subsidiaries are engaged, the Purchaser believes that consummation of the Offer
and the Merger will not violate the antitrust laws.
The Purchaser will not accept for payment any Shares tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied.
State Takeover Statutes.
Tennessee Statute. The Tennessee Business Combination Act (the
"Combination Act") provides that any corporation to which the Combination Act
applies, including the Company, shall not engage in any "business combination"
with an "interested shareholder" for a period of five years following the date
that such shareholder became an interested shareholder unless prior to such date
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder. In the Merger Agreement, the Company has represented
that the Board of Directors has duly and validly approved the transactions
contemplated by the Merger Agreement so as to render inapplicable the provisions
of Section 48-103-206 of the Combination Act, and that the Combination Act is
not applicable to such transactions.
The Combination Act defines "business combination" generally to mean any:
(i) merger or consolidation; (ii) share exchange; (iii) sale, lease, exchange,
pledge, mortgage or other transfer (in one transaction or a series of
transactions) of assets representing 10% or more of (A) the market value of
consolidated assets, (B) the market value of the corporation's outstanding
shares or (C) the corporation's consolidated net income; (iv) issuance or
transfer of shares from the corporation to the interested shareholder; (v) plan
of liquidation; (vi) transaction in which the interested shareholder's
proportionate share of the outstanding shares of any class of securities is
increased; or (vii) financing arrangements pursuant to which the interested
shareholder, directly or indirectly, receives a benefit except proportionately
as a shareholder.
The Combination Act defines "interested shareholder," generally, to mean
any person who is the beneficial owner, either directly or indirectly, of 10% or
more of any class or series of the outstanding voting stock, or any affiliate or
associate of the corporation who has been the beneficial owner, either directly
or indirectly, of 10% or more of the voting power of any class or series of the
corporation's stock at any time within the five-year period preceding the date
in question. Consummation of a business combination that is subject to the
five-year moratorium is permitted after such period if the transaction (i)
complies with all applicable charter and bylaw requirements and applicable
Tennessee law and (ii) is approved by at least two-thirds of the outstanding
voting stock not beneficially owned by the interested shareholder, or when the
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transaction meets certain fair price criteria. The fair price criteria include,
among others, the requirements that the per share consideration received in any
such business combination by each of the shareholders is equal to the highest of
(i) the highest per share price paid by the interested shareholder during the
preceding five-year period for shares of the same class or series plus interest
thereon from such date at a treasury bill rate less the aggregate amount of any
cash dividends paid and the market value of any dividends paid other than in
cash since such earliest date, up to the amount of such interest, (ii) the
highest preferential amount, if any, such class or series is entitled to receive
on liquidation or (iii) the market value of the shares on either the date the
business combination is announced or the date when the interested shareholder
reaches the 10% threshold, whichever is higher, plus interest thereon less
dividends as noted above.
Delaware Statute. Section 203 of the Delaware Law prohibits business
combination transactions involving a Delaware corporation (such as the
Purchaser) and an "interested shareholder" (defined generally as any person that
directly or indirectly beneficially owns 15% or more of the outstanding voting
stock of the
subject corporation) for three years following the date such person became an
interested shareholder, unless special requirements are met or certain
exceptions apply, including that prior to such date the board of directors of
the subject corporation approved either the business combination or the
transaction which resulted in such person being an interested shareholder. The
Board of Directors of the Purchaser has duly and validly approved the
transactions contemplated by the Merger Agreement, including the Offer, the
Merger and the acquisition of Shares pursuant thereto, and therefore the
provisions of Section 203 are not applicable to such transactions.
General. A number of other states have adopted laws and regulations
applicable to attempts to acquire securities of corporations which are
incorporated, or have substantial assets, shareholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects, in such states. In 1982, in Edgar v. MITE
Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Statute, which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that the State of Indiana may, as a matter of
corporate law, and, in particular, with respect to those aspects of corporate
law concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining shareholders. The state law before the Supreme Court
was by its terms applicable only to corporations that had a substantial number
of shareholders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer and has not necessarily complied with any such
laws. Should any person seek to apply any state takeover law, the Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer and the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for payment any Shares tendered. See Section 13.
FCC Approval. The construction, modification, operation, ownership and
acquisition of paging systems are subject to regulation by the FCC under the
Communications Act. The FCC has promulgated rules and regulations governing,
among other things, applications to construct and operate paging systems within
specified geographic areas, applications to transfer control of or assign paging
licenses and technical and operational standards for the operation of paging
systems (such as construction deadlines, maximum power and antenna height, and
coordination with adjacent co-channel users). The present regulatory structure
governing paging companies is subject to revision in light of changes to the
Communications Act and pending FCC proposals that, if adopted, may increase
competition for subscribers to wireless communication services and increase
competition for access to certain underlying services, facilities (such as
telephone numbers)
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necessary for the Company and the Purchaser to conduct their business and impose
competitive bidding rules for mutually exclusive paging applications.
The respective operating subsidiaries of the Company and the Purchaser are
licensed by the FCC to provide paging services in the respective geographic
areas in which they have operations. The Communications Act requires prior FCC
approval for the transfer of actual or legal control of companies holding FCC
authorizations. The Communications Act requires that the FCC find that the
proposed acquisition or transfer would serve the public interest, convenience
and necessity as a prerequisite to granting its approval. The FCC may also
require that the purchaser or transferee demonstrate that it possesses the
requisite legal and technical qualifications to operate the licensed facilities
in order for the transfer to be approved.
The Merger Agreement and the Shareholders' Agreement provide that (pending
completion of the Merger) the Purchaser shall not assume, either directly or
indirectly, de jure or de facto control of the Company without the prior consent
of the FCC or any appropriate state authority. Approval by the FCC is not a
condition to the acquisition of Shares pursuant to the Offer. However, the prior
approval of the FCC must be obtained to consummate the Merger. The Purchaser
intends to file with the FCC, as soon as practicable, applications seeking FCC
approval to take control of the Company. There can be no assurance that the FCC
will grant such approval or that, if granted, such FCC approval will be on a
timely basis or on terms and conditions acceptable to the Purchaser, or that any
such approval will not be subject to judicial review. In the event of a
challenge by an adverse party, the termination date established in the Merger
Agreement may not allow time for regulatory approvals to be received, or if
received for the approvals to become final.
Under the Communications Act, the amount of capital stock that aliens or
their representatives may own or vote in an FCC-licensed company is generally
limited to 20% or 25% in the parent of such a company. The Purchaser believes
that it and the Company currently meet this requirement. Should this restriction
ever be found to be violated, the FCC may revoke or refuse to grant or renew a
license, or refuse to approve the transfer of control of such license.
State Regulatory Approval. In addition to regulation by the FCC, certain
states impose various regulations on the common carrier paging operations of the
Purchaser and the Company. Historically, regulation in some states required the
Purchaser to obtain certain certificates of public convenience and necessity
before constructing, modifying or expanding paging facilities or offering or
abandoning paging services. Rates, terms and conditions under which the
Purchaser or the Company provided service, or any changes to those rates, have
also been subject to state regulation. However, under the federal Budget
Reconciliation Act of 1993 (the "Budget Act"), as a general rule states are
preempted from exercising rate and entry regulation of carriers such as the
Purchaser and the Company which are deemed to be providing Commercial Mobile
Radio Service ("CMRS"). States may, however, petition the FCC for authority to
continue to regulate CMRS rates, which petitions are to be evaluated by the FCC
applying the statutory criteria set forth in the Budget Act. In May 1995, the
FCC rejected such petitions by New York, Louisiana, Hawaii, Arizona, Ohio,
California and Connecticut.
Prior state approval is not required to acquire Shares pursuant to the
Offer. Some states regulating paging services have required the prior approval
of transactions that result in the assignment or transfer of control of a
certificated paging carrier, notwithstanding federal preemption. It is possible
that one or more states may assert a right to review and approve the Merger. In
such event, the Purchaser may choose to challenge such assertion, seek to obtain
such approval or take such other or further actions as it deems necessary or
advisable at the time. If any state were to claim a right to approve the Merger,
there is no assurance that any challenge to override or overturn that claim
would be successful or that any approval, if sought, would be granted or, if
granted, would be on a timely basis or on terms and conditions acceptable to the
Purchaser.
15. DIVIDENDS AND DISTRIBUTIONS.
If, on or after May 16, 1996, the Company should declare or pay any
dividend or other distribution (including, without limitation, the issuance of
additional Shares pursuant to stock dividend or stock split or the issuance of
rights for the purchase of any securities) with respect to the Shares that is
payable or distributable to shareholders of record on a date occurring prior to
the transfer to the name of the Purchaser or its nominees
39
<PAGE> 42
or transferees on the Company's stock transfer records of the Shares purchased
pursuant to the Offer, then, without prejudice to the Purchaser's rights
described in Section 13, (i) the purchase price per Share payable by the
Purchaser pursuant to the Offer will be reduced in the amount of any such cash
dividend or distribution, and (ii) the whole of any non-cash dividend or
distribution (including, without limitation, additional Shares or rights as
aforesaid) will be required to be remitted promptly and transferred by each
tendering shareholder to the Depositary for the account of the Purchaser
accompanied by appropriate documentation of transfer and pending such remittance
or appropriate assurance thereof, the Purchaser will be entitled to all rights
and privileges as owner of any such non-cash dividend, distribution or right,
and may withhold the entire purchase price or deduct from the purchase price the
amount or value of such non-cash dividend, distribution or right, as determined
by the Purchaser in its sole discretion.
If, on or after May 16, 1996, the Company should split the Shares or
combine or otherwise change the Shares or its capitalization, then, without
prejudice to the Purchaser's rights described in Section 13, appropriate
adjustments to reflect such split, combination or change may be made by the
Purchaser in the purchase price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
16. FEES AND EXPENSES.
Wheat is acting as financial advisor to the Purchaser in connection with
the Merger and related matters and is acting as Dealer Manager in connection
with the Offer. In consideration of its services, the Purchaser has agreed to
pay Wheat a transaction fee (the "Transaction Fee") equal to .5% of the
aggregate transaction consideration upon closing of the Merger. The Purchaser is
obligated to pay Wheat $100,000 upon execution of the definitive Merger
Agreement (to be credited against the Transaction Fee). The Purchaser is also
obligated to pay Wheat an additional $250,000 as a result of the delivery of the
Purchaser Fairness Opinion, and an additional $100,000 as compensation for its
role as Dealer Manager. If within one year of the closing of the Offer, the
Purchaser has acquired less than 50.1% of the Company's outstanding Common
Stock, the Purchaser will pay Wheat a fee of $500,000. In the event the Merger
is terminated, the Purchaser will pay Wheat a fee in the amount of 10% of any
termination fee, topping fee or expense reimbursement received by the Purchaser
from the Company. In addition, the Purchaser has agreed to reimburse Wheat for
its out-of-pocket expenses (including the fees and expenses of its counsel) and
to indemnify it against certain claims, loans and obligations, including certain
liabilities under U.S. federal securities law. The Purchaser has also retained
Daniels & Associates ("Daniels") as a financial advisor in connection with the
Merger, and has agreed to pay Daniels a fee equal to .75% of the aggregate
transaction consideration upon closing of the Merger.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and the Bank of New York as the Depositary in connection with
the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telecopy, telegraph and personal interview and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward the Offer material to beneficial owners. Each of the Information Agent
and the Depositary will receive reasonable and customary compensation for its
services and will be reimbursed for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities and expenses in connection
with the Offer, including certain liabilities under U.S. federal securities
laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Dealer Manager and the Information Agent). Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding materials to their customers.
17. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The Purchaser
is not aware of any state where the making of the Offer is
40
<PAGE> 43
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with such statute or seek to
have such statute declared inapplicable to the Offer. If, after such good faith
effort, the Purchaser cannot comply with such state statute, the Offer will not
be made to, nor will tenders be accepted from, or on behalf of, the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.
The Purchaser has filed with the Commission a Schedule 14D-1 together with
exhibits, pursuant to Rule 14d-3 promulgated by the Commission under the
Exchange Act, furnishing certain additional information with respect to the
Offer. Such statement and any amendments thereto, including exhibits, may be
examined and copies may be obtained at the same places and in the same manner as
set forth with respect to information about the Company in Section 7 (except
that such statement and amendments may not be available in the regional offices
of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED ON AS HAVING BEEN AUTHORIZED.
METROCALL, INC.
May 22, 1996
41
<PAGE> 44
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The names, business address, position with the Purchaser, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of the Purchaser, together with the names,
principal businesses and addresses of any corporations or other organizations in
which such principal occupations are conducted, is set forth below. Each
individual is a United States citizen and, unless otherwise indicated, each
individual's business address is 6677 Richmond Highway, Alexandria, Virginia
22306. Unless otherwise indicated, no director or executive officer of the
Purchaser beneficially owns any Shares (or rights to acquire Shares).
Ronald V. Aprahamian has been a member of the Board of Directors since June
1995. Mr. Aprahamian is Chairman and Chief Executive Officer of The Compucare
Company, a healthcare computer software and services firm. Mr. Aprahamian also
serves as a Consulting Director for the Riggs National Bank of Washington, D.C.,
and serves on the board of directors of Sunrise Assisted Living Inc. Mr.
Aprahamian's business address is 12110 Sunset Hills Road, Suite 600, Reston,
Virginia 22090.
Harry L. Brock, Jr. founded Metrocall and has served as Chairman of the
Board (through January 1996) and President (through August 1995) and a director
of Metrocall since 1982, and its predecessor companies since 1965. Mr. Brock was
a founding partner of Cellular One of Washington ("Cellular One"), one of the
first operating cellular systems. Mr. Brock is the husband of Suzanne S. Brock.
Richard M. Johnston has served as Chairman of the Board of Directors since
January 1996, and has been a member of the Board of Directors since September
1994. Mr. Johnston has been Vice President for Investments of The Hillman
Company, an investment firm which is a greater than 5% beneficial owner of
Metrocall's Common Stock, since 1970. Mr. Johnston's business address is 2000
Grant Building, Pittsburgh, PA 15219.
Suzanne S. Brock has been Secretary, Treasurer (through August 1995) and a
director of Metrocall since 1982. Ms. Brock has been employed by Metrocall and
its predecessor companies since 1965. Ms. Brock has agreed to resign as
Secretary effective May 31, 1996. Ms. Brock is the wife of Harry L. Brock, Jr.
William L. Collins, III has been President and Chief Executive Officer of
the Company since January 1996 and has served as Director and Vice Chairman of
the Board since September 1994. From 1988 to 1994, Mr. Collins was the Chairman
of the Board, Chief Executive Officer, President and a director of FirstPAGE
USA, Inc. and its predecessor companies. Mr. Collins serves as Chairman of the
Board of Directors of USA Telecommunications, Inc. ("USATel"). From 1977 to
1988, Mr. Collins was President of C&C, Inc. ("C&C"), a national communications
marketing and management company.
Francis A. Martin, III has been a member of the Board of Directors since
November 1994. Mr. Martin is a principal of U.S. Media Group and Chairman of the
Board, President and Chief Executive Officer of U.S. Media Holdings, Inc.,
having previously served as President and Chief Executive Officer of Chronicle
Broadcasting Company, a publicly-held television broadcasting company. Mr.
Martin's business address is 275 Battery Street, Suite 1850, San Francisco,
California 94111.
Steven D. Jacoby has been Chief Operating Officer and Vice President since
September 1994. Mr. Jacoby joined Metrocall from FirstPAGE USA, Inc. where he
served as Chief Operating Officer, Vice President and Secretary since 1988. Mr.
Jacoby has been a director of Metrocall since September 1994. Mr. Jacoby was a
principal of C&C, a national communications marketing and management company
from 1987 to 1988. Mr. Jacoby was Director of Operations for Vanguard Cellular
Systems, Inc. from 1985 to 1987.
Vincent D. Kelly has been the Chief Financial Officer and Vice President of
the Purchaser since January 1989. Mr. Kelly has also served as Treasurer since
August 1995. Mr. Kelly also served dual roles as Chief Operating Officer and
Chief Financial Officer of the Purchaser from February 1993 through August 31,
1994, when the Company acquired FirstPAGE USA, Inc. Mr. Kelly has been a
director of the Company since 1990. Prior to joining the Company, Mr. Kelly was
an accountant with Bruner, Kane & McCarthy, Ltd., certified public accountants.
42
<PAGE> 45
Christopher A. Kidd has been a director of the Company since 1990. Mr. Kidd
joined Metrocall in November 1986 and served as the Chief Executive Officer and
Vice President from February 1993 until January 1996. He served as Chief
Operating Officer from January 1989 until February 1993. Mr. Kidd has also
served as General Manager and Controller. Pursuant to a written agreement dated
February 7, 1996, Mr. Kidd will continue his term as a director only until May
31, 1996. Mr. Kidd's business address is 1110 Key Drive, Alexandria, Virginia
22302.
43
<PAGE> 46
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
METROCALL, INC.
AND
A+ NETWORK, INC.
MAY 16, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 47
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer................................................................ 1
SECTION 1.2 AN Actions............................................................... 3
SECTION 1.3 The Merger............................................................... 4
SECTION 1.4 Effective Time........................................................... 4
SECTION 1.5 Certificate of Incorporation and By-Laws................................. 4
SECTION 1.6 Directors and Officers of Surviving Corporation.......................... 4
ARTICLE II
CONVERSION OF SHARES; EXCHANGE PROCEDURES
SECTION 2.1 Conversion of Shares..................................................... 5
SECTION 2.2 Certain Definitions...................................................... 5
SECTION 2.3 Exchange of Certificates................................................. 5
SECTION 2.4 AN Option Plans.......................................................... 6
SECTION 2.5 AN Subordinated Notes.................................................... 7
SECTION 2.6 Cash Election Merger..................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AN
SECTION 3.1 Organization............................................................. 9
SECTION 3.2 Capitalization........................................................... 9
SECTION 3.3 Authorization; Validity of Agreement; AN Action.......................... 10
SECTION 3.4 Consents and Approvals; No Violations; Licenses.......................... 11
SECTION 3.5 SEC Reports and Financial Statements..................................... 12
SECTION 3.6 No Undisclosed Liabilities............................................... 12
SECTION 3.7 Absence of Certain Changes............................................... 12
SECTION 3.8 Employee Benefit Plans; ERISA; Labor..................................... 12
SECTION 3.9 Litigation............................................................... 14
SECTION 3.10 No Default; Compliance with Applicable Laws.............................. 14
SECTION 3.11 Taxes.................................................................... 14
SECTION 3.12 Environmental Matters.................................................... 15
SECTION 3.13 Insurance................................................................ 15
SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other
Information............................................................ 15
SECTION 3.15 Transactions with Affiliates............................................. 16
SECTION 3.16 Brokers.................................................................. 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MC
SECTION 4.1 Organization............................................................. 16
SECTION 4.2 Capitalization........................................................... 16
SECTION 4.3 Authorization; Validity of Agreement; MC Action.......................... 17
SECTION 4.4 Consents and Approvals; No Violations; Licenses.......................... 18
SECTION 4.5 SEC Reports and Financial Statements..................................... 18
SECTION 4.6 No Undisclosed Liabilities............................................... 19
SECTION 4.7 Absence of Certain Changes............................................... 19
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 4.8 Employee Benefit Plans; ERISA; Labor..................................... 19
SECTION 4.9 Litigation............................................................... 20
SECTION 4.10 No Default; Compliance with Applicable Laws.............................. 21
SECTION 4.11 Taxes.................................................................... 21
SECTION 4.12 Environmental Matters.................................................... 21
SECTION 4.13 Insurance................................................................ 21
SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other
Information............................................................ 21
SECTION 4.15 Transactions with Affiliates............................................. 22
SECTION 4.16 Financing................................................................ 22
SECTION 4.17 Share Ownership.......................................................... 22
SECTION 4.18 Brokers.................................................................. 22
ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of AN and MC.......................................... 22
SECTION 5.2 Stockholder Approval; Meetings; Etc...................................... 25
SECTION 5.3 Proxy Statement, Registration Statement, Etc............................. 25
SECTION 5.4 Compliance with the Securities Act....................................... 26
SECTION 5.5 Nasdaq Listing........................................................... 27
SECTION 5.6 Approvals and Consents; Cooperation...................................... 27
SECTION 5.7 Access to Information.................................................... 28
SECTION 5.8 Employee Benefits and Relocation Matters................................. 28
SECTION 5.9 No Solicitation by AN.................................................... 28
SECTION 5.10 No Solicitation by MC.................................................... 29
SECTION 5.11 Brokers or Finders....................................................... 30
SECTION 5.12 Publicity................................................................ 30
SECTION 5.13 Notification of Certain Matters.......................................... 30
SECTION 5.14 Directors' and Officers' Insurance and Indemnification................... 30
SECTION 5.15 Expenses................................................................. 31
SECTION 5.16 Repurchase Option........................................................ 31
SECTION 5.17 Fair Price Statute....................................................... 33
SECTION 5.18 Further Assurances....................................................... 33
ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger............... 34
SECTION 6.2 Conditions to Obligations of AN to Effect the Merger..................... 34
SECTION 6.3 Conditions to Obligations of MC to Effect the Merger..................... 35
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................................. 35
SECTION 7.2 Termination Fee.......................................................... 37
SECTION 7.3 Effect of Termination.................................................... 37
</TABLE>
ii
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendment and Modification............................................... 37
SECTION 8.2 Nonsurvival of Representations and Warranties............................ 37
SECTION 8.3 Notices.................................................................. 37
SECTION 8.4 Headings................................................................. 38
SECTION 8.5 Interpretation........................................................... 38
SECTION 8.6 Counterparts............................................................. 38
SECTION 8.7 Entire Agreement; Third Party Beneficiaries.............................. 38
SECTION 8.8 Governing Law............................................................ 39
SECTION 8.9 Assignment............................................................... 39
SECTION 8.10 Further Assurances....................................................... 39
<CAPTION>
ANNEXES
Annex A -- Conditions to the Offer
Annex B -- Directors of the Surviving Corporation
Annex C -- Terms of VCRs
Annex D -- Employment and Employee Benefits
SCHEDULES
AN:
<S> <C>
Schedule 3.1 -- Subsidiaries of AN
Schedule 3.2 -- AN Capitalization; AN Pending Transactions
Schedule 3.4(a) -- AN Consents and Approvals
Schedule 3.4(c) -- AN FCC Authorizations
Schedule 3.6 -- Undisclosed Liabilities
Schedule 3.7 -- Certain Changes
Schedule 3.8 -- Employee Benefit Plans
Schedule 3.9 -- Litigation
Schedule 3.11 -- Taxes
Schedule 3.15 -- Transactions with Affiliates
Schedule 5.1(a) -- Permitted Activities by AN
MC:
Schedule 4.1 -- Subsidiaries of MC
Schedule 4.2 -- MC Capitalization; Commitments Regarding MC Securities
Schedule 4.4 -- MC Consents and Approvals
Schedule 4.6 -- Undisclosed Liabilities
Schedule 4.7 -- Certain Changes
Schedule 4.8 -- Employee Benefit Plans
Schedule 4.9 -- Litigation
Schedule 4.11 -- Taxes
Schedule 4.15 -- Transactions with Affiliates
Schedule 5.1(b) -- Permitted Activities by MC
</TABLE>
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<PAGE> 50
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
A+ Network............................................................................. 11
Affiliates............................................................................. 26
AN..................................................................................... 1
AN Benefit Plans....................................................................... 12
AN Certificates........................................................................ 5
AN Comfort Letter...................................................................... 26
AN Employee Agreements................................................................. 12
AN ERISA Affiliate..................................................................... 12
AN Fairness Opinion.................................................................... 4
AN Financial Advisor................................................................... 4
AN Financial Statements................................................................ 12
AN Material Agreements................................................................. 11
AN Option.............................................................................. 6
AN Option Plans........................................................................ 7
AN Pending Transactions................................................................ 9
AN SEC Documents....................................................................... 12
AN State Certificates.................................................................. 11
AN Termination Fee Event............................................................... 32
Average Parent Share Price............................................................. 5
CERCLA................................................................................. 15
Claim.................................................................................. 31
Closing................................................................................ 4
Closing Date........................................................................... 4
Code................................................................................... 1
Combination Act........................................................................ 1
Communications Act..................................................................... 11
Confidentiality Agreement.............................................................. 28
Conversion Ratio....................................................................... 5
D&O Insurance.......................................................................... 31
DGCL................................................................................... 1
Effective Time......................................................................... 4
Election contest....................................................................... 32
Environmental Law...................................................................... 15
ERISA.................................................................................. 12
Exchange Act........................................................................... 2
Exchange Agent......................................................................... 5
FCC.................................................................................... 11
Final Regulatory Order................................................................. 32
Fully diluted basis.................................................................... 10
GAAP................................................................................... 12
Governmental Entity.................................................................... 11
HSR Act................................................................................ 11
Indemnified Party...................................................................... 30
Interest Payment Event................................................................. 32
IRS.................................................................................... 12
Junior Preferred....................................................................... 11
Material Adverse Effect................................................................ 11
Materials of Environmental Concern..................................................... 15
MC..................................................................................... 1
MC Benefit Plans....................................................................... 19
MC Employee Agreements................................................................. 19
MC ERISA Affiliate..................................................................... 19
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MC Fairness Opinion.................................................................... 3
MC Financial Advisor................................................................... 3
MC Financial Statements................................................................ 19
MC Licenses............................................................................ 18
MC Material Agreements................................................................. 18
MC Options............................................................................. 17
MC Pending Transactions................................................................ 17
MC SEC Documents....................................................................... 18
MC Shares.............................................................................. 3
MC Voting Agreement.................................................................... 1
Meeting................................................................................ 25
Merger................................................................................. 1
Merger Agreement....................................................................... A-1
Merger Consideration................................................................... 5
Merger Documents....................................................................... 4
Minimum Condition...................................................................... 2
Notes.................................................................................. 7
Offer.................................................................................. 1,2
Offer Documents........................................................................ 2
Offer Price............................................................................ 2
Offer to Purchase...................................................................... 2
Parent Pending Transactions............................................................ 17
Participant............................................................................ 32
Proposal............................................................................... 25
Proxy Statement........................................................................ 15
Registration Statement................................................................. 15
Regulatory Filings..................................................................... 27
Repurchase Event....................................................................... 31
Repurchase Period...................................................................... 32
Repurchase Shares...................................................................... 32
Rights................................................................................. 1
Rights Plan............................................................................ 1
SAS 49................................................................................. 26
Schedule 14D-1......................................................................... 2
Schedule 14D-9......................................................................... 3
SEC.................................................................................... 2
Securities Act......................................................................... 11
Shareholders' Agreement................................................................ 1
Shares................................................................................. 1
Solicitation........................................................................... 32
State Authority........................................................................ 11
Subsidiary............................................................................. 9
Surviving Corporation.................................................................. 4
Tax Return............................................................................. 14
Taxes.................................................................................. 14
TBCA................................................................................... 1
TIPA................................................................................... 1
VCRs................................................................................... 5
Voting Debt............................................................................ 10
Voting Stock........................................................................... 32
</TABLE>
v
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1996, between METROCALL,
INC., a Delaware corporation ("MC"), and A+ NETWORK, Inc., a Tennessee
corporation ("AN").
WHEREAS, the Boards of Directors of MC and AN have approved, and deemed it
advisable and in the best interests of their respective stockholders to
consummate, a combination of their respective businesses upon the terms and
subject to the conditions set forth herein;
WHEREAS, it is intended that the business combination be accomplished by MC
commencing a cash tender offer (the "Offer") for certain issued and outstanding
shares of common stock of AN, $.01 par value (the "Shares"), together with the
related share purchase rights (the "Rights") issued pursuant to the Rights
Agreement dated February 16, 1995 by and between AN and First Union National
Bank of North Carolina, as Rights Agent (the "Rights Plan"), to be followed by a
merger of AN with and into MC (the "Merger");
WHEREAS, to satisfy a condition to MC entering into this Agreement and
incurring the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, certain shareholders of AN have entered into a
Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with MC
pursuant to which such shareholders have agreed, on the terms and subject to the
conditions thereof, to sell certain of their Shares to MC, to vote certain of
their Shares and to grant MC an option to purchase certain of such Shares;
WHEREAS, to satisfy a condition of AN's entering into this Agreement and
incurring the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, certain stockholders of MC have entered into a
voting agreement (the "MC Voting Agreement") granting AN a proxy with respect to
the voting of their MC Shares (as defined below);
WHEREAS, the Board of Directors of AN has (i) adopted this Agreement
pursuant to Section 48-21-104(a) of the Tennessee Business Corporation Act (the
"TBCA"), resolved to submit this Agreement for approval by the holders of the
Shares pursuant to Section 48-21-104(b) of the TBCA, and resolved to recommend
acceptance of the Offer by the holders of the Shares, (ii) duly approved the
business combination contemplated by this Agreement, the Shareholders' Agreement
and the MC Voting Agreement in accordance with the provisions of Section
48-103-205 of the Tennessee Business Combination Act (the "Combination Act"),
(iii) caused the transactions contemplated hereby not to be a "take over offer"
as defined in Section 48-103-102(10)(B)(v) of the Tennessee Investor Protection
Act ("TIPA"), and (iv) determined that MC will not be deemed an "Acquiring
Person" for the purposes of the Rights Plan.
WHEREAS, the Board of Directors of MC has (i) adopted this Agreement,
resolved to submit this Agreement for approval by the stockholders of MC
pursuant to Section 252 of the Delaware General Corporation Law ("DGCL"), and
resolved to recommend that all stockholders of MC approve and adopt this
Agreement and the Merger, and (ii) duly approved the business combination
contemplated by this Agreement, the Shareholders' Agreement and the MC Voting
Agreement so as to render inapplicable thereto the provisions of Section 203 of
the DGCL; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger provided for herein shall qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code"), and this Agreement is intended
to be and is adopted as a plan of reorganization within the meaning of Section
368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer. (a) As promptly as practicable (but in no event
later than five business days after the public announcement of the execution of
this Agreement), MC shall commence (within the meaning
1
<PAGE> 53
of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
Exchange Act)), an offer (the Offer) to purchase for cash 2,140,526 Shares,
together with the Rights, at a price of $21.10 per Share, net to the seller in
cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Offer Price" (provided that MC shall not be
required to increase the Offer Price)), subject to there being validly tendered
in accordance with the terms of the Offer and not withdrawn prior to the
expiration of the Offer 2,140,526 Shares and related Rights (the "Minimum
Condition") and to the other conditions set forth in Annex A hereto. Except as
otherwise provided herein, MC shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as such actions are permitted under applicable
law. The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto. MC shall not
amend or waive the Minimum Condition and shall not decrease the Offer Price or
decrease the Minimum Condition or amend any other material condition of the
Offer in any manner adverse to the holders of the Shares without the prior
written consent of AN (such consent to be authorized by the Board of Directors
of AN or a duly authorized committee thereof). Notwithstanding the foregoing,
(i) if on the expiration date of the Offer (A) there exists an AN Acquisition
Proposal (as defined in Section 5.9(a)) involving a tender offer, MC may extend
the Offer to a date that is two business days after the date the position of AN
with respect to the tender offer is first published or sent pursuant to Rule
14e-2 under the Exchange Act, or (B) there exists an AN Acquisition Proposal
other than a tender offer, MC may extend the Offer to a date that is two
business days after the first date on which AN's failure to reject such AN
Acquisition Proposal would permit MC to terminate this Agreement pursuant to
Section 7.1(d)(v) hereof, (ii) in circumstances other than those covered by the
preceding clause (i), MC may extend the Offer for such period of time, not to
exceed 20 business days in the aggregate, as is reasonably expected to be
necessary in order to satisfy the Minimum Condition or the other conditions set
forth in Annex A hereto, and (iii) the Offer Price may be increased in good
faith and the Offer may be extended to the extent required by law in connection
with such increase, in each case without the consent of AN. It is agreed the
conditions set forth in Annex A hereto are for the benefit of MC and may be
asserted by MC regardless of the circumstances giving rise to any such condition
(including any action or inaction by MC not inconsistent with the terms hereof)
or, except with respect to the Minimum Condition set forth above, may be waived
(but not amended) by MC, in whole or in part at any time and from time to time,
in its sole discretion.
(b) As soon as practicable on the date the Offer is commenced, MC shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer
to Purchase and a form of letter of transmittal and summary advertisement
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). The Offer Documents will contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law, and shall conform in all material respects with the
requirements of the Exchange Act and any other applicable law; provided,
however, that no agreement or representation is hereby made or shall be made by
MC with respect to information supplied or approved by AN in writing expressly
for inclusion in the Offer Documents. MC agrees to take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Each of MC, on the one hand, and AN, on the other hand,
agrees to promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false and misleading in
any material respect, and MC further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. AN and its counsel shall be given the
opportunity to review the Schedule 14D-1 and any amendments thereto before any
of them are filed with the SEC. In addition, MC agrees to provide to AN and its
counsel, in written form and promptly after receipt, any comments or other
communications that MC or its counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents.
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(c) MC hereby approves of and consents to the Offer and represents and
warrants that the Board of Directors of MC, at a meeting duly called and held,
has, with the affirmative vote of at least a majority of the members of the
Board of Directors of MC, (i) determined that this Agreement, the MC Voting
Agreement, and the transactions contemplated hereby (which shall include the
Offer, the Merger, and the Shareholders' Agreement) are fair to and in the best
interests of the holders of shares of MC's common stock, $.01 par value (the "MC
Shares"), (ii) adopted this Agreement and resolved to submit this Agreement for
approval by the stockholders of MC pursuant to Section 252 of the DGCL, and
(iii) approved this Agreement and the transactions contemplated hereby, such
determination and approval constituting approval hereof for purposes of Section
203 of the DGCL.
(d) MC has received the written opinion of Wheat, First Securities, Inc.
(the "MC Financial Advisor"), dated on or before the date of this Agreement, to
the effect that, as of such date, the consideration to be paid (i) to the
holders of Shares pursuant to the Offer, and (ii) to the holders of Shares
pursuant to the Merger, taken together, is fair to the holders of MC Shares from
a financial point of view (the "MC Fairness Opinion"). MC has delivered to AN a
copy of the MC Fairness Opinion, together with MC Financial Advisor's written
consent to the inclusion of or reference to the MC Fairness Opinion (in a form
and substance satisfactory to MC Financial Advisor) in the Offer Documents, the
Schedule 14D-9 and the Registration Statement (as defined below).
SECTION 1.2 AN Actions. (a) AN hereby approves of and consents to the
Offer and represents and warrants that the Board of Directors of AN, at a
meeting duly called and held, has, with the affirmative vote of at least a
majority of the members of the Board of Directors of AN, (i) determined that
this Agreement and the transactions contemplated hereby (which shall include the
Offer, the Merger and the Shareholders' Agreement) are fair to and in the best
interests of the holders of Shares, (ii) approved this Agreement and the
transactions contemplated hereby, such determination and approval constituting
approval thereof for purposes of Section 48-103-205 of the Combination Act and
such that MC is not an "Acquiring Person" under the Rights Plan, (iii) adopted
this Agreement pursuant to Section 48-21-104(a) of the TBCA and resolved to
submit the Agreement for approval by the holders of the Shares pursuant to
Section 28-21-104(b), and (iv) resolved to recommend that the shareholders of AN
who desire to receive cash for their Shares (or a portion thereof) accept the
Offer and tender their Shares thereunder to MC and that all shareholders of AN
approve and adopt this Agreement and the Merger, which recommendation shall
comply with Section 48-103-102(10)(B) of TIPA; provided, that such
recommendations may be withdrawn, modified or amended upon a determination of
the Board of Directors made in accordance with Section 5.9(f).
(b) Concurrently with the commencement of the Offer, AN shall file with the
SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9") which shall, subject to a determination of the Board of
Directors made in accordance with Section 5.9(f), contain the recommendation
referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will
contain (or be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law, and shall conform
in all material respects with the requirements of the Exchange Act and any other
applicable law; provided, however, that no agreement or representation is hereby
made or shall be made by AN with respect to information supplied or approved by
MC in writing expressly for inclusion in the Schedule 14D-9. AN further agrees
to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Each of AN, on the one hand, and
MC, on the other hand, agrees to promptly correct any information such party has
previously provided for use in the Schedule 14D-9, if and to the extent that
such information shall have become false and misleading in any material respect,
and AN further agrees to take all steps necessary to cause the Schedule 14D-9
(as so corrected) to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. MC and its counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendments thereto before any of them are filed with the
SEC. In addition, AN agrees to provide MC and its counsel, promptly after
receipt and in written form, with any
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comments or other communications that AN or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9.
(c) In connection with the Offer, AN will promptly furnish or cause to be
furnished to MC mailing labels containing the names and addresses of the record
holders of the Shares as of a recent date and of those persons becoming record
holders subsequent to such date and, to the extent known, a list of the
beneficial owners of the Shares as of a recent date, together with copies of all
security positions listings and all other information in AN's possession or
control regarding the beneficial owners of the Shares, and shall furnish MC with
such information and assistance as MC or its agents may reasonably request in
communicating the Offer to the shareholders of AN. From and after the date of
this Agreement, all such information concerning AN's record and, to the extent
known, beneficial holders shall be made available to MC. Except for such steps
as are necessary to disseminate the Offer Documents or consummate the Merger, MC
shall hold in confidence the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence, will
use such information only in connection with the Offer and the Merger, and, if
this Agreement is terminated, will deliver or cause to be delivered to AN all
copies of such information then in its possession or the possession of its
agents or representatives.
(d) AN has received the written opinion of Prudential Securities
Incorporated (the "AN Financial Advisor"), dated on or before the date of this
Agreement, to the effect that, as of such date, the consideration to be received
by holders of Shares (other than MC and its affiliates) pursuant to the Offer
and Merger, taken together, is fair to such holders from a financial point of
view (the "AN Fairness Opinion"). AN has delivered to MC a copy of the AN
Fairness Opinion, together with AN Financial Advisor's written consent to the
inclusion of or reference to the AN Fairness Opinion (in a form and substance
satisfactory to AN Financial Advisor) in the Offer Documents, the Schedule 14D-9
and the Registration Statement.
SECTION 1.3 The Merger. Upon the terms and subject to the conditions set
forth in Article VI hereof, and in accordance with the DGCL and the TBCA, AN
shall be merged with and into MC. The closing (the "Closing") of the Merger
shall take place as promptly as practicable but in no event later than the date
that is two business days after satisfaction or waiver of the conditions set
forth in Article VI (other than those relating to documents to be delivered at
the Closing). The Closing will be held at such time and at such place as the
parties hereto may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date." Following the Merger, the separate corporate
existence of AN will cease, and MC shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all of the rights
and obligations of AN.
SECTION 1.4 Effective Time. Upon the Closing, the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Tennessee articles
of merger, certificates of merger or other appropriate documents (in any such
case, the "Merger Documents") in such form as is required by, and executed in
accordance with, this Agreement and the relevant provisions of the TBCA and the
DGCL (the date and time of the later of such filings being referred to herein as
the "Effective Time"). The Merger shall have the effects set forth in Section
48-21-108 of the TBCA and the Section 252 of DGCL.
SECTION 1.5 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws of MC, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
SECTION 1.6 Directors and Officers of Surviving Corporation. (a) The
directors of MC immediately prior to the Effective Time shall be the directors
of the Surviving Corporation at the Effective Time.
(b) The officers of MC shall be the officers of the Surviving Corporation
and shall hold their office from the Effective Time until they resign or their
earlier death or removal.
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ARTICLE II
CONVERSION OF SHARES; EXCHANGE PROCEDURES
SECTION 2.1 Conversion of Shares. (a) Each Share, together with the
related Rights, issued and outstanding immediately prior to the Effective Time
(other than Shares held by MC or any Subsidiary (as defined in Section 3.1) of
MC) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive (i) such number of duly
authorized, validly issued, fully paid and nonassessable MC Shares equal to the
Conversion Ratio (as defined in Section 2.2), and (ii) a number of rights to
receive amounts to be determined in accordance with, and which rights are
evidenced by, Variable Common Rights having the terms described in Annex C
hereto ("VCRs") in an amount equal to the number of MC Shares to be received
pursuant to clause (i); plus (iii) cash, if any, for fractional MC Shares and
VCRs pursuant to Section 2.3(f) hereof (collectively, the "Merger
Consideration").
(b) Each Share (i) held in the treasury of AN or any Subsidiary of AN and
(ii) held by MC or any Subsidiary of MC immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and cease to exist and no Merger Consideration
shall be issued in respect thereof.
SECTION 2.2 Certain Definitions.
"Average MC Share Price" shall mean the average of the last reported
bid price per MC Share on the Nasdaq National Market for the 50 consecutive
trading days ending on the trading day that is five trading days prior to
the Closing Date, provided that the Average MC Share Price shall not exceed
$21.88 or be less than $17.90.
"Conversion Ratio" shall mean the number determined by dividing $21.10
by the Average MC Share Price and rounding the result to the nearest
1/100,000 of a share. In the event that, between the date of this Agreement
and the Effective Time, the number of issued and outstanding Shares or MC
Shares shall have been changed into a different number of shares or a
different class of shares as a result of a stock split, reverse stock
split, stock dividend, spinoff, extraordinary dividend, recapitalization,
reclassification or other similar transaction with a record date within
such period, the Conversion Ratio shall be appropriately adjusted. The
Conversion Ratio shall also be adjusted by multiplying such Ratio at the
Effective Time by a fraction, (a) the numerator of which is the sum of (i)
Scheduled Shares (as defined below) plus (ii) any Shares with respect to
which MC consents to the issuance pursuant to Section 5.1(a) ("Total
Permitted Shares"), and (b) the denominator of which is the sum of (i) all
Shares issued and outstanding at the Effective Time plus (ii) all Shares
that would be issuable by AN pursuant to or in connection with pending
acquisition or AN Options, provided, that no adjustment shall be made if
the resulting fraction is equal to 1.00 or more.
SECTION 2.3 Exchange of Certificates. (a) Prior to the Effective Time, AN
and MC shall appoint First Union National Bank of North Carolina (or any other
commercial bank or trust company, which shall be reasonably acceptable to AN and
MC) to act as exchange agent (the "Exchange Agent") to effect the exchange of
certificates representing the Shares as set forth in Section 2.1 hereof
(collectively, the "AN Certificates") for the Merger Consideration. The
Surviving Corporation shall make available, or shall cause to be made available,
to the Exchange Agent for the benefit of the holders of Shares for exchange in
accordance with this Article II, certificates representing MC Shares and VCRs
issuable pursuant to Section 2.1 and funds in amounts necessary to make any cash
payments pursuant to Section 2.3(f).
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each person who was, at the Effective Time,
a holder of record of a AN Certificate (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to an AN
Certificate shall pass, upon (and only upon) proper delivery to, and receipt of
such AN Certificate by, the Exchange Agent, and which shall be in such form and
have such other provisions as the Surviving Corporation may reasonably specify,
and (ii) instructions for use in effecting the surrender of such AN Certificate
in exchange for a certificate representing MC Shares such holder is entitled to
pursuant to this Article II. Upon surrender of an AN Certificate, together with
such letter of transmittal duly completed and validly executed in
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accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such AN Certificate shall
be entitled to receive in exchange therefor, after the Effective Time, (i) a
certificate representing that number of MC Shares to which such holder of Shares
shall have become entitled pursuant to the provisions of this Article II, (ii) a
certificate representing that number of VCRs to which such holder of Shares
shall have become entitled pursuant to the provisions of this Article II, and
(iii) if applicable, a check representing the amount of cash to which such
holder of Shares shall have become entitled pursuant to the provisions of
Section 2.3(f), and the AN Certificate so surrendered shall forthwith be
canceled. All payments in respect of Shares which are made in accordance with
the terms hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such Shares.
(c) No dividends or other distributions declared with respect to Shares and
payable to the holders of record thereof after the Effective Time shall be paid
to the holder of any unsurrendered AN Certificate until the holder thereof shall
surrender such AN Certificate in accordance with Section 2.3(b) hereof. Subject
to the effect, if any, of applicable law, after the subsequent surrender and
exchange of an AN Certificate, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore have become payable with respect to MC Shares, into which the
Shares represented by such AN Certificate have been converted.
(d) If any portion of the Merger Consideration (whether a certificate
representing MC Shares, a certificate representing VCRs or a check representing
cash payment pursuant to Section 2.3(f)) is to be issued or paid in a name other
than that in which the AN Certificate surrendered in exchange therefor is
registered, it shall be a condition to the issuance thereof that the AN
Certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing MC Shares, a certificate representing VCRs or a check
representing the cash payment pursuant to Section 2.3(f) in any name other than
that of the registered holder of the AN Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) On and after the Effective Time: the stock transfer books of AN shall
be closed and there shall be no further registration of transfers of the Shares
which were outstanding immediately prior to the Effective Time; the AN
Certificates representing Shares (and the Rights) shall cease to have any rights
with respect to such Shares (or Rights) except as otherwise provided for herein
or by applicable law; and the MC Shares and VCRs into which Shares have been
converted pursuant to Section 2.1 hereof shall be deemed outstanding (subject to
Section 2.3(c)) notwithstanding the failure of the holders thereof to surrender
and exchange AN Certificates as specified herein.
(f) No certificates or scrip representing fractional MC Shares or VCRs
shall be issued upon the surrender for exchange of AN Certificates, no dividend,
distribution or other payment with respect to MC Shares or VCRs shall be payable
on or with respect to any fractional MC Share or VCR and such fractional MC
Share shall not entitle the owner thereof to vote or to any other rights of a
shareholder or creditor of AN. In lieu of any such fractional MC Share or
fractional VCR, the Surviving Corporation shall pay to each shareholder of AN
who otherwise would be entitled to receive a fractional MC Share and a
fractional VCR an amount in cash determined by (i) dividing $21.10 by the
Conversion Ratio and (ii) multiplying the result by the fractional MC Share
interest to which such holder would otherwise be entitled.
(g) At any time following six (6) months after the Effective Time, the
Surviving Corporation may terminate its agreement with the Exchange Agent, and
thereafter holders of AN Certificates shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the consideration payable upon due
surrender of their AN Certificates pursuant to the provisions of this Article
II. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a AN Certificate for
consideration delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
SECTION 2.4 AN Option Plans. (a) Each outstanding option to purchase
Shares (each, a "AN Option") granted pursuant to AN's 1987 Employee Stock
Incentive Plan, 1992 Employee Stock Incentive
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Plan, 1992 Non-Qualified Stock Option Plan or the Employee Stock Purchase Plan
(collectively, the "AN Option Plans"), or to Dan Hiller which are described in
Schedule 3.2, and which have not vested prior to the Effective Time, shall
become fully exercisable and vested as of the Effective Time.
(b) Effective as of the Effective Time, at the option of the holder
thereof, either (i) each AN Option then outstanding and not exercised shall be
converted automatically into an option to purchase such number of MC Shares and
VCRs equal to the number of Shares subject to such AN Option immediately prior
to the Effective Time multiplied by the Conversion Ratio, with the exercise
price adjusted accordingly, but otherwise on the same terms and conditions as
were applicable under the applicable AN Option Plan and the underlying stock
option agreement or (ii) up to a maximum of 40% of the Shares subject to AN
Options held by each holder, such percentage to be determined by such holder,
shall be cancelled and the holder thereof shall be entitled to receive, with
respect to each such Share subject to such AN Option, the Offer Price on the
Closing Date net to the holder in cash, less the aggregate unpaid exercise price
relating to the exercise of such AN Options, and the remaining AN Options held
by such holder shall be converted as described in clause (i) of this sentence.
(c) Notwithstanding the foregoing provisions, in the case of any option to
which Code Section 421 applies, the option price, the number of shares subject
to such option, and the terms and conditions of exercise of such option shall be
determined in order to comply with Code Section 424(a). As soon as practicable
after the Effective Time, the Surviving Corporation shall deliver to the holders
of AN Options appropriate notices setting forth such holders' rights pursuant to
AN Option Plans and each underlying stock option agreement.
SECTION 2.5 AN Subordinated Notes. After the Effective Time, MC will
comply with applicable terms of the Indenture for AN's 11 7/8% Senior
Subordinated Notes due 2005 (the "Notes") including, if required, offering to
repurchase the Notes or causing them to be assumed by the Surviving Corporation.
In the event MC elects to exercise the Scenario I Option (as defined in the
Shareholders Agreement), MC shall provide an irrevocable letter of credit (from
a bank and containing terms reasonably acceptable to AN) permitting AN to draw
sufficient funds for AN to honor the "Change in Control" provisions under the
11 7/8% Senior Subordinated Notes due 2005, dated as of October 25, 1995 (the
"Indenture") and to permit the Holders (as defined in the Indenture) to sell
such Holder's Notes to AN, in whole or in part, at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase; provided that MC may substitute for the
letter of credit a firm financing commitment satisfactory to AN, in its sole
discretion, permitting MC to borrow sufficient funds for AN to honor the
obligations set forth above. In such event, MC shall provide AN all funds
required to satisfy the "Change in Control" obligations under the Indenture
prior to the last date AN is permitted to make payments to the Holders of the
Notes to be purchased thereunder. If MC provides such funds to AN, upon the
purchase of Notes pursuant to the Change in Control obligations, AN will issue
to MC negotiable promissory notes in the respective principal amounts of the
funds provided by MC, each of which shall bear interest and otherwise have terms
and provisions identical as nearly as possible to the Notes so purchased,
including the terms and provisions of the Indenture under which such Notes were
issued.
SECTION 2.6 Cash Election Merger. In the event of, and subject to, the
purchase by MC of Shares pursuant to the Mandatory Option in accordance with
Section 3.3.3 of the Shareholders' Agreement, then, notwithstanding any other
provision of this Agreement to the contrary, each Share, together with the
related Rights, issued and outstanding immediately prior to the Effective Time,
other than Shares held by MC or any Subsidiary of MC (the "Non-MC Shares"),
shall, by virtue of the Merger and without any action on the part of any holder
thereof, be converted into the right to receive cash, on the one hand, and MC
Shares and VCRs (collectively, the "Alternative Merger Consideration"), on the
other, in accordance with the following terms and procedures:
(a) Each person who, at the Effective Time, is a record holder of
Non-MC Shares shall have the right to submit an Election Form (as defined
below) specifying the number of Shares that such person desires to have
converted into the right to receive cash equal to $21.10 (a "Cash
Election") or the number of MC Shares and VCRs equal, in each case, to the
Conversion Ratio (the "Stock Election").
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(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of the Shares
immediately prior to the Effective Time (A) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the AN Certificates shall pass, only upon delivery of such AN
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as MC shall specify), (B) instructions for use in
effecting the surrender of the AN Certificates in exchange for the
Alternative Merger Consideration, and (C) an election form (the "Election
Form") providing for such holders to make the Cash Election and/or the
Stock Election.
(c) Any Cash Election or Stock Election shall have been validly made
only if the Exchange Agent shall have received by 5:00 p.m. New York, New
York time on a date (the "Election Deadline") to be mutually agreed upon by
MC and AN prior to the Effective Time, an Election Form properly completed
and executed (with the signature or signatures thereof guaranteed to the
extent required by the Election Form) by such holder accompanied by such
holder's AN Certificates, or by an appropriate guarantee of delivery of
such AN Certificates. Any holder of Shares who has made an election by
submitting an Election Form to the Exchange Agent may at any time prior to
the Election Deadline change such holder's election by submitting a revised
Election Form, properly completed and signed, that is received by the
Exchange Act prior to the Election Deadline. In the event that any holder
of Shares shall not have submitted an Election Form or if the Election Form
is not in proper form, such holder will be deemed to have elected to have
made a Cash Election for 40% of such holder's Shares, and a Stock Election
for 60% of such holder's Shares. Promptly following the Election Deadline,
the Exchange Agent shall examine the Election Forms and determine the
aggregate number of Shares that have made, or are deemed to have made, the
Cash Election (the "Requested Cash Amount") and the aggregate number of
Shares that have made the Stock Election (the "Requested Stock Amount").
(d) In the event that the Requested Cash Amount exceeds 40% of the
aggregate Non-MC Shares ("Cash Cap"): (i) each holder who submitted or is
deemed to have submitted a Cash Election shall have the right to receive
(i) $21.10 per Share for that number of Shares, or fractions thereof, equal
to the number specified or deemed to be specified in the Cash Election,
multiplied times a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount; and (ii) with respect to
all other Shares, including Shares not converted into cash pursuant to
clause (i) and Shares as to which the holder has submitted or is deemed to
have submitted a Stock Election, the holder shall have the right to receive
for each such share (A) a number of MC Shares equal to the Conversion
Ratio, (B) a number of VCRs equal to the number of MC Shares to be received
pursuant to clause (A), plus (C) cash, if any, for fractional MC Shares and
VCRs pursuant to Section 2.3(f).
(e) In the event that the Requested Stock Amount exceeds 60% of the
aggregate Non-MC Shares ("Stock Cap"): (i) each holder who submitted or is
deemed to have submitted a Stock Election shall have the right to receive
for each Share subject to a Stock Election (A) that number of MC Shares
equal in each case, to the Conversion Ratio, multiplied by a fraction, the
numerator of which is the Stock Cap and the denominator of which is the
Requested Stock Amount, (B) a number of VCRs equal to the number of MC
Shares to be received pursuant to clause (A), plus (C) cash for fractional
shares calculated pursuant to Section 2.3(f); and (ii) with respect to all
other Shares, including Shares not converted into MC Shares and VCRs
pursuant to clause (i) and Shares as to which the holder has submitted or
is deemed to have submitted a Cash Election, or fractions thereof, the
holder shall have the right to receive $21.10 in cash per Share.
(f) Promptly after the Effective Time, (i) MC shall deposit (or cause
to be deposited) with the Exchange Agent, for the benefit of the holders of
the Shares, for exchange in accordance with this Section 2.6, cash in the
amount sufficient to pay the aggregate cash portion of the Alternative
Merger Consideration, and (ii) MC shall deposit (or cause to be deposited)
with the Exchange Agent, for the benefit of the holders of the Shares,
certificates representing the MC Shares and VCRs for exchange in accordance
with this Section 2.6.
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(g) Except as expressly provided herein, the conversion of Shares and
exchange for Alternative Merger Consideration, including without limitation
the treatment of unexercised AN Options, shall be governed by the
provisions of this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AN
AN represents and warrants to MC as follows:
SECTION 3.1 Organization. (a) Except as set forth on Schedule 3.1, each
of AN and its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not have a Material Adverse Effect on AN and its Subsidiaries
taken as a whole. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. As used in this Agreement,
any reference to "Material Adverse Effect" on or with respect to any entity (or
group of entities taken as a whole) means any event, change or effect that is
materially adverse to the consolidated financial condition, businesses, results
of operations or cash flows of such entity (or, if used with respect thereto, of
such group of entities taken as a whole). AN and each of its Subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from
consummating any of the transactions contemplated hereby.
(b) AN has heretofore made available to MC a complete and correct copy of
the Charter and By-Laws or other organizational documents of AN and the
organizational documents of each of its Subsidiaries, as currently in effect.
Each such document is in full force and effect and no other organizational
documents are applicable to or binding upon AN or any Subsidiary.
(c) Schedule 3.1 identifies all the Subsidiaries of AN.
SECTION 3.2 Capitalization. (a) The authorized capital stock of AN
consists of 30,000,000 shares of common stock and 1,500,000 shares of preferred
stock, par value $.01 per share, of which 500,000 shares have been reserved and
designated as Series A Junior Participating Preferred Stock ("Junior
Preferred"). Schedule 3.2 sets forth (i) the number of issued and outstanding
Shares as of the date hereof; (ii) the number of Shares that would be issuable
by AN upon the exercise of all unexpired AN Options granted pursuant to AN
Option Plans, including the name of each holder of AN Options, the number of AN
Options held by such holder, and the date of grant, date of vesting, and
exercise price for all such AN Options of AN; (iii) all Shares that would be
issuable by AN pursuant to or in connection with each of the acquisition
agreements or transactions identified in Schedule 3.2 (the "AN Pending
Transactions"); and (iv) all other Shares issuable to any person pursuant to any
existing options, warrants, calls, preemptive (or similar) rights, subscriptions
or other rights, agreements, arrangements or commitments of any character,
except pursuant to the Rights (collectively, the "Scheduled Shares"). As of the
date hereof, no shares of preferred stock, including any Junior Preferred, are
issued and outstanding or held in the treasury of AN, and no Shares are held in
the treasury of AN. AN has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue shares of AN's capital stock
which may be issued pursuant to AN Options. The Shares subject to the
Shareholders' Agreement, together with the Shares acquired by MC in the Offer
(assuming the Minimum Condition is not waived or reduced) do, and at all times
prior to the earlier of exercise or expiration of the
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options granted pursuant to the Shareholders' Agreement will, represent at least
a majority of the Shares on a fully diluted basis. For purposes of this
Agreement, "fully diluted basis" shall mean, at any time, the number of Shares
that would be outstanding assuming the exercise of all outstanding options and
other rights to acquire Shares (other than pursuant to the Rights) or other
securities convertible into Shares (including any Shares to be issued pursuant
to any AN Pending Transaction), and the conversion of all securities convertible
into Shares. All the outstanding shares of AN's capital stock are, and all
shares which may be issued pursuant to the exercise of AN Options, when issued
in accordance with the respective terms thereof will be, duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive (or
similar) rights. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of AN or any of its Subsidiaries issued and outstanding. Except
as set forth in Schedule 3.2 and for the Rights, as of the date hereof, (i)
there are no shares of capital stock of AN authorized, issued or outstanding,
(ii) there are no existing options, warrants, calls, preemptive (or similar)
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of AN or any
of its Subsidiaries, obligating AN or any of its Subsidiaries to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interest in, AN or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interest
or obligations of AN or any of its Subsidiaries, and (iii) other than as
contemplated herein, there are no outstanding contractual obligations of AN or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares,
or capital stock of AN or any Subsidiary or affiliate of AN.
(b) All of the outstanding shares of capital stock of each of AN's
Subsidiaries are beneficially owned by AN, directly or indirectly, free and
clear of all security interests, liens, claims, pledges, agreements, limitations
on voting rights, charges or other encumbrances of any nature whatsoever, other
than liens in favor of First National Bank of Chicago.
(c) There are no voting trusts or other agreements or understandings to
which AN or any of its Subsidiaries is a party with respect to the voting of the
capital stock of AN or any of its Subsidiaries. Other than as contemplated
herein, none of AN or its Subsidiaries is required to redeem, repurchase or
otherwise acquire shares of capital stock of AN, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
SECTION 3.3 Authorization; Validity of Agreement; AN Action. (a) AN has
full corporate power and authority to execute and deliver this Agreement and the
MC Voting Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by AN of this Agreement and the
MC Voting Agreement, and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of AN and
no other corporate action on the part of AN is necessary to authorize the
execution and delivery by AN of this Agreement and the MC Voting Agreement and
the consummation by it of the transactions contemplated hereby and thereby
(other than, with respect to the Merger, the approval of this Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares). This
Agreement and the MC Voting Agreement have been duly executed and delivered by
AN and (assuming due and valid authorization, execution and delivery hereof by
the other parties hereto and thereto) are valid and binding obligations of AN
enforceable against AN in accordance with their terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Board of Directors of AN also has approved the transactions
contemplated by this Agreement, the MC Voting Agreement and the Shareholders'
Agreement so as to render inapplicable thereto the provisions of Section
48-103-206 of the Combination Act and to cause such transactions to fail to meet
the definition of "takeover offer" as defined in Section 46-103-102(10)(B)(v) of
TIPA, and so that MC and the stockholder parties to the MC Voting Agreement will
not be deemed an "Acquiring Person" for purposes of the Rights.
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SECTION 3.4 Consents and Approvals; No Violations; Licenses. (a) Neither
the execution, delivery or performance of this Agreement or the MC Voting
Agreement by AN nor the consummation by AN of the transactions contemplated
hereby or thereby nor compliance by AN with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
Charter or By-Laws or other organizational documents of AN or of any of its
Subsidiaries, (ii) require on the part of AN any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") except for (A) filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Federal Communication
Commission ("FCC"), the Communications Act of 1934, as amended (the
"Communications Act"), state public utility or public service laws, the
Securities Act of 1933, as amended (the "Securities Act"), the DGCL, the TBCA,
state or foreign laws relating to takeovers, state securities or blue sky laws,
and the laws of other states in which AN is qualified to do or is doing
business, or (B) where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings, individually or in the aggregate,
would not have a Material Adverse Effect on AN and its Subsidiaries, taken as a
whole, or prevent AN from consummating the transactions contemplated hereby,
(iii) except as disclosed on Schedule 3.4(a), result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which AN or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound and which has been included as an
exhibit to AN's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 (the "AN Material Agreements") or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to AN, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole, or prevent AN from consummating the transactions
contemplated hereby.
(b) AN or one of its Subsidiaries holds all licenses, permits,
certificates, franchises, ordinances, registrations, or other rights,
applications and authorizations filed with, granted or issued by, or entered by
any Governmental Entity, including without limitation, the FCC, or any state or
local regulatory authorities or any state or local public service commission or
public utility commission asserting jurisdiction over the radio facilities used
in AN's business (each, a "State Authority"), that are required for the conduct
of their businesses as now being conducted, except for those the absence of
which would not individually or in the aggregate have a Material Adverse Effect
on AN and its Subsidiaries taken as a whole (collectively, "AN Licenses") and,
provided, that no representation is made with respect to such matters on behalf
of any third-parties who are part of the "A+ Network". The AN Licenses are
valid, in full force and effect, and the terms of said AN Licenses are not
subject to any restrictions or conditions that materially limit or would
materially limit the operations of the business of AN or any of its Subsidiaries
as presently conducted, other than restrictions or conditions generally
applicable to licenses of that type. The AN Licenses granted, issued or entered
by the FCC are subject to the Communications Act. There are no proceedings
pending or, to the best knowledge of AN, complaints or petitions by others, or
threatened proceedings, before the FCC or any other Governmental Entity relating
to the business or operations of AN or any of its Subsidiaries or The AN
Licenses, and there are no facts or conditions that reasonably could be expected
to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or
impose conditions on any renewal of any AN Licenses, that would, individually or
in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole, or prevent AN from consummating the transactions contemplated
hereby or to impose any fines, forfeitures or other penalties on AN or its
Subsidiaries that would, individually or in the aggregate, have a Material
Adverse Effect on AN and its Subsidiaries, taken as a whole.
(c) Schedule 3.4(c) contains a true and complete list of each FCC permit
and FCC license issued in the name of AN, or any of its Subsidiaries as of May
9, 1996. Schedule 3.4(c) also contains a true and complete list of all licenses,
certificates, consents, permits, approvals and authorizations pending before or
issued by any State Authority (the "AN State Certificates").
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SECTION 3.5 SEC Reports and Financial Statements. AN and its Subsidiaries
have filed with the SEC all forms, reports, schedules, statements, and other
documents required to be filed by them with the SEC (as such documents have been
amended since the time of their filing, collectively, the "AN SEC Documents"),
and have filed all exhibits required to be filed with AN SEC Documents. As of
their respective dates or, if amended, as of the date of the last such
amendment, AN SEC Documents, including, without limitation, any financial
statements or schedules included therein, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, and did
not 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 light of the circumstances under which they were made, not
misleading. None of AN's Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
The financial statements of AN included in AN's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (including the related notes thereto)
and for the quarter ended March 31, 1996, copies of which have been provided to
MC (together, the "AN Financial Statements"), have been prepared from, and are
in accordance with, the books and records of AN and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto and
subject, in the case of unaudited interim financial statements, to normal
year-end adjustments), and fairly present the consolidated financial position
and the consolidated results of operations and cash flows of AN and its
consolidated Subsidiaries as at the dates thereof or for the periods presented
therein.
SECTION 3.6 No Undisclosed Liabilities. Except (i) as disclosed in AN SEC
Documents, (ii) as set forth in Schedule 3.6, (iii) AN Pending Transactions, and
(iv) for liabilities incurred in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with the consummation
of the transactions contemplated hereby (none of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole), since December 31, 1995, neither AN nor any of
its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of AN and its Subsidiaries
(including the notes thereto), and, which individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole.
SECTION 3.7 Absence of Certain Changes. Except as contemplated by this
Agreement, for AN Pending Transactions, or as disclosed in the AN SEC Documents
or in Schedule 3.7 hereto, since December 31, 1995, (i) AN and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business and consistent with past practice, (ii) there has not been any change
in the business, properties, assets, liabilities, financial condition, cash
flows, operations, licenses, franchises or results of operations of AN or its
Subsidiaries which has had a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole, and (iii) there has not been any action taken by AN or its
Subsidiaries of a type described in clauses (ii) through (xvii) of Section
5.1(a).
SECTION 3.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 3.8 hereto
sets forth (i) a list of all employee benefit plans (including but not limited
to plans described in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), maintained by AN, any of its Subsidiaries or
any trade or business, whether or not incorporated (an "AN ERISA Affiliate"),
which together with AN would be deemed a "single employer" within the meaning of
section 4001(b)(1) of ERISA ("AN Benefit Plans") and (ii) all employment,
retention, and severance agreements with employees of AN and its Subsidiaries
("AN Employee Agreements"). True and complete copies of all current AN Benefit
Plans and Employee Agreements have been provided to MC by AN.
(b) With respect to each AN Benefit Plan: (i) if intended to qualify under
section 401(a) or 401(k) of the Code, such plan has received a determination
letter from the Internal Revenue Service ("IRS") stating that it so qualifies
and that its trust is exempt from taxation under section 501(a) of the Code, no
such determination letter has been revoked and no such revocation has been
threatened, nothing has occurred that could reasonably be expected to cause the
relevant AN Benefit Plan to lose such qualification or exemption;
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(ii) such plan has been administered in all material respects in accordance with
its terms and applicable law, including state and federal securities laws; (iii)
no breaches of fiduciary duty by AN, or, to AN's knowledge, by any other person,
have occurred that might reasonably be expected to give rise to material
liability on the part of AN or any AN ERISA Affiliate; (iv) no disputes are
pending, or, to the knowledge of AN, threatened that might reasonably be
expected to give rise to material liability on the part of AN or any AN ERISA
Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of
ERISA) has occurred that might reasonably be expected to give rise to material
liability on the part of AN or any AN ERISA Affiliate; (vi) all contributions
required to be made to such plan as of the date hereof (taking into account any
extensions for the making of such contributions) have been made in full; (vii)
to AN's knowledge, no AN Benefit Plans are presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
Department of Labor, or any other governmental agency or entity, and no matters
are pending with respect to any AN Benefit Plan under the IRS's Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar
programs; and (viii) all monies withheld from employee paychecks with respect to
Benefit Plans have been transferred to the appropriate plan in accordance with
the terms of such plan.
(c) No AN Benefit Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any AN Benefit Plan a plan described in section
4063(a) of ERISA. No AN Benefit Plan is or has been subject to Title IV of
ERISA.
(d) No liability under Title IV of ERISA has been incurred by AN or any AN
ERISA Affiliate (whether direct, indirect, actual, or contingent, and including,
without limitation, withdrawal liability to a multiemployer plan), and no
condition exists that presents a material risk to AN or any AN ERISA Affiliate
of incurring a material liability under such Title. No AN Benefit Plan has
incurred an accumulated funding deficiency, as defined in section 302 of ERISA
or section 312 of the Code, whether or not waived.
(e) With respect to each AN Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of AN or any of its
Subsidiaries beyond their termination of employment (other than to the extent
required by applicable law). All group health plans of AN and AN ERISA
Affiliates have been operated in material compliance with the requirements of
Section 4980B (and its predecessor) and 5000 of the Code, and AN and AN ERISA
Affiliates have provided to individuals entitled thereto all required notices
and coverage pursuant to Section 4980B, except to the extent that failure to
provide such notice or coverage is not reasonably likely to result, individually
or in the aggregate, in a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole.
(f) No AN Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees of
AN or its Subsidiaries by its terms prohibits the amendment or termination of
any such AN Benefit Plan.
(g) As of the date hereof, except for AN Employee Agreements and AN Option
Plans, AN and its Subsidiaries are not parties to any (i) agreement with any
director, executive officer or other key employee of AN or its Subsidiaries (A)
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving AN or its Subsidiaries
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from AN or its Subsidiaries that may
be subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person's "parachute payment" under Section 280G of the
Code; and (iii) agreement or plan binding AN or its Subsidiaries, including
without limitation any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit plan or employee
benefit plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
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(h) As of the date hereof, no collective bargaining agreement is binding
and in force against AN or its Subsidiaries or is currently under negotiation,
and no current employees of AN or its Subsidiaries are represented by any labor
union. As of the date hereof, to AN's knowledge, no labor representation effort
exists with respect to AN or its Subsidiaries.
SECTION 3.9 Litigation. Schedule 3.9 hereto sets forth each suit, action
or proceeding pending (as to which AN has received notice), or, to the knowledge
of AN, threatened against AN, any of its Subsidiaries, or any of their
properties or assets on the date hereof. Except as set forth on Schedule 3.9,
none of the foregoing, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, if
resolved adversely to AN or its Subsidiaries. As of the date hereof, neither AN
nor any of its Subsidiaries, nor any of their respective properties, is subject
to any order, writ, judgment, injunction, decree, determination or award having,
or which would have, a Material Adverse Effect on AN and its Subsidiaries, taken
as a whole, or which would prevent AN from consummating the transactions
contemplated hereby.
SECTION 3.10 No Default; Compliance with Applicable Laws. Neither AN nor
any of its Subsidiaries is in default or violation in any material respect of
any term, condition or provision of (i) its respective Charter or By-laws or
other organizational documents, (ii) any AN Material Agreement or (iii) any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to AN or any of its
Subsidiaries or by which they or their respective assets may be bound (other
than matters addressed in Sections 3.4, 3.8, 3.9, 3.11, and 3.12), excluding
from the foregoing clauses (ii) and (iii), defaults or violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from
consummating the transactions contemplated hereby.
SECTION 3.11 Taxes. Except as set forth on Schedule 3.11:
(a) AN and its Subsidiaries have (i) duly and timely filed (or there
has been filed on their behalf) with the appropriate governmental
authorities all Tax Returns (as hereinafter defined) required to be filed
by them on or prior to the date hereof, other than those Tax Returns for
which extensions for filing have been obtained in a timely manner, and such
Tax Returns are true, correct and complete in all material respects, and
(ii) duly paid in full all Taxes (as hereinafter defined) shown to be due
on such Tax Returns or have provided adequate reserves in their financial
statements for any Taxes that have not been paid. There are no liens on any
of the assets of AN or any of its Subsidiaries that arose in connection
with any delinquency in paying any tax.
(b) As of the date hereof, there are no ongoing federal, state, local
or foreign audits or examinations of any Tax Return of AN or its
Subsidiaries.
(c) As of the date hereof, there are no outstanding requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies
against AN or any of its Subsidiaries (excluding extensions for filings
that have been timely obtained), and no power of attorney granted by either
AN or any of its Subsidiaries with respect to any Taxes is currently in
force.
(d) Neither AN nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the
Internal Revenue Service or any taxing authority (whether domestic or
foreign including, without limitation, any state, county, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments. "Tax Return" shall mean any
report,
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return, document, declaration or other information or filing required to be
supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes.
SECTION 3.12 Environmental Matters. (a) AN and its Subsidiaries have
complied in all respects with all applicable Environmental Laws (as defined
below), except to the extent that any failure to comply is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on AN and
its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of
AN, threatened, civil or criminal litigation, written notice or violation,
formal administrative proceeding or investigation, inquiry or information
request by any Governmental Entity relating to any Environmental Law involving
AN or any of its Subsidiaries or any of their properties. For purposes of this
Agreement, "Environmental Law" means any foreign, federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
or transportation of industrial, toxic or hazardous substances or solid or
hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including without limitation emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of
wildlife, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health and
safety of employees and other persons; and (ix) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste. As used above, the
terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
(b) With the exception of releases that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole, there have been no releases of any Materials of
Environmental Concern (as defined below) into the environment by AN or any of
its Subsidiaries, or, to the knowledge of AN, by any other party at any parcel
of real property or any facility formerly or currently owned, operated or
controlled by AN or any of its Subsidiaries. For purposes of this Agreement,
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resource Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
SECTION 3.13 Insurance. AN and the Subsidiaries maintain adequate
insurance with respect to the their respective businesses and are in compliance
with all material requirements and provisions thereof.
SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement;
Other Information. The information with respect to AN, its officers and
directors and its Subsidiaries (i) to be contained in the Schedule 14D-9, (ii)
supplied in writing by AN for inclusion in the Offer Documents, (iii) to be
contained in the definitive joint Proxy Statement to be furnished to the
respective shareholders of AN and the stockholders of MC pursuant to Section 5.2
and which will form a part of MC's Registration Statement on Form S-4 (the
"Registration Statement") to be filed with the SEC and will constitute a
prospectus of MC with respect to the MC Shares to be issued in the Merger (the
"Proxy Statement"), and (iv) to be contained in the Registration Statement will
not, on the respective dates on which (A) the Schedule 14D-9, the Offer
Documents or any amendment or supplement thereto are filed with the SEC (in the
case of each respective document), (B) the Proxy Statement is first mailed to
shareholders of AN and MC or on the date of the stockholders' meetings referred
to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration
Statement becomes effective (in the case of the Registration Statement), and (D)
in the case of the Proxy Statement and the Registration Statement, as such Proxy
Statement or Registration Statement is then amended or supplemented, at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or necessary to correct any statement made by AN in any
earlier filing with the SEC or any amendment thereto or any earlier
communication made by AN
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(including the Proxy Statement) to shareholders of AN with respect to the
Merger. When the Proxy Statement or any amendment or supplement thereto shall be
mailed, and at the time of each meeting and at the Effective Time, the Proxy
Statement will comply as to form with all applicable laws including the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder. If at any time prior to the Effective Time
any event with respect to AN, its officers and directors and its Subsidiaries
should occur which is or should be described in an amendment of, or a supplement
to, the Proxy Statement or the Registration Statement, AN shall promptly so
inform MC and such event shall be so described in an amendment or supplement to
the Proxy Statement and such information in such amendment or supplement will
not 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, in light of the circumstances under which they were made, not
misleading, or necessary to correct any statement made by AN in any earlier
filing with the SEC of such Proxy Statement, or any amendment or supplement
thereto, or any earlier communication to shareholders of AN with respect to the
Merger.
SECTION 3.15 Transactions with Affiliates. Except as set forth in the AN
SEC Documents or on Schedule 3.15, since December 31, 1995, neither AN nor any
of its Subsidiaries has entered into any transaction with any current director
or officer of AN or any Subsidiary or any transaction which would be subject to
proxy statement disclosure under the Exchange Act pursuant to the requirements
of Item 404 of Regulation S-K.
SECTION 3.16 Brokers. Other than the AN Financial Advisor, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission from AN in connection with the transactions contemplated by this
Agreement. AN has informed MC of the compensation to be paid by AN to the AN
Financial Advisor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MC
MC represents and warrants to AN as follows:
SECTION 4.1 Organization. (a) Each of MC and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have a Material Adverse
Effect on MC and its Subsidiaries taken as a whole. MC and each of its
Subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from
consummating any of the transactions contemplated hereby.
(b) MC has heretofore made available to AN a complete and correct copy of
the Certificate of Incorporation and By-Laws or other organizational documents
of MC and the organizational documents of each of its Subsidiaries, as currently
in effect. Each such document is in full force and effect and no other
organizational documents are applicable to or binding upon MC or any Subsidiary.
(c) Schedule 4.1 identifies all the Subsidiaries of MC.
(d) At the time of issuance, (i) the MC Shares and VCRs issued pursuant to
the Merger or the Shareholders' Agreement will be duly authorized and validly
issued, and the MC Shares will be fully paid and nonassessable and not subject
to preemptive (or similar) rights; and (ii) the VCRs will represent unsecured
obligations of MC ranking pari passu with all other general obligations of MC.
SECTION 4.2 Capitalization. (a) The authorized capital stock of MC
consists of 26,000,000 shares of common stock and 1,000,000 shares of preferred
stock, par value $.01 per share. Schedule 4.2 sets forth the
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(i) the number of issued and outstanding MC Shares as of the date hereof; (ii)
the number of MC Shares that would be issuable by MC upon the exercise of all
unexpired options to purchase MC Shares ("MC Options"), and date of vesting
thereof, (iii) all MC Shares that would be issuable by MC pursuant to or in
connection with each of the acquisition agreements or transactions identified in
Schedule 4.2 (the "MC Pending Transactions"); and (iv) all other MC Shares
issuable to any person pursuant to any existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character. As of the date hereof, no shares
of preferred stock are issued and outstanding or held in the treasury of MC, and
no MC Shares are held in the treasury of MC. MC has taken all necessary
corporate and other action to authorize and reserve and to permit it to issue MC
Shares which may be issued pursuant to MC Options or the transactions
contemplated hereby. There is no Voting Debt of MC or any of its Subsidiaries
issued and outstanding. Except as set forth in Schedule 4.2, as of the date
hereof, (i) there are no shares of capital stock of MC authorized, issued or
outstanding, (ii) there are no existing options, warrants, calls, preemptive (or
similar) rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of MC or any of its Subsidiaries, obligating MC or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, MC or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interest or obligations of MC or any of its Subsidiaries, and (iii) there
are no outstanding contractual obligations of MC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any MC Shares, or capital stock of MC or
any Subsidiary or affiliate of MC.
(b) All of the outstanding shares of capital stock of each of MC's
Subsidiaries are beneficially owned by MC, directly or indirectly, free and
clear of all security interests, liens, claims, pledges, agreements, limitations
on voting rights, charges or other encumbrances of any nature whatsoever, other
than liens in favor of Toronto Dominion Bank or First National Bank of Boston.
(c) Except for (i) the Voting Agreement dated August 31, 1994, as amended,
which has been terminated effective at the Effective Time, and (ii) the Brock
Voting Agreement dated May 15, 1996, there are no voting trusts or other
agreements or understandings to which MC or any of its Subsidiaries is a party
with respect to the voting of the capital stock of MC or any of its
Subsidiaries. None of MC or its Subsidiaries is required to redeem, repurchase
or otherwise acquire shares of capital stock of MC, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
SECTION 4.3 Authorization; Validity of Agreement; MC Action. (a) MC has
full corporate power and authority to execute and deliver this Agreement and the
Shareholders' Agreement and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by MC of this Agreement and
the Shareholders' Agreement, and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of MC and no other corporate action on the part of MC is necessary to
authorize the execution and delivery by MC of this Agreement and the
Shareholders' Agreement and the consummation by it of the transactions
contemplated hereby and thereby (other than, with respect to the Merger, the
adoption of this Agreement by the affirmative vote of the holders of a majority
of the outstanding MC Shares). This Agreement and the Shareholders' Agreement
have been duly executed and delivered by MC and (assuming due and valid
authorization, execution and delivery hereof by the other parties hereto and
thereto) are valid and binding obligations of MC enforceable against MC in
accordance with their terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) The Board of Directors of MC also has approved the transactions
contemplated by this Agreement, the Shareholders' Agreement and the MC Voting
Agreement so as to render inapplicable thereto the provisions of Section 203 of
the DGCL.
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SECTION 4.4 Consents and Approvals; No Violations; Licenses. (a) Neither
the execution, delivery or performance of this Agreement or the Shareholders'
Agreement by MC nor the consummation by MC of the transactions contemplated
hereby or thereby nor compliance by MC with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws or other organizational documents of MC
or of any of its Subsidiaries, (ii) require on the part of MC any filing with,
or permit, authorization, consent or approval of, any Governmental Entity except
for (A) filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, the HSR
Act, the FCC, the Communications Act, state public utility or public service
laws, the Securities Act, the DGCL, the TBCA, state or foreign laws relating to
takeovers, state securities or blue sky laws, and the laws of other states in
which MC is qualified to do or is doing business, or (B) where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings, individually or in the aggregate, would not have a Material Adverse
Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from
consummating the transactions contemplated hereby, (iii) except as disclosed on
Schedule 4.4, result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which MC or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound and which has been included as an exhibit to MC's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (the "MC
Material Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to MC, any of its Subsidiaries or any of
their properties or assets, excluding from the foregoing clauses (iii) and (iv)
such violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a
whole, or prevent MC from consummating the transactions contemplated hereby.
(b) MC or one of its Subsidiaries holds all licenses, permits,
certificates, franchises, ordinances, registrations, or other rights,
applications and authorizations filed with, granted or issued by, or entered by
any Governmental Entity, including without limitation, the FCC, or any State
Authority, that are required for the conduct of their businesses as now being
conducted, except for those the absence of which would not individually or in
the aggregate have a Material Adverse Effect on MC and its Subsidiaries, taken
as a whole (collectively, "MC Licenses"). The MC Licenses are valid, in full
force and effect, and the terms of said MC Licenses are not subject to any
restrictions or conditions that materially limit or would materially limit the
operations of the business of MC or any of its Subsidiaries as presently
conducted, other than restrictions or conditions generally applicable to
licenses of that type. The MC Licenses granted, issued or entered by the FCC are
subject to the Communications Act. There are no proceedings pending or, to the
best knowledge of MC, complaints or petitions by others, or threatened
proceedings, before the FCC or any other Governmental Entity relating to the
business or operations of MC or any of its Subsidiaries or the MC Licenses, and
there are no facts or conditions that reasonably could be expected to constitute
grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose
conditions on any renewal of any MC Licenses, that would, individually or in the
aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a
whole, or prevent MC from consummating the transactions contemplated hereby or
to impose any fines, forfeitures or other penalties on MC or its Subsidiaries
that would, individually or in the aggregate, have a Material Adverse Effect on
MC and its Subsidiaries, taken as a whole.
SECTION 4.5 SEC Reports and Financial Statements. MC and its Subsidiaries
have filed with the SEC all forms, reports, schedules, statements, and other
documents required to be filed by them with the SEC (as such documents have been
amended since the time of their filing, collectively, the "MC SEC Documents"),
and have filed all exhibits required to be filed with MC SEC Documents. As of
their respective dates or, if amended, as of the date of the last such
amendment, MC SEC Documents, including, without limitation, any financial
statements or schedules included therein, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, and did
not 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 light of the circumstances under which they were made, not
misleading. None of MC's Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
The financial statements of MC included in MC's Annual Report on Form 10-K for
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the fiscal year ended December 31, 1995 (including the related notes thereto)
and for the quarter ended March 31, 1996, copies of which have been furnished to
AN (together, the "MC Financial Statements"), have been prepared from, and are
in accordance with, the books and records of MC and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto and subject, in the case of unaudited interim financial
statements, to normal year-end adjustments), and fairly present the consolidated
financial position and the consolidated results of operations and cash flows of
MC and its consolidated Subsidiaries as at the dates thereof or for the periods
presented therein.
SECTION 4.6 No Undisclosed Liabilities. Except (i) as disclosed in MC SEC
Documents, (ii) set forth in Schedule 4.6, (iii) MC Pending Transactions, and
(iv) for liabilities incurred in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with the consummation
of the transactions contemplated hereby (none of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole), since December 31, 1995, neither MC nor any of
its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of MC and its Subsidiaries
(including the notes thereto), and which individually or in which the aggregate,
is reasonably likely to have a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole.
SECTION 4.7 Absence of Certain Changes. Except as contemplated by this
Agreement, for MC Pending Transactions, or as disclosed in MC SEC Documents or
in Schedule 4.7 hereto, since December 31, 1995, (i) MC and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business and consistent with past practice, (ii) there has not been any change
in the business, properties, assets, liabilities, financial condition, cash
flows, operations, licenses, franchises or results of operations of MC or its
Subsidiaries which has had a Material Adverse Effect on MC and its Subsidiaries,
taken as a whole, and (iii) there has not been any action taken by MC or its
Subsidiaries of a type described in clauses (i) through (ix) of Section 5.1(b).
SECTION 4.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 4.8 hereto
sets forth (i) a list of all employee benefit plans (including but not limited
to plans described in section 3(3) of ERISA), maintained by MC, any of its
Subsidiaries or any trade or business, whether or not incorporated (a "MC ERISA
Affiliate"), which together with MC would be deemed a "single employer" within
the meaning of section 4001(b)(1) of ERISA ("MC Benefit Plans") and (ii) all
employment, retention, and severance agreements with employees of MC and its
Subsidiaries ("MC Employee Agreements"). True and complete copies of all current
MC Benefit Plans and MC Employee Agreements have been made available to AN.
(b) With respect to each MC Benefit Plan: (i) if intended to qualify under
section 401(a) or 401(k) of the Code, such plan has received a determination
letter from the IRS stating that it so qualifies and that its trust is exempt
from taxation under section 501(a) of the Code, no such determination letter has
been revoked and no such revocation has been threatened, nothing has occurred
that could reasonably be expected to cause the relevant MC Benefit Plan to lose
such qualification or exemption; (ii) such plan has been administered in all
material respects in accordance with its terms and applicable law, including
state and federal securities laws; (iii) no breaches of fiduciary duty by MC,
or, to MC's knowledge, by any other person have occurred that might reasonably
be expected to give rise to material liability on the part of MC or any MC ERISA
Affiliate; (iv) no disputes are pending, or, to the knowledge of MC, threatened
that might reasonably be expected to give rise to material liability on the part
of MC or any MC ERISA Affiliate; (v) no prohibited transaction (within the
meaning of Section 406 of ERISA) has occurred that might reasonably be expected
to give rise to material liability on the part of MC or any MC ERISA Affiliate;
(vi) all contributions required to be made to such plan as of the date hereof
(taking into account any extensions for the making of such contributions) have
been made in full; (vii) to MC's knowledge, no MC Benefit Plans are presently
under audit or examination (nor has notice been received of a potential audit or
examination) by the IRS, Department of Labor, or any other governmental agency
or entity, and no matters are pending with respect to any Benefit Plan under the
IRS's Voluntary Compliance Resolution program, its Closing Agreement Program,
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or other similar programs; and (viii) all monies withheld with respect to MC
Benefit Plans have been transferred to the appropriate plan in accordance with
the terms of such plan.
(c) No MC Benefit Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any MC Benefit Plan a plan described in section
4063(a) of ERISA. No MC Benefit Plan is or has been subject to Title IV of
ERISA.
(d) No liability under Title IV of ERISA has been incurred by MC or any MC
ERISA Affiliate (whether direct, indirect, actual, or contingent, and including,
without limitation, withdrawal liability to a multiemployer plan), and no
condition exists that presents a material risk to MC or any MC ERISA Affiliate
of incurring a material liability under such Title. No MC Benefit Plan has
incurred an accumulated funding deficiency, as defined in section 302 of ERISA
or section 312 of the Code, whether or not waived.
(e) With respect to each MC Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of MC or any of its
Subsidiaries beyond their termination of employment (other than to the extent
required by applicable law). All group health plans of MC and MC ERISA
Affiliates have been operated in material compliance with the requirements of
Section 4980B (and its predecessor) and 5000 of the Code, and MC and MC ERISA
Affiliates have provided, or will have provided prior to the Effective Date, to
individuals entitled thereto all required notices and coverage pursuant to
Section 4980B, except to the extent that failure to provide such notice or
coverage is not reasonably likely to result, individually or in the aggregate,
in a Material Adverse Effect on MC and its Subsidiaries, taken as a whole.
(f) No MC Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees of
MC or its Subsidiaries by its terms prohibits the amendment or termination of
any such Benefit Plan.
(g) As of the date hereof, except for MC Employee Agreements or as
described in MC SEC Documents, MC and its Subsidiaries are not parties to any
(i) agreement with any director, executive officer or other key employee of MC
or its Subsidiaries (A) the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving MC
or its Subsidiaries of the nature of any of the transactions contemplated by
this Agreement, (B) providing any term of employment or compensation guarantee
or (C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person may receive payments from MC or its
Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code
or included in the determination of such person's "parachute payment" under
Section 280G of the Code; and (iii) agreement or plan binding MC or its
Subsidiaries, including without limitation any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plan or employee benefit plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(h) As of the date hereof, no collective bargaining agreement is binding
and in force against MC or its Subsidiaries or is currently under negotiation,
and no current employees of MC or its Subsidiaries are represented by any labor
union. As of the date hereof, to MC's knowledge, no labor representation effort
exists with respect to MC or its Subsidiaries.
SECTION 4.9 Litigation. Schedule 4.9 hereto sets forth each suit, action
or proceeding pending (as to which MC has received notice), or, to the knowledge
of MC, threatened against MC, any of its Subsidiaries, or their properties or
assets on the date hereof. Except as set forth on Schedule 4.9 hereto, none of
the foregoing, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole, if
resolved adversely to MC or its Subsidiaries. As of the date hereof, neither MC
nor any of its Subsidiaries, nor any of their respective properties, is subject
to any order, writ, judgment, injunction, decree, determination or award having,
or which would have, a Material Adverse Effect on MC
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and its Subsidiaries, taken as a whole, or which would prevent MC from
consummating the transactions contemplated hereby.
SECTION 4.10 No Default; Compliance with Applicable Laws. Neither MC nor
any of its Subsidiaries is in default or violation in any material respect of
any term, condition or provision of (i) its respective Certificate of
Incorporation or By-laws or other organizational documents, (ii) any MC Material
Agreement or (iii) any federal, state, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to MC or
any of its Subsidiaries or by which they or their respective assets may be bound
(other than matters addressed in Sections 4.4, 4.8, 4.9, 4.10, 4.11, and 4.12),
excluding from the foregoing clauses (ii) and (iii), defaults or violations
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent
MC from consummating the transactions contemplated hereby.
SECTION 4.11 Taxes. Except as set forth on Schedule 4.11:
(a) MC and its Subsidiaries have (i) duly and timely filed (or there
has been filed on their behalf) with the appropriate governmental
authorities all Tax Returns (as hereinafter defined) required to be filed
by them on or prior to the date hereof, other than those Tax Returns for
which extensions for filing have been obtained in a timely manner, and such
Tax Returns are true, correct and complete in all material respects, and
(ii) duly paid in full all Taxes (as hereinafter defined) shown to be due
on such Tax Returns or have provided adequate reserves in their financial
statements for any Taxes that have not been paid. There are no liens on any
of the assets of MC or any of its Subsidiaries that arose in connection
with any delinquency in paying any Tax.
(b) As of the date hereof, there are no ongoing federal, state, local
or foreign audits or examinations of any Tax Return of MC or its
Subsidiaries.
(c) As of the date hereof, there are no outstanding requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies
against MC or any of its Subsidiaries (excluding extensions for filings
that have been timely obtained), and no power of attorney granted by either
MC or any of its Subsidiaries with respect to any Taxes is currently in
force.
(d) Neither MC nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes.
SECTION 4.12 Environmental Matters. (a) MC and its Subsidiaries have
complied in all material respects with all applicable Environmental Laws, except
to the extent that any failure to comply is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole. There is no pending or, to the knowledge of MC,
threatened, civil or criminal litigation, written notice or violation, formal
administrative proceeding or investigation, inquiry or information request by
any Governmental Entity relating to any Environmental Law involving MC or any of
its Subsidiaries or any of their properties.
(b) With the exception of releases that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole, there have been no releases of any Materials of
Environmental Concern into the environment by MC or any of its Subsidiaries, or,
to the knowledge of MC, by any other party at any parcel of real property or any
facility formerly or currently owned, operated or controlled by MC or any of its
Subsidiaries.
SECTION 4.13 Insurance. MC and the Subsidiaries maintain adequate
insurance with respect to the their respective businesses and are in compliance
with all material requirements and provisions thereof.
SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement;
Other Information. The information with respect to MC, its officers and
directors and its Subsidiaries (i) to be contained in the Offer Documents, (ii)
to be contained in the Proxy Statement; and (iii) to be contained in the
Registration Statement will not, on the respective dates on which (A) the Offer
Documents or any amendment or
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supplement thereto are filed with the SEC (in the case of each respective
document), (B) the Proxy Statement is first mailed to shareholders of AN and the
stockholders of MC or on the date of the stockholders' meetings referred to in
Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement
becomes effective (in the case thereof), and (D) in the case of the Proxy
Statement and the Registration Statement, as such Proxy Statement or
Registration Statement is then amended or supplemented, at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or necessary to correct any statement made by MC in any earlier
filing with the SEC of such Registration Statement or any amendment thereto
(including the Proxy Statement). When the Registration Statement or any
post-effective amendment thereto shall become effective and when the Proxy
Statement or any amendment or supplement thereto shall be mailed, and at the
time of each meeting and at the Effective Time, the Proxy Statement will comply
as to form with all applicable laws including the provisions of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
If at any time prior to the Effective Time any event with respect to MC, its
officers and directors and its Subsidiaries should occur which is or should be
described in an amendment of, or a supplement to, the Proxy Statement or the
Registration Statement, MC shall promptly so inform AN and such event shall be
so described in an amendment or supplement to the Registration Statements and
such information in such amendment or supplement will not 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, in light of the
circumstances under which they were made, not misleading, or necessary to
correct any statement made by MC in any earlier filing with the SEC of such
Registration Statement, or any amendment or supplement thereto, or any earlier
communication to stockholders of MC with respect to the Merger.
SECTION 4.15 Transactions with Affiliates. Except as set forth in MC SEC
Documents or on Schedule 4.15, since December 31, 1995, neither MC nor any of
its Subsidiaries has entered into any transaction with any current director or
officer of MC or any Subsidiary or any transaction which would be subject to
proxy statement disclosure under the Exchange Act pursuant to the requirements
of Item 404 of Regulation S-K.
SECTION 4.16 Financing. MC has sufficient funds available (through
existing credit arrangements or otherwise) to purchase Shares pursuant to the
Offer and to pay all fees and expenses related to the transactions contemplated
by this Agreement.
SECTION 4.17 Share Ownership. As of the date hereof, neither MC nor any
of its affiliates beneficially owns any Shares.
SECTION 4.18 Brokers. Other than the MC Financial Advisor and Daniels &
Associates, L.P., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from MC in connection with the
transactions contemplated by this Agreement. MC has informed AN of the
compensation to be paid by MC to the MC Financial Advisor and Daniels &
Associates, L.P.
ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of AN and MC. (a) AN covenants and agrees
that, except (w) as contemplated by this Agreement, (x) as set forth in Schedule
5.1(a) or Annex D, (y) as agreed in writing by MC, or (z) as contemplated by the
AN Pending Transactions, after the date hereof and prior the Effective Time:
(i) the business of AN and its Subsidiaries shall be conducted only
in, and AN and its Subsidiaries shall not take any action except in, the
ordinary and usual course of business and consistent with past practice,
and AN and its Subsidiaries shall use all reasonable efforts, consistent
with past practice, to maintain and preserve their business organizations,
assets, employees and advantageous business relations;
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(ii) AN will not, directly or indirectly, (A) sell, transfer or pledge
or agree to sell, transfer or pledge any Shares, preferred stock or capital
stock of any of its Subsidiaries beneficially owned by it, either directly
or indirectly; or (B) split, combine or reclassify the outstanding Shares
or any outstanding capital stock of any of the Subsidiaries of AN;
(iii) neither AN nor any of its Subsidiaries shall: (A) amend its
Charter or by-laws; (B) issue, grant, sell, pledge, dispose of or encumber
any shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of AN or its Subsidiaries or any other
ownership interests (including but not limited to stock appreciation rights
or phantom stock), other than Shares reserved for issuance on the date
hereof pursuant to the exercise of AN Options outstanding on the date
hereof and options automatically granted pursuant to the 1992 Non-Qualified
Stock Option Plan; (C) with the exception of the existing liens in favor of
First National Bank of Chicago, transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice;
(D) incur any indebtedness other than borrowings under existing agreements
or modify the terms of any indebtedness; (E) incur any material liability,
other than borrowings permitted by clause (D) above of money under existing
agreements or incurrence of other liabilities in the ordinary and usual
course of business and consistent with past practice; or (F) redeem,
purchase or otherwise acquire directly or indirectly any of its capital
stock;
(iv) AN will not declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock;
(v) neither AN nor any of its Subsidiaries shall modify, amend or
terminate any AN Material Agreements or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(vi) each of AN and its Subsidiaries shall maintain in full force and
effect such types and amounts of insurance issued by insurers of recognized
responsibility insuring it with respect to its respective business and
properties, in such amount and against such losses and risks as is usually
carried by persons engaged in the same or similar businesses;
(vii) neither AN nor any of its Subsidiaries shall; (A) except for or
on behalf of Subsidiaries, assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person; (B) make any loans, advances or capital
contributions to, or investments in, any other person (other than to
Subsidiaries of AN pursuant to AN's written obligations on the date
hereof), other than in the ordinary course of business and consistent with
past practice; or (C) enter into any commitment or transactions with
respect to any of the foregoing (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets);
(viii) neither AN nor any of its Subsidiaries shall change any of the
accounting methods used by it unless required by GAAP;
(ix) except as permitted by Section 5.1(a)(xi), neither AN nor any of
its Subsidiaries will adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of AN or any of its Subsidiaries (other than the
Merger);
(x) neither AN nor any of its Subsidiaries will take, or agree to take
any action that would result in any of the conditions set forth herein or
in Annex A not being satisfied, unless the Board of Directors of AN makes a
determination in accordance with Section 5.9(f) below;
(xi) neither AN nor any of its Subsidiaries will acquire (by merger,
consolidation, or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division of any
such entity; provided, however, that AN may engage in such a transaction if
(i) AN notifies MC prior to entering into any such transaction, (ii) the
purchase price for each such transaction is payable only in cash and such
price does not exceed $5,000,000, and (iii) the purchase price for each
such transaction does not exceed eight times annualized EBITDA for the most
recent calendar quarter ended.
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(xii) neither AN nor any of its Subsidiaries will increase the
compensation or fringe benefits of any of its directors, officers or
employees, except for increases in compensation of employees of AN or its
Subsidiaries who are not executive officers or directors of AN in the
ordinary course of business and consistent with past practice, or grant any
severance or termination pay not currently required to be paid under
existing severance plans to, or enter into any employment, consulting or
severance agreement with, any present or former director, officer or other
employee of AN or any of its Subsidiaries, or establish, adopt, enter into
or amend or terminate any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors,
officers or employees, other than employment of non-executive officers in
the ordinary course of business and consistent with past practice;
(xiii) neither AN nor any of its Subsidiaries will make any material
tax election or settle or compromise any material federal, state, local or
foreign tax liability except for settlements that would not be material to
AN or do not otherwise materially impair the business of AN;
(xiv) neither AN nor any of its Subsidiaries will settle or compromise
any pending or threatened suit, action or claim, which settlement or
compromise is material or which relates to the transactions contemplated
hereby;
(xv) neither AN nor any of its Subsidiaries will pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practice of liabilities (A) reflected or reserved against in the
financial statements of AN, (B) incurred in the ordinary course of business
and consistent with the past practice or (C) incurred in a manner not
otherwise prohibited under this Section 5.1(a);
(xvi) AN shall not effect a registration under the Securities Act with
respect to Shares held by any person and entity, other than the
registration on a Registration Statement on Form S-8 of Shares to be issued
pursuant to AN Options and the registration of Shares pursuant to
registration rights agreements in effect on the date hereof or pursuant to
the Shareholders' Agreement;
(xvii) neither AN nor any of its Subsidiaries will modify or amend any
AN Pending Transaction in any manner that would increase the consideration
payable pursuant to such transaction; and
(xviii) neither AN nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
(b) MC covenants and agrees that except (w) as contemplated by this
Agreement or the Shareholders' Agreement, (x) as set forth in Schedule 5.1(b),
(y) as agreed in writing by AN, or (z) as contemplated by any MC Pending
Transactions, after the date hereof and prior to the Effective Time:
(i) MC will not (A) amend its Certificate of Incorporation or By-Laws;
or (B) redeem, purchase or otherwise acquire directly or indirectly any of
its capital stock, provided, that the Board of Directors of MC may adopt a
resolution to amend MC's Certificate of Incorporation to increase the
number of authorized MC Shares by 7,500,000, and if the Board of Directors
of MC declares that such amendment is advisable, the Board may submit such
resolution for a vote of the stockholders at the Meeting, and if such
amendment is approved at the Meeting, MC may so amend its Certificate of
Incorporation;
(ii) MC will not declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock;
(iii) MC will not, directly or indirectly, split, combine or
reclassify the outstanding MC Shares;
(iv) with the exception of the existing liens in favor of Toronto
Dominion Bank and the First National Bank of Boston, neither MC nor any of
its Subsidiaries will issue, sell, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class of MC or its
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Subsidiaries, other than (A) issuances of MC Shares reserved for issuance
on the date hereof upon exercise of MC Options outstanding on the date
hereof, (B) issuances by MC of MC Shares or other securities for the fair
market value of such MC Shares or other securities at the time of such
issuance, provided, that the issuance of MC Shares pursuant to an
acquisition agreement with a third party on terms negotiated on an arms'
length basis or the issuance of other securities convertible into MC Shares
to an unaffiliated third party on terms negotiated on an arms' length basis
shall be deemed for purposes hereof the issuance of MC Shares at the fair
market value of such MC Shares, and (C) the granting (and issuance of MC
Shares upon exercise) of options pursuant to MC's director and employee
stock option plans as in effect on the date hereof, with exercise prices
equal to the fair market value of MC Shares on the date of grant.
(v) MC will not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of MC or any of its Subsidiaries;
(vi) neither MC nor any of its Subsidiaries will take, or agree to
take, any action that would result in any of the conditions set forth
herein or in Annex A not being satisfied;
(vii) neither MC nor any of its Subsidiaries will consummate any
acquisitions (by merger, consolidation, or acquisition of stock or assets
or otherwise), other than MC Pending Transactions; provided, that MC may
make acquisitions to the extent that they (A) comply with the requirements
of Section 5.1(b)(iv)(B), (B) do not involve businesses that would be
considered "significant subsidiaries" within the meaning of Rule 1-02(v) of
Regulation S-X, and (C) do not result in the issuance of more than
3,000,000 MC Shares in the aggregate;
(viii) neither MC nor any of its Subsidiaries shall engage in any
business other than that conducted in the telecommunications industry; and
(ix) neither MC nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
SECTION 5.2 Stockholder Approval; Meetings; Etc. (a) Subject to the
fiduciary duties of AN's Board of Directors and MC's Board of Directors under
applicable law, as the case may be, each of AN and MC will take all action
necessary in accordance with applicable law, the rules of Nasdaq, this Agreement
and AN's or MC's, as the case may be, Charter and By-Laws to convene a meeting
of its stockholders (each, a "Meeting") as promptly as practicable after
consummation of the Offer to consider and vote upon a proposal to adopt this
Agreement (the "Proposal"). Subject to a determination of the respective Board
of Directors of AN and MC made in accordance with Section 5.9(f), each of AN and
MC will (i) recommend that their respective stockholders vote in favor of the
Proposal and (ii) use their respective best efforts to cause to be solicited
proxies from stockholders of AN or MC, as the case may be, to be voted at their
Meetings in favor of the Proposal and to take all other actions necessary or
advisable to secure the vote or consent of stockholders required to effect the
Merger. MC agrees to vote all Shares purchased in the Offer or pursuant to the
Shareholders' Agreement in favor of the Proposal. In addition, AN shall present
a resolution to be approved by the affirmative vote of the outstanding Shares as
required by Section 48-103-503(a) of the Tennessee Greenmail Act in order to
exempt the transactions contemplated by Section 5.16 from the provisions
thereof.
(b) MC shall use its best efforts to cause, immediately prior to the
Effective Time, Ray M. Russenberger and Elliott H. Singer to be appointed to the
Board of Directors of the Surviving Corporation, to serve in the classes set
forth on Annex B.
(c) MC agrees to use its reasonable best efforts to take the actions
described in Section 3.3.2 and 3.3.3 of the Shareholders' Agreement.
SECTION 5.3 Proxy Statement, Registration Statement, Etc. (a) AN and MC
shall promptly after consummation of the Offer prepare and file with the SEC
under the Exchange Act, and shall use their best efforts to have cleared by the
SEC and shall thereafter promptly mail to their stockholders, the Proxy
Statement for the Meetings, which shall also constitute the prospectus included
in the Registration Statement to be filed by MC pursuant to Section 5.3(b)
hereof. The Proxy Statement shall be mailed to stockholders of
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each of AN and MC, as the case may be, at least 20 business days in advance of
the date of its Meeting. MC shall furnish AN, and AN shall furnish MC, with all
information and shall take such other action as AN or MC, as the case may be,
may reasonably request in connection with the Proxy Statement. Subject to a
determination of the respective Board of Directors of AN and MC made in
accordance with Section 5.9(f), the Proxy Statement shall contain the
recommendation of each Board of Directors that stockholders of AN and MC, as the
case may be, approve and adopt the Proposal.
(b) MC shall promptly after consummation of the Offer prepare and file with
the SEC under the Securities Act the Registration Statement with respect to MC
Shares and the VCRs to be issued in the Merger and shall use its best efforts to
have the Registration Statement declared effective by the SEC as promptly as
practicable. MC shall also take any action required to be taken under state blue
sky or other securities laws in connection with the issuance of MC Shares and
the VCRs in the Merger, including qualification under the Trust Indenture Act
with respect to the VCRs. AN shall furnish MC with all information and shall
take such other action as MC may reasonably request in connection with any such
action.
(c) AN and MC shall notify one another of the receipt of the comments of
the SEC and of any requests by the SEC for amendments or supplements to the
Proxy Statement or the Registration Statement or for additional information, and
shall promptly supply one another with copies of all correspondence between any
of them (or their representatives) and the SEC (or its staff) with respect
thereto. If, at any time prior to either Meeting, any event should occur
relating to or affecting AN, MC, or their respective officers or directors,
which event should be described in an amendment or supplement to the Proxy
Statement or the Registration Statement, the parties shall promptly inform one
another and shall cooperate in promptly preparing, filing and clearing with the
SEC and, if required by applicable securities laws, mailing to AN's or MC's
stockholders, as the case may be, such amendment or supplement.
(d) Notwithstanding anything to the contrary in this Agreement, AN shall
have no obligation to mail the Proxy Statement to its shareholders unless and
until AN shall have received a "comfort letter" from Deloitte and Touche LLP,
the independent auditors of MC, in the form, scope and content contemplated by
Statement of Auditing Standards No. 49 issued by the American Institute of
Certified Public Accountants, Inc. ("SAS 49"), relating to financial statements
and other financial data with respect to MC and its consolidated Subsidiaries
included or incorporated by reference in the Proxy Statement and such other
matters as may be reasonably required by AN, and based upon procedures carried
out to a specified date not earlier than five days prior to the date thereof.
(e) Notwithstanding anything to the contrary contained in this Agreement,
MC shall not mail the Proxy Statement to its stockholders unless and until the
Registration Statement has been declared effective under the Securities Act, and
MC shall have no obligations to mail the Proxy Statement to its stockholders
unless and until MC shall have received a "comfort letter" from Arthur Andersen
LLP, the independent auditors of AN, in the form, scope, and content
contemplated by SAS 49, relating to the financial statements and other financial
data with respect to AN and its consolidated Subsidiaries included or
incorporated by reference in the Proxy Statement and such other matters as may
be reasonably required by MC, and based upon procedures carried out to a
specified date not earlier than five days prior to the date thereof.
SECTION 5.4 Compliance with the Securities Act. (a) Prior to the
Effective Time, AN shall cause to be delivered to MC a list identifying all
persons who are, at the time of the Meeting, considered by AN to be "affiliates"
of AN for purposes of Rule 145 under the Securities Act (the "Affiliates").
(b) AN shall use reasonable efforts to cause each person who is identified
as an affiliate of AN to deliver to MC on or prior to the Effective Time a
written agreement, in such form as may be agreed to by the parties, that such
person will not offer to sell, sell or otherwise dispose of any of MC Shares
issued to such person in connection with the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 or pursuant to
an exemption from the registration requirements of the Securities Act. The
Surviving Corporation shall be entitled to place appropriate legends on the
certificates evidencing MC Shares to be received by such affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for MC Shares, to the effect that MC Shares received or to
be received by
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such affiliate pursuant to the terms of this Agreement may only be sold,
transferred or otherwise conveyed, and the holder thereof may only reduce his
interest in or risks relating to such shares pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of paragraph (d) of Rule 145 or pursuant to an exemption provided
from registration under the Securities Act. The foregoing restrictions on the
transferability of MC Shares shall apply to all purported sales, transfers and
other conveyances of the shares received or to be received by such affiliate
pursuant to the Merger and to all purported reductions in the interest in or
risks relating to such MC Shares.
SECTION 5.5 Nasdaq Listing. MC shall use all reasonable efforts to cause
MC Shares to be admitted for quotation on the Nasdaq National Market System.
SECTION 5.6 Approvals and Consents; Cooperation. (a) Subject to the terms
and conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by the
Offer and this Agreement, and to cooperate with each of the other parties hereto
in connection with the foregoing, including using all reasonable efforts: (i) to
obtain all necessary waivers, consents and approvals from other parties to loan
agreements, leases and other contracts; (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
state or foreign laws or regulations; (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (iv) to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and Communications Act and submissions of information requested by
Governmental Entities; and (v) to fulfill all conditions to this Agreement. Each
of AN and MC further covenants and agrees that, prior to the exercise by MC of
its right to terminate the Offer under paragraphs (c) or (d) of Annex A hereto,
each of AN and MC shall use its respective best efforts (which shall not be
construed to require the payment of any money to a third party (other than legal
counsel) or the divestiture of any business or assets) to prevent, with respect
to a threatened or pending preliminary or permanent injunction or the other
order, decree or ruling or statute, rule, regulation or executive order
specified in such paragraphs, the entry, enactment or promulgation thereof, as
the case may be. For purposes of the foregoing, the obligation of MC to use
"best efforts" or "reasonable efforts" to obtain waivers, consents and approvals
to loan agreements, leases and other contracts shall not include any obligation
to agree to a modification of the terms of such documents, except as expressly
contemplated hereby or to make any monetary payment in consideration of such
waiver, consent or approval.
(b) AN and MC shall take all reasonable actions necessary to file as soon
as practicable notifications under the HSR Act and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters.
(c) Within fifteen business days of the date of this Agreement, or as soon
thereafter as practicable, MC and AN shall prepare and make all filings (the
"Regulatory Filings") required to be made with the FCC pursuant to the
Communications Act and with any State Authority as are required to permit the
consummation of the Merger and shall thereafter promptly make any additional or
supplemental submissions required or requested by the FCC and any such State
Authority. With respect to the Regulatory Filings, counsel to AN shall be
responsible for preparing, with the advice and consent of counsel to MC, the
transferor's portion of the submissions with respect to the AN Licenses, and
counsel to MC shall be responsible for preparing, with the advice and consent of
counsel to AN, the transferee's portion of such submissions. Counsel to AN shall
also be responsible for preparing, with the advice and consent of counsel to MC,
any pro forma transfer applications with respect to the AN Licenses that are
required to permit the Merger. All filing fees associated with the preparation
and filing of Regulatory Filings pursuant to this Section 5.6(c) shall be shared
equally by MC and AN. Each party shall bear its own counsel fees in connection
with the Regulatory Filings.
(d) Notwithstanding any provision of this Agreement or the Shareholders'
Agreement to the contrary, MC shall not assume, either directly or indirectly,
de jure or de facto control of AN without the prior consent of the FCC and any
State Authority of competent jurisdiction. Nothing contained herein shall,
without the
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prior consent of the FCC and any State Authority of competent jurisdiction, give
MC any control or responsibility for (i) AN's facilities, including without
limitation control of use of the facilities; (ii) daily operations; (iii) policy
decisions, including preparing and filing applications with the FCC; (iv)
employment, supervision and dismissal of personnel; or (v) payment of financing
obligations, including expenses arising out of operations. Without the prior
consent of the FCC and any State Authority of competent jurisdiction, MC shall
not receive any monies and profits derived from the operation of the AN
facilities.
SECTION 5.7 Access to Information. Upon reasonable notice, each of AN and
MC shall (and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
MC or AN, as the case may be, access, during normal business hours during the
period prior to the Effective Time, to all its officers, employees, properties,
facilities, books, contracts, commitments and records and, during such period,
each of AN and MC shall (and shall cause each of its Subsidiaries to) furnish
promptly to MC or AN, as the case may be (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as MC or AN, as
the case may be, may reasonably request. Each of MC and AN will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement between AN and MC, dated on or about November
22, 1995 (the "Confidentiality Agreement"). No investigation pursuant to this
Section 5.7 shall affect any representations or warranties of the parties herein
or the conditions to the obligations of the parties hereto. Without limiting the
foregoing, prior to the earlier of the Effective Time or the termination of the
Agreement, each party shall have the right to have no more than two (2)
representatives, who shall be directors or members of senior management of such
party, attend regular or special meetings of the Board of Directors of the other
party; provided, that such representatives may not attend any portion of any
meeting concerning this Agreement or the transactions contemplated hereby. Each
party will give reasonable notice to the other of such meetings, and the party's
representatives may be present by telephone.
SECTION 5.8 Employee Benefits and Relocation Matters. (a) MC agrees to
use its reasonable best efforts to maintain a southeast/southwest regional
operations center in Pensacola, Florida for a period not less than three years
from the Effective Time, provided that such operations center may be closed in
the event of a consolidation or merger of MC or a sale of substantially all of
the assets of MC or of a majority of MC's common stock outstanding after the
Effective Time.
(b) The parties' agreement with respect to certain employment matters is
set forth in Annex D hereto.
SECTION 5.9 No Solicitation by AN. (a) AN, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease all existing discussions or negotiations, if any, with any
parties (other than MC) conducted heretofore with respect to any AN Acquisition
Proposal. For purposes of this Agreement, "AN Acquisition Proposal" shall mean
any proposal relating to (i) a possible acquisition of AN, whether by way of
merger, purchase of all or substantially all of the assets of AN, or any similar
transaction, or (ii) a tender offer for more than 5% of the Shares (excluding
any AN Pending Transaction or any other transactions permitted by Section
5.1(a)).
(b) AN may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access, to any person
made after the date hereof which was not encouraged, solicited or initiated by
AN or any of its affiliates or any of their respective officers, directors,
employees, representatives, financial advisors or agents after the date hereof,
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such party concerning any AN Acquisition
Proposal, but only if (i) such party has submitted a written proposal to the
Board of Directors of AN relating to any such transaction involving economic
consideration per Share that the Board of Directors of AN reasonably believes is
economically superior to the consideration to be paid hereunder and which does
not include or contemplate any condition relating to the obtaining of funds for
such AN Acquisition Proposal and (ii) the Board of Directors of AN has made a
determination in accordance with Section 5.9(f). AN shall notify MC immediately
if any written or oral AN Acquisition Proposal is made and shall keep MC
promptly
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advised of all written or oral AN Acquisition Proposals, provide a copy of any
written AN Acquisition Proposal and provide in writing the terms of all oral AN
Acquisition Proposals.
(c) Except as set forth in this Section 5.9, neither AN or any of its
affiliates, nor any of their respective officers, directors, employees,
representatives, financial advisors or agents, shall, directly or indirectly,
encourage or solicit submission of any inquiries, proposals or offers by;
participate in or initiate any discussions or negotiations with; disclose any
information about AN or its Subsidiaries to, or otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with any corporation,
partnership, person or other entity or group (other than MC, any affiliate or
associate of MC or any designees of MC) in connection with any AN Acquisition
Proposal; provided that the Board of Directors of AN shall not recommend that
the shareholders of AN tender their Shares in connection with any tender offer
unless the Board of Directors of AN makes a determination in accordance with
Section 5.9(f).
(d) AN agrees not to release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which AN is a party, unless
the Board of Directors of AN makes a determination in accordance with Section
5.9(f). AN will use all reasonable efforts to have all copies of all nonpublic
information it or AN Financial Advisor has distributed to other potential
purchasers returned to it as soon as possible after the date hereof.
(e) Nothing contained in this Section 5.9 shall prohibit AN or its Board of
Directors from taking and disclosing to AN's shareholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making such disclosure to
AN's shareholders or otherwise if the Board of Directors makes a determination
in accordance with Section 5.9(f).
(f) For purposes of this Agreement, any determination of directors made in
accordance with this Section 5.9(f) shall mean that directors constituting a
majority of all directors then in office of AN shall reasonably determine in
good faith, after consultation with and based upon the advice of independent
legal counsel, that the taking of action or the failure to take action (or to
withdraw or modify a recommendation) would constitute a breach of such
directors' fiduciary duties to stockholders of AN under applicable law.
SECTION 5.10 No Solicitation by MC. (a) MC, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease all existing discussions or negotiations, if any, with any
parties (other than AN) conducted heretofore with respect to any MC Acquisition
Proposal. For purposes of this Agreement, "MC Acquisition Proposal" shall mean
any proposal relating to (i) a possible acquisition of MC, whether by way of
merger, purchase of all or substantially all of the assets of MC, or any similar
transaction, or (ii) a tender offer for more than 5% of the MC Shares (excluding
any MC Pending Transactions or any other transactions permitted by Section
5.1(b)).
(b) MC may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access, to any person
made after the date hereof which was not encouraged, solicited or initiated by
MC or any of its affiliates or any of their respective officers, directors,
employees, representatives, financial advisors or agents after the date hereof,
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such party concerning any MC Acquisition
Proposal, but only if the Board of Directors of MC has made a determination in
accordance with Section 5.10(f). MC shall notify AN immediately if any written
or oral MC Acquisition Proposal is made and shall keep AN promptly advised of
all written or oral MC Acquisition Proposals, provide a copy of any written MC
Acquisition Proposal and provide in writing the terms of all oral MC Acquisition
Proposals.
(c) Except as set forth in this Section 5.10, neither MC or any of its
affiliates, nor any of their respective officers, directors, employees,
representatives, financial advisors or agents, shall, directly or indirectly,
encourage or solicit submission of any inquiries proposals, or offers by;
participate in or initiate any discussions or negotiations with, or disclose any
information about MC or any Subsidiaries to, or otherwise assist, facilitate, or
encourage, or enter into any agreement or understanding with, any corporation,
partnership, person or other entity or group (other than AN, any affiliate or
associate of AN or any designees of AN) in connection with any MC Acquisition
Proposal; provided that the Board of Directors of MC shall not
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recommend that the stockholders of MC tender their MC Shares in connection with
any tender offer unless the Board of Directors of MC makes a determination in
accordance with Section 5.10(f).
(d) MC agrees not to release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which MC is a party, unless
the Board of Directors of MC makes a determination in accordance with Section
5.10(f). MC will use all reasonable efforts to have all copies of all nonpublic
information it or MC Financial Advisor has distributed to other potential
companies returned to it as soon as possible after the date hereof.
(e) Nothing contained in this Section 5.10 shall prohibit MC or its Board
of Directors from taking and disclosing to MC's stockholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making such disclosure to
MC's stockholders or otherwise if the Board of Directors makes a determination
in accordance with Section 5.10(f).
(f) For purposes of this Agreement, any determination of directors made in
accordance with this Section 5.10(f) shall mean that directors constituting a
majority of all directors then in office shall reasonably determine in good
faith, after consultation with and based upon the advice of independent legal
counsel, that the taking of action or the failure to take action (or to withdraw
or modify a recommendation) would constitute a breach of such directors'
fiduciary duties to stockholders of MC under applicable law.
SECTION 5.11 Brokers or Finders. Each of MC and AN represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement except the AN
Financial Advisor, whose fees and expenses will be paid by AN in accordance with
its agreement with such firm, and the MC Financial Advisor and Daniels &
Associates L.P., whose fees and expenses will be paid by MC in accordance with
MC's agreement with such firms. Each of MC and AN agrees to indemnify and hold
the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
SECTION 5.12 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to MC and
AN. Thereafter, so long as this Agreement is in effect, neither AN, MC nor any
of their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by the rules of Nasdaq.
SECTION 5.13 Notification of Certain Matters. AN shall give prompt notice
to MC and MC shall give prompt notice to AN of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any failure of AN or MC,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, provided, however,
that the delivery of any notice pursuant to this Section 5.13 (a) is not
required until an executive officer of AN or MC, as the case may be, has actual
knowledge of the circumstance requiring such notice and (b) shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 5.14 Directors' and Officers' Insurance and Indemnification.
(a) From and after the Effective Time, MC shall, or shall cause the
Surviving Corporation, to the fullest extent permitted under applicable
law, AN's Charter, By-Laws or indemnification agreements in effect on the
date hereof, including provisions relating to advancement of expenses
incurred in the defense of any action or suit, to indemnify, defend and
hold harmless all persons who are now, or have been at any time prior to
the date hereof, or who become prior to the Effective Time, an officer,
director, employee or agent of AN or any of its Subsidiaries, or who are or
were serving at the request of AN or any of its Subsidiaries as a director,
officer, employee or agent of another corporation, partnership, trust,
limited liability company or other business enterprise (each, an
"Indemnified Party"), against all losses, claims, damages, liabilities,
costs and expenses (including attorney's fees and expenses) judgments,
fines, losses, and amounts paid in settlement in connection with any actual
or threatened action, suit, claim,
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proceeding or investigation (each a "Claim") to the extent that any such
Claim is based on, or arises out of, (i) the fact that such person is or
was a director, officer, employee or agent of AN or any of its
Subsidiaries; or (ii) this Agreement, or any of the transactions
contemplated hereby or thereby, in each case to the extent that any such
Claim pertains to any matter or fact arising, existing, or occurring prior
to or at the Effective Time, regardless of whether such Claim is asserted
or claimed prior to, at or after the Effective Time. Without limiting the
foregoing, in the event that any Claim is brought against an Indemnified
Party (whether arising before or after the Effective Time), the Indemnified
Party may retain counsel satisfactory to them, and MC (or prior to the
Effective Time, AN) shall advance the fees and expenses of such counsel for
the Indemnified Party in accordance with Section 12(a) of Article 12 of the
Charter of AN in effect on the date hereof.
(b) MC and AN agree that the Surviving Corporation's Certificate of
Incorporation shall contain provisions no less favorable with respect to
rights to indemnification and limitations on liability provided in AN's
Charter and By-Laws as in effect as of the date hereof, for a period of six
(6) years from the Effective Time to the extent such rights are consistent
with the DGCL; provided, that, in the event any claim or claims are
asserted or made within such six (6) year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims; provided further, that any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under applicable law,
MC's Certificate of Incorporation or By-Laws or such agreements, as the
case may be, shall be made by independent legal counsel selected by MC and
reasonably acceptable to the Indemnified Party and; provided further, that
nothing in this Section 5.14 shall impair any rights or obligations of any
present or former directors or officers of AN.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 5.14, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall succeed to the obligations set forth in this Section 5.14
and none of the actions described in clauses (i) or (ii) shall be taken
until such provision is made.
(d) MC or the Surviving Corporation shall use all reasonable efforts
to maintain AN's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of not less than six (6) years after
the Effective Date; provided, (i) that MC may substitute therefor policies
of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; and (ii) if the existing
D&O Insurance expires or is canceled during such period, MC or the
Surviving Corporation will use reasonable efforts to obtain substantially
similar D&O Insurance to the extent available.
SECTION 5.15 Expenses. Except as otherwise provided in the penultimate
sentence of Section 5.6(c) and in Section 7.2, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense, except that the filing fee for the Proxy Statement or Registration
Statement, and all expenses incurred in connection with the printing and mailing
of the Proxy Statement and prospectus included in the Registration Statement
shall be borne one-half by AN and one-half by MC. The payment of costs and
expenses by MC or AN shall not reduce any consideration paid in the Merger.
Notwithstanding the foregoing, the costs and expenses incurred in connection
with the Shareholders' Agreement will be paid in accordance with the terms of
such Agreements.
SECTION 5.16 Repurchase Option. (a) For the purposes of this Section
5.16:
A "Repurchase Event" shall occur automatically if (i) either (A) the
Offer has been consummated or (B) a Scenario II Trigger Event (as defined
in the Shareholders' Agreement) shall have occurred, (ii) AN is not in
material breach of any of its obligations under this Agreement entitling MC
to terminate this Agreement, (iii) there has been no AN Termination Fee
Event (as hereinafter defined) and (iv) this Agreement has been terminated
in accordance with its terms.
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"Interest Payment Event" shall mean, in the case of a Repurchase
Event, the occurrence of any of the following (i) a Final Regulatory Order
(as hereinafter defined) by the FCC or any State Authority has been entered
prohibiting the transfer of the AN Licenses to MC; (ii) the entry of a
non-appealable final order by a court of competent jurisdiction prohibiting
the consummation of the Merger, or (iii) November 16, 1996 (provided that,
if at November 16, 1996 the sole reason the Merger shall not have occurred
is the failure to obtain a Final Regulatory Order permitting the
consummation of the Merger from the FCC, such date shall be February 16,
1997).
"AN Termination Fee Event" shall mean the termination of this
Agreement in accordance with its terms solely pursuant to Sections
7.1(d)(iv) or (v).
"Regulatory Order" shall mean an action taken or order issued by the
FCC with respect to the AN Licenses as to which (i) no request for stay by
the FCC of the action or order is pending, no such stay is in effect, and,
if any deadline for filing any such request is designated by statute or
regulation, it has passed; and (ii) with respect to an action taken or
order issued by the FCC granting consent to the Merger, such consent shall
be without material adverse conditions, other than conditions that have
been agreed to by AN and MC or that are routine conditions with respect to
transfers of this nature. A "Final Regulatory Order" shall mean a
Regulatory Order as to which (i) no petition for rehearing or
reconsideration of the action or order is pending before the FCC and the
time for filing any such petition has passed; and (ii) the FCC does not
have the action or order under reconsideration on its own motion and the
time for such reconsideration has passed.
"Repurchase Period" shall mean the period commencing upon the
occurrence of the Repurchase Event and ending on the earlier of (i) the
first anniversary of a Repurchase Event and (ii) the sale or distribution
of all Repurchase Shares.
"Repurchase Shares" means all Shares purchased by MC and/or its
affiliates pursuant to the Offer, the Shareholders' Agreement or otherwise.
"Voting Stock" means the Shares or any other shares of the capital
stock of AN having the ordinary power to vote in the election of directors.
(b) In the event of a Repurchase Event and during the Repurchase Period,
(i) MC shall not (A) acquire any additional Shares or other Voting Stock other
than pursuant to any stock dividend, stock split or similar event, (B) solicit
proxies with respect to Voting Stock of AN or be a "participant" in an "election
contest" or "solicitation" (as such terms are used in Regulation 14A under the
Exchange Act) with respect to Voting Stock of AN, (C) deposit any Voting Stock
of AN or the Repurchase Shares into a voting trust, (D) propose or advise any
other entity to propose any MC Acquisition Proposal, or (E) act in concert with
any person for the purpose of holding any Voting Stock of AN; and (ii) the
Repurchase Shares may only be voted pro rata with the Shares voted by all other
shareholders of AN (excluding MC and its affiliates) with respect to all
matters. Notwithstanding the foregoing, (x) MC may sell, transfer or otherwise
dispose of any Shares 90 days after the termination of this Agreement if this
Agreement is terminated solely pursuant to Section 7.1(d)(v), (y) MC may tender
or exchange Repurchase Shares into any tender offer or AN Acquisition Proposal
with respect to which the Board of Directors of AN has recommended to AN's
shareholders that they accept such tender offer or AN Acquisition Proposal and
tender or exchange their Shares pursuant to such tender offer or AN Acquisition
Proposal (provided that to the extent the Repurchase Shares are not purchased or
exchanged pursuant to such tender offer or AN Acquisition Proposal under this
clause (y), such Repurchase Shares shall remain subject to the provisions of
this Section 5.16), and (z) MC may pledge the Repurchase Shares pursuant to a
bona fide pledge to secure indebtedness of MC or any of its Subsidiaries,
provided, that such Repurchase Shares will remain subject to the provisions of
this Section 5.16.
(c) In the event of an Interest Payment Event, AN shall have the right
during the period ending 90 days after the Repurchase Event either to (i)
repurchase all the Repurchase Shares or (ii) designate a third party to purchase
the Repurchase Shares, which third party shall repurchase such Repurchase
Shares, in each case at a price per Share equal to (x) with respect to the
Repurchase Shares purchased pursuant to the Offer, the Offer Price plus an
interest factor of 10.125% per annum commencing on the date of the consummation
of the
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Offer and ending on the date of such purchase of the Repurchase Shares and (y)
with respect to the Repurchase Shares purchased pursuant to the Shareholders'
Agreement, cash equal to the price paid therefor (such price with respect to
consideration consisting of MC Shares to be equal to the Average MC Share Price
used in determining the consideration paid therefor) plus an interest factor of
10.125% per annum commencing on the date any such cash was paid and ending on
the date of such purchase; provided, that in the event of such an election, the
repurchase shall not occur any earlier than six months and one day after the
Shares were acquired by MC.
(d) In the event of any Repurchase Event which is not an Interest Payment
Event, AN shall have the right during the period ending 90 days after the
Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii)
designate a third party to purchase the Repurchase Shares, which third party
shall repurchase such Repurchase Shares, in each case at a price per Share equal
to (x) with respect to the Repurchase Shares purchased pursuant to the Offer,
the Offer Price and (y) with respect to the Repurchase Shares purchased pursuant
to the Shareholders' Agreement, the price paid therefor (such price with respect
to consideration consisting of MC Shares to be equal to the Average MC Share
Price used in determining the consideration paid therefor).
(e) (i) If a Repurchase Event occurs and AN has not elected to purchase any
Repurchase Shares pursuant to paragraph (c) or (d), as applicable, or (ii) upon
request by MC given within 90 days after this Agreement has been terminated due
to an AN Termination Fee Event or solely pursuant to Section 7.1(d)(iii), then
AN and MC shall cooperate in good faith to sell all of the Repurchase Shares in
an orderly and reasonably widespread distribution, subject to the following:
(a) In the event of an underwritten public offering, AN shall be
entitled to select the lead underwriter, which shall be reasonably
acceptable to MC, and MC shall be entitled to select one or more
co-managing underwriters, which shall be reasonably acceptable to AN.
(b) All sales shall be made at market prices or, in the case of an
underwritten public offering, the price at which such underwriter
reasonably determines. MC shall bear all expenses incurred in connection
with such sales, including underwriter's discounts, commissions and
expenses, except for AN's legal fees, accounting fees and other expenses,
which shall be borne in all cases by AN.
(f) Notwithstanding the provisions of Section 7.3 hereof, the provisions of
this Section 5.16 shall survive any termination of this Agreement.
SECTION 5.17 Fair Price Statute. If any "fair price" or "control share
acquisition" or "anti-takeover" statute, or other similar statute or regulations
or any state "blue sky" statute shall become applicable to the transactions
contemplated hereby or by the Shareholders' Agreement, AN and the members of the
Board of Directors of AN shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby, and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
SECTION 5.18 Further Assurances. Each party hereto shall take all such
actions and execute all such documents and instruments that are reasonably
requested by the other party to carry out the intent of the parties under this
Agreement, and in particular, AN shall take all such actions necessary to obtain
the release, or assignment to MC's lenders, of all liens in favor of First
National Bank of Chicago prior to the Effective Time, including executing and
delivering for filing appropriate UCC-3 statements and other necessary documents
for release or assignment of such liens.
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ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Purchase of Shares in Offer. MC shall have purchased Shares
pursuant to the Offer or pursuant to the Shareholders' Agreement;
(b) Stockholder/Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of capital stock
of MC and AN in accordance with the DGCL and TBCA and the respective
Certificates of Incorporation/Charters and By-Laws of MC and AN;
(c) Statutes; Consents. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any Government Entity preventing
the Merger or the consummation of the transactions contemplated hereby, and
all orders and approvals from Governmental Entities required for the
consummation of the Merger and the transactions contemplated hereby shall
have been obtained and shall be in effect at the Effective Time;
(d) Injunctions. There shall be no order or injunction of a foreign
or United States federal or state court or other governmental authority of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger;
(e) Regulatory Approval. A Regulatory Order permitting the Merger to
be consummated shall have been received from the FCC (or at the election of
MC, approval shall have been received from the FCC), and Regulatory Orders
permitting the Merger to be consummated shall have been received from any
requisite State Authorities;
(f) HSR Act. The expiration or early termination of any waiting
period under the HSR Act shall have occurred;
(g) Registration Statement. The Registration Statement for MC Shares
and VCRs, and the Trust Indenture Act qualification for VCRs, shall have
been declared effective and no stop order with respect thereto shall be in
effect at the Effective Time; and
(h) Nasdaq Listing. The MC Shares to be issued in the Merger shall
have been admitted for quotation on the Nasdaq National Market System.
SECTION 6.2 Conditions to Obligations of AN to Effect the Merger. The
obligation of AN to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of the following additional conditions:
(a) MC shall have performed and complied in all material respects with
all obligations and agreements required to be performed and complied with
by it under this Agreement at or prior to the Effective Time;
(b) The representations and warranties of MC contained in this
Agreement shall have been true and correct in all material respects at the
time when made, and (except for representations made as of a certain date)
shall be deemed made again on the Closing Date and shall be true in all
material respects as of such date, except for changes specifically
permitted by this Agreement;
(c) Except for the transactions contemplated by this Agreement, and
except for matters which affect generally the economy or the industry in
which MC and its Subsidiaries are engaged, as of the Closing Date, there
shall not have occurred any change in the business, properties, assets,
liabilities, financial conditions, cash flows, operations, licenses,
franchises or results of operations of MC or its Subsidiaries which has a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole;
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(d) AN shall have received a certificate from MC, signed on behalf of
MC by the Chief Executive Officer or Chief Financial Officer of MC, dated
the Closing Date, to the effect that the conditions set forth in paragraph
(a), (b) and (c) above have been satisfied; and
(e) AN shall have received the opinion of Wilmer, Cutler & Pickering,
dated the Closing Date and in a form reasonably acceptable to AN, to the
effect that MC Shares and VCRs to be issued in the Merger have been duly
authorized, and when issued in accordance with this Agreement will be
validly issued, and with respect to MC Shares, fully paid and nonassessable
and no holder of any MC Shares outstanding as of such date has any
preemptive or other rights to subscribe for MC Shares pursuant to the DGCL,
the Certificate of Incorporation or pursuant to agreements of MC set forth
on a schedule to such opinion, which MC will have certified to such counsel
as representing all agreements which contain preemptive right or rights to
subscribe for MC Shares.
SECTION 6.3 Conditions to Obligations of MC to Effect the Merger. The
obligation of MC to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of the following additional conditions:
(a) AN shall have performed or complied in all material respects with
all obligations and agreements required to be performed or complied with by
it under this Agreement at or prior to the Effective Time;
(b) The representations and warranties of AN contained in this
Agreement shall have been true and correct in all material respects at the
time when made, and (except for representations made as of a certain date)
shall be deemed made again on the Closing Date and shall be true in all
material respects as of such date, except for changes specifically
permitted by this Agreement;
(c) Except for the transactions contemplated by this Agreement and the
Shareholders' Agreement, and except for matters which affect generally the
economy or the industry in which AN and its Subsidiaries are engaged, as of
the Closing Date, there shall not have occurred any change in business,
properties, assets, liabilities, financial condition, cash flows,
operations, licenses, franchises or results of operations of AN or its
Subsidiaries which has a material adverse effect on AN and its Subsidiaries
taken as a whole;
(d) MC shall have received a certificate from AN, signed on behalf of
AN by the Chief Executive Officer or Chief Financial Officer of AN, dated
the Closing Date, to the effect that the conditions set forth in paragraph
(a), (b) and (c) above have been satisfied.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual written consent of MC and AN.
(b) By either AN or MC:
(i) If any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree or other action
the parties hereto shall use their reasonably efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable; or
(ii) If the Merger shall not have occurred by November 15, 1996,
provided, that if at November 16, 1996, the sole reason the Merger shall
not have occurred is the failure to obtain a Final Regulatory Order
permitting the consummation of the Merger from the FCC, MC may extend
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the date in this clause (ii) to February 16, 1997, provided, further,
that the foregoing date may be extended for an additional 60 days at
MC's option following an event described in Section 3.3.2 or 3.3.3 of
the Shareholders' Agreement if necessary to allow time for the Meeting,
provided, further, that notwithstanding the foregoing, the right to
terminate this Agreement under this Section 7.1(b)(ii) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before November 16, 1996 (or February 16, 1997, as
the case may be).
(c) By AN:
(i) if MC shall have terminated the Offer, or the Offer shall have
expired, without MC purchasing any Shares pursuant thereto; provided
that AN may not terminate this Agreement pursuant to this Section
7.1(c)(i) if AN is in material breach of any of its covenants or
agreements in this Agreement;
(ii) if, due to an occurrence that, if occurring after the
commencement of the Offer, would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, MC or any of its affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that AN may not terminate this Agreement pursuant to this
Section 7.1(c)(ii) if AN is in material breach of any of its covenants
or agreements in this Agreement;
(iii) if MC shall have failed to perform and comply in all material
respects with all material obligations and agreements required to be
performed and complied with by it under this Agreement or the
Shareholders' Agreement, which failure to perform shall not have been
cured prior to the expiration of thirty (30) days following notice of
such failure;
(iv) if the Proposal shall not have been approved and adopted by
the requisite vote of the holders of capital stock of MC in accordance
with the DGCL and the Certificate of Incorporation and By-Laws of MC at
a Meeting held for that purpose (including any adjournment thereof); or
(v) if the Board of Directors of MC shall have (A) withdrawn or
modified or changed in any manner adverse to AN its approval or
recommendation of this Agreement, the Offer or the Merger or (B) shall
have failed to recommend against a MC Acquisition Proposal involving a
tender offer or failed to reject any other MC Acquisition Proposal
within ten business days of receipt by the Board of Directors of MC of
such proposal or shall have executed an agreement in principle (or
similar agreement) or definitive agreement relating to a MC Acquisition
Proposal or similar business combination with a person or entity other
than AN (or the Board of Directors of MC resolves to do any of the
foregoing).
(d) By MC:
(i) if MC shall have terminated the Offer, or the Offer shall have
expired without MC purchasing any Shares thereunder, provided, that MC
may not terminate this Agreement pursuant to this Section 7.1(d)(i) if
it has failed to purchase Shares in the Offer in violation of the
material terms hereof or thereof;
(ii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, MC or any of its affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer,
provided that MC may not terminate this Agreement pursuant to this
Section 7.1(d)(ii) if MC is in material breach of any of its covenants
or agreements in this Agreement or the Shareholders' Agreement;
(iii) if AN or any of its Subsidiaries shall have failed to perform
and comply in all material respects with all material obligations and
agreements required to be performed and complied with by them under this
Agreement which failure to perform shall not have been cured prior to
the expiration of thirty (30) days following notice of each failure;
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(iv) if the Proposal shall not have been adopted by the requisite
vote of the holders of capital stock of AN in accordance with the TBCA
and the Charter and By-Laws of AN at a Meeting held for that purpose
(including any adjournment thereof); provided, that all Shares then
owned by MC are voted in favor of the Proposal; or
(v) if the Board of Directors of AN shall have (A) withdrawn or
modified or changed, in any manner adverse to MC, its approval or
recommendation of this Agreement, the Offer or the Merger or (B) shall
have failed to recommend against an AN Acquisition Proposal involving a
tender offer or failed to reject any other AN Acquisition Proposal
within ten business days of receipt by the Board of Directors of AN of
such proposal or shall have executed an agreement in principle (or
similar agreement) or definitive agreement relating to an AN Acquisition
Proposal or similar business combination with a person or entity other
than MC (or the Board of Directors of AN resolves to do any of the
foregoing) and MC shall not have exercised its right to purchase Shares
under the Shareholders' Agreement.
SECTION 7.2 Termination Fee. (a) If this Agreement is terminated pursuant
to Section 7.1(c)(iv) or (c)(v), then MC will immediately pay to AN a
termination fee equal to $10,000,000 in cash.
(b) If this Agreement is terminated pursuant to Section 7.1(d)(iv) or
(d)(v), then AN will immediately pay to MC a termination fee equal to
$10,000,000 in cash.
(c) The agreement contained in Section 7.2 is an integral part of the
transactions contemplated by this Agreement and constitutes liquidated damages
in the event of a termination under the Sections specified herein and not a
penalty.
SECTION 7.3 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (except for the
provisions of Sections 5.15, 5.16 and 7.2, which shall survive such termination)
shall forthwith become null and void and, subject to the provisions of Section
7.2, there shall be no liability on the part of MC or AN except for fraud or for
material breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of AN contemplated hereby,
by written agreement of the parties hereto, at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
after the approval of this Agreement by the shareholders of AN, no such
amendment, modification or supplement shall reduce or change the Conversion
Ratio.
SECTION 8.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
SECTION 8.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service,
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<PAGE> 89
such as Federal Express, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) If to MC to:
Metrocall, Inc.
6910 Richmond Highway
Alexandria, Virginia 22306
Attention: Vincent D. Kelly
Telecopy No.: (703) 768-9625
with a copy (which shall not constitute notice) to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas and Thomas W. White
Telecopy No.: (202) 663-6363
and
(b) if to AN, to:
A+ Network, Inc.
40 South Palafox Street
Pensacola, Florida 32501
Attention: Chuck Emling
Telecopy No.: (904) 432-9208
with a copy (which shall not constitute notice) to:
Waller Lansden Dortch & Davis
511 Union Street
Suite 2100
Nashville, TN 37219
Attention: Ralph W. Davis
Telecopy No: (615) 244-6804
SECTION 8.4 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 8.5 Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
SECTION 8.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which have been considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.7 Entire Agreement; Third Party Beneficiaries. This Agreement,
the Shareholders' Agreement, the MC Voting Agreement and the Confidentiality
Agreement (including the documents and the instruments referred herein and
therein): (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder, except that Article II
and Section 5.14 shall confer on the third parties contemplated thereby the
benefits thereof.
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<PAGE> 90
SECTION 8.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
SECTION 8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided, that MC may assign its rights hereunder
to a direct or indirect wholly-owned subsidiary, so long as MC remains liable
for its obligations hereunder. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 8.10 Further Assurances. The parties agree to execute such
further instruments and documents as shall reasonably be necessary to carry out
the transactions contemplated by this Agreement, including, without limitation,
to file any notices, or to obtain any consents appropriate to carry out the
transactions contemplated by this Agreement.
[The remainder of this page is intentionally left blank.]
39
<PAGE> 91
IN WITNESS WHEREOF, MC and AN have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date first written
above.
METROCALL, INC.
By: /s/ VINCENT D. KELLY
------------------------------------
Name: Vincent D. Kelly
Title: Vice President and
Chief Financial Officer
A+ NETWORK, INC.
By: /s/ CHARLES A. EMLING III
------------------------------------
Name: Charles A. Emling III
Title: President and Chief Executive
Officer
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<PAGE> 92
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A have the meaning set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) MC's rights to extend and amend the Offer at any time in
its sole discretion (subject to the provisions of the Merger Agreement), MC
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred above, the payment for, any tendered
Shares, and may amend the Offer consistent with the terms of the Merger
Agreement or terminate the Offer if (i) any applicable waiting period under the
HSR Act has not expired or terminated prior to the expiration of the Offer, (ii)
the Minimum Condition has not been satisfied, or (iii) at any time on or after
May 16, 1996 and before the time of acceptance of Shares for payment pursuant to
the Offer, any of the following events shall occur:
(a) the affirmative vote of the holders of more than a majority of the
outstanding Shares is required to consummate the Merger or MC is not
entitled to vote its Shares, including any Shares acquired pursuant to the
Shareholders' Agreement for the Merger;
(b) any change shall have occurred in the business, properties,
assets, liabilities, capitalization, stockholder's equity, financial
condition, cash flows, operations, licenses, franchises or results of
operations of AN or its Subsidiaries which has a Material Adverse Effect on
AN and its Subsidiaries taken as a whole, except for matters which affect
generally the economy or industry in which AN and its Subsidiaries are
engaged;
(c) (I) there shall have been instituted or pending any, or there is
threatened any, action, proceeding, application or counterclaim by any
government or governmental authority or agency, or by AN or an affiliate of
AN, which (i) challenges or seeks to challenge the acquisition by MC (or
any affiliate of MC) of the Shares, restrain or prohibit the making or
consummation of the Offer or the Merger, prohibits the performance by MC of
the Offer, the Merger, the Shareholders' Agreement or any agreements
contemplated thereby, or seeks to obtain any material damages directly or
indirectly relating to the transactions contemplated by the Offer, the
Merger, or Shareholders' Agreement, (ii) seeks to make the purchase of, or
payment for, some or all of the Shares pursuant to the Offer or the Merger
or Shareholders' Agreement illegal or results in a material delay in the
ability of MC to accept for payment or pay for some or all of the Shares,
(iii) seeks to prohibit or limit the ownership or operation by MC (or any
affiliate of MC) of all or any material portion of the business or assets
of AN and its Subsidiaries or of MC and its affiliates or to compel MC (or
any affiliate of MC) to dispose of or to hold separately all or any
material portion of the business or assets of MC or any of its affiliates
or of AN or any of its Subsidiaries or seeks to impose any material
limitation on the ability of MC, or any other affiliate of MC, to conduct
AN's or any of its Subsidiary's business or own such assets, (iv) seeks to
impose or confirm material limitations on the ability of MC (or any
affiliate of MC) to acquire or hold or to exercise full rights of ownership
of the Shares, including but not limited to, the right to vote the Shares
purchased by them on all matters properly presented to the stockholders of
AN, or (v) seeks to require divestiture by MC of any of its Subsidiaries or
affiliates of all or any of the Shares, or (II) there shall have been
instituted any action, proceeding, application or counterclaim by any
person (other than a Governmental Entity or AN, or an affiliate of AN),
before any court or governmental regulatory or administrative agency,
authority or tribunal, with respect to the matters set forth in subsections
(i)-(v) above, which has resulted in the issuance of a temporary
restraining order ("TRO"), preliminary injunction or permanent injunction
enjoining the Merger, this Agreement or the transactions contemplated
hereby if such TRO, preliminary injunction or permanent injunction has not
been removed or rescinded within 20 business days after the original
expiration date of the Offer;
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<PAGE> 93
(d) there shall be any action taken, or any statute, rule, regulation
shall be enacted, promulgated, entered, enforced or deemed applicable to,
or any order shall be entered or enforced with respect to, the Offer, the
Merger or the Shareholders' Agreement by any government, governmental
authority or court, domestic, foreign or supranational, other than the
routine application to the Offer, the Merger or other subsequent business
combination of waiting periods under the HSR Act or approval of license
transfers under the Communications Act or by state regulatory agencies that
is reasonably likely to, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of subsection (c)(I)
above;
(e) the representations and warranties of AN set forth in the Merger
Agreement shall not have been true and correct in all material respects on
the date of the Merger Agreement or shall not be true and correct as of the
date of consummation of the Offer as though made on or as of such date or
AN shall have breached or failed to perform or comply with any obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in such cases, (i) for changes specifically
permitted by the Merger Agreement and (ii) those representations and
warranties that address matters only as of a particular date which are true
and correct as of such date;
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
(g) (i) it shall have been publicly disclosed that any person, entity
or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than
MC, shall have acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 25% of any class or
series of capital stock of AN (including the Shares) through the
acquisition of stock, formation of a group or otherwise, other than any
person or group existing on the date hereof which beneficially owns more
than 25% of any class or series of capital stock of AN, or (ii) AN shall
have entered into or announced its intention to enter into a definitive
agreement or agreement in principle with any person with respect to an AN
Acquisition Proposal or similar business combination.
(h) AN's Board of Directors shall have withdrawn, or modified or
changed in any manner adverse to MC (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger, or recommended an AN Acquisition Proposal, or shall have resolved
to do any of the foregoing; or
(i) any party to the Shareholders' Agreement other than MC shall have
breached or failed to perform, in each case in any material respect, any of
its agreements under such agreement or any of the representations and
warranties of any such party set forth in such agreement shall not be true
in any material respect, in each case, when made or at any time prior to
the consummation of the Offer as if made at and as of such time, or the
Shareholders' Agreement shall have been invalidated or terminated with
respect to any Shares subject thereto;
which in the reasonable judgment of MC, in any such case, and regardless of the
circumstances giving rise to such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of MC and may be asserted
by MC regardless of any circumstances giving rise to any condition and may be
waived by MC, in whole or in part at any time and from time to time in the sole
discretion of MC. The failure by MC (or any affiliate of MC) at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
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<PAGE> 94
ANNEX B
DIRECTORS OF THE SURVIVING CORPORATION
The following sets forth the membership, by class, of the Board of
Directors of the Surviving Corporation.
Class of 1997
S. Brock
W. Collins
F. Martin
Class of 1998
E. Singer
R. Aprahamian
To be determined
Class of 1999
H. Brock
R. Johnston
R. Russenberger
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<PAGE> 95
ANNEX C
PRINCIPAL TERMS OF INDEXED VARIABLE COMMON RIGHTS ("VCRS")
ISSUER..................... Metrocall, Inc. ("MC")
PAYMENT AT MATURITY........ Following the maturity of a VCR, the holder of such
VCR (the "VCR Holder") shall have the right to
receive the amount, if any, by which the Target
Price exceeds the greater of the Current Market
Value and the Minimum Price (each as defined
below). The VCRs shall mature on the Maturity Date
unless otherwise extended to the Extended Maturity
Date (as defined below).
FORM OF PAYMENT............ MC, at its option, may pay any amount due under the
terms of the VCRs to the VCR Holders in cash or MC
Common Stock valued based on the Current Market
Value as defined below or common stock equivalents
at fair market value (as determined by an
independent nationally recognized investment bank).
TARGET PRICE............... "Target Price" means (i) at the Maturity Date,
$21.10 reduced but not increased by the "Index
Factor", as hereinafter defined, and (ii) at the
Extended Maturity Date, $25.10 reduced but not
increased by the Index Factor. In each case, such
Target Prices shall be adjusted upon the occurrence
of any event described in the Section entitled
"Antidilution" set forth below.
CURRENT MARKET VALUE....... "Current Market Value" means with respect to the
Maturity Date and the Extended Maturity Date, the
median of the averages of the closing bid prices on
the Nasdaq NMS (or such other exchange on which
such shares are then listed) of shares of MC's
Common Stock, par value $.01 per share (the "Common
Stock"), during each 20 consecutive trading day
period that both begins and ends in the Valuation
Period. "Valuation Period" means the 60 trading day
period immediately preceding (and including) the
Maturity Date or the Extended Maturity Date, as the
case may be.
MINIMUM PRICE.............. "Minimum Price" means (i) at the Maturity Date,
$16.10, and (ii) at the Extended Maturity Date,
$18.10. In each case, subject to adjustment upon
the occurrence of any event described in the
Section entitled "Antidilution" set forth below.
INDEX FACTOR............... An Index Factor shall be calculated based upon the
ratio of the relevant ending period stock prices
for the Comparable Paging Company Index (the Index
Factor numerator) and the initial Comparable Paging
Company Index (the Index Factor denominator). The
Comparable Paging Company Index shall consist of
the stocks of ARCH COMMUNICATIONS GROUP, INC.,
MOBILMEDIA COMMUNICATIONS, INC., AND PRONET, INC.,
or each's successors. The initial Comparable Paging
Company Index shall be the median of the simple
arithmetic average of closing bid prices of the
index group for the 20 trading days preceding May
14, 1996. The ending period Comparable Company
Paging Index shall be the same median of the simple
arithmetic average of closing bid prices of the
index group as measured in the identical fashion as
MC's closing bid prices during the relevant
Valuation Periods preceding the Maturity Date,
Extended Maturity Date, or Disposition Date, as the
case may be. In each case, such adjustments shall
be made, as appropriate, for each
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company's stock prices that is included in the
Comparable Paging Company Index, upon the
occurrence of any event similar to that described
in the "Antidilution" section below.
EARLY TERMINATION.......... If the closing bid prices of the Common Stock
exceeds (i) $21.10 for any 50 calendar day period
prior to the Maturity Date, or (ii) $25.10 for any
50 calendar day period between the Maturity Date
and the Extended Maturity Date, then the VCRs shall
immediately expire and be of no further force and
effect.
MATURITY DATE; EXTENSION
THEREOF.................. "Maturity Date" means the first anniversary of the
effective time (the "Effective Time") of the merger
between MC and A+ Network, Inc. ("AN") (the
"Merger"); provided, however, that MC, at its
option, may extend the Maturity Date to the second
anniversary of the Effective Time (the "Extended
Maturity Date"). MC shall exercise either such
option to extend by publishing notice of such
exercise in the Wall Street Journal (Eastern
Edition), or if the Wall Street Journal is not then
published, such other newspaper with general
circulation in the City of New York, New York no
later than one business day preceding the Maturity
Date, as the case may be.
NO INTEREST................ Other than in the case of interest on the Default
Amount (as defined below), no interest shall accrue
on any amounts payable to the VCR Holders pursuant
to the terms of VCRs.
DISPOSITION PAYMENT........ Following the consummation of a Disposition (as
defined below), MC shall pay to each VCR Holder for
each VCR held by such VCR Holder an amount, if any,
by which the Discounted Target Price (as defined
below) exceeds the greater of (a) the fair market
value (as determined by an independent nationally
recognized investment banking firm) of the
consideration, if any, received by holders of
Common Stock for each share of Common Stock held by
such holder as a result of such Disposition and (b)
the Minimum Price.
DISPOSITION EVENT.......... "Disposition" means (a) a merger, consolidation or
other business combination involving MC as a result
of which no shares of Common Stock shall remain
outstanding, (b) a sale, transfer or other
disposition, in one or a series of transactions, of
all or substantially all of the assets of MC or (c)
a reclassification of Common Stock as any other
capital stock of MC or any other person.
ACCELERATION UPON EVENT OF
DEFAULT.................. If an Event of Default (as defined below) occurs
and is continuing, either the bank or trust company
acting as the trustee (the "Trustee") or VCR
Holders holding at least 25% of the outstanding
VCRs, by notice to MC (and to the Trustee if given
by VCR Holders), may declare the VCRs to be due and
payable, and upon any such declaration, the Default
Amount shall become due and payable and,
thereafter, shall bear interest at an interest rate
of 12% per annum until payment is made to the
Trustee. "Default Amount" means the amount, if any,
by which the Discounted Target Price exceeds the
Minimum Price.
DISCOUNTED TARGET PRICE.... "Discounted Target Price" means (a) if a
Disposition or an Event of Default shall occur
prior to the Maturity Date, $21.10 reduced but not
increased by the relevant Index Factor, discounted
to the Disposition Payment Date (as defined below)
or the Default Payment Date (as
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defined below), as the case may be, at a per annum
rate of 8%; or (b) if a Disposition or an Event of
Default shall occur after the Maturity Date but
prior to the Extended Maturity Date, $25.10 reduced
but not increased by the relevant Index Factor
discounted to the date of the Disposition Payment
Date or Default Payment Date, as the case may be,
at a per annum rate of 8%. In each case, the
Discounted Target Price and the Minimum Price shall
be adjusted upon the occurrence of any event
described in the Section entitled "Antidilution"
set forth below. "Disposition Payment Date", with
respect to a Disposition, means the date
established by MC for payment of the amount due on
the VCRs in respect of such Disposition, which in
no event shall be more than 38 days after the date
on which such Disposition was consummated. "Default
Payment Date" means the date on which the VCRs
become due and payable upon the declaration thereof
following an Event of Default.
EVENTS OF DEFAULT.......... "Event of Default", with respect to the VCRs, means
any of the following which shall have occurred and
be continuing; (a) default in the payment of all or
any part of the amounts payable in respect of any
of the VCRs as and when the same shall become due
and payable following the Maturity Date or the
Extended Maturity Date, the Disposition Payment
Date or otherwise; (b) material default in the
performance, or material breach, of any material
covenant or warranty of MC,and continuance of such
material default or breach for a period of 98 days
after written notice has been given to MC by the
Trustee or to MC and the Trustee by VCR Holders
holding at least 25% of the outstanding VCRs; or
(c) certain events of bankruptcy, insolvency,
reorganization or other similar events in respect
of MC.
ANTIDILUTION............... If MC shall in any manner subdivide (by stock
split, stock dividend or otherwise) or combine (by
reverse stock split or otherwise) the number of
outstanding shares of Common Stock, MC shall
correspondingly subdivide or combine the VCRs and
shall appropriately adjust the Target Price, the
Minimum Price and the Discounted Target Price.
TRADING.................... None of MC or any of its affiliates shall trade in
shares of Common Stock during the period commencing
18 trading days before the Valuation Period and
ending on the last day of the Valuation Period,
except with respect to employee benefit plans and
other incentive compensation arrangements.
VCR AGREEMENT.............. The VCRs will be issued pursuant to a VCR Agreement
between MC and the Trustee. MC shall use its
reasonable best efforts to cause the VCR Agreement
to be qualified under the Trust Indenture Act of
1939, as amended.
REGISTRATION............... The VCRs will be issued in registered form.
NATURE AND RANKING OF
VCRS....................... The VCRs are unsecured obligations of MC and will
rank equally with all other unsecured obligations
of MC.
DIVIDENDS.................. If any dividends are paid on the MC Common Stock
prior to the Maturity Date or the Extended Maturity
Date, as applicable, the holders of the VCRs shall
have no right to receive any such dividends.
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<PAGE> 98
ANNEX D
EMPLOYMENT AND EMPLOYEE BENEFITS COVENANTS
The capitalized terms used in this Annex D have the meaning set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
(a) Charles A. Emling, III ("Emling"), AN's executive officers,
managers, salespeople, and staff will continue to participate in the AN
Benefit Plans and AN Employee Agreements as in effect on the date of the
Merger Agreement until the Effective Time.
(b) AN will use its best efforts to cause Ray D. Russenberger and
Elliot H. Singer to enter into non-compete agreements with MC that will
take effect at the Effective Time.
(c) MC will review compensation arrangements and bonus plans in its
normal budgeting cycle, with the expectation of transitioning current AN
employees to the MC compensation arrangements and bonus plans as of the
later of the Effective Time and January 1, 1997.
(d) Emling will cooperate with the officers of MC and Tom Matthews in
identifying employees whose services will not be required by the Surviving
Corporation. Employees who are terminated after the date hereof and before
the Effective Time will be provided with severance, less any applicable
withholding and social security taxes, equal to the lesser of (i) one (1)
month's salary (at the level in effect on the date hereof) for each full
year employed by AN to a maximum of six months' pay and (ii) the severance
payable under the AN Benefit Plans as of the date hereof.
(e) AN shall provide all notices, if any, required by the Worker
Adjustment and Retraining Notification Act with respect to actions taken
before the Effective Time.
(f) Certain existing one-year employment contract will be revised in
accordance with the employment contract entered into with Emling as of the
date hereof (to take effect at the Effective Time). MC currently
contemplates that these arrangements will cover Poole, Schultz, Goldstein,
and Smith.
(g) AN will review the performance of Goldstein and Schultz at their
customary anniversary date (summer 96) for both salary increases and
bonuses based on 1996 performance.
(h) MC agrees to employ all or substantially all of AN employees who
are legally on payroll on the Effective Date and to enroll them in the MC
Benefit Plans in accordance with the terms of such plans. The employees so
hired will be at-will employees of MC.
(i) MC is under no obligation to provide or continue any MC Benefit
Plan or arrangement or any other plan or arrangement before or after the
Effective Time and may amend or terminate any such plan or arrangement in
whole or in part, and may modify any provision thereof, including any
provision dealing with eligibility, levels or types of benefits,
deductibles, or co-payment obligations, or any other right, feature, or
characteristic.
(j) AN agrees that it will take appropriate steps to ensure that the
AN 401(k) plan meets any ERISA requirements applicable with respect to
participating in the Tender Offer and the Merger. In particular, AN will
take the appropriate steps to ensure that the trustee(s) of the AN 401(k)
Plan meet their obligations with respect to the Shares held in that plan.
The parties hereto agree that no employee or former employee of AN (or its
predecessors) or beneficiary or dependent thereof, whether hired before or after
the date hereof, shall have any third-party beneficiary rights under this Annex
D.
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<PAGE> 99
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each shareholder or his
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY: MAIL BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange (212) 815-6213 Tender & Exchange
Department Department
P.O. Box 11248 Confirm by Telephone: 101 Barclay Street
Church Street Station (800) 507-9357 Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
</TABLE>
Any questions and requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its addresses and telephone numbers set forth below. Shareholders may
also contact their broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219
CALL TOLL-FREE: (800) 826-2804
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES
OF
COMMON STOCK
(TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS)
OF
A+ NETWORK, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 21, 1996
BY
METROCALL, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, NY 10286
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE
THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This letter of transmittal (the "Letter of Transmittal") is to be completed
by holders of Shares (as defined below) (the "Shareholders"), either if
certificates representing Shares ("Share Certificates") are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if tenders of Shares are to be made by book-entry transfer into the
account of The Bank of New York, as Depository (the "Depository"), at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase dated May 22, 1996 (the "Offer to Purchase").
Shareholders who tender Shares by book-entry transfer are referred to herein as
"Book-Entry Shareholders".
Shareholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase), or who cannot complete the procedures for delivery by
book-entry transfer on a timely basis, may tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED SCHEDULE, IF NECESSARY)
NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S)) (SEE INSTRUCTION 3)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARE TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED SHARES
NUMBER(S)* BY SHARE TENDERED**
CERTIFICATES
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be deemed to have
been tendered. See Instruction 4.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
NAME OF TENDERING INSTITUTION:
CHECK BOX OF APPLICABLE BOOK-ENTRY TRANSFER FACILITY:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number:______________________Transaction Code Number:___________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING
(PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY):
NAME(S) OF REGISTERED HOLDER(S):___________________________________________
WINDOW TICKET NUMBER (IF ANY):_____________________________________________
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY:________________________
NAME OF INSTITUTION THAT GUARANTEED DELIVERY:______________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX OF APPLICABLE BOOK-ENTRY
TRANSFER FACILITY:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number:______________________Transaction Code Number:___________________
NOTE SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation
(the "Purchaser"), the above-described shares of Common Stock, par value $0.01
per share, together with the related share purchase rights (collectively, the
"Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"),
pursuant to the Purchaser's offer to purchase 2,140,526 of the outstanding
Shares at a purchase price of $21.10 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in this Letter of Transmittal (which together
constitute the "Offer"), receipt of each of which is hereby acknowledged. The
undersigned understands that the Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its affiliates,
the right to purchase all or any portion of the Shares tendered pursuant to the
Offer.
<PAGE> 3
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment, the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all of the Shares that are being tendered hereby and any
and all dividends, distributions (including additional Shares) or rights
declared, paid or issued with respect to the tendered Shares on or after May 16,
1996 (collectively, "Distributions"), and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
(and any Distributions) with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to (a) deliver
such Share Certificates (and any Distributions), or transfer ownership of such
Shares (and any Distributions) on the account books maintained by a Book-Entry
Transfer Facility, together in any case with appropriate evidences of transfer
and authenticity, to, or upon the order of, the Purchaser, upon receipt by the
Depositary, as the undersigned's agent, of the purchase price, (b) present such
Shares (and any Distributions) for transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and any Distributions), all in accordance with the terms and
subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints William L. Collins, III and
Vincent D. Kelly, and each of them, or any other designees of the Purchaser, as
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to the
Shares tendered by the undersigned and accepted for payment and paid for by the
Purchaser (and any Distributions). This power of attorney and proxy shall be
considered irrevocable and coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts such Shares for payment and deposits the purchase price therefore with
the Depositary. Upon such payment, all prior powers of attorney and proxies
given by the undersigned with respect to such Shares (and any Distributions)
will be revoked without further action, and no subsequent powers of attorney or
proxies may be given nor any subsequent written consents executed by the
undersigned (and, if given or executed, will not be deemed effective). Upon such
payment by the Purchaser, the designees of the Purchaser will be empowered to
exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares (and any Distributions),
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distributions) tendered hereby and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to the Shares (and any Distributions), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distributions). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any Distribution in respect of the Shares tendered hereby, accompanied
by appropriate documentation of transfer, and pending such remittance or
appropriate assurance thereof, the Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price of Shares tendered hereby or deduct from the
purchase price the amount of value thereof, as determined by the Purchaser in
its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment as provided in the Offer to Purchase, may also be withdrawn
after July 20, 1996. See Section 4 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
The undersigned understands that if more than 2,140,526 Shares are validly
tendered prior to the expiration of the Offer and not validly withdrawn in
accordance with Section 4 of the Offer to Purchase, Shares so tendered and not
validly withdrawn shall be accepted for payment on a pro rata basis according to
the number of Shares validly tendered and not withdrawn by the Expiration Date
(with appropriate adjustments to avoid the purchase of fractional Shares). The
Depositary shall promptly remit to tendering shareholders shares not accepted
for payment (following appropriate adjustments to avoid the purchase of
fractional shares).
<PAGE> 4
The undersigned understands that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may terminate or amend the Offer or may not
be required to accept for payment any of the Shares tendered herewith or may
accept for payment, pro rata with shares tendered by other stockholders, fewer
than all of the Shares tendered herewith.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any Share
Certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both "Special Delivery Instructions" and "Special Payment Instructions" are
completed, please issue the check for the purchase price and/or return any Share
Certificate(s) to, the person(s) so indicated. Unless otherwise indicated herein
under "Special Payment Instructions," please credit any Shares tendered herewith
by book-entry transfer that are not accepted for payment by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that the Purchaser has no obligation, pursuant to the "Special
Payment Instructions" to transfer any Shares from the name(s) of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the Shares
tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificate(s) for Shares not tendered or not
accepted for payment and/ or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned
or if Shares tendered by book-entry transfer which are not accepted for payment
are to be returned by credit to any account maintained at a Book-Entry Transfer
Facility other than the account indicated above.
Issue: / / check / / certificates to:
Name............................................................................
(PLEASE PRINT)
Address.........................................................................
................................................................................
................................................................................
(INCLUDE ZIP CODE)
................................................................................
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
Credit Shares tendered by book-entry transfer that are not accepted for payment
to (check one):
/ / DTC / / PDTC
................................................................................
(DTC OR PDTC ACCOUNT NO.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificates(s) for Shares not tendered or not
accepted for payment and/ or the check for the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
Mail: / / check / / certificates to:
Name............................................................................
(PLEASE PRINT)
Address.........................................................................
................................................................................
................................................................................
(INCLUDE ZIP CODE)
................................................................................
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
<PAGE> 5
- --------------------------------------------------------------------------------
IMPORTANT
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
SIGN X............................................................. SIGN
HERE HERE
X.............................................................
SIGNATURE(S) OF HOLDER(S)
Dated:.....................,1996
(Must be signed by the registered holder(s) exactly as name(s)
appears(s) on Share Certificate(s) or on a security position
listing or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5.)
Name(s):......................................................
..............................................................
(PLEASE PRINT)
Capacity (full title):........................................
(SEE INSTRUCTION 5)
Address:......................................................
..............................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number:...............................
Tax Identification or Social Security No.:....................
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:.........................................
Name:.........................................................
..............................................................
(PLEASE PRINT)
Name of Firm:.................................................
Address:......................................................
..............................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number:...............................
Dated:.....................,1996
- --------------------------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORM PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Share(s)) tendered herewith, unless
such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Share(s) are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program, the Stock
Exchanges' Medallion Program or the New York Stock Exchange, Inc. Medallion
Signature Program (each of the foregoing being referred to as an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by shareholders either if Share Certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if tenders of Shares are to be made by
book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. In order for Shares to be validly tendered pursuant to the
Offer, this Letter of Transmittal (or a facsimile hereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase on or prior to the Expiration Date and either (i) Share Certificates
representing tendered Shares must be received by the Depositary at such address
or such Shares must be tendered by book-entry transfer and a timely confirmation
of such book-entry transfer (a "Book-Entry Confirmation") must be received by
the Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures described in the following sentence must be
complied with. Shareholders whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other required
documents to reach the Depositary on or prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary on or
prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer, in
each case together with this Letter of Transmittal (or a facsimile hereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market ("NNM") trading days after the
date of execution of such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto and
referenced in the Description of Shares Tendered.
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Shareholders.) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificate(s)
for the Shares that were evidenced by your old Share Certificate(s), but were
not tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
expiration or termination of the Offer. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
<PAGE> 7
If any of the tendered Shares tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Share Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates for Shares not tendered or not purchased are to be issued in the
name of, a person other than the registered holder(s), in which case signatures
on such Share Certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Share Certificate(s) listed, the Share
Certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate(s). Signature(s) on such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if Share
Certificate(s) for Shares not tendered or not accepted for payment are to be
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, then the amount of stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or an exemption therefrom, is submitted.
EXCEPT AS SET FORTH IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATE(S) LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or Share Certificate(s) for Shares not tendered or not
accepted for payment are to be issued or returned to, a person other than the
signer of this Letter of Transmittal, or if a check and/or such Share
Certificate(s) are to be returned to a person other than the signer of this
Letter of Transmittal or to an address of the signer other than that shown in
this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal
must be completed. Book-Entry Shareholders may request that Shares not accepted
for payment be credited to such account maintained at a Book-Entry Transfer
Facility as such Book-Entry Shareholder may designate under "Special Payment
Instructions." If no such instructions are given, such Shares not accepted for
payment will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement (as
defined in the Offer to Purchase), the conditions of the Offer may be waived by
the Purchaser, in whole or in part, at any time and from time to time in its
sole discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal income
tax law, a shareholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN (e.g., social security number or employer
identification number), the Internal Revenue Service may subject the stockholder
or other payee to penalties. In addition, payments that are made to such
shareholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding.
FAILURE TO PROVIDE THE INFORMATION REQUIRED ON THE SUBSTITUTE FORM W-9 MAY
SUBJECT THE TENDERING SHAREHOLDER TO THE 31% FEDERAL INCOME TAX BACKUP
WITHHOLDING REQUIREMENT WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER.
Certain shareholders are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the shareholder must submit a Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
IF BACKUP WITHHOLDING APPLIES, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31%
OF ANY PAYMENTS MADE TO THE SHAREHOLDER OR OTHER PAYEE. BACKUP WITHHOLDING IS
NOT AN ADDITIONAL TAX. RATHER, THE TAX LIABILITY OF PERSONS SUBJECT TO BACKUP
WITHHOLDING WILL BE REDUCED BY THE AMOUNT OF TAX WITHHELD. IF WITHHOLDING
RESULTS IN AN OVERPAYMENT OF TAXES, A REFUND MAY BE OBTAINED FROM THE INTERNAL
REVENUE SERVICE.
<PAGE> 8
The box in Part 4 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 4 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding. If
the box in Part 4 is checked and the Certificate of Awaiting Taxpayer
Identification Number is completed, but the Depositary is not provided with the
TIN within 60 days, the Depositary will withhold 31% of all payments made
thereafter until such time as a properly certified TIN is provided to the
Depositary.
The shareholder is required to give the Depositary the TIN of the record
owner of the Shares or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares. If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and all other tender
offer materials may be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies at the Purchaser's expense.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate(s)
has been lost, destroyed or stolen, the shareholder should promptly notify the
Depositary. The shareholder will then be instructed as to the steps that must be
taken in order to replace the Share Certificate(s). This Letter of Transmittal
and related documents cannot be processed until the procedures for replacing
lost or destroyed Share Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF) OR, IF
APPROPRIATE, AN AGENT'S MESSAGE, TOGETHER WITH SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR THE
NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO
THE EXPIRATION DATE.
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security number or
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Employer Identification Number
------------------------------------
(If awaiting TIN, write "Applied
For" and check Part 4)
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Department of the Treasury PART 2 -- Shareholders who are exempt from backup withholding should review the
Internal Revenue Service enclosed Guidelines for Certification of Taxpayer on Substitute Form W-9 and complete
as instructed therein.
PART 3 -- Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to Payer's Request for backup withholding.
Payer's Request for Taxpayer CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) above if you have been
Identification Number ("TIN") notified by the IRS that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out such Item (2).
---------------------------------------------------------------------------------------
SIGN HERE SIGNATURE ______________________________________________ PART 4 --
Awaiting TIN / /
DATE ,_____________________________________________ 1996
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS
<PAGE> 9
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 4 OF SUBSTITUTE FROM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a Taxpayer Identification Number.
<TABLE>
<S> <C>
Signature Dated , 1996
</TABLE>
The Information Agent for the Offer is:
(GEORGESON & COMPANY, INC LOGO)
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219
CALL TOLL-FREE: (800) 826-2804
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
A+ NETWORK, INC.
As set forth in Section 3 of the Offer to Purchase defined below, this
Notice of Guaranteed Delivery or one substantially equivalent hereto must be
used to tender shares of Common Stock, par value $0.01 per share, together with
the related share purchase rights (collectively, the "Shares"), of A+ Network,
Inc., a Tennessee corporation (the "Company"), pursuant to the Offer (as defined
below) if certificates for Shares are not immediately available or the
certificates for Shares and all other required documents cannot be delivered to
the Depositary on or prior to the Expiration Date (as defined in the Offer), or
if the procedures for delivery by book-entry transfer cannot be completed on a
timely basis. This instrument may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, NY 10286
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box in the Letter of Transmittal.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated May 22, 1996 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares indicated below pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Signature(s)
Name(s) of Record Holders
Please Type or Print
Number of Shares
Share Certificate No(s). (If available)
Dated , 1996
Address(es)
Zip Code
Area Code and Tel. No.(s)
(Check one box if Shares will be tendered by
book-entry transfer)
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, the Stock Exchanges' Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program, hereby
(a) represents that the above named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of Shares complies with Rule 14e-4, and (c) guarantees to either deliver to the
Depositary the certificates representing all the Shares tendered hereby, in
proper form for transfer, or deliver such Shares pursuant to the procedure for
book-entry transfer into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company, in either case together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry transfer, and
with any other required documents, all within three Nasdaq National Market
trading days after the date hereof.
<TABLE>
<S> <C>
_______________________________________________ __________________________________________
Name of Firm Authorized Signature
_______________________________________________ Name______________________________________
Address Please Type or Print
_______________________________________________ Title_____________________________________
Zip Code
Area Code and Tel. No._________________________ Dated_____________________________ , 1996
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
ONLY BE SENT TOGETHER WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE
FOR CASH
2,140,526 SHARES
(TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS)
OF
COMMON STOCK
OF
A+ NETWORK, INC.
AT
$21.10 NET PER SHARE
BY
METROCALL, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12.00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Metrocall, Inc., a Delaware corporation (the
"Purchaser"), to act as Dealer Manager in connection with the Purchaser's offer
to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per
share, together with the related share purchase rights (collectively, the
"Shares"), of A+ Network, Inc., a Tennessee corporation (the "Company"), at a
purchase price of $21.10 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 22, 1996 (the "Offer to Purchase") and in the related Letter
of Transmittal (which together constitute the "Offer") enclosed herewith.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least
2,140,526 Shares. The Offer is also subject to certain other terms and
conditions contained in the Offer to Purchase. The Offer is not conditioned upon
the Purchaser obtaining financing or upon receipt of Federal Communications
Commission approval.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee. Enclosed herewith for your information and forwarding to your
clients are copies of the following documents.
1. The Offer to Purchase, dated May 22, 1996.
2. The green Letter of Transmittal to tender Shares (for your use and
for the information of your clients). Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A letter to the stockholders of the Company from the President and
Chief Executive Officer of the Company, together with the
Solicitation/Recommendation Statement on Schedule 14D-9.
4. The yellow Notice of Guaranteed Delivery for Shares (to be used to
accept the Offer if Share Certificates are not immediately available or if
such Share Certificates and all other required documents cannot be
delivered to The Bank of New York (the "Depositary") on or prior to the
Expiration Date or if the procedures for book-entry transfer cannot be
completed on a timely basis).
5. A gray printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such client's instructions
with regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED.
In order for Shares to be validly tendered pursuant to the Offer, (i) a
duly executed and properly completed Letter of Transmittal (or a facsimile
thereof) together with any required signature guarantees, or an Agent's Message
(as defined
<PAGE> 2
in the Offer to Purchase) in connection with a book-entry delivery of Shares,
and other documents required by the Letter of Transmittal must be received by
the Depositary on or prior to the Expiration Date, and (ii) either certificates
representing tendered Shares or a Book-Entry Confirmation (as described in the
Offer to Purchase) must be received by the Depositary, all in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Share Certificates are not immediately available, or such
stockholder cannot deliver the Share Certificates and all other required
documents to reach the Depositary on or prior to the Expiration Date, or such
stockholder cannot complete the procedure for delivery by book-entry transfer on
a timely basis, such Shares may nevertheless be tendered by following the
guaranteed delivery procedures specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commission to any broker, dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager and Georgeson & Company Inc. ("the "Information
Agent"), as described in the Offer to Purchase). The Purchaser will, however,
upon request, reimburse you for customary mailing and handling expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer and sale of Shares to the Purchaser pursuant to the Offer, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or to the Dealer Manager, at their respective addresses
and telephone numbers set forth on the back cover of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the Information
Agent.
Very truly yours,
WHEAT FIRST BUTCHER SINGER
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE
FOR CASH
2,140,526 SHARES
(TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS)
OF
COMMON STOCK
OF
A+ NETWORK, INC.
AT
$21.10 NET PER SHARE
BY
METROCALL, INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated May 22, 1996
(the "Offer to Purchase") and the related Letter of Transmittal (which together
constitute the "Offer") relating to an offer by Metrocall, Inc., a Delaware
corporation (the "Purchaser"), to purchase 2,140,526 outstanding shares of
Common Stock, par value $0.01 per share, together with the related share
purchase rights (collectively, the "Shares"), of A+ Network, Inc., a Tennessee
corporation (the "Company"), at a purchase price of $21.10 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $21.10 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
2. The Offer is made for 2,140,526 Shares. If more than 2,140,526
Shares are validly tendered on or prior to the Expiration Date and not
properly withdrawn, the Purchaser will, upon the terms and subject to the
conditions of the Offer, purchase 2,140,526 Shares on a pro rata basis
(with adjustments to avoid purchases of fractional Shares).
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, June 19, 1996, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least 2,140,526 Shares. The Offer is also subject to certain other terms
and conditions contained in the Offer to Purchase. The Offer is not
conditioned upon the Purchaser obtaining financing or upon receipt of
Federal Communications Commission approval.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer and sale of Shares
pursuant to the Offer.
6. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by The Bank of
New York (the "Depositary") of (i) Share Certificates or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository
Trust Company (each, a "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and (iii) any other documents required
by the Letter of Transmittal. Accordingly, payment might not be made to all
tendering stockholders at the same time and will depend upon when Share
Certificates are received by
<PAGE> 2
the Depositary or confirmations of book-entry transfer of such Shares are
received into the Depositary's account at a Book-Entry Transfer Facility.
The Offer is being made by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. The Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, the Purchaser will make a good faith
effort to comply with any such state statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
nor will tenders be accepted from or on behalf of the holders of Shares in such
state. In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Purchaser by the Dealer Manager (as defined) or one
or more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
INSTRUCTIONS WITH RESPECT
TO THE
OFFER TO PURCHASE
FOR CASH
2,140,526 SHARES
OF
COMMON STOCK
OF
A+ NETWORK, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated May 22, 1996 (the "Offer to Purchase") and the related Letter
of Transmittal pursuant to an offer by Metrocall, Inc., a Delaware corporation,
to purchase 2,140,526 outstanding shares of Common Stock, par value $0.01 per
share, together with the related share purchase rights (collectively, the
"Shares"), of A+ Network, Inc., a Tennessee corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares to be Tendered*: ________________________ Shares
Dated: ________________________ , 1996
SIGN HERE
Signature(s):________________________________________________________________
Please print name(s):________________________________________________________
Address(es):_________________________________________________________________
Area Code and Telephone Number(s):___________________________________________
Tax Identification or Social Security Number(s):_____________________________
- ---------------
*Unless otherwise indicated, it will be assumed that all of the Shares held by
us for your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)
PURPOSE OF FORM. -- A person who is required to file an information return with
the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU
MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
FORM 22-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.
To complete Form W-9, If you do not have a TIN, write "Applied for" in the space
for the TIN in Part 1, sign and date the form, and give it to the requester.
Generally, you will then have 60 days to obtain a TIN and furnish it to the
requester. If the requester does not receive your TIN within 60 days, backup
withholding, if applicable, will begin and continue until you furnish your TIN
to the requester. For reportable interest or dividend payments, the payer must
exercise one of the following options concerning backup withholding during this
60-day period. Under option (1), a payer must backup withhold on any withdrawals
you make from your account after 7 business days after the requester receives
this form back from you. Under option (2), the payer must backup withhold on any
reportable interest or dividend payments made to your account, regardless of
whether you make any withdrawals. The backup withholding under option (2) must
begin no later than 7 business days after the requester receives this form back.
Under option (2), the payer is required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during the period.
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR
A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date this form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after 1992
are required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be subject
to backup withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate certifications,
and report all your taxable interest and dividends on your tax return, your
payments will not be subject to backup withholding. Payments you receive will be
subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to backup
withholding under (3) above (for reportable interest and dividend accounts
opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends all listed payees are exempt except item
(9). For broker transactions, payees listed in (1) through (13) and a person
registered under the investment Advisers Act of 1940 who regularly acts as a
broker are exempt. Payments subject to reporting under sections 6041 and 6041A
are generally exempt from backup withholding only if made to payees described in
items (1) through (7), except that a corporation that provides medical and
health care services or bills and collects payments for such services is not
exempt from backup withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends, and payments by certain fishing boat
operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in trade or business in the U.S. and
that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE
AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- Payments of tax-exempt (including exempt-interest dividends under section
852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 5041(a), 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. -- If the requestor discloses or uses TINs in violation of
federal law, the requestor may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME. -- If you are an individual, you must generally provide the name shown on
your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.
If you are sole proprietor, you must furnish your individual name and either
your SSN or EIN. You may also enter your business name or "doing business as"
name on the business name line. Enter your name(s) as shown on your social
security card and/or as it was used to apply for your EIN on Form SS-4.
SIGNING THE CERTIFICATION. --
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may cross
out item (2) of the certification.
(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part 1, write "EXEMPT" in the block in Part II, sign
and date the form. If you are a nonresident alien or foreign entity not subject
to backup withholding, give the requester a completed FORM W-8, Certificate of
Foreign Status.
(7) TIN "APPLIED FOR". -- Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, check the box in Part II of the Substitute Form W-9 and sign and date
the form.
SIGNATURE. -- For a joint account, only the person whose TIN is shown in Part I
should sign the form.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ------------------------------------------------------------
GIVE THE NAME AND GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: EMPLOYER IDENTIFICATION
NUMBER OF: NUMBER OF:
- ------------------------------------------------------------ ------------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner (3)
2. Two or more individuals (joint The actual owner of the 7. A valid trust, estate or Legal entity (4)
account) account or, if combined funds, pension trust
the first individual on the
account (1) 8. Corporate The corporation
3. Custodian account of a minor The minor (2) 9. Association, club, religious, The organization
(Uniform Gift to Minors Act) charitable, educational, or
other tax-exempt organization
4. a. The usual revocable savings The grantor-trustee (1)
trust (grantor is also 10. Partnership The partnership
trustee)
11. A broker or registered nominee The broker or nominee
b. So-called trust account that The actual owner (1)
is not a legal or valid trust 12. Account with the Department of The public entity
under state law Agriculture in the name of a
public entity (such as a state
5. Sole proprietorship The owner (3) or local government, school
district, or prison) that
receives agricultural program
payments
- ------------------------------------------------------------ ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title).
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer is made solely by the Offer to
Purchase (as defined below) and the related Letter of Transmittal, and is being
made to all holders of Shares. Purchaser (as defined below) is not aware of any
state where the making of the Offer is prohibited by administrative or judicial
action pursuant to any valid state statute. If Purchaser becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of
Shares pursuant thereto, Purchaser will make a good faith effort to comply with
such state statute. If, after such good faith effort, Purchaser cannot comply
with such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE
FOR CASH
2,140,526 SHARES
OF
COMMON STOCK
(TOGETHER WITH THE RELATED SHARE PURCHASE RIGHTS)
OF
A+ NETWORK, INC.
AT
$21.10 NET PER SHARE
BY
METROCALL, INC.
Metrocall, Inc., a Delaware corporation ("Purchaser") is offering to
purchase 2,140,526 shares of Common Stock, par value $.01 per share, together
with the related share purchase rights issued pursuant to the Rights Agreement
dated February 16, 1995 by and between the Company (as defined below) and First
Union National Bank of North Carolina, as Rights Agent (the "Rights" and,
together with shares of Common Stock, the "Shares"), of A+ Network, Inc., a
Tennessee corporation (the "Company"), at a price of $21.10 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 22, 1996 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer"). Following
the Offer, Purchaser intends to effect the Merger described below.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 19, 1996,
(THE "EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer 2,140,526
Shares. The Offer is also conditioned upon, among other things, the expiration
or termination of the applicable antitrust waiting period.
If more than 2,140,526 Shares are validly tendered on or prior to the
Expiration Date and not properly withdrawn, the Purchaser will, upon the terms
and subject to the conditions of the Offer, purchase 2,140,526 Shares on a pro
rata basis (with adjustments to avoid purchases of fractional Shares) based on
the number of Shares validly tendered on or prior to the Expiration Date and not
properly withdrawn. In the event that proration of tendered Shares is required,
because of the time required to determine the precise number of
<PAGE> 2
Shares validly tendered and not properly withdrawn, the Purchaser does not
expect to be able to announce the final results of proration or to pay for any
Shares until approximately seven Nasdaq National Market trading days after the
Expiration Date. Preliminary results of such proration will be announced by
press release as promptly as practicable after the Expiration Date. Holders of
Shares may obtain such preliminary information from the Information Agent or the
Dealer Manager and may be able to obtain such information from their brokers.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 16, 1996 (the "Merger Agreement"), among the Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the satisfaction of the conditions set forth in the Merger
Agreement and in accordance with relevant provisions of the General Corporation
Law of the State of Delaware (the "Delaware Law") and the Tennessee Business
Corporation Act (the "Tennessee Law"), the Company will be merged with and into
the Purchaser (the "Merger"). Following consummation of the Merger, the
Purchaser will continue as the surviving corporation (the "Surviving
Corporation"). At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company, or owned by Purchaser) will be
cancelled and converted automatically into the right to receive (i) the number
of shares of common stock, $.01 par value, of the Purchaser (the "Purchaser
Shares") equal to the Conversion Ratio (determined on the basis described
below), (ii) the same number of Variable Common Rights (the "VCRs" and, together
with the Shares, the "Purchaser Securities"), plus (iii) cash in respect of
fractional Purchaser Securities, if any. The Conversion Ratio shall be
determined by dividing $21.10 by the average of the last bid price for the
Purchaser Shares on the Nasdaq National Market for the 50 consecutive trading
days ending on the trading day which is five days prior to the Closing Date
("Average Purchaser Share Price"), except that if the Average Purchaser Share
Price is greater than $21.88 or less than $17.90, then the Conversion Ratio
shall be .96435 or 1.17877, respectively. Each VCR will entitle the holder to
receive the amount, not to exceed $5.00 per VCR (unless increased as described
below), by which the market value of Purchaser Shares determined as of the first
anniversary of the Effective Time (the "Maturity Date"), is less than the
"Target Price" of $21.10 per share, adjusted downward, but not upward, based on
changes in an index composed of average closing bid prices of three other
companies in the paging industry. If the Purchaser extends the Maturity Date by
one year (the "Extended Maturity Date"), the Target Price will increase to
$25.10, adjusted as previously described, and the maximum amount which the
holder may receive will be $7.00 per VCR. The market value of the Purchaser
Shares for this purpose will be the median of the averages of the last bid price
for the Purchaser Shares on each trading day during each twenty trading day
period within the 60 trading days prior to the Maturity Date. In addition, if
the last bid price of the Purchaser Shares exceeds $21.10 for any consecutive
50-day period after the Effective Time and before the relevant Maturity Date or,
if the Maturity Date is extended, $25.10 for any 50-day period after the
Maturity Date and before the Extended Maturity Date, then the right to receive
any payments under the VCR will terminate. Any amounts payable under the VCRs
will be in cash or Purchaser Shares or common stock equivalents, as determined
by the Purchaser. The terms of the VCRs are described in Annex C to the Merger
Agreement.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE
COMPANY, AND RECOMMENDS ACCEPTANCE OF THE OFFER BY SHAREHOLDERS WHO WISH TO
RECEIVE CASH FOR A PORTION OF THEIR SHARES.
Simultaneously with entering into the Merger Agreement, the Purchaser and
certain shareholders of the Company, who together own 53.9% of the currently
outstanding shares, entered into a Shareholders' Option and Sale Agreement dated
as of May 16, 1996 (the "Shareholders' Agreement"), pursuant to which such
shareholders of the Company agreed to sell 2,210,217 Shares, representing 40% of
the Shares held by these shareholders, to Purchaser for a purchase price per
Share equal to the price per Share payable in the Offer. These Shareholders also
agreed to vote all of their shares in favor of the Merger. These shareholders
also granted the Purchaser options to purchase Shares, subject to certain
conditions, in certain circumstances, as described in more detail in the Offer
to Purchase.
<PAGE> 3
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to The Bank of
New York (the "Depositary") of Purchaser's acceptance for payment of such Shares
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payments
from Purchaser and transmitting such payments to tendering stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
"Section 2. Acceptance for Payment and Payment for Shares" of the Offer to
Purchase) pursuant to the procedure set forth in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees and (iii) any other documents
required under the Letter of Transmittal.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement, which limit the Purchaser's
right to extend), at any time and from time to time, to extend for any reason
the period of time during which the Offer is open, including the occurrence of
any condition specified in "Section 13. Certain Conditions of the Offer" of the
Offer to Purchase, by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as practicable by
public announcement thereof, such announcement to be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date of the Offer. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of tendering stockholders to withdraw their Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on June 19, 1996 (or the latest time and date at which the Offer, if
extended by Purchaser, shall expire) and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn at any time
after July 20, 1996. For the withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at one of its addresses set forth on the back cover page of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (as defined in "Section 3. Procedures for Accepting
the Offer and Tendering Shares" of the Offer to Purchase), unless such Shares
have been tendered for the account of an Eligible Institution. If Shares have
been tendered pursuant to the procedure for book-entry transfer as set forth in
"Section 3. Procedures for Accepting the Offer and Tendering Shares" of the
Offer to Purchase, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares. All questions as to the form and validity (including the time
of receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose
<PAGE> 4
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or commissions
will be paid to brokers, dealers or other persons (other than the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219
CALL TOLL-FREE: (800) 826-2804
May 22, 1996
<PAGE> 1
FOR IMMEDIATE RELEASE Contact: Vincent D. Kelly
May 16, 1996 Chief Financial Officer
Metrocall
(202) 663-6873
Elliott H. Singer
Chairman of the Board
A+ Network
(615) 385-4500
Paul J. Liberty
VP, Investor/Public Relations
Metrocall
(703) 660-6677, ext. 6260
METROCALL AND A+ NETWORK ANNOUNCE
DEFINITIVE MERGER AGREEMENT
May 16, 1996, Alexandria, VA and Nashville, TN. Metrocall, Inc. (MCLL - Nasdaq
NMS) and A+ Network, Inc. (ACOM - Nasdaq NMS) jointly announced today that they
have entered into a definitive merger agreement, whereby A+ Network would merge
into Metrocall in a two-step transaction. Metrocall will commence a tender
offer to purchase approximately 2.1 million A+ Network shares at $21.00 per
share, which combined with the direct purchase of approximately 2.2 million
shares from certain A+ Network shareholders will result in Metrocall owning
approximately 40% of the outstanding A+ Network shares upon completion of the
tender offer. At the time of the merger, each A+ Network shareholder will
receive shares of Metrocall common stock having a value of $21.10, subject to
certain adjustments based on the future trading price of Metrocall common
stock. A+ Network shareholders will also receive variable common rights
("VCRs") designed to provide additional consideration to A+ Network
shareholders if Metrocall's stock trades below certain targets over the next
year.
<PAGE> 2
The tender offer is expected to be completed in June 1996, and the subsequent
merger is expected to be completed during the fourth quarter of 1996. The
merger is subject to customary state and federal regulatory approvals and the
respective shareholder approvals of Metrocall and A+ Network. Major
shareholders from each of Metrocall and A+ Network have agreed to vote their
shares for the merger. Two members of the A+ Network board of directors,
Elliott H. Singer and Ray D. Russenberger, will join a newly constituted
Metrocall board of directors upon the completion of the merger. Charles
(Chuck) A. Emling, III, President and CEO of A+ Network, will become the
President of a newly-formed southeastern region.
This transaction, the sixth acquisition announced by Metrocall this year, will
make Metrocall the fourth largest paging company in the United States with pro
forma units in service approaching 2.5 million. Metrocall expects to finance
the tender offer and stock purchases through its existing cash on hand and
borrowings under its bank credit facilities. The 11 7/8% senior subordinated
debentures of A+ Network will be assumed by Metrocall upon the completion of
the merger.
A+ Network operates in the states of Florida, Georgia, Alabama, North Carolina,
South Carolina, Mississippi, Louisiana, Texas, Tennessee, and Virginia.
Currently, A+ Network has over 596,000 paging units in service and is expected
to exceed 675,000 units in service at the time of closing. In addition, A+
Network is a founding investor in PCS Development Corp., a holder and developer
of a nationwide Narrowband PCS license throughout the U.S. A+ Network was
recently formed through the merger of privately-held Network USA with A+
Communications.
-2-
<PAGE> 3
William L. Collins, III, Chief Executive Officer and President of Metrocall,
commented, "This is an outstanding strategic opportunity for Metrocall and we
are extremely pleased about completing Phase II of our stated three phase
strategy this far ahead of schedule. A+ Network is strategically
well-positioned with a dominant position in the southeastern United States, has
an enviable track record of outstanding internal growth and improving operating
performance. Our firms share a similar philosophy of providing high quality
services cost-effectively. A+ Network is an extremely strong competitor in the
core region in which it operates, and affords us the addition of a national
affiliate distribution network to load our own nationwide paging network, both
for the resale of local services as well as our enhanced regional and
nationwide coverage products. The addition of A+ Network is a significant step
in accomplishing our goal of achieving national scale and scope as an integral
component of our growth strategy."
Elliott H. Singer, Chairman of A+ Network, said "we are extremely excited about
the opportunity to combine our resources with Metrocall to exploit the dynamic
market opportunities in wireless communications. The scale of our combined
operations will better position us to exploit strategic distribution
relationships and in narrowband PCS services and other emerging digital
wireless technologies."
Metrocall's financial advisors are Wheat First Butcher & Singer and Daniels &
Associates. The financial advisor to A+ Network in the merger is Prudential
Securities Incorporated.
-3-
<PAGE> 4
Assuming completion of the A+ Network merger and other announced acquisitions,
Metrocall will be the nation's fourth largest wireless messaging company, and
would serve nearly 2-5 million subscribers.
* * *
-4-
<PAGE> 1
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
METROCALL, INC.
AND
A+ NETWORK, INC.
MAY 16, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer................................................................ 1
SECTION 1.2 AN Actions............................................................... 3
SECTION 1.3 The Merger............................................................... 4
SECTION 1.4 Effective Time........................................................... 4
SECTION 1.5 Certificate of Incorporation and By-Laws................................. 4
SECTION 1.6 Directors and Officers of Surviving Corporation.......................... 4
ARTICLE II
CONVERSION OF SHARES; EXCHANGE PROCEDURES
SECTION 2.1 Conversion of Shares..................................................... 5
SECTION 2.2 Certain Definitions...................................................... 5
SECTION 2.3 Exchange of Certificates................................................. 5
SECTION 2.4 AN Option Plans.......................................................... 6
SECTION 2.5 AN Subordinated Notes.................................................... 7
SECTION 2.6 Cash Election Merger..................................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AN
SECTION 3.1 Organization............................................................. 9
SECTION 3.2 Capitalization........................................................... 9
SECTION 3.3 Authorization; Validity of Agreement; AN Action.......................... 10
SECTION 3.4 Consents and Approvals; No Violations; Licenses.......................... 11
SECTION 3.5 SEC Reports and Financial Statements..................................... 12
SECTION 3.6 No Undisclosed Liabilities............................................... 12
SECTION 3.7 Absence of Certain Changes............................................... 12
SECTION 3.8 Employee Benefit Plans; ERISA; Labor..................................... 12
SECTION 3.9 Litigation............................................................... 14
SECTION 3.10 No Default; Compliance with Applicable Laws.............................. 14
SECTION 3.11 Taxes.................................................................... 14
SECTION 3.12 Environmental Matters.................................................... 15
SECTION 3.13 Insurance................................................................ 15
SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement; Other
Information............................................................ 15
SECTION 3.15 Transactions with Affiliates............................................. 16
SECTION 3.16 Brokers.................................................................. 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MC
SECTION 4.1 Organization............................................................. 16
SECTION 4.2 Capitalization........................................................... 16
SECTION 4.3 Authorization; Validity of Agreement; MC Action.......................... 17
SECTION 4.4 Consents and Approvals; No Violations; Licenses.......................... 18
SECTION 4.5 SEC Reports and Financial Statements..................................... 18
SECTION 4.6 No Undisclosed Liabilities............................................... 19
SECTION 4.7 Absence of Certain Changes............................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 4.8 Employee Benefit Plans; ERISA; Labor..................................... 19
SECTION 4.9 Litigation............................................................... 20
SECTION 4.10 No Default; Compliance with Applicable Laws.............................. 21
SECTION 4.11 Taxes.................................................................... 21
SECTION 4.12 Environmental Matters.................................................... 21
SECTION 4.13 Insurance................................................................ 21
SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement; Other
Information............................................................ 21
SECTION 4.15 Transactions with Affiliates............................................. 22
SECTION 4.16 Financing................................................................ 22
SECTION 4.17 Share Ownership.......................................................... 22
SECTION 4.18 Brokers.................................................................. 22
ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of AN and MC.......................................... 22
SECTION 5.2 Stockholder Approval; Meetings; Etc...................................... 25
SECTION 5.3 Proxy Statement, Registration Statement, Etc............................. 25
SECTION 5.4 Compliance with the Securities Act....................................... 26
SECTION 5.5 Nasdaq Listing........................................................... 27
SECTION 5.6 Approvals and Consents; Cooperation...................................... 27
SECTION 5.7 Access to Information.................................................... 28
SECTION 5.8 Employee Benefits and Relocation Matters................................. 28
SECTION 5.9 No Solicitation by AN.................................................... 28
SECTION 5.10 No Solicitation by MC.................................................... 29
SECTION 5.11 Brokers or Finders....................................................... 30
SECTION 5.12 Publicity................................................................ 30
SECTION 5.13 Notification of Certain Matters.......................................... 30
SECTION 5.14 Directors' and Officers' Insurance and Indemnification................... 30
SECTION 5.15 Expenses................................................................. 31
SECTION 5.16 Repurchase Option........................................................ 31
SECTION 5.17 Fair Price Statute....................................................... 33
SECTION 5.18 Further Assurances....................................................... 33
ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger............... 34
SECTION 6.2 Conditions to Obligations of AN to Effect the Merger..................... 34
SECTION 6.3 Conditions to Obligations of MC to Effect the Merger..................... 35
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................................. 35
SECTION 7.2 Termination Fee.......................................................... 37
SECTION 7.3 Effect of Termination.................................................... 37
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendment and Modification............................................... 37
SECTION 8.2 Nonsurvival of Representations and Warranties............................ 37
SECTION 8.3 Notices.................................................................. 37
SECTION 8.4 Headings................................................................. 38
SECTION 8.5 Interpretation........................................................... 38
SECTION 8.6 Counterparts............................................................. 38
SECTION 8.7 Entire Agreement; Third Party Beneficiaries.............................. 38
SECTION 8.8 Governing Law............................................................ 39
SECTION 8.9 Assignment............................................................... 39
SECTION 8.10 Further Assurances....................................................... 39
<CAPTION>
ANNEXES
Annex A -- Conditions to the Offer
Annex B -- Directors of the Surviving Corporation
Annex C -- Terms of VCRs
Annex D -- Employment and Employee Benefits
SCHEDULES
AN:
<S> <C>
Schedule 3.1 -- Subsidiaries of AN
Schedule 3.2 -- AN Capitalization; AN Pending Transactions
Schedule 3.4(a) -- AN Consents and Approvals
Schedule 3.4(c) -- AN FCC Authorizations
Schedule 3.6 -- Undisclosed Liabilities
Schedule 3.7 -- Certain Changes
Schedule 3.8 -- Employee Benefit Plans
Schedule 3.9 -- Litigation
Schedule 3.11 -- Taxes
Schedule 3.15 -- Transactions with Affiliates
Schedule 5.1(a) -- Permitted Activities by AN
MC:
Schedule 4.1 -- Subsidiaries of MC
Schedule 4.2 -- MC Capitalization; Commitments Regarding MC Securities
Schedule 4.4 -- MC Consents and Approvals
Schedule 4.6 -- Undisclosed Liabilities
Schedule 4.7 -- Certain Changes
Schedule 4.8 -- Employee Benefit Plans
Schedule 4.9 -- Litigation
Schedule 4.11 -- Taxes
Schedule 4.15 -- Transactions with Affiliates
Schedule 5.1(b) -- Permitted Activities by MC
</TABLE>
iii
<PAGE> 5
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
A+ Network............................................................................. 11
Affiliates............................................................................. 26
AN..................................................................................... 1
AN Benefit Plans....................................................................... 12
AN Certificates........................................................................ 5
AN Comfort Letter...................................................................... 26
AN Employee Agreements................................................................. 12
AN ERISA Affiliate..................................................................... 12
AN Fairness Opinion.................................................................... 4
AN Financial Advisor................................................................... 4
AN Financial Statements................................................................ 12
AN Material Agreements................................................................. 11
AN Option.............................................................................. 6
AN Option Plans........................................................................ 7
AN Pending Transactions................................................................ 9
AN SEC Documents....................................................................... 12
AN State Certificates.................................................................. 11
AN Termination Fee Event............................................................... 32
Average Parent Share Price............................................................. 5
CERCLA................................................................................. 15
Claim.................................................................................. 31
Closing................................................................................ 4
Closing Date........................................................................... 4
Code................................................................................... 1
Combination Act........................................................................ 1
Communications Act..................................................................... 11
Confidentiality Agreement.............................................................. 28
Conversion Ratio....................................................................... 5
D&O Insurance.......................................................................... 31
DGCL................................................................................... 1
Effective Time......................................................................... 4
Election contest....................................................................... 32
Environmental Law...................................................................... 15
ERISA.................................................................................. 12
Exchange Act........................................................................... 2
Exchange Agent......................................................................... 5
FCC.................................................................................... 11
Final Regulatory Order................................................................. 32
Fully diluted basis.................................................................... 10
GAAP................................................................................... 12
Governmental Entity.................................................................... 11
HSR Act................................................................................ 11
Indemnified Party...................................................................... 30
Interest Payment Event................................................................. 32
IRS.................................................................................... 12
Junior Preferred....................................................................... 11
Material Adverse Effect................................................................ 11
Materials of Environmental Concern..................................................... 15
MC..................................................................................... 1
MC Benefit Plans....................................................................... 19
MC Employee Agreements................................................................. 19
MC ERISA Affiliate..................................................................... 19
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MC Fairness Opinion.................................................................... 3
MC Financial Advisor................................................................... 3
MC Financial Statements................................................................ 19
MC Licenses............................................................................ 18
MC Material Agreements................................................................. 18
MC Options............................................................................. 17
MC Pending Transactions................................................................ 17
MC SEC Documents....................................................................... 18
MC Shares.............................................................................. 3
MC Voting Agreement.................................................................... 1
Meeting................................................................................ 25
Merger................................................................................. 1
Merger Agreement....................................................................... A-1
Merger Consideration................................................................... 5
Merger Documents....................................................................... 4
Minimum Condition...................................................................... 2
Notes.................................................................................. 7
Offer.................................................................................. 1,2
Offer Documents........................................................................ 2
Offer Price............................................................................ 2
Offer to Purchase...................................................................... 2
Parent Pending Transactions............................................................ 17
Participant............................................................................ 32
Proposal............................................................................... 25
Proxy Statement........................................................................ 15
Registration Statement................................................................. 15
Regulatory Filings..................................................................... 27
Repurchase Event....................................................................... 31
Repurchase Period...................................................................... 32
Repurchase Shares...................................................................... 32
Rights................................................................................. 1
Rights Plan............................................................................ 1
SAS 49................................................................................. 26
Schedule 14D-1......................................................................... 2
Schedule 14D-9......................................................................... 3
SEC.................................................................................... 2
Securities Act......................................................................... 11
Shareholders' Agreement................................................................ 1
Shares................................................................................. 1
Solicitation........................................................................... 32
State Authority........................................................................ 11
Subsidiary............................................................................. 9
Surviving Corporation.................................................................. 4
Tax Return............................................................................. 14
Taxes.................................................................................. 14
TBCA................................................................................... 1
TIPA................................................................................... 1
VCRs................................................................................... 5
Voting Debt............................................................................ 10
Voting Stock........................................................................... 32
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1996, between METROCALL,
INC., a Delaware corporation ("MC"), and A+ NETWORK, Inc., a Tennessee
corporation ("AN").
WHEREAS, the Boards of Directors of MC and AN have approved, and deemed it
advisable and in the best interests of their respective stockholders to
consummate, a combination of their respective businesses upon the terms and
subject to the conditions set forth herein;
WHEREAS, it is intended that the business combination be accomplished by MC
commencing a cash tender offer (the "Offer") for certain issued and outstanding
shares of common stock of AN, $.01 par value (the "Shares"), together with the
related share purchase rights (the "Rights") issued pursuant to the Rights
Agreement dated February 16, 1995 by and between AN and First Union National
Bank of North Carolina, as Rights Agent (the "Rights Plan"), to be followed by a
merger of AN with and into MC (the "Merger");
WHEREAS, to satisfy a condition to MC entering into this Agreement and
incurring the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, certain shareholders of AN have entered into a
Shareholders' Option and Sale Agreement (the "Shareholders' Agreement") with MC
pursuant to which such shareholders have agreed, on the terms and subject to the
conditions thereof, to sell certain of their Shares to MC, to vote certain of
their Shares and to grant MC an option to purchase certain of such Shares;
WHEREAS, to satisfy a condition of AN's entering into this Agreement and
incurring the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, certain stockholders of MC have entered into a
voting agreement (the "MC Voting Agreement") granting AN a proxy with respect to
the voting of their MC Shares (as defined below);
WHEREAS, the Board of Directors of AN has (i) adopted this Agreement
pursuant to Section 48-21-104(a) of the Tennessee Business Corporation Act (the
"TBCA"), resolved to submit this Agreement for approval by the holders of the
Shares pursuant to Section 48-21-104(b) of the TBCA, and resolved to recommend
acceptance of the Offer by the holders of the Shares, (ii) duly approved the
business combination contemplated by this Agreement, the Shareholders' Agreement
and the MC Voting Agreement in accordance with the provisions of Section
48-103-205 of the Tennessee Business Combination Act (the "Combination Act"),
(iii) caused the transactions contemplated hereby not to be a "take over offer"
as defined in Section 48-103-102(10)(B)(v) of the Tennessee Investor Protection
Act ("TIPA"), and (iv) determined that MC will not be deemed an "Acquiring
Person" for the purposes of the Rights Plan.
WHEREAS, the Board of Directors of MC has (i) adopted this Agreement,
resolved to submit this Agreement for approval by the stockholders of MC
pursuant to Section 252 of the Delaware General Corporation Law ("DGCL"), and
resolved to recommend that all stockholders of MC approve and adopt this
Agreement and the Merger, and (ii) duly approved the business combination
contemplated by this Agreement, the Shareholders' Agreement and the MC Voting
Agreement so as to render inapplicable thereto the provisions of Section 203 of
the DGCL; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger provided for herein shall qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code"), and this Agreement is intended
to be and is adopted as a plan of reorganization within the meaning of Section
368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer. (a) As promptly as practicable (but in no event
later than five business days after the public announcement of the execution of
this Agreement), MC shall commence (within the meaning
1
<PAGE> 8
of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
Exchange Act)), an offer (the Offer) to purchase for cash 2,140,526 Shares,
together with the Rights, at a price of $21.10 per Share, net to the seller in
cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Offer Price" (provided that MC shall not be
required to increase the Offer Price)), subject to there being validly tendered
in accordance with the terms of the Offer and not withdrawn prior to the
expiration of the Offer 2,140,526 Shares and related Rights (the "Minimum
Condition") and to the other conditions set forth in Annex A hereto. Except as
otherwise provided herein, MC shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as such actions are permitted under applicable
law. The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto. MC shall not
amend or waive the Minimum Condition and shall not decrease the Offer Price or
decrease the Minimum Condition or amend any other material condition of the
Offer in any manner adverse to the holders of the Shares without the prior
written consent of AN (such consent to be authorized by the Board of Directors
of AN or a duly authorized committee thereof). Notwithstanding the foregoing,
(i) if on the expiration date of the Offer (A) there exists an AN Acquisition
Proposal (as defined in Section 5.9(a)) involving a tender offer, MC may extend
the Offer to a date that is two business days after the date the position of AN
with respect to the tender offer is first published or sent pursuant to Rule
14e-2 under the Exchange Act, or (B) there exists an AN Acquisition Proposal
other than a tender offer, MC may extend the Offer to a date that is two
business days after the first date on which AN's failure to reject such AN
Acquisition Proposal would permit MC to terminate this Agreement pursuant to
Section 7.1(d)(v) hereof, (ii) in circumstances other than those covered by the
preceding clause (i), MC may extend the Offer for such period of time, not to
exceed 20 business days in the aggregate, as is reasonably expected to be
necessary in order to satisfy the Minimum Condition or the other conditions set
forth in Annex A hereto, and (iii) the Offer Price may be increased in good
faith and the Offer may be extended to the extent required by law in connection
with such increase, in each case without the consent of AN. It is agreed the
conditions set forth in Annex A hereto are for the benefit of MC and may be
asserted by MC regardless of the circumstances giving rise to any such condition
(including any action or inaction by MC not inconsistent with the terms hereof)
or, except with respect to the Minimum Condition set forth above, may be waived
(but not amended) by MC, in whole or in part at any time and from time to time,
in its sole discretion.
(b) As soon as practicable on the date the Offer is commenced, MC shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer
to Purchase and a form of letter of transmittal and summary advertisement
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). The Offer Documents will contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law, and shall conform in all material respects with the
requirements of the Exchange Act and any other applicable law; provided,
however, that no agreement or representation is hereby made or shall be made by
MC with respect to information supplied or approved by AN in writing expressly
for inclusion in the Offer Documents. MC agrees to take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Each of MC, on the one hand, and AN, on the other hand,
agrees to promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false and misleading in
any material respect, and MC further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. AN and its counsel shall be given the
opportunity to review the Schedule 14D-1 and any amendments thereto before any
of them are filed with the SEC. In addition, MC agrees to provide to AN and its
counsel, in written form and promptly after receipt, any comments or other
communications that MC or its counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents.
2
<PAGE> 9
(c) MC hereby approves of and consents to the Offer and represents and
warrants that the Board of Directors of MC, at a meeting duly called and held,
has, with the affirmative vote of at least a majority of the members of the
Board of Directors of MC, (i) determined that this Agreement, the MC Voting
Agreement, and the transactions contemplated hereby (which shall include the
Offer, the Merger, and the Shareholders' Agreement) are fair to and in the best
interests of the holders of shares of MC's common stock, $.01 par value (the "MC
Shares"), (ii) adopted this Agreement and resolved to submit this Agreement for
approval by the stockholders of MC pursuant to Section 252 of the DGCL, and
(iii) approved this Agreement and the transactions contemplated hereby, such
determination and approval constituting approval hereof for purposes of Section
203 of the DGCL.
(d) MC has received the written opinion of Wheat, First Securities, Inc.
(the "MC Financial Advisor"), dated on or before the date of this Agreement, to
the effect that, as of such date, the consideration to be paid (i) to the
holders of Shares pursuant to the Offer, and (ii) to the holders of Shares
pursuant to the Merger, taken together, is fair to the holders of MC Shares from
a financial point of view (the "MC Fairness Opinion"). MC has delivered to AN a
copy of the MC Fairness Opinion, together with MC Financial Advisor's written
consent to the inclusion of or reference to the MC Fairness Opinion (in a form
and substance satisfactory to MC Financial Advisor) in the Offer Documents, the
Schedule 14D-9 and the Registration Statement (as defined below).
SECTION 1.2 AN Actions. (a) AN hereby approves of and consents to the
Offer and represents and warrants that the Board of Directors of AN, at a
meeting duly called and held, has, with the affirmative vote of at least a
majority of the members of the Board of Directors of AN, (i) determined that
this Agreement and the transactions contemplated hereby (which shall include the
Offer, the Merger and the Shareholders' Agreement) are fair to and in the best
interests of the holders of Shares, (ii) approved this Agreement and the
transactions contemplated hereby, such determination and approval constituting
approval thereof for purposes of Section 48-103-205 of the Combination Act and
such that MC is not an "Acquiring Person" under the Rights Plan, (iii) adopted
this Agreement pursuant to Section 48-21-104(a) of the TBCA and resolved to
submit the Agreement for approval by the holders of the Shares pursuant to
Section 28-21-104(b), and (iv) resolved to recommend that the shareholders of AN
who desire to receive cash for their Shares (or a portion thereof) accept the
Offer and tender their Shares thereunder to MC and that all shareholders of AN
approve and adopt this Agreement and the Merger, which recommendation shall
comply with Section 48-103-102(10)(B) of TIPA; provided, that such
recommendations may be withdrawn, modified or amended upon a determination of
the Board of Directors made in accordance with Section 5.9(f).
(b) Concurrently with the commencement of the Offer, AN shall file with the
SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9") which shall, subject to a determination of the Board of
Directors made in accordance with Section 5.9(f), contain the recommendation
referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will
contain (or be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law, and shall conform
in all material respects with the requirements of the Exchange Act and any other
applicable law; provided, however, that no agreement or representation is hereby
made or shall be made by AN with respect to information supplied or approved by
MC in writing expressly for inclusion in the Schedule 14D-9. AN further agrees
to take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Each of AN, on the one hand, and
MC, on the other hand, agrees to promptly correct any information such party has
previously provided for use in the Schedule 14D-9, if and to the extent that
such information shall have become false and misleading in any material respect,
and AN further agrees to take all steps necessary to cause the Schedule 14D-9
(as so corrected) to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. MC and its counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendments thereto before any of them are filed with the
SEC. In addition, AN agrees to provide MC and its counsel, promptly after
receipt and in written form, with any
3
<PAGE> 10
comments or other communications that AN or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9.
(c) In connection with the Offer, AN will promptly furnish or cause to be
furnished to MC mailing labels containing the names and addresses of the record
holders of the Shares as of a recent date and of those persons becoming record
holders subsequent to such date and, to the extent known, a list of the
beneficial owners of the Shares as of a recent date, together with copies of all
security positions listings and all other information in AN's possession or
control regarding the beneficial owners of the Shares, and shall furnish MC with
such information and assistance as MC or its agents may reasonably request in
communicating the Offer to the shareholders of AN. From and after the date of
this Agreement, all such information concerning AN's record and, to the extent
known, beneficial holders shall be made available to MC. Except for such steps
as are necessary to disseminate the Offer Documents or consummate the Merger, MC
shall hold in confidence the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence, will
use such information only in connection with the Offer and the Merger, and, if
this Agreement is terminated, will deliver or cause to be delivered to AN all
copies of such information then in its possession or the possession of its
agents or representatives.
(d) AN has received the written opinion of Prudential Securities
Incorporated (the "AN Financial Advisor"), dated on or before the date of this
Agreement, to the effect that, as of such date, the consideration to be received
by holders of Shares (other than MC and its affiliates) pursuant to the Offer
and Merger, taken together, is fair to such holders from a financial point of
view (the "AN Fairness Opinion"). AN has delivered to MC a copy of the AN
Fairness Opinion, together with AN Financial Advisor's written consent to the
inclusion of or reference to the AN Fairness Opinion (in a form and substance
satisfactory to AN Financial Advisor) in the Offer Documents, the Schedule 14D-9
and the Registration Statement.
SECTION 1.3 The Merger. Upon the terms and subject to the conditions set
forth in Article VI hereof, and in accordance with the DGCL and the TBCA, AN
shall be merged with and into MC. The closing (the "Closing") of the Merger
shall take place as promptly as practicable but in no event later than the date
that is two business days after satisfaction or waiver of the conditions set
forth in Article VI (other than those relating to documents to be delivered at
the Closing). The Closing will be held at such time and at such place as the
parties hereto may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date." Following the Merger, the separate corporate
existence of AN will cease, and MC shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all of the rights
and obligations of AN.
SECTION 1.4 Effective Time. Upon the Closing, the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Tennessee articles
of merger, certificates of merger or other appropriate documents (in any such
case, the "Merger Documents") in such form as is required by, and executed in
accordance with, this Agreement and the relevant provisions of the TBCA and the
DGCL (the date and time of the later of such filings being referred to herein as
the "Effective Time"). The Merger shall have the effects set forth in Section
48-21-108 of the TBCA and the Section 252 of DGCL.
SECTION 1.5 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws of MC, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
SECTION 1.6 Directors and Officers of Surviving Corporation. (a) The
directors of MC immediately prior to the Effective Time shall be the directors
of the Surviving Corporation at the Effective Time.
(b) The officers of MC shall be the officers of the Surviving Corporation
and shall hold their office from the Effective Time until they resign or their
earlier death or removal.
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<PAGE> 11
ARTICLE II
CONVERSION OF SHARES; EXCHANGE PROCEDURES
SECTION 2.1 Conversion of Shares. (a) Each Share, together with the
related Rights, issued and outstanding immediately prior to the Effective Time
(other than Shares held by MC or any Subsidiary (as defined in Section 3.1) of
MC) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive (i) such number of duly
authorized, validly issued, fully paid and nonassessable MC Shares equal to the
Conversion Ratio (as defined in Section 2.2), and (ii) a number of rights to
receive amounts to be determined in accordance with, and which rights are
evidenced by, Variable Common Rights having the terms described in Annex C
hereto ("VCRs") in an amount equal to the number of MC Shares to be received
pursuant to clause (i); plus (iii) cash, if any, for fractional MC Shares and
VCRs pursuant to Section 2.3(f) hereof (collectively, the "Merger
Consideration").
(b) Each Share (i) held in the treasury of AN or any Subsidiary of AN and
(ii) held by MC or any Subsidiary of MC immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and cease to exist and no Merger Consideration
shall be issued in respect thereof.
SECTION 2.2 Certain Definitions.
"Average MC Share Price" shall mean the average of the last reported
bid price per MC Share on the Nasdaq National Market for the 50 consecutive
trading days ending on the trading day that is five trading days prior to
the Closing Date, provided that the Average MC Share Price shall not exceed
$21.88 or be less than $17.90.
"Conversion Ratio" shall mean the number determined by dividing $21.10
by the Average MC Share Price and rounding the result to the nearest
1/100,000 of a share. In the event that, between the date of this Agreement
and the Effective Time, the number of issued and outstanding Shares or MC
Shares shall have been changed into a different number of shares or a
different class of shares as a result of a stock split, reverse stock
split, stock dividend, spinoff, extraordinary dividend, recapitalization,
reclassification or other similar transaction with a record date within
such period, the Conversion Ratio shall be appropriately adjusted. The
Conversion Ratio shall also be adjusted by multiplying such Ratio at the
Effective Time by a fraction, (a) the numerator of which is the sum of (i)
Scheduled Shares (as defined below) plus (ii) any Shares with respect to
which MC consents to the issuance pursuant to Section 5.1(a) ("Total
Permitted Shares"), and (b) the denominator of which is the sum of (i) all
Shares issued and outstanding at the Effective Time plus (ii) all Shares
that would be issuable by AN pursuant to or in connection with pending
acquisition or AN Options, provided, that no adjustment shall be made if
the resulting fraction is equal to 1.00 or more.
SECTION 2.3 Exchange of Certificates. (a) Prior to the Effective Time, AN
and MC shall appoint First Union National Bank of North Carolina (or any other
commercial bank or trust company, which shall be reasonably acceptable to AN and
MC) to act as exchange agent (the "Exchange Agent") to effect the exchange of
certificates representing the Shares as set forth in Section 2.1 hereof
(collectively, the "AN Certificates") for the Merger Consideration. The
Surviving Corporation shall make available, or shall cause to be made available,
to the Exchange Agent for the benefit of the holders of Shares for exchange in
accordance with this Article II, certificates representing MC Shares and VCRs
issuable pursuant to Section 2.1 and funds in amounts necessary to make any cash
payments pursuant to Section 2.3(f).
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each person who was, at the Effective Time,
a holder of record of a AN Certificate (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to an AN
Certificate shall pass, upon (and only upon) proper delivery to, and receipt of
such AN Certificate by, the Exchange Agent, and which shall be in such form and
have such other provisions as the Surviving Corporation may reasonably specify,
and (ii) instructions for use in effecting the surrender of such AN Certificate
in exchange for a certificate representing MC Shares such holder is entitled to
pursuant to this Article II. Upon surrender of an AN Certificate, together with
such letter of transmittal duly completed and validly executed in
5
<PAGE> 12
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such AN Certificate shall
be entitled to receive in exchange therefor, after the Effective Time, (i) a
certificate representing that number of MC Shares to which such holder of Shares
shall have become entitled pursuant to the provisions of this Article II, (ii) a
certificate representing that number of VCRs to which such holder of Shares
shall have become entitled pursuant to the provisions of this Article II, and
(iii) if applicable, a check representing the amount of cash to which such
holder of Shares shall have become entitled pursuant to the provisions of
Section 2.3(f), and the AN Certificate so surrendered shall forthwith be
canceled. All payments in respect of Shares which are made in accordance with
the terms hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such Shares.
(c) No dividends or other distributions declared with respect to Shares and
payable to the holders of record thereof after the Effective Time shall be paid
to the holder of any unsurrendered AN Certificate until the holder thereof shall
surrender such AN Certificate in accordance with Section 2.3(b) hereof. Subject
to the effect, if any, of applicable law, after the subsequent surrender and
exchange of an AN Certificate, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore have become payable with respect to MC Shares, into which the
Shares represented by such AN Certificate have been converted.
(d) If any portion of the Merger Consideration (whether a certificate
representing MC Shares, a certificate representing VCRs or a check representing
cash payment pursuant to Section 2.3(f)) is to be issued or paid in a name other
than that in which the AN Certificate surrendered in exchange therefor is
registered, it shall be a condition to the issuance thereof that the AN
Certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing MC Shares, a certificate representing VCRs or a check
representing the cash payment pursuant to Section 2.3(f) in any name other than
that of the registered holder of the AN Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) On and after the Effective Time: the stock transfer books of AN shall
be closed and there shall be no further registration of transfers of the Shares
which were outstanding immediately prior to the Effective Time; the AN
Certificates representing Shares (and the Rights) shall cease to have any rights
with respect to such Shares (or Rights) except as otherwise provided for herein
or by applicable law; and the MC Shares and VCRs into which Shares have been
converted pursuant to Section 2.1 hereof shall be deemed outstanding (subject to
Section 2.3(c)) notwithstanding the failure of the holders thereof to surrender
and exchange AN Certificates as specified herein.
(f) No certificates or scrip representing fractional MC Shares or VCRs
shall be issued upon the surrender for exchange of AN Certificates, no dividend,
distribution or other payment with respect to MC Shares or VCRs shall be payable
on or with respect to any fractional MC Share or VCR and such fractional MC
Share shall not entitle the owner thereof to vote or to any other rights of a
shareholder or creditor of AN. In lieu of any such fractional MC Share or
fractional VCR, the Surviving Corporation shall pay to each shareholder of AN
who otherwise would be entitled to receive a fractional MC Share and a
fractional VCR an amount in cash determined by (i) dividing $21.10 by the
Conversion Ratio and (ii) multiplying the result by the fractional MC Share
interest to which such holder would otherwise be entitled.
(g) At any time following six (6) months after the Effective Time, the
Surviving Corporation may terminate its agreement with the Exchange Agent, and
thereafter holders of AN Certificates shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the consideration payable upon due
surrender of their AN Certificates pursuant to the provisions of this Article
II. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Exchange Agent shall be liable to any holder of a AN Certificate for
consideration delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
SECTION 2.4 AN Option Plans. (a) Each outstanding option to purchase
Shares (each, a "AN Option") granted pursuant to AN's 1987 Employee Stock
Incentive Plan, 1992 Employee Stock Incentive
6
<PAGE> 13
Plan, 1992 Non-Qualified Stock Option Plan or the Employee Stock Purchase Plan
(collectively, the "AN Option Plans"), or to Dan Hiller which are described in
Schedule 3.2, and which have not vested prior to the Effective Time, shall
become fully exercisable and vested as of the Effective Time.
(b) Effective as of the Effective Time, at the option of the holder
thereof, either (i) each AN Option then outstanding and not exercised shall be
converted automatically into an option to purchase such number of MC Shares and
VCRs equal to the number of Shares subject to such AN Option immediately prior
to the Effective Time multiplied by the Conversion Ratio, with the exercise
price adjusted accordingly, but otherwise on the same terms and conditions as
were applicable under the applicable AN Option Plan and the underlying stock
option agreement or (ii) up to a maximum of 40% of the Shares subject to AN
Options held by each holder, such percentage to be determined by such holder,
shall be cancelled and the holder thereof shall be entitled to receive, with
respect to each such Share subject to such AN Option, the Offer Price on the
Closing Date net to the holder in cash, less the aggregate unpaid exercise price
relating to the exercise of such AN Options, and the remaining AN Options held
by such holder shall be converted as described in clause (i) of this sentence.
(c) Notwithstanding the foregoing provisions, in the case of any option to
which Code Section 421 applies, the option price, the number of shares subject
to such option, and the terms and conditions of exercise of such option shall be
determined in order to comply with Code Section 424(a). As soon as practicable
after the Effective Time, the Surviving Corporation shall deliver to the holders
of AN Options appropriate notices setting forth such holders' rights pursuant to
AN Option Plans and each underlying stock option agreement.
SECTION 2.5 AN Subordinated Notes. After the Effective Time, MC will
comply with applicable terms of the Indenture for AN's 11 7/8% Senior
Subordinated Notes due 2005 (the "Notes") including, if required, offering to
repurchase the Notes or causing them to be assumed by the Surviving Corporation.
In the event MC elects to exercise the Scenario I Option (as defined in the
Shareholders Agreement), MC shall provide an irrevocable letter of credit (from
a bank and containing terms reasonably acceptable to AN) permitting AN to draw
sufficient funds for AN to honor the "Change in Control" provisions under the
11 7/8% Senior Subordinated Notes due 2005, dated as of October 25, 1995 (the
"Indenture") and to permit the Holders (as defined in the Indenture) to sell
such Holder's Notes to AN, in whole or in part, at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase; provided that MC may substitute for the
letter of credit a firm financing commitment satisfactory to AN, in its sole
discretion, permitting MC to borrow sufficient funds for AN to honor the
obligations set forth above. In such event, MC shall provide AN all funds
required to satisfy the "Change in Control" obligations under the Indenture
prior to the last date AN is permitted to make payments to the Holders of the
Notes to be purchased thereunder. If MC provides such funds to AN, upon the
purchase of Notes pursuant to the Change in Control obligations, AN will issue
to MC negotiable promissory notes in the respective principal amounts of the
funds provided by MC, each of which shall bear interest and otherwise have terms
and provisions identical as nearly as possible to the Notes so purchased,
including the terms and provisions of the Indenture under which such Notes were
issued.
SECTION 2.6 Cash Election Merger. In the event of, and subject to, the
purchase by MC of Shares pursuant to the Mandatory Option in accordance with
Section 3.3.3 of the Shareholders' Agreement, then, notwithstanding any other
provision of this Agreement to the contrary, each Share, together with the
related Rights, issued and outstanding immediately prior to the Effective Time,
other than Shares held by MC or any Subsidiary of MC (the "Non-MC Shares"),
shall, by virtue of the Merger and without any action on the part of any holder
thereof, be converted into the right to receive cash, on the one hand, and MC
Shares and VCRs (collectively, the "Alternative Merger Consideration"), on the
other, in accordance with the following terms and procedures:
(a) Each person who, at the Effective Time, is a record holder of
Non-MC Shares shall have the right to submit an Election Form (as defined
below) specifying the number of Shares that such person desires to have
converted into the right to receive cash equal to $21.10 (a "Cash
Election") or the number of MC Shares and VCRs equal, in each case, to the
Conversion Ratio (the "Stock Election").
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(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of the Shares
immediately prior to the Effective Time (A) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the AN Certificates shall pass, only upon delivery of such AN
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as MC shall specify), (B) instructions for use in
effecting the surrender of the AN Certificates in exchange for the
Alternative Merger Consideration, and (C) an election form (the "Election
Form") providing for such holders to make the Cash Election and/or the
Stock Election.
(c) Any Cash Election or Stock Election shall have been validly made
only if the Exchange Agent shall have received by 5:00 p.m. New York, New
York time on a date (the "Election Deadline") to be mutually agreed upon by
MC and AN prior to the Effective Time, an Election Form properly completed
and executed (with the signature or signatures thereof guaranteed to the
extent required by the Election Form) by such holder accompanied by such
holder's AN Certificates, or by an appropriate guarantee of delivery of
such AN Certificates. Any holder of Shares who has made an election by
submitting an Election Form to the Exchange Agent may at any time prior to
the Election Deadline change such holder's election by submitting a revised
Election Form, properly completed and signed, that is received by the
Exchange Act prior to the Election Deadline. In the event that any holder
of Shares shall not have submitted an Election Form or if the Election Form
is not in proper form, such holder will be deemed to have elected to have
made a Cash Election for 40% of such holder's Shares, and a Stock Election
for 60% of such holder's Shares. Promptly following the Election Deadline,
the Exchange Agent shall examine the Election Forms and determine the
aggregate number of Shares that have made, or are deemed to have made, the
Cash Election (the "Requested Cash Amount") and the aggregate number of
Shares that have made the Stock Election (the "Requested Stock Amount").
(d) In the event that the Requested Cash Amount exceeds 40% of the
aggregate Non-MC Shares ("Cash Cap"): (i) each holder who submitted or is
deemed to have submitted a Cash Election shall have the right to receive
(i) $21.10 per Share for that number of Shares, or fractions thereof, equal
to the number specified or deemed to be specified in the Cash Election,
multiplied times a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount; and (ii) with respect to
all other Shares, including Shares not converted into cash pursuant to
clause (i) and Shares as to which the holder has submitted or is deemed to
have submitted a Stock Election, the holder shall have the right to receive
for each such share (A) a number of MC Shares equal to the Conversion
Ratio, (B) a number of VCRs equal to the number of MC Shares to be received
pursuant to clause (A), plus (C) cash, if any, for fractional MC Shares and
VCRs pursuant to Section 2.3(f).
(e) In the event that the Requested Stock Amount exceeds 60% of the
aggregate Non-MC Shares ("Stock Cap"): (i) each holder who submitted or is
deemed to have submitted a Stock Election shall have the right to receive
for each Share subject to a Stock Election (A) that number of MC Shares
equal in each case, to the Conversion Ratio, multiplied by a fraction, the
numerator of which is the Stock Cap and the denominator of which is the
Requested Stock Amount, (B) a number of VCRs equal to the number of MC
Shares to be received pursuant to clause (A), plus (C) cash for fractional
shares calculated pursuant to Section 2.3(f); and (ii) with respect to all
other Shares, including Shares not converted into MC Shares and VCRs
pursuant to clause (i) and Shares as to which the holder has submitted or
is deemed to have submitted a Cash Election, or fractions thereof, the
holder shall have the right to receive $21.10 in cash per Share.
(f) Promptly after the Effective Time, (i) MC shall deposit (or cause
to be deposited) with the Exchange Agent, for the benefit of the holders of
the Shares, for exchange in accordance with this Section 2.6, cash in the
amount sufficient to pay the aggregate cash portion of the Alternative
Merger Consideration, and (ii) MC shall deposit (or cause to be deposited)
with the Exchange Agent, for the benefit of the holders of the Shares,
certificates representing the MC Shares and VCRs for exchange in accordance
with this Section 2.6.
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(g) Except as expressly provided herein, the conversion of Shares and
exchange for Alternative Merger Consideration, including without limitation
the treatment of unexercised AN Options, shall be governed by the
provisions of this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AN
AN represents and warrants to MC as follows:
SECTION 3.1 Organization. (a) Except as set forth on Schedule 3.1, each
of AN and its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not have a Material Adverse Effect on AN and its Subsidiaries
taken as a whole. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. As used in this Agreement,
any reference to "Material Adverse Effect" on or with respect to any entity (or
group of entities taken as a whole) means any event, change or effect that is
materially adverse to the consolidated financial condition, businesses, results
of operations or cash flows of such entity (or, if used with respect thereto, of
such group of entities taken as a whole). AN and each of its Subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from
consummating any of the transactions contemplated hereby.
(b) AN has heretofore made available to MC a complete and correct copy of
the Charter and By-Laws or other organizational documents of AN and the
organizational documents of each of its Subsidiaries, as currently in effect.
Each such document is in full force and effect and no other organizational
documents are applicable to or binding upon AN or any Subsidiary.
(c) Schedule 3.1 identifies all the Subsidiaries of AN.
SECTION 3.2 Capitalization. (a) The authorized capital stock of AN
consists of 30,000,000 shares of common stock and 1,500,000 shares of preferred
stock, par value $.01 per share, of which 500,000 shares have been reserved and
designated as Series A Junior Participating Preferred Stock ("Junior
Preferred"). Schedule 3.2 sets forth (i) the number of issued and outstanding
Shares as of the date hereof; (ii) the number of Shares that would be issuable
by AN upon the exercise of all unexpired AN Options granted pursuant to AN
Option Plans, including the name of each holder of AN Options, the number of AN
Options held by such holder, and the date of grant, date of vesting, and
exercise price for all such AN Options of AN; (iii) all Shares that would be
issuable by AN pursuant to or in connection with each of the acquisition
agreements or transactions identified in Schedule 3.2 (the "AN Pending
Transactions"); and (iv) all other Shares issuable to any person pursuant to any
existing options, warrants, calls, preemptive (or similar) rights, subscriptions
or other rights, agreements, arrangements or commitments of any character,
except pursuant to the Rights (collectively, the "Scheduled Shares"). As of the
date hereof, no shares of preferred stock, including any Junior Preferred, are
issued and outstanding or held in the treasury of AN, and no Shares are held in
the treasury of AN. AN has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue shares of AN's capital stock
which may be issued pursuant to AN Options. The Shares subject to the
Shareholders' Agreement, together with the Shares acquired by MC in the Offer
(assuming the Minimum Condition is not waived or reduced) do, and at all times
prior to the earlier of exercise or expiration of the
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options granted pursuant to the Shareholders' Agreement will, represent at least
a majority of the Shares on a fully diluted basis. For purposes of this
Agreement, "fully diluted basis" shall mean, at any time, the number of Shares
that would be outstanding assuming the exercise of all outstanding options and
other rights to acquire Shares (other than pursuant to the Rights) or other
securities convertible into Shares (including any Shares to be issued pursuant
to any AN Pending Transaction), and the conversion of all securities convertible
into Shares. All the outstanding shares of AN's capital stock are, and all
shares which may be issued pursuant to the exercise of AN Options, when issued
in accordance with the respective terms thereof will be, duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive (or
similar) rights. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of AN or any of its Subsidiaries issued and outstanding. Except
as set forth in Schedule 3.2 and for the Rights, as of the date hereof, (i)
there are no shares of capital stock of AN authorized, issued or outstanding,
(ii) there are no existing options, warrants, calls, preemptive (or similar)
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of AN or any
of its Subsidiaries, obligating AN or any of its Subsidiaries to issue, transfer
or sell or cause to be issued, transferred or sold any shares of capital stock
or Voting Debt of, or other equity interest in, AN or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interest
or obligations of AN or any of its Subsidiaries, and (iii) other than as
contemplated herein, there are no outstanding contractual obligations of AN or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares,
or capital stock of AN or any Subsidiary or affiliate of AN.
(b) All of the outstanding shares of capital stock of each of AN's
Subsidiaries are beneficially owned by AN, directly or indirectly, free and
clear of all security interests, liens, claims, pledges, agreements, limitations
on voting rights, charges or other encumbrances of any nature whatsoever, other
than liens in favor of First National Bank of Chicago.
(c) There are no voting trusts or other agreements or understandings to
which AN or any of its Subsidiaries is a party with respect to the voting of the
capital stock of AN or any of its Subsidiaries. Other than as contemplated
herein, none of AN or its Subsidiaries is required to redeem, repurchase or
otherwise acquire shares of capital stock of AN, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
SECTION 3.3 Authorization; Validity of Agreement; AN Action. (a) AN has
full corporate power and authority to execute and deliver this Agreement and the
MC Voting Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by AN of this Agreement and the
MC Voting Agreement, and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of AN and
no other corporate action on the part of AN is necessary to authorize the
execution and delivery by AN of this Agreement and the MC Voting Agreement and
the consummation by it of the transactions contemplated hereby and thereby
(other than, with respect to the Merger, the approval of this Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares). This
Agreement and the MC Voting Agreement have been duly executed and delivered by
AN and (assuming due and valid authorization, execution and delivery hereof by
the other parties hereto and thereto) are valid and binding obligations of AN
enforceable against AN in accordance with their terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) The Board of Directors of AN also has approved the transactions
contemplated by this Agreement, the MC Voting Agreement and the Shareholders'
Agreement so as to render inapplicable thereto the provisions of Section
48-103-206 of the Combination Act and to cause such transactions to fail to meet
the definition of "takeover offer" as defined in Section 46-103-102(10)(B)(v) of
TIPA, and so that MC and the stockholder parties to the MC Voting Agreement will
not be deemed an "Acquiring Person" for purposes of the Rights.
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SECTION 3.4 Consents and Approvals; No Violations; Licenses. (a) Neither
the execution, delivery or performance of this Agreement or the MC Voting
Agreement by AN nor the consummation by AN of the transactions contemplated
hereby or thereby nor compliance by AN with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
Charter or By-Laws or other organizational documents of AN or of any of its
Subsidiaries, (ii) require on the part of AN any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") except for (A) filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Federal Communication
Commission ("FCC"), the Communications Act of 1934, as amended (the
"Communications Act"), state public utility or public service laws, the
Securities Act of 1933, as amended (the "Securities Act"), the DGCL, the TBCA,
state or foreign laws relating to takeovers, state securities or blue sky laws,
and the laws of other states in which AN is qualified to do or is doing
business, or (B) where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings, individually or in the aggregate,
would not have a Material Adverse Effect on AN and its Subsidiaries, taken as a
whole, or prevent AN from consummating the transactions contemplated hereby,
(iii) except as disclosed on Schedule 3.4(a), result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which AN or any of its Subsidiaries is a party or by which any of them or any
of their properties or assets may be bound and which has been included as an
exhibit to AN's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 (the "AN Material Agreements") or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to AN, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole, or prevent AN from consummating the transactions
contemplated hereby.
(b) AN or one of its Subsidiaries holds all licenses, permits,
certificates, franchises, ordinances, registrations, or other rights,
applications and authorizations filed with, granted or issued by, or entered by
any Governmental Entity, including without limitation, the FCC, or any state or
local regulatory authorities or any state or local public service commission or
public utility commission asserting jurisdiction over the radio facilities used
in AN's business (each, a "State Authority"), that are required for the conduct
of their businesses as now being conducted, except for those the absence of
which would not individually or in the aggregate have a Material Adverse Effect
on AN and its Subsidiaries taken as a whole (collectively, "AN Licenses") and,
provided, that no representation is made with respect to such matters on behalf
of any third-parties who are part of the "A+ Network". The AN Licenses are
valid, in full force and effect, and the terms of said AN Licenses are not
subject to any restrictions or conditions that materially limit or would
materially limit the operations of the business of AN or any of its Subsidiaries
as presently conducted, other than restrictions or conditions generally
applicable to licenses of that type. The AN Licenses granted, issued or entered
by the FCC are subject to the Communications Act. There are no proceedings
pending or, to the best knowledge of AN, complaints or petitions by others, or
threatened proceedings, before the FCC or any other Governmental Entity relating
to the business or operations of AN or any of its Subsidiaries or The AN
Licenses, and there are no facts or conditions that reasonably could be expected
to constitute grounds for the FCC to revoke, terminate, suspend, deny, annul, or
impose conditions on any renewal of any AN Licenses, that would, individually or
in the aggregate, have a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole, or prevent AN from consummating the transactions contemplated
hereby or to impose any fines, forfeitures or other penalties on AN or its
Subsidiaries that would, individually or in the aggregate, have a Material
Adverse Effect on AN and its Subsidiaries, taken as a whole.
(c) Schedule 3.4(c) contains a true and complete list of each FCC permit
and FCC license issued in the name of AN, or any of its Subsidiaries as of May
9, 1996. Schedule 3.4(c) also contains a true and complete list of all licenses,
certificates, consents, permits, approvals and authorizations pending before or
issued by any State Authority (the "AN State Certificates").
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SECTION 3.5 SEC Reports and Financial Statements. AN and its Subsidiaries
have filed with the SEC all forms, reports, schedules, statements, and other
documents required to be filed by them with the SEC (as such documents have been
amended since the time of their filing, collectively, the "AN SEC Documents"),
and have filed all exhibits required to be filed with AN SEC Documents. As of
their respective dates or, if amended, as of the date of the last such
amendment, AN SEC Documents, including, without limitation, any financial
statements or schedules included therein, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, and did
not 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 light of the circumstances under which they were made, not
misleading. None of AN's Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
The financial statements of AN included in AN's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (including the related notes thereto)
and for the quarter ended March 31, 1996, copies of which have been provided to
MC (together, the "AN Financial Statements"), have been prepared from, and are
in accordance with, the books and records of AN and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto and
subject, in the case of unaudited interim financial statements, to normal
year-end adjustments), and fairly present the consolidated financial position
and the consolidated results of operations and cash flows of AN and its
consolidated Subsidiaries as at the dates thereof or for the periods presented
therein.
SECTION 3.6 No Undisclosed Liabilities. Except (i) as disclosed in AN SEC
Documents, (ii) as set forth in Schedule 3.6, (iii) AN Pending Transactions, and
(iv) for liabilities incurred in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with the consummation
of the transactions contemplated hereby (none of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole), since December 31, 1995, neither AN nor any of
its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of AN and its Subsidiaries
(including the notes thereto), and, which individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole.
SECTION 3.7 Absence of Certain Changes. Except as contemplated by this
Agreement, for AN Pending Transactions, or as disclosed in the AN SEC Documents
or in Schedule 3.7 hereto, since December 31, 1995, (i) AN and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business and consistent with past practice, (ii) there has not been any change
in the business, properties, assets, liabilities, financial condition, cash
flows, operations, licenses, franchises or results of operations of AN or its
Subsidiaries which has had a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole, and (iii) there has not been any action taken by AN or its
Subsidiaries of a type described in clauses (ii) through (xvii) of Section
5.1(a).
SECTION 3.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 3.8 hereto
sets forth (i) a list of all employee benefit plans (including but not limited
to plans described in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), maintained by AN, any of its Subsidiaries or
any trade or business, whether or not incorporated (an "AN ERISA Affiliate"),
which together with AN would be deemed a "single employer" within the meaning of
section 4001(b)(1) of ERISA ("AN Benefit Plans") and (ii) all employment,
retention, and severance agreements with employees of AN and its Subsidiaries
("AN Employee Agreements"). True and complete copies of all current AN Benefit
Plans and Employee Agreements have been provided to MC by AN.
(b) With respect to each AN Benefit Plan: (i) if intended to qualify under
section 401(a) or 401(k) of the Code, such plan has received a determination
letter from the Internal Revenue Service ("IRS") stating that it so qualifies
and that its trust is exempt from taxation under section 501(a) of the Code, no
such determination letter has been revoked and no such revocation has been
threatened, nothing has occurred that could reasonably be expected to cause the
relevant AN Benefit Plan to lose such qualification or exemption;
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(ii) such plan has been administered in all material respects in accordance with
its terms and applicable law, including state and federal securities laws; (iii)
no breaches of fiduciary duty by AN, or, to AN's knowledge, by any other person,
have occurred that might reasonably be expected to give rise to material
liability on the part of AN or any AN ERISA Affiliate; (iv) no disputes are
pending, or, to the knowledge of AN, threatened that might reasonably be
expected to give rise to material liability on the part of AN or any AN ERISA
Affiliate; (v) no prohibited transaction (within the meaning of Section 406 of
ERISA) has occurred that might reasonably be expected to give rise to material
liability on the part of AN or any AN ERISA Affiliate; (vi) all contributions
required to be made to such plan as of the date hereof (taking into account any
extensions for the making of such contributions) have been made in full; (vii)
to AN's knowledge, no AN Benefit Plans are presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
Department of Labor, or any other governmental agency or entity, and no matters
are pending with respect to any AN Benefit Plan under the IRS's Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar
programs; and (viii) all monies withheld from employee paychecks with respect to
Benefit Plans have been transferred to the appropriate plan in accordance with
the terms of such plan.
(c) No AN Benefit Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any AN Benefit Plan a plan described in section
4063(a) of ERISA. No AN Benefit Plan is or has been subject to Title IV of
ERISA.
(d) No liability under Title IV of ERISA has been incurred by AN or any AN
ERISA Affiliate (whether direct, indirect, actual, or contingent, and including,
without limitation, withdrawal liability to a multiemployer plan), and no
condition exists that presents a material risk to AN or any AN ERISA Affiliate
of incurring a material liability under such Title. No AN Benefit Plan has
incurred an accumulated funding deficiency, as defined in section 302 of ERISA
or section 312 of the Code, whether or not waived.
(e) With respect to each AN Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of AN or any of its
Subsidiaries beyond their termination of employment (other than to the extent
required by applicable law). All group health plans of AN and AN ERISA
Affiliates have been operated in material compliance with the requirements of
Section 4980B (and its predecessor) and 5000 of the Code, and AN and AN ERISA
Affiliates have provided to individuals entitled thereto all required notices
and coverage pursuant to Section 4980B, except to the extent that failure to
provide such notice or coverage is not reasonably likely to result, individually
or in the aggregate, in a Material Adverse Effect on AN and its Subsidiaries,
taken as a whole.
(f) No AN Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees of
AN or its Subsidiaries by its terms prohibits the amendment or termination of
any such AN Benefit Plan.
(g) As of the date hereof, except for AN Employee Agreements and AN Option
Plans, AN and its Subsidiaries are not parties to any (i) agreement with any
director, executive officer or other key employee of AN or its Subsidiaries (A)
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving AN or its Subsidiaries
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from AN or its Subsidiaries that may
be subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person's "parachute payment" under Section 280G of the
Code; and (iii) agreement or plan binding AN or its Subsidiaries, including
without limitation any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit plan or employee
benefit plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
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(h) As of the date hereof, no collective bargaining agreement is binding
and in force against AN or its Subsidiaries or is currently under negotiation,
and no current employees of AN or its Subsidiaries are represented by any labor
union. As of the date hereof, to AN's knowledge, no labor representation effort
exists with respect to AN or its Subsidiaries.
SECTION 3.9 Litigation. Schedule 3.9 hereto sets forth each suit, action
or proceeding pending (as to which AN has received notice), or, to the knowledge
of AN, threatened against AN, any of its Subsidiaries, or any of their
properties or assets on the date hereof. Except as set forth on Schedule 3.9,
none of the foregoing, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on AN and its Subsidiaries, taken as a whole, if
resolved adversely to AN or its Subsidiaries. As of the date hereof, neither AN
nor any of its Subsidiaries, nor any of their respective properties, is subject
to any order, writ, judgment, injunction, decree, determination or award having,
or which would have, a Material Adverse Effect on AN and its Subsidiaries, taken
as a whole, or which would prevent AN from consummating the transactions
contemplated hereby.
SECTION 3.10 No Default; Compliance with Applicable Laws. Neither AN nor
any of its Subsidiaries is in default or violation in any material respect of
any term, condition or provision of (i) its respective Charter or By-laws or
other organizational documents, (ii) any AN Material Agreement or (iii) any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to AN or any of its
Subsidiaries or by which they or their respective assets may be bound (other
than matters addressed in Sections 3.4, 3.8, 3.9, 3.11, and 3.12), excluding
from the foregoing clauses (ii) and (iii), defaults or violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on AN and its Subsidiaries, taken as a whole, or prevent AN from
consummating the transactions contemplated hereby.
SECTION 3.11 Taxes. Except as set forth on Schedule 3.11:
(a) AN and its Subsidiaries have (i) duly and timely filed (or there
has been filed on their behalf) with the appropriate governmental
authorities all Tax Returns (as hereinafter defined) required to be filed
by them on or prior to the date hereof, other than those Tax Returns for
which extensions for filing have been obtained in a timely manner, and such
Tax Returns are true, correct and complete in all material respects, and
(ii) duly paid in full all Taxes (as hereinafter defined) shown to be due
on such Tax Returns or have provided adequate reserves in their financial
statements for any Taxes that have not been paid. There are no liens on any
of the assets of AN or any of its Subsidiaries that arose in connection
with any delinquency in paying any tax.
(b) As of the date hereof, there are no ongoing federal, state, local
or foreign audits or examinations of any Tax Return of AN or its
Subsidiaries.
(c) As of the date hereof, there are no outstanding requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies
against AN or any of its Subsidiaries (excluding extensions for filings
that have been timely obtained), and no power of attorney granted by either
AN or any of its Subsidiaries with respect to any Taxes is currently in
force.
(d) Neither AN nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the
Internal Revenue Service or any taxing authority (whether domestic or
foreign including, without limitation, any state, county, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments. "Tax Return" shall mean any
report,
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return, document, declaration or other information or filing required to be
supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes.
SECTION 3.12 Environmental Matters. (a) AN and its Subsidiaries have
complied in all respects with all applicable Environmental Laws (as defined
below), except to the extent that any failure to comply is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on AN and
its Subsidiaries, taken as a whole. There is no pending or, to the knowledge of
AN, threatened, civil or criminal litigation, written notice or violation,
formal administrative proceeding or investigation, inquiry or information
request by any Governmental Entity relating to any Environmental Law involving
AN or any of its Subsidiaries or any of their properties. For purposes of this
Agreement, "Environmental Law" means any foreign, federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
or transportation of industrial, toxic or hazardous substances or solid or
hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including without limitation emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of
wildlife, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health and
safety of employees and other persons; and (ix) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste. As used above, the
terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
(b) With the exception of releases that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on AN and its
Subsidiaries, taken as a whole, there have been no releases of any Materials of
Environmental Concern (as defined below) into the environment by AN or any of
its Subsidiaries, or, to the knowledge of AN, by any other party at any parcel
of real property or any facility formerly or currently owned, operated or
controlled by AN or any of its Subsidiaries. For purposes of this Agreement,
"Materials of Environmental Concern" means any chemicals, pollutants or
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resource Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
SECTION 3.13 Insurance. AN and the Subsidiaries maintain adequate
insurance with respect to the their respective businesses and are in compliance
with all material requirements and provisions thereof.
SECTION 3.14 Offer Documents; Proxy Statement; Registration Statement;
Other Information. The information with respect to AN, its officers and
directors and its Subsidiaries (i) to be contained in the Schedule 14D-9, (ii)
supplied in writing by AN for inclusion in the Offer Documents, (iii) to be
contained in the definitive joint Proxy Statement to be furnished to the
respective shareholders of AN and the stockholders of MC pursuant to Section 5.2
and which will form a part of MC's Registration Statement on Form S-4 (the
"Registration Statement") to be filed with the SEC and will constitute a
prospectus of MC with respect to the MC Shares to be issued in the Merger (the
"Proxy Statement"), and (iv) to be contained in the Registration Statement will
not, on the respective dates on which (A) the Schedule 14D-9, the Offer
Documents or any amendment or supplement thereto are filed with the SEC (in the
case of each respective document), (B) the Proxy Statement is first mailed to
shareholders of AN and MC or on the date of the stockholders' meetings referred
to in Section 5.2 (in the case of the Proxy Statement), (C) the Registration
Statement becomes effective (in the case of the Registration Statement), and (D)
in the case of the Proxy Statement and the Registration Statement, as such Proxy
Statement or Registration Statement is then amended or supplemented, at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or necessary to correct any statement made by AN in any
earlier filing with the SEC or any amendment thereto or any earlier
communication made by AN
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(including the Proxy Statement) to shareholders of AN with respect to the
Merger. When the Proxy Statement or any amendment or supplement thereto shall be
mailed, and at the time of each meeting and at the Effective Time, the Proxy
Statement will comply as to form with all applicable laws including the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder. If at any time prior to the Effective Time
any event with respect to AN, its officers and directors and its Subsidiaries
should occur which is or should be described in an amendment of, or a supplement
to, the Proxy Statement or the Registration Statement, AN shall promptly so
inform MC and such event shall be so described in an amendment or supplement to
the Proxy Statement and such information in such amendment or supplement will
not 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, in light of the circumstances under which they were made, not
misleading, or necessary to correct any statement made by AN in any earlier
filing with the SEC of such Proxy Statement, or any amendment or supplement
thereto, or any earlier communication to shareholders of AN with respect to the
Merger.
SECTION 3.15 Transactions with Affiliates. Except as set forth in the AN
SEC Documents or on Schedule 3.15, since December 31, 1995, neither AN nor any
of its Subsidiaries has entered into any transaction with any current director
or officer of AN or any Subsidiary or any transaction which would be subject to
proxy statement disclosure under the Exchange Act pursuant to the requirements
of Item 404 of Regulation S-K.
SECTION 3.16 Brokers. Other than the AN Financial Advisor, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission from AN in connection with the transactions contemplated by this
Agreement. AN has informed MC of the compensation to be paid by AN to the AN
Financial Advisor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MC
MC represents and warrants to AN as follows:
SECTION 4.1 Organization. (a) Each of MC and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have a Material Adverse
Effect on MC and its Subsidiaries taken as a whole. MC and each of its
Subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from
consummating any of the transactions contemplated hereby.
(b) MC has heretofore made available to AN a complete and correct copy of
the Certificate of Incorporation and By-Laws or other organizational documents
of MC and the organizational documents of each of its Subsidiaries, as currently
in effect. Each such document is in full force and effect and no other
organizational documents are applicable to or binding upon MC or any Subsidiary.
(c) Schedule 4.1 identifies all the Subsidiaries of MC.
(d) At the time of issuance, (i) the MC Shares and VCRs issued pursuant to
the Merger or the Shareholders' Agreement will be duly authorized and validly
issued, and the MC Shares will be fully paid and nonassessable and not subject
to preemptive (or similar) rights; and (ii) the VCRs will represent unsecured
obligations of MC ranking pari passu with all other general obligations of MC.
SECTION 4.2 Capitalization. (a) The authorized capital stock of MC
consists of 26,000,000 shares of common stock and 1,000,000 shares of preferred
stock, par value $.01 per share. Schedule 4.2 sets forth the
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(i) the number of issued and outstanding MC Shares as of the date hereof; (ii)
the number of MC Shares that would be issuable by MC upon the exercise of all
unexpired options to purchase MC Shares ("MC Options"), and date of vesting
thereof, (iii) all MC Shares that would be issuable by MC pursuant to or in
connection with each of the acquisition agreements or transactions identified in
Schedule 4.2 (the "MC Pending Transactions"); and (iv) all other MC Shares
issuable to any person pursuant to any existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character. As of the date hereof, no shares
of preferred stock are issued and outstanding or held in the treasury of MC, and
no MC Shares are held in the treasury of MC. MC has taken all necessary
corporate and other action to authorize and reserve and to permit it to issue MC
Shares which may be issued pursuant to MC Options or the transactions
contemplated hereby. There is no Voting Debt of MC or any of its Subsidiaries
issued and outstanding. Except as set forth in Schedule 4.2, as of the date
hereof, (i) there are no shares of capital stock of MC authorized, issued or
outstanding, (ii) there are no existing options, warrants, calls, preemptive (or
similar) rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of MC or any of its Subsidiaries, obligating MC or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, MC or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interest or obligations of MC or any of its Subsidiaries, and (iii) there
are no outstanding contractual obligations of MC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any MC Shares, or capital stock of MC or
any Subsidiary or affiliate of MC.
(b) All of the outstanding shares of capital stock of each of MC's
Subsidiaries are beneficially owned by MC, directly or indirectly, free and
clear of all security interests, liens, claims, pledges, agreements, limitations
on voting rights, charges or other encumbrances of any nature whatsoever, other
than liens in favor of Toronto Dominion Bank or First National Bank of Boston.
(c) Except for (i) the Voting Agreement dated August 31, 1994, as amended,
which has been terminated effective at the Effective Time, and (ii) the Brock
Voting Agreement dated May 15, 1996, there are no voting trusts or other
agreements or understandings to which MC or any of its Subsidiaries is a party
with respect to the voting of the capital stock of MC or any of its
Subsidiaries. None of MC or its Subsidiaries is required to redeem, repurchase
or otherwise acquire shares of capital stock of MC, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
SECTION 4.3 Authorization; Validity of Agreement; MC Action. (a) MC has
full corporate power and authority to execute and deliver this Agreement and the
Shareholders' Agreement and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by MC of this Agreement and
the Shareholders' Agreement, and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of MC and no other corporate action on the part of MC is necessary to
authorize the execution and delivery by MC of this Agreement and the
Shareholders' Agreement and the consummation by it of the transactions
contemplated hereby and thereby (other than, with respect to the Merger, the
adoption of this Agreement by the affirmative vote of the holders of a majority
of the outstanding MC Shares). This Agreement and the Shareholders' Agreement
have been duly executed and delivered by MC and (assuming due and valid
authorization, execution and delivery hereof by the other parties hereto and
thereto) are valid and binding obligations of MC enforceable against MC in
accordance with their terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) The Board of Directors of MC also has approved the transactions
contemplated by this Agreement, the Shareholders' Agreement and the MC Voting
Agreement so as to render inapplicable thereto the provisions of Section 203 of
the DGCL.
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SECTION 4.4 Consents and Approvals; No Violations; Licenses. (a) Neither
the execution, delivery or performance of this Agreement or the Shareholders'
Agreement by MC nor the consummation by MC of the transactions contemplated
hereby or thereby nor compliance by MC with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws or other organizational documents of MC
or of any of its Subsidiaries, (ii) require on the part of MC any filing with,
or permit, authorization, consent or approval of, any Governmental Entity except
for (A) filings, permits, authorizations, consents and approvals as may be
required under, and other applicable requirements of, the Exchange Act, the HSR
Act, the FCC, the Communications Act, state public utility or public service
laws, the Securities Act, the DGCL, the TBCA, state or foreign laws relating to
takeovers, state securities or blue sky laws, and the laws of other states in
which MC is qualified to do or is doing business, or (B) where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings, individually or in the aggregate, would not have a Material Adverse
Effect on MC and its Subsidiaries, taken as a whole, or prevent MC from
consummating the transactions contemplated hereby, (iii) except as disclosed on
Schedule 4.4, result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which MC or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound and which has been included as an exhibit to MC's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (the "MC
Material Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to MC, any of its Subsidiaries or any of
their properties or assets, excluding from the foregoing clauses (iii) and (iv)
such violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a
whole, or prevent MC from consummating the transactions contemplated hereby.
(b) MC or one of its Subsidiaries holds all licenses, permits,
certificates, franchises, ordinances, registrations, or other rights,
applications and authorizations filed with, granted or issued by, or entered by
any Governmental Entity, including without limitation, the FCC, or any State
Authority, that are required for the conduct of their businesses as now being
conducted, except for those the absence of which would not individually or in
the aggregate have a Material Adverse Effect on MC and its Subsidiaries, taken
as a whole (collectively, "MC Licenses"). The MC Licenses are valid, in full
force and effect, and the terms of said MC Licenses are not subject to any
restrictions or conditions that materially limit or would materially limit the
operations of the business of MC or any of its Subsidiaries as presently
conducted, other than restrictions or conditions generally applicable to
licenses of that type. The MC Licenses granted, issued or entered by the FCC are
subject to the Communications Act. There are no proceedings pending or, to the
best knowledge of MC, complaints or petitions by others, or threatened
proceedings, before the FCC or any other Governmental Entity relating to the
business or operations of MC or any of its Subsidiaries or the MC Licenses, and
there are no facts or conditions that reasonably could be expected to constitute
grounds for the FCC to revoke, terminate, suspend, deny, annul, or impose
conditions on any renewal of any MC Licenses, that would, individually or in the
aggregate, have a Material Adverse Effect on MC and its Subsidiaries, taken as a
whole, or prevent MC from consummating the transactions contemplated hereby or
to impose any fines, forfeitures or other penalties on MC or its Subsidiaries
that would, individually or in the aggregate, have a Material Adverse Effect on
MC and its Subsidiaries, taken as a whole.
SECTION 4.5 SEC Reports and Financial Statements. MC and its Subsidiaries
have filed with the SEC all forms, reports, schedules, statements, and other
documents required to be filed by them with the SEC (as such documents have been
amended since the time of their filing, collectively, the "MC SEC Documents"),
and have filed all exhibits required to be filed with MC SEC Documents. As of
their respective dates or, if amended, as of the date of the last such
amendment, MC SEC Documents, including, without limitation, any financial
statements or schedules included therein, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, and did
not 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 light of the circumstances under which they were made, not
misleading. None of MC's Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
The financial statements of MC included in MC's Annual Report on Form 10-K for
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the fiscal year ended December 31, 1995 (including the related notes thereto)
and for the quarter ended March 31, 1996, copies of which have been furnished to
AN (together, the "MC Financial Statements"), have been prepared from, and are
in accordance with, the books and records of MC and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto and subject, in the case of unaudited interim financial
statements, to normal year-end adjustments), and fairly present the consolidated
financial position and the consolidated results of operations and cash flows of
MC and its consolidated Subsidiaries as at the dates thereof or for the periods
presented therein.
SECTION 4.6 No Undisclosed Liabilities. Except (i) as disclosed in MC SEC
Documents, (ii) set forth in Schedule 4.6, (iii) MC Pending Transactions, and
(iv) for liabilities incurred in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with the consummation
of the transactions contemplated hereby (none of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole), since December 31, 1995, neither MC nor any of
its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of MC and its Subsidiaries
(including the notes thereto), and which individually or in which the aggregate,
is reasonably likely to have a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole.
SECTION 4.7 Absence of Certain Changes. Except as contemplated by this
Agreement, for MC Pending Transactions, or as disclosed in MC SEC Documents or
in Schedule 4.7 hereto, since December 31, 1995, (i) MC and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business and consistent with past practice, (ii) there has not been any change
in the business, properties, assets, liabilities, financial condition, cash
flows, operations, licenses, franchises or results of operations of MC or its
Subsidiaries which has had a Material Adverse Effect on MC and its Subsidiaries,
taken as a whole, and (iii) there has not been any action taken by MC or its
Subsidiaries of a type described in clauses (i) through (ix) of Section 5.1(b).
SECTION 4.8 Employee Benefit Plans; ERISA; Labor. (a) Schedule 4.8 hereto
sets forth (i) a list of all employee benefit plans (including but not limited
to plans described in section 3(3) of ERISA), maintained by MC, any of its
Subsidiaries or any trade or business, whether or not incorporated (a "MC ERISA
Affiliate"), which together with MC would be deemed a "single employer" within
the meaning of section 4001(b)(1) of ERISA ("MC Benefit Plans") and (ii) all
employment, retention, and severance agreements with employees of MC and its
Subsidiaries ("MC Employee Agreements"). True and complete copies of all current
MC Benefit Plans and MC Employee Agreements have been made available to AN.
(b) With respect to each MC Benefit Plan: (i) if intended to qualify under
section 401(a) or 401(k) of the Code, such plan has received a determination
letter from the IRS stating that it so qualifies and that its trust is exempt
from taxation under section 501(a) of the Code, no such determination letter has
been revoked and no such revocation has been threatened, nothing has occurred
that could reasonably be expected to cause the relevant MC Benefit Plan to lose
such qualification or exemption; (ii) such plan has been administered in all
material respects in accordance with its terms and applicable law, including
state and federal securities laws; (iii) no breaches of fiduciary duty by MC,
or, to MC's knowledge, by any other person have occurred that might reasonably
be expected to give rise to material liability on the part of MC or any MC ERISA
Affiliate; (iv) no disputes are pending, or, to the knowledge of MC, threatened
that might reasonably be expected to give rise to material liability on the part
of MC or any MC ERISA Affiliate; (v) no prohibited transaction (within the
meaning of Section 406 of ERISA) has occurred that might reasonably be expected
to give rise to material liability on the part of MC or any MC ERISA Affiliate;
(vi) all contributions required to be made to such plan as of the date hereof
(taking into account any extensions for the making of such contributions) have
been made in full; (vii) to MC's knowledge, no MC Benefit Plans are presently
under audit or examination (nor has notice been received of a potential audit or
examination) by the IRS, Department of Labor, or any other governmental agency
or entity, and no matters are pending with respect to any Benefit Plan under the
IRS's Voluntary Compliance Resolution program, its Closing Agreement Program,
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or other similar programs; and (viii) all monies withheld with respect to MC
Benefit Plans have been transferred to the appropriate plan in accordance with
the terms of such plan.
(c) No MC Benefit Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any MC Benefit Plan a plan described in section
4063(a) of ERISA. No MC Benefit Plan is or has been subject to Title IV of
ERISA.
(d) No liability under Title IV of ERISA has been incurred by MC or any MC
ERISA Affiliate (whether direct, indirect, actual, or contingent, and including,
without limitation, withdrawal liability to a multiemployer plan), and no
condition exists that presents a material risk to MC or any MC ERISA Affiliate
of incurring a material liability under such Title. No MC Benefit Plan has
incurred an accumulated funding deficiency, as defined in section 302 of ERISA
or section 312 of the Code, whether or not waived.
(e) With respect to each MC Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of MC or any of its
Subsidiaries beyond their termination of employment (other than to the extent
required by applicable law). All group health plans of MC and MC ERISA
Affiliates have been operated in material compliance with the requirements of
Section 4980B (and its predecessor) and 5000 of the Code, and MC and MC ERISA
Affiliates have provided, or will have provided prior to the Effective Date, to
individuals entitled thereto all required notices and coverage pursuant to
Section 4980B, except to the extent that failure to provide such notice or
coverage is not reasonably likely to result, individually or in the aggregate,
in a Material Adverse Effect on MC and its Subsidiaries, taken as a whole.
(f) No MC Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to employees of
MC or its Subsidiaries by its terms prohibits the amendment or termination of
any such Benefit Plan.
(g) As of the date hereof, except for MC Employee Agreements or as
described in MC SEC Documents, MC and its Subsidiaries are not parties to any
(i) agreement with any director, executive officer or other key employee of MC
or its Subsidiaries (A) the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving MC
or its Subsidiaries of the nature of any of the transactions contemplated by
this Agreement, (B) providing any term of employment or compensation guarantee
or (C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person may receive payments from MC or its
Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code
or included in the determination of such person's "parachute payment" under
Section 280G of the Code; and (iii) agreement or plan binding MC or its
Subsidiaries, including without limitation any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plan or employee benefit plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(h) As of the date hereof, no collective bargaining agreement is binding
and in force against MC or its Subsidiaries or is currently under negotiation,
and no current employees of MC or its Subsidiaries are represented by any labor
union. As of the date hereof, to MC's knowledge, no labor representation effort
exists with respect to MC or its Subsidiaries.
SECTION 4.9 Litigation. Schedule 4.9 hereto sets forth each suit, action
or proceeding pending (as to which MC has received notice), or, to the knowledge
of MC, threatened against MC, any of its Subsidiaries, or their properties or
assets on the date hereof. Except as set forth on Schedule 4.9 hereto, none of
the foregoing, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole, if
resolved adversely to MC or its Subsidiaries. As of the date hereof, neither MC
nor any of its Subsidiaries, nor any of their respective properties, is subject
to any order, writ, judgment, injunction, decree, determination or award having,
or which would have, a Material Adverse Effect on MC
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and its Subsidiaries, taken as a whole, or which would prevent MC from
consummating the transactions contemplated hereby.
SECTION 4.10 No Default; Compliance with Applicable Laws. Neither MC nor
any of its Subsidiaries is in default or violation in any material respect of
any term, condition or provision of (i) its respective Certificate of
Incorporation or By-laws or other organizational documents, (ii) any MC Material
Agreement or (iii) any federal, state, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to MC or
any of its Subsidiaries or by which they or their respective assets may be bound
(other than matters addressed in Sections 4.4, 4.8, 4.9, 4.10, 4.11, and 4.12),
excluding from the foregoing clauses (ii) and (iii), defaults or violations
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole, or prevent
MC from consummating the transactions contemplated hereby.
SECTION 4.11 Taxes. Except as set forth on Schedule 4.11:
(a) MC and its Subsidiaries have (i) duly and timely filed (or there
has been filed on their behalf) with the appropriate governmental
authorities all Tax Returns (as hereinafter defined) required to be filed
by them on or prior to the date hereof, other than those Tax Returns for
which extensions for filing have been obtained in a timely manner, and such
Tax Returns are true, correct and complete in all material respects, and
(ii) duly paid in full all Taxes (as hereinafter defined) shown to be due
on such Tax Returns or have provided adequate reserves in their financial
statements for any Taxes that have not been paid. There are no liens on any
of the assets of MC or any of its Subsidiaries that arose in connection
with any delinquency in paying any Tax.
(b) As of the date hereof, there are no ongoing federal, state, local
or foreign audits or examinations of any Tax Return of MC or its
Subsidiaries.
(c) As of the date hereof, there are no outstanding requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies
against MC or any of its Subsidiaries (excluding extensions for filings
that have been timely obtained), and no power of attorney granted by either
MC or any of its Subsidiaries with respect to any Taxes is currently in
force.
(d) Neither MC nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes.
SECTION 4.12 Environmental Matters. (a) MC and its Subsidiaries have
complied in all material respects with all applicable Environmental Laws, except
to the extent that any failure to comply is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole. There is no pending or, to the knowledge of MC,
threatened, civil or criminal litigation, written notice or violation, formal
administrative proceeding or investigation, inquiry or information request by
any Governmental Entity relating to any Environmental Law involving MC or any of
its Subsidiaries or any of their properties.
(b) With the exception of releases that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on MC and its
Subsidiaries, taken as a whole, there have been no releases of any Materials of
Environmental Concern into the environment by MC or any of its Subsidiaries, or,
to the knowledge of MC, by any other party at any parcel of real property or any
facility formerly or currently owned, operated or controlled by MC or any of its
Subsidiaries.
SECTION 4.13 Insurance. MC and the Subsidiaries maintain adequate
insurance with respect to the their respective businesses and are in compliance
with all material requirements and provisions thereof.
SECTION 4.14 Offer Documents; Proxy Statement; Registration Statement;
Other Information. The information with respect to MC, its officers and
directors and its Subsidiaries (i) to be contained in the Offer Documents, (ii)
to be contained in the Proxy Statement; and (iii) to be contained in the
Registration Statement will not, on the respective dates on which (A) the Offer
Documents or any amendment or
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supplement thereto are filed with the SEC (in the case of each respective
document), (B) the Proxy Statement is first mailed to shareholders of AN and the
stockholders of MC or on the date of the stockholders' meetings referred to in
Section 5.2 (in the case of the Proxy Statement), (C) the Registration Statement
becomes effective (in the case thereof), and (D) in the case of the Proxy
Statement and the Registration Statement, as such Proxy Statement or
Registration Statement is then amended or supplemented, at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or necessary to correct any statement made by MC in any earlier
filing with the SEC of such Registration Statement or any amendment thereto
(including the Proxy Statement). When the Registration Statement or any
post-effective amendment thereto shall become effective and when the Proxy
Statement or any amendment or supplement thereto shall be mailed, and at the
time of each meeting and at the Effective Time, the Proxy Statement will comply
as to form with all applicable laws including the provisions of the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.
If at any time prior to the Effective Time any event with respect to MC, its
officers and directors and its Subsidiaries should occur which is or should be
described in an amendment of, or a supplement to, the Proxy Statement or the
Registration Statement, MC shall promptly so inform AN and such event shall be
so described in an amendment or supplement to the Registration Statements and
such information in such amendment or supplement will not 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, in light of the
circumstances under which they were made, not misleading, or necessary to
correct any statement made by MC in any earlier filing with the SEC of such
Registration Statement, or any amendment or supplement thereto, or any earlier
communication to stockholders of MC with respect to the Merger.
SECTION 4.15 Transactions with Affiliates. Except as set forth in MC SEC
Documents or on Schedule 4.15, since December 31, 1995, neither MC nor any of
its Subsidiaries has entered into any transaction with any current director or
officer of MC or any Subsidiary or any transaction which would be subject to
proxy statement disclosure under the Exchange Act pursuant to the requirements
of Item 404 of Regulation S-K.
SECTION 4.16 Financing. MC has sufficient funds available (through
existing credit arrangements or otherwise) to purchase Shares pursuant to the
Offer and to pay all fees and expenses related to the transactions contemplated
by this Agreement.
SECTION 4.17 Share Ownership. As of the date hereof, neither MC nor any
of its affiliates beneficially owns any Shares.
SECTION 4.18 Brokers. Other than the MC Financial Advisor and Daniels &
Associates, L.P., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from MC in connection with the
transactions contemplated by this Agreement. MC has informed AN of the
compensation to be paid by MC to the MC Financial Advisor and Daniels &
Associates, L.P.
ARTICLE V
COVENANTS
SECTION 5.1 Interim Operations of AN and MC. (a) AN covenants and agrees
that, except (w) as contemplated by this Agreement, (x) as set forth in Schedule
5.1(a) or Annex D, (y) as agreed in writing by MC, or (z) as contemplated by the
AN Pending Transactions, after the date hereof and prior the Effective Time:
(i) the business of AN and its Subsidiaries shall be conducted only
in, and AN and its Subsidiaries shall not take any action except in, the
ordinary and usual course of business and consistent with past practice,
and AN and its Subsidiaries shall use all reasonable efforts, consistent
with past practice, to maintain and preserve their business organizations,
assets, employees and advantageous business relations;
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(ii) AN will not, directly or indirectly, (A) sell, transfer or pledge
or agree to sell, transfer or pledge any Shares, preferred stock or capital
stock of any of its Subsidiaries beneficially owned by it, either directly
or indirectly; or (B) split, combine or reclassify the outstanding Shares
or any outstanding capital stock of any of the Subsidiaries of AN;
(iii) neither AN nor any of its Subsidiaries shall: (A) amend its
Charter or by-laws; (B) issue, grant, sell, pledge, dispose of or encumber
any shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of AN or its Subsidiaries or any other
ownership interests (including but not limited to stock appreciation rights
or phantom stock), other than Shares reserved for issuance on the date
hereof pursuant to the exercise of AN Options outstanding on the date
hereof and options automatically granted pursuant to the 1992 Non-Qualified
Stock Option Plan; (C) with the exception of the existing liens in favor of
First National Bank of Chicago, transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice;
(D) incur any indebtedness other than borrowings under existing agreements
or modify the terms of any indebtedness; (E) incur any material liability,
other than borrowings permitted by clause (D) above of money under existing
agreements or incurrence of other liabilities in the ordinary and usual
course of business and consistent with past practice; or (F) redeem,
purchase or otherwise acquire directly or indirectly any of its capital
stock;
(iv) AN will not declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock;
(v) neither AN nor any of its Subsidiaries shall modify, amend or
terminate any AN Material Agreements or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(vi) each of AN and its Subsidiaries shall maintain in full force and
effect such types and amounts of insurance issued by insurers of recognized
responsibility insuring it with respect to its respective business and
properties, in such amount and against such losses and risks as is usually
carried by persons engaged in the same or similar businesses;
(vii) neither AN nor any of its Subsidiaries shall; (A) except for or
on behalf of Subsidiaries, assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person; (B) make any loans, advances or capital
contributions to, or investments in, any other person (other than to
Subsidiaries of AN pursuant to AN's written obligations on the date
hereof), other than in the ordinary course of business and consistent with
past practice; or (C) enter into any commitment or transactions with
respect to any of the foregoing (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets);
(viii) neither AN nor any of its Subsidiaries shall change any of the
accounting methods used by it unless required by GAAP;
(ix) except as permitted by Section 5.1(a)(xi), neither AN nor any of
its Subsidiaries will adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of AN or any of its Subsidiaries (other than the
Merger);
(x) neither AN nor any of its Subsidiaries will take, or agree to take
any action that would result in any of the conditions set forth herein or
in Annex A not being satisfied, unless the Board of Directors of AN makes a
determination in accordance with Section 5.9(f) below;
(xi) neither AN nor any of its Subsidiaries will acquire (by merger,
consolidation, or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division of any
such entity; provided, however, that AN may engage in such a transaction if
(i) AN notifies MC prior to entering into any such transaction, (ii) the
purchase price for each such transaction is payable only in cash and such
price does not exceed $5,000,000, and (iii) the purchase price for each
such transaction does not exceed eight times annualized EBITDA for the most
recent calendar quarter ended.
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(xii) neither AN nor any of its Subsidiaries will increase the
compensation or fringe benefits of any of its directors, officers or
employees, except for increases in compensation of employees of AN or its
Subsidiaries who are not executive officers or directors of AN in the
ordinary course of business and consistent with past practice, or grant any
severance or termination pay not currently required to be paid under
existing severance plans to, or enter into any employment, consulting or
severance agreement with, any present or former director, officer or other
employee of AN or any of its Subsidiaries, or establish, adopt, enter into
or amend or terminate any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors,
officers or employees, other than employment of non-executive officers in
the ordinary course of business and consistent with past practice;
(xiii) neither AN nor any of its Subsidiaries will make any material
tax election or settle or compromise any material federal, state, local or
foreign tax liability except for settlements that would not be material to
AN or do not otherwise materially impair the business of AN;
(xiv) neither AN nor any of its Subsidiaries will settle or compromise
any pending or threatened suit, action or claim, which settlement or
compromise is material or which relates to the transactions contemplated
hereby;
(xv) neither AN nor any of its Subsidiaries will pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practice of liabilities (A) reflected or reserved against in the
financial statements of AN, (B) incurred in the ordinary course of business
and consistent with the past practice or (C) incurred in a manner not
otherwise prohibited under this Section 5.1(a);
(xvi) AN shall not effect a registration under the Securities Act with
respect to Shares held by any person and entity, other than the
registration on a Registration Statement on Form S-8 of Shares to be issued
pursuant to AN Options and the registration of Shares pursuant to
registration rights agreements in effect on the date hereof or pursuant to
the Shareholders' Agreement;
(xvii) neither AN nor any of its Subsidiaries will modify or amend any
AN Pending Transaction in any manner that would increase the consideration
payable pursuant to such transaction; and
(xviii) neither AN nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
(b) MC covenants and agrees that except (w) as contemplated by this
Agreement or the Shareholders' Agreement, (x) as set forth in Schedule 5.1(b),
(y) as agreed in writing by AN, or (z) as contemplated by any MC Pending
Transactions, after the date hereof and prior to the Effective Time:
(i) MC will not (A) amend its Certificate of Incorporation or By-Laws;
or (B) redeem, purchase or otherwise acquire directly or indirectly any of
its capital stock, provided, that the Board of Directors of MC may adopt a
resolution to amend MC's Certificate of Incorporation to increase the
number of authorized MC Shares by 7,500,000, and if the Board of Directors
of MC declares that such amendment is advisable, the Board may submit such
resolution for a vote of the stockholders at the Meeting, and if such
amendment is approved at the Meeting, MC may so amend its Certificate of
Incorporation;
(ii) MC will not declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock;
(iii) MC will not, directly or indirectly, split, combine or
reclassify the outstanding MC Shares;
(iv) with the exception of the existing liens in favor of Toronto
Dominion Bank and the First National Bank of Boston, neither MC nor any of
its Subsidiaries will issue, sell, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class of MC or its
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Subsidiaries, other than (A) issuances of MC Shares reserved for issuance
on the date hereof upon exercise of MC Options outstanding on the date
hereof, (B) issuances by MC of MC Shares or other securities for the fair
market value of such MC Shares or other securities at the time of such
issuance, provided, that the issuance of MC Shares pursuant to an
acquisition agreement with a third party on terms negotiated on an arms'
length basis or the issuance of other securities convertible into MC Shares
to an unaffiliated third party on terms negotiated on an arms' length basis
shall be deemed for purposes hereof the issuance of MC Shares at the fair
market value of such MC Shares, and (C) the granting (and issuance of MC
Shares upon exercise) of options pursuant to MC's director and employee
stock option plans as in effect on the date hereof, with exercise prices
equal to the fair market value of MC Shares on the date of grant.
(v) MC will not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of MC or any of its Subsidiaries;
(vi) neither MC nor any of its Subsidiaries will take, or agree to
take, any action that would result in any of the conditions set forth
herein or in Annex A not being satisfied;
(vii) neither MC nor any of its Subsidiaries will consummate any
acquisitions (by merger, consolidation, or acquisition of stock or assets
or otherwise), other than MC Pending Transactions; provided, that MC may
make acquisitions to the extent that they (A) comply with the requirements
of Section 5.1(b)(iv)(B), (B) do not involve businesses that would be
considered "significant subsidiaries" within the meaning of Rule 1-02(v) of
Regulation S-X, and (C) do not result in the issuance of more than
3,000,000 MC Shares in the aggregate;
(viii) neither MC nor any of its Subsidiaries shall engage in any
business other than that conducted in the telecommunications industry; and
(ix) neither MC nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
SECTION 5.2 Stockholder Approval; Meetings; Etc. (a) Subject to the
fiduciary duties of AN's Board of Directors and MC's Board of Directors under
applicable law, as the case may be, each of AN and MC will take all action
necessary in accordance with applicable law, the rules of Nasdaq, this Agreement
and AN's or MC's, as the case may be, Charter and By-Laws to convene a meeting
of its stockholders (each, a "Meeting") as promptly as practicable after
consummation of the Offer to consider and vote upon a proposal to adopt this
Agreement (the "Proposal"). Subject to a determination of the respective Board
of Directors of AN and MC made in accordance with Section 5.9(f), each of AN and
MC will (i) recommend that their respective stockholders vote in favor of the
Proposal and (ii) use their respective best efforts to cause to be solicited
proxies from stockholders of AN or MC, as the case may be, to be voted at their
Meetings in favor of the Proposal and to take all other actions necessary or
advisable to secure the vote or consent of stockholders required to effect the
Merger. MC agrees to vote all Shares purchased in the Offer or pursuant to the
Shareholders' Agreement in favor of the Proposal. In addition, AN shall present
a resolution to be approved by the affirmative vote of the outstanding Shares as
required by Section 48-103-503(a) of the Tennessee Greenmail Act in order to
exempt the transactions contemplated by Section 5.16 from the provisions
thereof.
(b) MC shall use its best efforts to cause, immediately prior to the
Effective Time, Ray M. Russenberger and Elliott H. Singer to be appointed to the
Board of Directors of the Surviving Corporation, to serve in the classes set
forth on Annex B.
(c) MC agrees to use its reasonable best efforts to take the actions
described in Section 3.3.2 and 3.3.3 of the Shareholders' Agreement.
SECTION 5.3 Proxy Statement, Registration Statement, Etc. (a) AN and MC
shall promptly after consummation of the Offer prepare and file with the SEC
under the Exchange Act, and shall use their best efforts to have cleared by the
SEC and shall thereafter promptly mail to their stockholders, the Proxy
Statement for the Meetings, which shall also constitute the prospectus included
in the Registration Statement to be filed by MC pursuant to Section 5.3(b)
hereof. The Proxy Statement shall be mailed to stockholders of
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each of AN and MC, as the case may be, at least 20 business days in advance of
the date of its Meeting. MC shall furnish AN, and AN shall furnish MC, with all
information and shall take such other action as AN or MC, as the case may be,
may reasonably request in connection with the Proxy Statement. Subject to a
determination of the respective Board of Directors of AN and MC made in
accordance with Section 5.9(f), the Proxy Statement shall contain the
recommendation of each Board of Directors that stockholders of AN and MC, as the
case may be, approve and adopt the Proposal.
(b) MC shall promptly after consummation of the Offer prepare and file with
the SEC under the Securities Act the Registration Statement with respect to MC
Shares and the VCRs to be issued in the Merger and shall use its best efforts to
have the Registration Statement declared effective by the SEC as promptly as
practicable. MC shall also take any action required to be taken under state blue
sky or other securities laws in connection with the issuance of MC Shares and
the VCRs in the Merger, including qualification under the Trust Indenture Act
with respect to the VCRs. AN shall furnish MC with all information and shall
take such other action as MC may reasonably request in connection with any such
action.
(c) AN and MC shall notify one another of the receipt of the comments of
the SEC and of any requests by the SEC for amendments or supplements to the
Proxy Statement or the Registration Statement or for additional information, and
shall promptly supply one another with copies of all correspondence between any
of them (or their representatives) and the SEC (or its staff) with respect
thereto. If, at any time prior to either Meeting, any event should occur
relating to or affecting AN, MC, or their respective officers or directors,
which event should be described in an amendment or supplement to the Proxy
Statement or the Registration Statement, the parties shall promptly inform one
another and shall cooperate in promptly preparing, filing and clearing with the
SEC and, if required by applicable securities laws, mailing to AN's or MC's
stockholders, as the case may be, such amendment or supplement.
(d) Notwithstanding anything to the contrary in this Agreement, AN shall
have no obligation to mail the Proxy Statement to its shareholders unless and
until AN shall have received a "comfort letter" from Deloitte and Touche LLP,
the independent auditors of MC, in the form, scope and content contemplated by
Statement of Auditing Standards No. 49 issued by the American Institute of
Certified Public Accountants, Inc. ("SAS 49"), relating to financial statements
and other financial data with respect to MC and its consolidated Subsidiaries
included or incorporated by reference in the Proxy Statement and such other
matters as may be reasonably required by AN, and based upon procedures carried
out to a specified date not earlier than five days prior to the date thereof.
(e) Notwithstanding anything to the contrary contained in this Agreement,
MC shall not mail the Proxy Statement to its stockholders unless and until the
Registration Statement has been declared effective under the Securities Act, and
MC shall have no obligations to mail the Proxy Statement to its stockholders
unless and until MC shall have received a "comfort letter" from Arthur Andersen
LLP, the independent auditors of AN, in the form, scope, and content
contemplated by SAS 49, relating to the financial statements and other financial
data with respect to AN and its consolidated Subsidiaries included or
incorporated by reference in the Proxy Statement and such other matters as may
be reasonably required by MC, and based upon procedures carried out to a
specified date not earlier than five days prior to the date thereof.
SECTION 5.4 Compliance with the Securities Act. (a) Prior to the
Effective Time, AN shall cause to be delivered to MC a list identifying all
persons who are, at the time of the Meeting, considered by AN to be "affiliates"
of AN for purposes of Rule 145 under the Securities Act (the "Affiliates").
(b) AN shall use reasonable efforts to cause each person who is identified
as an affiliate of AN to deliver to MC on or prior to the Effective Time a
written agreement, in such form as may be agreed to by the parties, that such
person will not offer to sell, sell or otherwise dispose of any of MC Shares
issued to such person in connection with the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 or pursuant to
an exemption from the registration requirements of the Securities Act. The
Surviving Corporation shall be entitled to place appropriate legends on the
certificates evidencing MC Shares to be received by such affiliates pursuant to
the terms of this Agreement, and to issue appropriate stop transfer instructions
to the transfer agent for MC Shares, to the effect that MC Shares received or to
be received by
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such affiliate pursuant to the terms of this Agreement may only be sold,
transferred or otherwise conveyed, and the holder thereof may only reduce his
interest in or risks relating to such shares pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of paragraph (d) of Rule 145 or pursuant to an exemption provided
from registration under the Securities Act. The foregoing restrictions on the
transferability of MC Shares shall apply to all purported sales, transfers and
other conveyances of the shares received or to be received by such affiliate
pursuant to the Merger and to all purported reductions in the interest in or
risks relating to such MC Shares.
SECTION 5.5 Nasdaq Listing. MC shall use all reasonable efforts to cause
MC Shares to be admitted for quotation on the Nasdaq National Market System.
SECTION 5.6 Approvals and Consents; Cooperation. (a) Subject to the terms
and conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by the
Offer and this Agreement, and to cooperate with each of the other parties hereto
in connection with the foregoing, including using all reasonable efforts: (i) to
obtain all necessary waivers, consents and approvals from other parties to loan
agreements, leases and other contracts; (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
state or foreign laws or regulations; (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (iv) to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and Communications Act and submissions of information requested by
Governmental Entities; and (v) to fulfill all conditions to this Agreement. Each
of AN and MC further covenants and agrees that, prior to the exercise by MC of
its right to terminate the Offer under paragraphs (c) or (d) of Annex A hereto,
each of AN and MC shall use its respective best efforts (which shall not be
construed to require the payment of any money to a third party (other than legal
counsel) or the divestiture of any business or assets) to prevent, with respect
to a threatened or pending preliminary or permanent injunction or the other
order, decree or ruling or statute, rule, regulation or executive order
specified in such paragraphs, the entry, enactment or promulgation thereof, as
the case may be. For purposes of the foregoing, the obligation of MC to use
"best efforts" or "reasonable efforts" to obtain waivers, consents and approvals
to loan agreements, leases and other contracts shall not include any obligation
to agree to a modification of the terms of such documents, except as expressly
contemplated hereby or to make any monetary payment in consideration of such
waiver, consent or approval.
(b) AN and MC shall take all reasonable actions necessary to file as soon
as practicable notifications under the HSR Act and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters.
(c) Within fifteen business days of the date of this Agreement, or as soon
thereafter as practicable, MC and AN shall prepare and make all filings (the
"Regulatory Filings") required to be made with the FCC pursuant to the
Communications Act and with any State Authority as are required to permit the
consummation of the Merger and shall thereafter promptly make any additional or
supplemental submissions required or requested by the FCC and any such State
Authority. With respect to the Regulatory Filings, counsel to AN shall be
responsible for preparing, with the advice and consent of counsel to MC, the
transferor's portion of the submissions with respect to the AN Licenses, and
counsel to MC shall be responsible for preparing, with the advice and consent of
counsel to AN, the transferee's portion of such submissions. Counsel to AN shall
also be responsible for preparing, with the advice and consent of counsel to MC,
any pro forma transfer applications with respect to the AN Licenses that are
required to permit the Merger. All filing fees associated with the preparation
and filing of Regulatory Filings pursuant to this Section 5.6(c) shall be shared
equally by MC and AN. Each party shall bear its own counsel fees in connection
with the Regulatory Filings.
(d) Notwithstanding any provision of this Agreement or the Shareholders'
Agreement to the contrary, MC shall not assume, either directly or indirectly,
de jure or de facto control of AN without the prior consent of the FCC and any
State Authority of competent jurisdiction. Nothing contained herein shall,
without the
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prior consent of the FCC and any State Authority of competent jurisdiction, give
MC any control or responsibility for (i) AN's facilities, including without
limitation control of use of the facilities; (ii) daily operations; (iii) policy
decisions, including preparing and filing applications with the FCC; (iv)
employment, supervision and dismissal of personnel; or (v) payment of financing
obligations, including expenses arising out of operations. Without the prior
consent of the FCC and any State Authority of competent jurisdiction, MC shall
not receive any monies and profits derived from the operation of the AN
facilities.
SECTION 5.7 Access to Information. Upon reasonable notice, each of AN and
MC shall (and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
MC or AN, as the case may be, access, during normal business hours during the
period prior to the Effective Time, to all its officers, employees, properties,
facilities, books, contracts, commitments and records and, during such period,
each of AN and MC shall (and shall cause each of its Subsidiaries to) furnish
promptly to MC or AN, as the case may be (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as MC or AN, as
the case may be, may reasonably request. Each of MC and AN will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement between AN and MC, dated on or about November
22, 1995 (the "Confidentiality Agreement"). No investigation pursuant to this
Section 5.7 shall affect any representations or warranties of the parties herein
or the conditions to the obligations of the parties hereto. Without limiting the
foregoing, prior to the earlier of the Effective Time or the termination of the
Agreement, each party shall have the right to have no more than two (2)
representatives, who shall be directors or members of senior management of such
party, attend regular or special meetings of the Board of Directors of the other
party; provided, that such representatives may not attend any portion of any
meeting concerning this Agreement or the transactions contemplated hereby. Each
party will give reasonable notice to the other of such meetings, and the party's
representatives may be present by telephone.
SECTION 5.8 Employee Benefits and Relocation Matters. (a) MC agrees to
use its reasonable best efforts to maintain a southeast/southwest regional
operations center in Pensacola, Florida for a period not less than three years
from the Effective Time, provided that such operations center may be closed in
the event of a consolidation or merger of MC or a sale of substantially all of
the assets of MC or of a majority of MC's common stock outstanding after the
Effective Time.
(b) The parties' agreement with respect to certain employment matters is
set forth in Annex D hereto.
SECTION 5.9 No Solicitation by AN. (a) AN, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease all existing discussions or negotiations, if any, with any
parties (other than MC) conducted heretofore with respect to any AN Acquisition
Proposal. For purposes of this Agreement, "AN Acquisition Proposal" shall mean
any proposal relating to (i) a possible acquisition of AN, whether by way of
merger, purchase of all or substantially all of the assets of AN, or any similar
transaction, or (ii) a tender offer for more than 5% of the Shares (excluding
any AN Pending Transaction or any other transactions permitted by Section
5.1(a)).
(b) AN may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access, to any person
made after the date hereof which was not encouraged, solicited or initiated by
AN or any of its affiliates or any of their respective officers, directors,
employees, representatives, financial advisors or agents after the date hereof,
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such party concerning any AN Acquisition
Proposal, but only if (i) such party has submitted a written proposal to the
Board of Directors of AN relating to any such transaction involving economic
consideration per Share that the Board of Directors of AN reasonably believes is
economically superior to the consideration to be paid hereunder and which does
not include or contemplate any condition relating to the obtaining of funds for
such AN Acquisition Proposal and (ii) the Board of Directors of AN has made a
determination in accordance with Section 5.9(f). AN shall notify MC immediately
if any written or oral AN Acquisition Proposal is made and shall keep MC
promptly
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advised of all written or oral AN Acquisition Proposals, provide a copy of any
written AN Acquisition Proposal and provide in writing the terms of all oral AN
Acquisition Proposals.
(c) Except as set forth in this Section 5.9, neither AN or any of its
affiliates, nor any of their respective officers, directors, employees,
representatives, financial advisors or agents, shall, directly or indirectly,
encourage or solicit submission of any inquiries, proposals or offers by;
participate in or initiate any discussions or negotiations with; disclose any
information about AN or its Subsidiaries to, or otherwise assist, facilitate or
encourage, or enter into any agreement or understanding with any corporation,
partnership, person or other entity or group (other than MC, any affiliate or
associate of MC or any designees of MC) in connection with any AN Acquisition
Proposal; provided that the Board of Directors of AN shall not recommend that
the shareholders of AN tender their Shares in connection with any tender offer
unless the Board of Directors of AN makes a determination in accordance with
Section 5.9(f).
(d) AN agrees not to release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which AN is a party, unless
the Board of Directors of AN makes a determination in accordance with Section
5.9(f). AN will use all reasonable efforts to have all copies of all nonpublic
information it or AN Financial Advisor has distributed to other potential
purchasers returned to it as soon as possible after the date hereof.
(e) Nothing contained in this Section 5.9 shall prohibit AN or its Board of
Directors from taking and disclosing to AN's shareholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making such disclosure to
AN's shareholders or otherwise if the Board of Directors makes a determination
in accordance with Section 5.9(f).
(f) For purposes of this Agreement, any determination of directors made in
accordance with this Section 5.9(f) shall mean that directors constituting a
majority of all directors then in office of AN shall reasonably determine in
good faith, after consultation with and based upon the advice of independent
legal counsel, that the taking of action or the failure to take action (or to
withdraw or modify a recommendation) would constitute a breach of such
directors' fiduciary duties to stockholders of AN under applicable law.
SECTION 5.10 No Solicitation by MC. (a) MC, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease all existing discussions or negotiations, if any, with any
parties (other than AN) conducted heretofore with respect to any MC Acquisition
Proposal. For purposes of this Agreement, "MC Acquisition Proposal" shall mean
any proposal relating to (i) a possible acquisition of MC, whether by way of
merger, purchase of all or substantially all of the assets of MC, or any similar
transaction, or (ii) a tender offer for more than 5% of the MC Shares (excluding
any MC Pending Transactions or any other transactions permitted by Section
5.1(b)).
(b) MC may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access, to any person
made after the date hereof which was not encouraged, solicited or initiated by
MC or any of its affiliates or any of their respective officers, directors,
employees, representatives, financial advisors or agents after the date hereof,
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such party concerning any MC Acquisition
Proposal, but only if the Board of Directors of MC has made a determination in
accordance with Section 5.10(f). MC shall notify AN immediately if any written
or oral MC Acquisition Proposal is made and shall keep AN promptly advised of
all written or oral MC Acquisition Proposals, provide a copy of any written MC
Acquisition Proposal and provide in writing the terms of all oral MC Acquisition
Proposals.
(c) Except as set forth in this Section 5.10, neither MC or any of its
affiliates, nor any of their respective officers, directors, employees,
representatives, financial advisors or agents, shall, directly or indirectly,
encourage or solicit submission of any inquiries proposals, or offers by;
participate in or initiate any discussions or negotiations with, or disclose any
information about MC or any Subsidiaries to, or otherwise assist, facilitate, or
encourage, or enter into any agreement or understanding with, any corporation,
partnership, person or other entity or group (other than AN, any affiliate or
associate of AN or any designees of AN) in connection with any MC Acquisition
Proposal; provided that the Board of Directors of MC shall not
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recommend that the stockholders of MC tender their MC Shares in connection with
any tender offer unless the Board of Directors of MC makes a determination in
accordance with Section 5.10(f).
(d) MC agrees not to release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which MC is a party, unless
the Board of Directors of MC makes a determination in accordance with Section
5.10(f). MC will use all reasonable efforts to have all copies of all nonpublic
information it or MC Financial Advisor has distributed to other potential
companies returned to it as soon as possible after the date hereof.
(e) Nothing contained in this Section 5.10 shall prohibit MC or its Board
of Directors from taking and disclosing to MC's stockholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act or from making such disclosure to
MC's stockholders or otherwise if the Board of Directors makes a determination
in accordance with Section 5.10(f).
(f) For purposes of this Agreement, any determination of directors made in
accordance with this Section 5.10(f) shall mean that directors constituting a
majority of all directors then in office shall reasonably determine in good
faith, after consultation with and based upon the advice of independent legal
counsel, that the taking of action or the failure to take action (or to withdraw
or modify a recommendation) would constitute a breach of such directors'
fiduciary duties to stockholders of MC under applicable law.
SECTION 5.11 Brokers or Finders. Each of MC and AN represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement except the AN
Financial Advisor, whose fees and expenses will be paid by AN in accordance with
its agreement with such firm, and the MC Financial Advisor and Daniels &
Associates L.P., whose fees and expenses will be paid by MC in accordance with
MC's agreement with such firms. Each of MC and AN agrees to indemnify and hold
the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
SECTION 5.12 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to MC and
AN. Thereafter, so long as this Agreement is in effect, neither AN, MC nor any
of their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by the rules of Nasdaq.
SECTION 5.13 Notification of Certain Matters. AN shall give prompt notice
to MC and MC shall give prompt notice to AN of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) any failure of AN or MC,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, provided, however,
that the delivery of any notice pursuant to this Section 5.13 (a) is not
required until an executive officer of AN or MC, as the case may be, has actual
knowledge of the circumstance requiring such notice and (b) shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 5.14 Directors' and Officers' Insurance and Indemnification.
(a) From and after the Effective Time, MC shall, or shall cause the
Surviving Corporation, to the fullest extent permitted under applicable
law, AN's Charter, By-Laws or indemnification agreements in effect on the
date hereof, including provisions relating to advancement of expenses
incurred in the defense of any action or suit, to indemnify, defend and
hold harmless all persons who are now, or have been at any time prior to
the date hereof, or who become prior to the Effective Time, an officer,
director, employee or agent of AN or any of its Subsidiaries, or who are or
were serving at the request of AN or any of its Subsidiaries as a director,
officer, employee or agent of another corporation, partnership, trust,
limited liability company or other business enterprise (each, an
"Indemnified Party"), against all losses, claims, damages, liabilities,
costs and expenses (including attorney's fees and expenses) judgments,
fines, losses, and amounts paid in settlement in connection with any actual
or threatened action, suit, claim,
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proceeding or investigation (each a "Claim") to the extent that any such
Claim is based on, or arises out of, (i) the fact that such person is or
was a director, officer, employee or agent of AN or any of its
Subsidiaries; or (ii) this Agreement, or any of the transactions
contemplated hereby or thereby, in each case to the extent that any such
Claim pertains to any matter or fact arising, existing, or occurring prior
to or at the Effective Time, regardless of whether such Claim is asserted
or claimed prior to, at or after the Effective Time. Without limiting the
foregoing, in the event that any Claim is brought against an Indemnified
Party (whether arising before or after the Effective Time), the Indemnified
Party may retain counsel satisfactory to them, and MC (or prior to the
Effective Time, AN) shall advance the fees and expenses of such counsel for
the Indemnified Party in accordance with Section 12(a) of Article 12 of the
Charter of AN in effect on the date hereof.
(b) MC and AN agree that the Surviving Corporation's Certificate of
Incorporation shall contain provisions no less favorable with respect to
rights to indemnification and limitations on liability provided in AN's
Charter and By-Laws as in effect as of the date hereof, for a period of six
(6) years from the Effective Time to the extent such rights are consistent
with the DGCL; provided, that, in the event any claim or claims are
asserted or made within such six (6) year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims; provided further, that any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under applicable law,
MC's Certificate of Incorporation or By-Laws or such agreements, as the
case may be, shall be made by independent legal counsel selected by MC and
reasonably acceptable to the Indemnified Party and; provided further, that
nothing in this Section 5.14 shall impair any rights or obligations of any
present or former directors or officers of AN.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 5.14, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall succeed to the obligations set forth in this Section 5.14
and none of the actions described in clauses (i) or (ii) shall be taken
until such provision is made.
(d) MC or the Surviving Corporation shall use all reasonable efforts
to maintain AN's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of not less than six (6) years after
the Effective Date; provided, (i) that MC may substitute therefor policies
of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; and (ii) if the existing
D&O Insurance expires or is canceled during such period, MC or the
Surviving Corporation will use reasonable efforts to obtain substantially
similar D&O Insurance to the extent available.
SECTION 5.15 Expenses. Except as otherwise provided in the penultimate
sentence of Section 5.6(c) and in Section 7.2, whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense, except that the filing fee for the Proxy Statement or Registration
Statement, and all expenses incurred in connection with the printing and mailing
of the Proxy Statement and prospectus included in the Registration Statement
shall be borne one-half by AN and one-half by MC. The payment of costs and
expenses by MC or AN shall not reduce any consideration paid in the Merger.
Notwithstanding the foregoing, the costs and expenses incurred in connection
with the Shareholders' Agreement will be paid in accordance with the terms of
such Agreements.
SECTION 5.16 Repurchase Option. (a) For the purposes of this Section
5.16:
A "Repurchase Event" shall occur automatically if (i) either (A) the
Offer has been consummated or (B) a Scenario II Trigger Event (as defined
in the Shareholders' Agreement) shall have occurred, (ii) AN is not in
material breach of any of its obligations under this Agreement entitling MC
to terminate this Agreement, (iii) there has been no AN Termination Fee
Event (as hereinafter defined) and (iv) this Agreement has been terminated
in accordance with its terms.
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"Interest Payment Event" shall mean, in the case of a Repurchase
Event, the occurrence of any of the following (i) a Final Regulatory Order
(as hereinafter defined) by the FCC or any State Authority has been entered
prohibiting the transfer of the AN Licenses to MC; (ii) the entry of a
non-appealable final order by a court of competent jurisdiction prohibiting
the consummation of the Merger, or (iii) November 16, 1996 (provided that,
if at November 16, 1996 the sole reason the Merger shall not have occurred
is the failure to obtain a Final Regulatory Order permitting the
consummation of the Merger from the FCC, such date shall be February 16,
1997).
"AN Termination Fee Event" shall mean the termination of this
Agreement in accordance with its terms solely pursuant to Sections
7.1(d)(iv) or (v).
"Regulatory Order" shall mean an action taken or order issued by the
FCC with respect to the AN Licenses as to which (i) no request for stay by
the FCC of the action or order is pending, no such stay is in effect, and,
if any deadline for filing any such request is designated by statute or
regulation, it has passed; and (ii) with respect to an action taken or
order issued by the FCC granting consent to the Merger, such consent shall
be without material adverse conditions, other than conditions that have
been agreed to by AN and MC or that are routine conditions with respect to
transfers of this nature. A "Final Regulatory Order" shall mean a
Regulatory Order as to which (i) no petition for rehearing or
reconsideration of the action or order is pending before the FCC and the
time for filing any such petition has passed; and (ii) the FCC does not
have the action or order under reconsideration on its own motion and the
time for such reconsideration has passed.
"Repurchase Period" shall mean the period commencing upon the
occurrence of the Repurchase Event and ending on the earlier of (i) the
first anniversary of a Repurchase Event and (ii) the sale or distribution
of all Repurchase Shares.
"Repurchase Shares" means all Shares purchased by MC and/or its
affiliates pursuant to the Offer, the Shareholders' Agreement or otherwise.
"Voting Stock" means the Shares or any other shares of the capital
stock of AN having the ordinary power to vote in the election of directors.
(b) In the event of a Repurchase Event and during the Repurchase Period,
(i) MC shall not (A) acquire any additional Shares or other Voting Stock other
than pursuant to any stock dividend, stock split or similar event, (B) solicit
proxies with respect to Voting Stock of AN or be a "participant" in an "election
contest" or "solicitation" (as such terms are used in Regulation 14A under the
Exchange Act) with respect to Voting Stock of AN, (C) deposit any Voting Stock
of AN or the Repurchase Shares into a voting trust, (D) propose or advise any
other entity to propose any MC Acquisition Proposal, or (E) act in concert with
any person for the purpose of holding any Voting Stock of AN; and (ii) the
Repurchase Shares may only be voted pro rata with the Shares voted by all other
shareholders of AN (excluding MC and its affiliates) with respect to all
matters. Notwithstanding the foregoing, (x) MC may sell, transfer or otherwise
dispose of any Shares 90 days after the termination of this Agreement if this
Agreement is terminated solely pursuant to Section 7.1(d)(v), (y) MC may tender
or exchange Repurchase Shares into any tender offer or AN Acquisition Proposal
with respect to which the Board of Directors of AN has recommended to AN's
shareholders that they accept such tender offer or AN Acquisition Proposal and
tender or exchange their Shares pursuant to such tender offer or AN Acquisition
Proposal (provided that to the extent the Repurchase Shares are not purchased or
exchanged pursuant to such tender offer or AN Acquisition Proposal under this
clause (y), such Repurchase Shares shall remain subject to the provisions of
this Section 5.16), and (z) MC may pledge the Repurchase Shares pursuant to a
bona fide pledge to secure indebtedness of MC or any of its Subsidiaries,
provided, that such Repurchase Shares will remain subject to the provisions of
this Section 5.16.
(c) In the event of an Interest Payment Event, AN shall have the right
during the period ending 90 days after the Repurchase Event either to (i)
repurchase all the Repurchase Shares or (ii) designate a third party to purchase
the Repurchase Shares, which third party shall repurchase such Repurchase
Shares, in each case at a price per Share equal to (x) with respect to the
Repurchase Shares purchased pursuant to the Offer, the Offer Price plus an
interest factor of 10.125% per annum commencing on the date of the consummation
of the
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Offer and ending on the date of such purchase of the Repurchase Shares and (y)
with respect to the Repurchase Shares purchased pursuant to the Shareholders'
Agreement, cash equal to the price paid therefor (such price with respect to
consideration consisting of MC Shares to be equal to the Average MC Share Price
used in determining the consideration paid therefor) plus an interest factor of
10.125% per annum commencing on the date any such cash was paid and ending on
the date of such purchase; provided, that in the event of such an election, the
repurchase shall not occur any earlier than six months and one day after the
Shares were acquired by MC.
(d) In the event of any Repurchase Event which is not an Interest Payment
Event, AN shall have the right during the period ending 90 days after the
Repurchase Event either to (i) repurchase all the Repurchase Shares or (ii)
designate a third party to purchase the Repurchase Shares, which third party
shall repurchase such Repurchase Shares, in each case at a price per Share equal
to (x) with respect to the Repurchase Shares purchased pursuant to the Offer,
the Offer Price and (y) with respect to the Repurchase Shares purchased pursuant
to the Shareholders' Agreement, the price paid therefor (such price with respect
to consideration consisting of MC Shares to be equal to the Average MC Share
Price used in determining the consideration paid therefor).
(e) (i) If a Repurchase Event occurs and AN has not elected to purchase any
Repurchase Shares pursuant to paragraph (c) or (d), as applicable, or (ii) upon
request by MC given within 90 days after this Agreement has been terminated due
to an AN Termination Fee Event or solely pursuant to Section 7.1(d)(iii), then
AN and MC shall cooperate in good faith to sell all of the Repurchase Shares in
an orderly and reasonably widespread distribution, subject to the following:
(a) In the event of an underwritten public offering, AN shall be
entitled to select the lead underwriter, which shall be reasonably
acceptable to MC, and MC shall be entitled to select one or more
co-managing underwriters, which shall be reasonably acceptable to AN.
(b) All sales shall be made at market prices or, in the case of an
underwritten public offering, the price at which such underwriter
reasonably determines. MC shall bear all expenses incurred in connection
with such sales, including underwriter's discounts, commissions and
expenses, except for AN's legal fees, accounting fees and other expenses,
which shall be borne in all cases by AN.
(f) Notwithstanding the provisions of Section 7.3 hereof, the provisions of
this Section 5.16 shall survive any termination of this Agreement.
SECTION 5.17 Fair Price Statute. If any "fair price" or "control share
acquisition" or "anti-takeover" statute, or other similar statute or regulations
or any state "blue sky" statute shall become applicable to the transactions
contemplated hereby or by the Shareholders' Agreement, AN and the members of the
Board of Directors of AN shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby, and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
SECTION 5.18 Further Assurances. Each party hereto shall take all such
actions and execute all such documents and instruments that are reasonably
requested by the other party to carry out the intent of the parties under this
Agreement, and in particular, AN shall take all such actions necessary to obtain
the release, or assignment to MC's lenders, of all liens in favor of First
National Bank of Chicago prior to the Effective Time, including executing and
delivering for filing appropriate UCC-3 statements and other necessary documents
for release or assignment of such liens.
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ARTICLE VI
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Purchase of Shares in Offer. MC shall have purchased Shares
pursuant to the Offer or pursuant to the Shareholders' Agreement;
(b) Stockholder/Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of capital stock
of MC and AN in accordance with the DGCL and TBCA and the respective
Certificates of Incorporation/Charters and By-Laws of MC and AN;
(c) Statutes; Consents. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any Government Entity preventing
the Merger or the consummation of the transactions contemplated hereby, and
all orders and approvals from Governmental Entities required for the
consummation of the Merger and the transactions contemplated hereby shall
have been obtained and shall be in effect at the Effective Time;
(d) Injunctions. There shall be no order or injunction of a foreign
or United States federal or state court or other governmental authority of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger;
(e) Regulatory Approval. A Regulatory Order permitting the Merger to
be consummated shall have been received from the FCC (or at the election of
MC, approval shall have been received from the FCC), and Regulatory Orders
permitting the Merger to be consummated shall have been received from any
requisite State Authorities;
(f) HSR Act. The expiration or early termination of any waiting
period under the HSR Act shall have occurred;
(g) Registration Statement. The Registration Statement for MC Shares
and VCRs, and the Trust Indenture Act qualification for VCRs, shall have
been declared effective and no stop order with respect thereto shall be in
effect at the Effective Time; and
(h) Nasdaq Listing. The MC Shares to be issued in the Merger shall
have been admitted for quotation on the Nasdaq National Market System.
SECTION 6.2 Conditions to Obligations of AN to Effect the Merger. The
obligation of AN to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of the following additional conditions:
(a) MC shall have performed and complied in all material respects with
all obligations and agreements required to be performed and complied with
by it under this Agreement at or prior to the Effective Time;
(b) The representations and warranties of MC contained in this
Agreement shall have been true and correct in all material respects at the
time when made, and (except for representations made as of a certain date)
shall be deemed made again on the Closing Date and shall be true in all
material respects as of such date, except for changes specifically
permitted by this Agreement;
(c) Except for the transactions contemplated by this Agreement, and
except for matters which affect generally the economy or the industry in
which MC and its Subsidiaries are engaged, as of the Closing Date, there
shall not have occurred any change in the business, properties, assets,
liabilities, financial conditions, cash flows, operations, licenses,
franchises or results of operations of MC or its Subsidiaries which has a
Material Adverse Effect on MC and its Subsidiaries, taken as a whole;
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(d) AN shall have received a certificate from MC, signed on behalf of
MC by the Chief Executive Officer or Chief Financial Officer of MC, dated
the Closing Date, to the effect that the conditions set forth in paragraph
(a), (b) and (c) above have been satisfied; and
(e) AN shall have received the opinion of Wilmer, Cutler & Pickering,
dated the Closing Date and in a form reasonably acceptable to AN, to the
effect that MC Shares and VCRs to be issued in the Merger have been duly
authorized, and when issued in accordance with this Agreement will be
validly issued, and with respect to MC Shares, fully paid and nonassessable
and no holder of any MC Shares outstanding as of such date has any
preemptive or other rights to subscribe for MC Shares pursuant to the DGCL,
the Certificate of Incorporation or pursuant to agreements of MC set forth
on a schedule to such opinion, which MC will have certified to such counsel
as representing all agreements which contain preemptive right or rights to
subscribe for MC Shares.
SECTION 6.3 Conditions to Obligations of MC to Effect the Merger. The
obligation of MC to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of the following additional conditions:
(a) AN shall have performed or complied in all material respects with
all obligations and agreements required to be performed or complied with by
it under this Agreement at or prior to the Effective Time;
(b) The representations and warranties of AN contained in this
Agreement shall have been true and correct in all material respects at the
time when made, and (except for representations made as of a certain date)
shall be deemed made again on the Closing Date and shall be true in all
material respects as of such date, except for changes specifically
permitted by this Agreement;
(c) Except for the transactions contemplated by this Agreement and the
Shareholders' Agreement, and except for matters which affect generally the
economy or the industry in which AN and its Subsidiaries are engaged, as of
the Closing Date, there shall not have occurred any change in business,
properties, assets, liabilities, financial condition, cash flows,
operations, licenses, franchises or results of operations of AN or its
Subsidiaries which has a material adverse effect on AN and its Subsidiaries
taken as a whole;
(d) MC shall have received a certificate from AN, signed on behalf of
AN by the Chief Executive Officer or Chief Financial Officer of AN, dated
the Closing Date, to the effect that the conditions set forth in paragraph
(a), (b) and (c) above have been satisfied.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual written consent of MC and AN.
(b) By either AN or MC:
(i) If any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree or other action
the parties hereto shall use their reasonably efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable; or
(ii) If the Merger shall not have occurred by November 15, 1996,
provided, that if at November 16, 1996, the sole reason the Merger shall
not have occurred is the failure to obtain a Final Regulatory Order
permitting the consummation of the Merger from the FCC, MC may extend
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the date in this clause (ii) to February 16, 1997, provided, further,
that the foregoing date may be extended for an additional 60 days at
MC's option following an event described in Section 3.3.2 or 3.3.3 of
the Shareholders' Agreement if necessary to allow time for the Meeting,
provided, further, that notwithstanding the foregoing, the right to
terminate this Agreement under this Section 7.1(b)(ii) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before November 16, 1996 (or February 16, 1997, as
the case may be).
(c) By AN:
(i) if MC shall have terminated the Offer, or the Offer shall have
expired, without MC purchasing any Shares pursuant thereto; provided
that AN may not terminate this Agreement pursuant to this Section
7.1(c)(i) if AN is in material breach of any of its covenants or
agreements in this Agreement;
(ii) if, due to an occurrence that, if occurring after the
commencement of the Offer, would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, MC or any of its affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that AN may not terminate this Agreement pursuant to this
Section 7.1(c)(ii) if AN is in material breach of any of its covenants
or agreements in this Agreement;
(iii) if MC shall have failed to perform and comply in all material
respects with all material obligations and agreements required to be
performed and complied with by it under this Agreement or the
Shareholders' Agreement, which failure to perform shall not have been
cured prior to the expiration of thirty (30) days following notice of
such failure;
(iv) if the Proposal shall not have been approved and adopted by
the requisite vote of the holders of capital stock of MC in accordance
with the DGCL and the Certificate of Incorporation and By-Laws of MC at
a Meeting held for that purpose (including any adjournment thereof); or
(v) if the Board of Directors of MC shall have (A) withdrawn or
modified or changed in any manner adverse to AN its approval or
recommendation of this Agreement, the Offer or the Merger or (B) shall
have failed to recommend against a MC Acquisition Proposal involving a
tender offer or failed to reject any other MC Acquisition Proposal
within ten business days of receipt by the Board of Directors of MC of
such proposal or shall have executed an agreement in principle (or
similar agreement) or definitive agreement relating to a MC Acquisition
Proposal or similar business combination with a person or entity other
than AN (or the Board of Directors of MC resolves to do any of the
foregoing).
(d) By MC:
(i) if MC shall have terminated the Offer, or the Offer shall have
expired without MC purchasing any Shares thereunder, provided, that MC
may not terminate this Agreement pursuant to this Section 7.1(d)(i) if
it has failed to purchase Shares in the Offer in violation of the
material terms hereof or thereof;
(ii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, MC or any of its affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer,
provided that MC may not terminate this Agreement pursuant to this
Section 7.1(d)(ii) if MC is in material breach of any of its covenants
or agreements in this Agreement or the Shareholders' Agreement;
(iii) if AN or any of its Subsidiaries shall have failed to perform
and comply in all material respects with all material obligations and
agreements required to be performed and complied with by them under this
Agreement which failure to perform shall not have been cured prior to
the expiration of thirty (30) days following notice of each failure;
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<PAGE> 43
(iv) if the Proposal shall not have been adopted by the requisite
vote of the holders of capital stock of AN in accordance with the TBCA
and the Charter and By-Laws of AN at a Meeting held for that purpose
(including any adjournment thereof); provided, that all Shares then
owned by MC are voted in favor of the Proposal; or
(v) if the Board of Directors of AN shall have (A) withdrawn or
modified or changed, in any manner adverse to MC, its approval or
recommendation of this Agreement, the Offer or the Merger or (B) shall
have failed to recommend against an AN Acquisition Proposal involving a
tender offer or failed to reject any other AN Acquisition Proposal
within ten business days of receipt by the Board of Directors of AN of
such proposal or shall have executed an agreement in principle (or
similar agreement) or definitive agreement relating to an AN Acquisition
Proposal or similar business combination with a person or entity other
than MC (or the Board of Directors of AN resolves to do any of the
foregoing) and MC shall not have exercised its right to purchase Shares
under the Shareholders' Agreement.
SECTION 7.2 Termination Fee. (a) If this Agreement is terminated pursuant
to Section 7.1(c)(iv) or (c)(v), then MC will immediately pay to AN a
termination fee equal to $10,000,000 in cash.
(b) If this Agreement is terminated pursuant to Section 7.1(d)(iv) or
(d)(v), then AN will immediately pay to MC a termination fee equal to
$10,000,000 in cash.
(c) The agreement contained in Section 7.2 is an integral part of the
transactions contemplated by this Agreement and constitutes liquidated damages
in the event of a termination under the Sections specified herein and not a
penalty.
SECTION 7.3 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (except for the
provisions of Sections 5.15, 5.16 and 7.2, which shall survive such termination)
shall forthwith become null and void and, subject to the provisions of Section
7.2, there shall be no liability on the part of MC or AN except for fraud or for
material breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of AN contemplated hereby,
by written agreement of the parties hereto, at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
after the approval of this Agreement by the shareholders of AN, no such
amendment, modification or supplement shall reduce or change the Conversion
Ratio.
SECTION 8.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
SECTION 8.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service,
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<PAGE> 44
such as Federal Express, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) If to MC to:
Metrocall, Inc.
6910 Richmond Highway
Alexandria, Virginia 22306
Attention: Vincent D. Kelly
Telecopy No.: (703) 768-9625
with a copy (which shall not constitute notice) to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas and Thomas W. White
Telecopy No.: (202) 663-6363
and
(b) if to AN, to:
A+ Network, Inc.
40 South Palafox Street
Pensacola, Florida 32501
Attention: Chuck Emling
Telecopy No.: (904) 432-9208
with a copy (which shall not constitute notice) to:
Waller Lansden Dortch & Davis
511 Union Street
Suite 2100
Nashville, TN 37219
Attention: Ralph W. Davis
Telecopy No: (615) 244-6804
SECTION 8.4 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 8.5 Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
SECTION 8.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which have been considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 8.7 Entire Agreement; Third Party Beneficiaries. This Agreement,
the Shareholders' Agreement, the MC Voting Agreement and the Confidentiality
Agreement (including the documents and the instruments referred herein and
therein): (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder, except that Article II
and Section 5.14 shall confer on the third parties contemplated thereby the
benefits thereof.
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SECTION 8.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
SECTION 8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided, that MC may assign its rights hereunder
to a direct or indirect wholly-owned subsidiary, so long as MC remains liable
for its obligations hereunder. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 8.10 Further Assurances. The parties agree to execute such
further instruments and documents as shall reasonably be necessary to carry out
the transactions contemplated by this Agreement, including, without limitation,
to file any notices, or to obtain any consents appropriate to carry out the
transactions contemplated by this Agreement.
[The remainder of this page is intentionally left blank.]
39
<PAGE> 46
IN WITNESS WHEREOF, MC and AN have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date first written
above.
METROCALL, INC.
By: /s/ VINCENT D. KELLY
------------------------------------
Name: Vincent D. Kelly
Title: Vice President and
Chief Financial Officer
A+ NETWORK, INC.
By: /s/ CHARLES A. EMLING III
------------------------------------
Name: Charles A. Emling III
Title: President and Chief Executive
Officer
40
<PAGE> 47
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A have the meaning set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) MC's rights to extend and amend the Offer at any time in
its sole discretion (subject to the provisions of the Merger Agreement), MC
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred above, the payment for, any tendered
Shares, and may amend the Offer consistent with the terms of the Merger
Agreement or terminate the Offer if (i) any applicable waiting period under the
HSR Act has not expired or terminated prior to the expiration of the Offer, (ii)
the Minimum Condition has not been satisfied, or (iii) at any time on or after
May 16, 1996 and before the time of acceptance of Shares for payment pursuant to
the Offer, any of the following events shall occur:
(a) the affirmative vote of the holders of more than a majority of the
outstanding Shares is required to consummate the Merger or MC is not
entitled to vote its Shares, including any Shares acquired pursuant to the
Shareholders' Agreement for the Merger;
(b) any change shall have occurred in the business, properties,
assets, liabilities, capitalization, stockholder's equity, financial
condition, cash flows, operations, licenses, franchises or results of
operations of AN or its Subsidiaries which has a Material Adverse Effect on
AN and its Subsidiaries taken as a whole, except for matters which affect
generally the economy or industry in which AN and its Subsidiaries are
engaged;
(c) (I) there shall have been instituted or pending any, or there is
threatened any, action, proceeding, application or counterclaim by any
government or governmental authority or agency, or by AN or an affiliate of
AN, which (i) challenges or seeks to challenge the acquisition by MC (or
any affiliate of MC) of the Shares, restrain or prohibit the making or
consummation of the Offer or the Merger, prohibits the performance by MC of
the Offer, the Merger, the Shareholders' Agreement or any agreements
contemplated thereby, or seeks to obtain any material damages directly or
indirectly relating to the transactions contemplated by the Offer, the
Merger, or Shareholders' Agreement, (ii) seeks to make the purchase of, or
payment for, some or all of the Shares pursuant to the Offer or the Merger
or Shareholders' Agreement illegal or results in a material delay in the
ability of MC to accept for payment or pay for some or all of the Shares,
(iii) seeks to prohibit or limit the ownership or operation by MC (or any
affiliate of MC) of all or any material portion of the business or assets
of AN and its Subsidiaries or of MC and its affiliates or to compel MC (or
any affiliate of MC) to dispose of or to hold separately all or any
material portion of the business or assets of MC or any of its affiliates
or of AN or any of its Subsidiaries or seeks to impose any material
limitation on the ability of MC, or any other affiliate of MC, to conduct
AN's or any of its Subsidiary's business or own such assets, (iv) seeks to
impose or confirm material limitations on the ability of MC (or any
affiliate of MC) to acquire or hold or to exercise full rights of ownership
of the Shares, including but not limited to, the right to vote the Shares
purchased by them on all matters properly presented to the stockholders of
AN, or (v) seeks to require divestiture by MC of any of its Subsidiaries or
affiliates of all or any of the Shares, or (II) there shall have been
instituted any action, proceeding, application or counterclaim by any
person (other than a Governmental Entity or AN, or an affiliate of AN),
before any court or governmental regulatory or administrative agency,
authority or tribunal, with respect to the matters set forth in subsections
(i)-(v) above, which has resulted in the issuance of a temporary
restraining order ("TRO"), preliminary injunction or permanent injunction
enjoining the Merger, this Agreement or the transactions contemplated
hereby if such TRO, preliminary injunction or permanent injunction has not
been removed or rescinded within 20 business days after the original
expiration date of the Offer;
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(d) there shall be any action taken, or any statute, rule, regulation
shall be enacted, promulgated, entered, enforced or deemed applicable to,
or any order shall be entered or enforced with respect to, the Offer, the
Merger or the Shareholders' Agreement by any government, governmental
authority or court, domestic, foreign or supranational, other than the
routine application to the Offer, the Merger or other subsequent business
combination of waiting periods under the HSR Act or approval of license
transfers under the Communications Act or by state regulatory agencies that
is reasonably likely to, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of subsection (c)(I)
above;
(e) the representations and warranties of AN set forth in the Merger
Agreement shall not have been true and correct in all material respects on
the date of the Merger Agreement or shall not be true and correct as of the
date of consummation of the Offer as though made on or as of such date or
AN shall have breached or failed to perform or comply with any obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in such cases, (i) for changes specifically
permitted by the Merger Agreement and (ii) those representations and
warranties that address matters only as of a particular date which are true
and correct as of such date;
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
(g) (i) it shall have been publicly disclosed that any person, entity
or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than
MC, shall have acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 25% of any class or
series of capital stock of AN (including the Shares) through the
acquisition of stock, formation of a group or otherwise, other than any
person or group existing on the date hereof which beneficially owns more
than 25% of any class or series of capital stock of AN, or (ii) AN shall
have entered into or announced its intention to enter into a definitive
agreement or agreement in principle with any person with respect to an AN
Acquisition Proposal or similar business combination.
(h) AN's Board of Directors shall have withdrawn, or modified or
changed in any manner adverse to MC (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger, or recommended an AN Acquisition Proposal, or shall have resolved
to do any of the foregoing; or
(i) any party to the Shareholders' Agreement other than MC shall have
breached or failed to perform, in each case in any material respect, any of
its agreements under such agreement or any of the representations and
warranties of any such party set forth in such agreement shall not be true
in any material respect, in each case, when made or at any time prior to
the consummation of the Offer as if made at and as of such time, or the
Shareholders' Agreement shall have been invalidated or terminated with
respect to any Shares subject thereto;
which in the reasonable judgment of MC, in any such case, and regardless of the
circumstances giving rise to such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of MC and may be asserted
by MC regardless of any circumstances giving rise to any condition and may be
waived by MC, in whole or in part at any time and from time to time in the sole
discretion of MC. The failure by MC (or any affiliate of MC) at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right
and each right will be deemed an ongoing right which may be asserted at any time
and from time to time.
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ANNEX B
DIRECTORS OF THE SURVIVING CORPORATION
The following sets forth the membership, by class, of the Board of
Directors of the Surviving Corporation.
Class of 1997
S. Brock
W. Collins
F. Martin
Class of 1998
E. Singer
R. Aprahamian
To be determined
Class of 1999
H. Brock
R. Johnston
R. Russenberger
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<PAGE> 50
ANNEX C
PRINCIPAL TERMS OF INDEXED VARIABLE COMMON RIGHTS ("VCRS")
ISSUER..................... Metrocall, Inc. ("MC")
PAYMENT AT MATURITY........ Following the maturity of a VCR, the holder of such
VCR (the "VCR Holder") shall have the right to
receive the amount, if any, by which the Target
Price exceeds the greater of the Current Market
Value and the Minimum Price (each as defined
below). The VCRs shall mature on the Maturity Date
unless otherwise extended to the Extended Maturity
Date (as defined below).
FORM OF PAYMENT............ MC, at its option, may pay any amount due under the
terms of the VCRs to the VCR Holders in cash or MC
Common Stock valued based on the Current Market
Value as defined below or common stock equivalents
at fair market value (as determined by an
independent nationally recognized investment bank).
TARGET PRICE............... "Target Price" means (i) at the Maturity Date,
$21.10 reduced but not increased by the "Index
Factor", as hereinafter defined, and (ii) at the
Extended Maturity Date, $25.10 reduced but not
increased by the Index Factor. In each case, such
Target Prices shall be adjusted upon the occurrence
of any event described in the Section entitled
"Antidilution" set forth below.
CURRENT MARKET VALUE....... "Current Market Value" means with respect to the
Maturity Date and the Extended Maturity Date, the
median of the averages of the closing bid prices on
the Nasdaq NMS (or such other exchange on which
such shares are then listed) of shares of MC's
Common Stock, par value $.01 per share (the "Common
Stock"), during each 20 consecutive trading day
period that both begins and ends in the Valuation
Period. "Valuation Period" means the 60 trading day
period immediately preceding (and including) the
Maturity Date or the Extended Maturity Date, as the
case may be.
MINIMUM PRICE.............. "Minimum Price" means (i) at the Maturity Date,
$16.10, and (ii) at the Extended Maturity Date,
$18.10. In each case, subject to adjustment upon
the occurrence of any event described in the
Section entitled "Antidilution" set forth below.
INDEX FACTOR............... An Index Factor shall be calculated based upon the
ratio of the relevant ending period stock prices
for the Comparable Paging Company Index (the Index
Factor numerator) and the initial Comparable Paging
Company Index (the Index Factor denominator). The
Comparable Paging Company Index shall consist of
the stocks of ARCH COMMUNICATIONS GROUP, INC.,
MOBILMEDIA COMMUNICATIONS, INC., AND PRONET, INC.,
or each's successors. The initial Comparable Paging
Company Index shall be the median of the simple
arithmetic average of closing bid prices of the
index group for the 20 trading days preceding May
14, 1996. The ending period Comparable Company
Paging Index shall be the same median of the simple
arithmetic average of closing bid prices of the
index group as measured in the identical fashion as
MC's closing bid prices during the relevant
Valuation Periods preceding the Maturity Date,
Extended Maturity Date, or Disposition Date, as the
case may be. In each case, such adjustments shall
be made, as appropriate, for each
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company's stock prices that is included in the
Comparable Paging Company Index, upon the
occurrence of any event similar to that described
in the "Antidilution" section below.
EARLY TERMINATION.......... If the closing bid prices of the Common Stock
exceeds (i) $21.10 for any 50 calendar day period
prior to the Maturity Date, or (ii) $25.10 for any
50 calendar day period between the Maturity Date
and the Extended Maturity Date, then the VCRs shall
immediately expire and be of no further force and
effect.
MATURITY DATE; EXTENSION
THEREOF.................. "Maturity Date" means the first anniversary of the
effective time (the "Effective Time") of the merger
between MC and A+ Network, Inc. ("AN") (the
"Merger"); provided, however, that MC, at its
option, may extend the Maturity Date to the second
anniversary of the Effective Time (the "Extended
Maturity Date"). MC shall exercise either such
option to extend by publishing notice of such
exercise in the Wall Street Journal (Eastern
Edition), or if the Wall Street Journal is not then
published, such other newspaper with general
circulation in the City of New York, New York no
later than one business day preceding the Maturity
Date, as the case may be.
NO INTEREST................ Other than in the case of interest on the Default
Amount (as defined below), no interest shall accrue
on any amounts payable to the VCR Holders pursuant
to the terms of VCRs.
DISPOSITION PAYMENT........ Following the consummation of a Disposition (as
defined below), MC shall pay to each VCR Holder for
each VCR held by such VCR Holder an amount, if any,
by which the Discounted Target Price (as defined
below) exceeds the greater of (a) the fair market
value (as determined by an independent nationally
recognized investment banking firm) of the
consideration, if any, received by holders of
Common Stock for each share of Common Stock held by
such holder as a result of such Disposition and (b)
the Minimum Price.
DISPOSITION EVENT.......... "Disposition" means (a) a merger, consolidation or
other business combination involving MC as a result
of which no shares of Common Stock shall remain
outstanding, (b) a sale, transfer or other
disposition, in one or a series of transactions, of
all or substantially all of the assets of MC or (c)
a reclassification of Common Stock as any other
capital stock of MC or any other person.
ACCELERATION UPON EVENT OF
DEFAULT.................. If an Event of Default (as defined below) occurs
and is continuing, either the bank or trust company
acting as the trustee (the "Trustee") or VCR
Holders holding at least 25% of the outstanding
VCRs, by notice to MC (and to the Trustee if given
by VCR Holders), may declare the VCRs to be due and
payable, and upon any such declaration, the Default
Amount shall become due and payable and,
thereafter, shall bear interest at an interest rate
of 12% per annum until payment is made to the
Trustee. "Default Amount" means the amount, if any,
by which the Discounted Target Price exceeds the
Minimum Price.
DISCOUNTED TARGET PRICE.... "Discounted Target Price" means (a) if a
Disposition or an Event of Default shall occur
prior to the Maturity Date, $21.10 reduced but not
increased by the relevant Index Factor, discounted
to the Disposition Payment Date (as defined below)
or the Default Payment Date (as
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defined below), as the case may be, at a per annum
rate of 8%; or (b) if a Disposition or an Event of
Default shall occur after the Maturity Date but
prior to the Extended Maturity Date, $25.10 reduced
but not increased by the relevant Index Factor
discounted to the date of the Disposition Payment
Date or Default Payment Date, as the case may be,
at a per annum rate of 8%. In each case, the
Discounted Target Price and the Minimum Price shall
be adjusted upon the occurrence of any event
described in the Section entitled "Antidilution"
set forth below. "Disposition Payment Date", with
respect to a Disposition, means the date
established by MC for payment of the amount due on
the VCRs in respect of such Disposition, which in
no event shall be more than 38 days after the date
on which such Disposition was consummated. "Default
Payment Date" means the date on which the VCRs
become due and payable upon the declaration thereof
following an Event of Default.
EVENTS OF DEFAULT.......... "Event of Default", with respect to the VCRs, means
any of the following which shall have occurred and
be continuing; (a) default in the payment of all or
any part of the amounts payable in respect of any
of the VCRs as and when the same shall become due
and payable following the Maturity Date or the
Extended Maturity Date, the Disposition Payment
Date or otherwise; (b) material default in the
performance, or material breach, of any material
covenant or warranty of MC,and continuance of such
material default or breach for a period of 98 days
after written notice has been given to MC by the
Trustee or to MC and the Trustee by VCR Holders
holding at least 25% of the outstanding VCRs; or
(c) certain events of bankruptcy, insolvency,
reorganization or other similar events in respect
of MC.
ANTIDILUTION............... If MC shall in any manner subdivide (by stock
split, stock dividend or otherwise) or combine (by
reverse stock split or otherwise) the number of
outstanding shares of Common Stock, MC shall
correspondingly subdivide or combine the VCRs and
shall appropriately adjust the Target Price, the
Minimum Price and the Discounted Target Price.
TRADING.................... None of MC or any of its affiliates shall trade in
shares of Common Stock during the period commencing
18 trading days before the Valuation Period and
ending on the last day of the Valuation Period,
except with respect to employee benefit plans and
other incentive compensation arrangements.
VCR AGREEMENT.............. The VCRs will be issued pursuant to a VCR Agreement
between MC and the Trustee. MC shall use its
reasonable best efforts to cause the VCR Agreement
to be qualified under the Trust Indenture Act of
1939, as amended.
REGISTRATION............... The VCRs will be issued in registered form.
NATURE AND RANKING OF
VCRS....................... The VCRs are unsecured obligations of MC and will
rank equally with all other unsecured obligations
of MC.
DIVIDENDS.................. If any dividends are paid on the MC Common Stock
prior to the Maturity Date or the Extended Maturity
Date, as applicable, the holders of the VCRs shall
have no right to receive any such dividends.
C-3
<PAGE> 53
ANNEX D
EMPLOYMENT AND EMPLOYEE BENEFITS COVENANTS
The capitalized terms used in this Annex D have the meaning set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
(a) Charles A. Emling, III ("Emling"), AN's executive officers,
managers, salespeople, and staff will continue to participate in the AN
Benefit Plans and AN Employee Agreements as in effect on the date of the
Merger Agreement until the Effective Time.
(b) AN will use its best efforts to cause Ray D. Russenberger and
Elliot H. Singer to enter into non-compete agreements with MC that will
take effect at the Effective Time.
(c) MC will review compensation arrangements and bonus plans in its
normal budgeting cycle, with the expectation of transitioning current AN
employees to the MC compensation arrangements and bonus plans as of the
later of the Effective Time and January 1, 1997.
(d) Emling will cooperate with the officers of MC and Tom Matthews in
identifying employees whose services will not be required by the Surviving
Corporation. Employees who are terminated after the date hereof and before
the Effective Time will be provided with severance, less any applicable
withholding and social security taxes, equal to the lesser of (i) one (1)
month's salary (at the level in effect on the date hereof) for each full
year employed by AN to a maximum of six months' pay and (ii) the severance
payable under the AN Benefit Plans as of the date hereof.
(e) AN shall provide all notices, if any, required by the Worker
Adjustment and Retraining Notification Act with respect to actions taken
before the Effective Time.
(f) Certain existing one-year employment contract will be revised in
accordance with the employment contract entered into with Emling as of the
date hereof (to take effect at the Effective Time). MC currently
contemplates that these arrangements will cover Poole, Schultz, Goldstein,
and Smith.
(g) AN will review the performance of Goldstein and Schultz at their
customary anniversary date (summer 96) for both salary increases and
bonuses based on 1996 performance.
(h) MC agrees to employ all or substantially all of AN employees who
are legally on payroll on the Effective Date and to enroll them in the MC
Benefit Plans in accordance with the terms of such plans. The employees so
hired will be at-will employees of MC.
(i) MC is under no obligation to provide or continue any MC Benefit
Plan or arrangement or any other plan or arrangement before or after the
Effective Time and may amend or terminate any such plan or arrangement in
whole or in part, and may modify any provision thereof, including any
provision dealing with eligibility, levels or types of benefits,
deductibles, or co-payment obligations, or any other right, feature, or
characteristic.
(j) AN agrees that it will take appropriate steps to ensure that the
AN 401(k) plan meets any ERISA requirements applicable with respect to
participating in the Tender Offer and the Merger. In particular, AN will
take the appropriate steps to ensure that the trustee(s) of the AN 401(k)
Plan meet their obligations with respect to the Shares held in that plan.
The parties hereto agree that no employee or former employee of AN (or its
predecessors) or beneficiary or dependent thereof, whether hired before or after
the date hereof, shall have any third-party beneficiary rights under this Annex
D.
D-1
<PAGE> 54
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each shareholder or his
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY: MAIL BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
Tender & Exchange (212) 815-6213 Tender & Exchange
Department Department
P.O. Box 11248 Confirm by Telephone: 101 Barclay Street
Church Street Station (800) 507-9357 Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
</TABLE>
Any questions and requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its addresses and telephone numbers set forth below. Shareholders may
also contact their broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219
CALL TOLL-FREE: (800) 826-2804
<PAGE> 1
EXHIBIT 11(C)(2)
A+ SHAREHOLDERS'
OPTION AND SALE AGREEMENT
BY AND AMONG
METROCALL, INC.
AND
CERTAIN SHAREHOLDERS OF
A+ NETWORK, INC.
May 16, 1996
<PAGE> 2
A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT
<TABLE>
<S> <C>
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-------------------
2. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------------
2.1. Representations and Warranties of the Shareholders . . . . . . . . . . . . . . . . . . . . . . 4
--------------------------------------------------
2.1.1 Binding Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
2.1.2 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
2.1.3 Ownership of Owned Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------------
2.1.4 Purchase Not for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------------------
2.1.5 Tax Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------
2.2 Representations and Warranties of MC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------------------------
2.2.1 Binding Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
2.2.2 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
2.2.3 Purchase Not for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------
2.2.4 MC Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
3. Transactions for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------
3.1 Certain Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------------
3.2 Scenario I Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------
3.2.1 Cash Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------------
3.2.2 Scenario I Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------
3.3 Scenario II Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------------
3.3.1 Scenario II Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------
3.3.2 Scenario II Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------
3.3.3 Scenario II Mandatory Share Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------------
3.3.4 Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------
4. Voting Agreement and Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------------
5. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------
6. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------
7. Specific Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------
8. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------
9. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------
10. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
11. Scope of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------
12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------
13. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------
14. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------------
15. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------
16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------
17. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------
18. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------
19. No Solicitation; Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------
</TABLE>
ii
<PAGE> 4
A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT
A+ SHAREHOLDERS' OPTION AND SALE AGREEMENT, dated as of May 16, 1996 (this
"Agreement"), by and among Metrocall, Inc., a Delaware corporation ("MC"), and
the shareholders identified on Annex I hereto (each, a "Shareholder" and
collectively, the "Shareholders") of A+ Network, Inc., a Tennessee corporation
("AN").
WHEREAS, MC and AN have entered into an Agreement and Plan of Merger of
even date herewith (the "Merger Agreement"), pursuant to which it is intended
that a business combination be accomplished by MC commencing a cash tender
offer (the "Offer") for certain issued and outstanding shares of common stock
of AN, $.01 par value (the "Shares"), together with the related share purchase
rights (the "Rights") issued pursuant to the Rights Agreement dated February
16, 1995 by and between AN and First Union National Bank of North Carolina, as
Rights Agent (the "Rights Plan"), to be followed by a merger of AN with and
into MC (the "Merger");
WHEREAS, as of the date hereof, each of the Shareholders is beneficial
owner of, and, except for the RR Option Shares (as defined below), has the sole
right to vote and dispose of, the number of Shares (together with the related
rights) which is set forth opposite such Shareholder's name in Annex II (the
"Owned Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, MC has required that each of the Shareholders agree, and each of the
Shareholders is willing to agree, upon the terms and subject to the conditions
set forth herein, to grant MC certain rights with respect to certain of the
Owned Shares.
NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereto agree as follows:
1. Certain Definitions.
"Adjusted Owned Shares" shall mean such number of Shares, as selected by
MC, that in the aggregate is greater than 40%, but does not exceed 49.9% (or
such lesser percentage as may be required by applicable law), of the issued and
outstanding Shares on the date of calculation. The RR Option Shares shall be
disregarded for purposes of calculating the Adjusted Owned Shares for each
Shareholder's pro rata share under Section 3.3.1.
"AN Acquisition Proposal" shall mean any proposal relating to (i) a
possible acquisition of AN, whether by way of merger, purchase of all or
substantially all of the assets of AN, or any similar transaction, or (ii) a
tender offer for more than 5% of the Shares (excluding AN Pending Transactions
as defined in the Merger Agreement or any other transactions permitted by
Section 5.1(a)of the Merger Agreement).
1
<PAGE> 5
"AN Securities" shall mean the Owned Shares, together with all options and
other rights to purchase Shares granted to MC pursuant to this Agreement.
"Average MC Share Price" shall mean the average of the last reported bid
price per MC Share on the Nasdaq National Market for the 50 consecutive trading
days ending on the trading day that is five trading days prior to the relevant
date of Closing, provided that the Average MC Share Price shall not exceed
$21.88 or be less than $17.90.
"Cash Purchase Shares" shall mean a number of Shares equal to 40% of the
number of Owned Shares.
"Closing" shall mean the closing of the sale of any AN Securities, which in
each case shall occur at the offices of Wilmer, Cutler & Pickering, 2445 M
Street, N.W., Washington D.C. 20037, at 11:00 a.m. (Eastern Time) on the date
specified herein for such closing.
"Conversion Ratio" shall have the meaning set forth in Section 2.2 of the
Merger Agreement, provided, that for the purposes of this Agreement, the
Conversion Ratio shall be calculated using the Average MC Share Price as
defined above.
"Effective Time" shall have the meaning set forth in Section 1.5 of the
Merger Agreement.
"Evidence of Financing" shall mean a letter of credit or other acceptable
financing commitment satisfying MC's obligations with respect to the Scenario I
Option under Section 2.5 of the Merger Agreement.
"Exercise Conditions" shall have the meaning set forth in Section 3.2.2(c).
"FCC" shall mean the Federal Communications Commission.
"Final Regulatory Order" shall mean a Regulatory Order as to which (i) no
petition for rehearing or reconsideration of the action or order is pending
before the FCC and the time for filing any such petition has passed; and (ii)
the FCC does not have the action or order under reconsideration on its own
motion and the time for such reconsideration has passed.
"MC Securities" shall mean the MC Shares and VCRs issuable to the
Shareholders pursuant to this Agreement or the Merger Agreement.
"MC Shares" shall mean duly authorized, validly issued, fully paid and
nonassessable shares of common stock of MC, $.01 par value.
"Option Period" shall have the meaning set forth in Section 3.2.2(b).
"RR Option Shares" shall have the meaning set forth in Section 2.1.3(b).
2
<PAGE> 6
"Regulatory Order" shall mean an action taken or order issued by the FCC
with respect to the AN Licenses (as defined in the Merger Agreement) as to
which (i) no request for stay by the FCC of the action or order is pending, no
such stay is in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it has passed; and (ii) with respect to an
action taken or order issued by the FCC granting consent to the Merger, such
consent shall be without material adverse conditions, other than conditions
that have been agreed to by AN and MC or that are routine conditions with
respect to transfers of this nature.
"Scenario I Option" shall have the meaning given such term in Section
3.2.2.
"Scenario I Option Shares" shall mean, with respect to each Shareholder,
all of the Owned Shares owned by such Shareholder (other than the Cash Purchase
Shares previously purchased by MC, or with respect to Mr. Russenberger, the RR
Option Shares).
"Scenario II Option" shall have the meaning given such term in Section
3.3.2.
"Scenario II Option Shares" shall mean, with respect to each Shareholder,
all of the Owned Shares owned by such Shareholder (other than the Adjusted
Owned Shares previously purchased by MC, or with respect to Mr. Russenberger,
the RR Option Shares).
"Scenario II Tender Offer" shall have the meaning given such term in
Section 3.3.2 hereof.
"Scenario II Trigger Event" shall occur if (i) prior to expiration of the
Offer, AN receives an AN Acquisition Proposal or an event described in Section
7.1(d)(iv) of the Merger Agreement occurs, (ii) the Offer expires in accordance
with its terms (including any extension permitted under Section 1.1 of the
Merger Agreement) without any Shares accepted for payment in circumstances in
which all conditions to the Offer other than the Minimum Condition or the
condition relating to an injunction in paragraph (c)(II) of Annex A to the
Merger Agreement, shall have been satisfied, and (iii) as soon as practicable,
but in no event later than two business days after the expiration of the Offer,
MC gives notice to AN and the Shareholders of its election not to terminate the
Merger Agreement pursuant to Section 7.1(d) (iv) or (v) of the Merger
Agreement, but in lieu thereof shall have elected to exercise its rights under
Section 3.3 hereof.
"Scenario II Trigger Shares" shall mean the Adjusted Owned Shares minus the
Cash Purchase Shares.
"VCR" has the same meaning as set forth in Section 2.1 of the Merger
Agreement.
3
<PAGE> 7
2. Representations and Warranties.
2.1. Representations and Warranties of the Shareholders. Each
of the Shareholders, individually and not jointly, represents and warrants to
MC with respect to itself as follows:
2.1.1 Binding Agreement. Such Shareholder has the capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Such Shareholder has duly and validly executed and
delivered this Agreement and this Agreement constitutes a legal, valid and
binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.1.2 No Conflict. Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, nor the
compliance with any of the provisions hereof, (a) require on the part of such
Shareholder, any permit, authorization, consent or approval of, or filing
(except for filings under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Securities Act of 1933 (the "Securities Act"), the
Communications Act of 1934, as amended (the "Communications Act"), the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), or state
public utility or public service laws (if any)) with, or notification to, any
governmental entity, (b) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any contract,
agreement, instrument, commitment, arrangement or understanding with respect to
any of the Owned Shares owned by such Shareholder, or result in the creation of
a security interest, lien, charge, encumbrance, equity or claim upon such
shares, (c) require any material consent, authorization or approval of any
person other than a governmental entity, or (d) violate any order, writ,
injunctions decree, statute, rule or regulation applicable to such Shareholder
or to the Owned Shares owned by such Shareholder, excluding from the foregoing
clauses (a)-(d) such violations, breaches or defaults which would not,
individually or in the aggregate, prevent such Shareholder from consummating
the transactions contemplated hereby.
2.1.3 Ownership of Owned Shares. (a) With respect to all the
Owned Shares (other than the RR Option Shares), except as otherwise provided in
this Agreement, such Shareholder is the beneficial owner of the number of
Shares set forth opposite such Shareholder's name in Annex II hereto, free and
clear of any security interests, liens, charges, encumbrances, equities,
claims, options (other than pledges pursuant to commercially customary brokers'
margin accounts which would not restrict the exercise of any of the options
hereunder upon payment of the margin loan) or as otherwise set forth in Annex
II or limitations of whatever nature and free of any other limitation or
restriction (including any restriction on the right to
4
<PAGE> 8
vote, sell or otherwise dispose of the Owned Shares), other than those arising
under the Securities Act of 1933 and applicable state securities laws.
(b) With respect to 299,375 of the Owned Shares of which Mr.
Ray Russenberger is the beneficial owner, (the "RR Option Shares"), Mr.
Russenberger has granted options in favor of certain persons and, therefore,
the RR Option Shares are not available for sale hereunder.
2.1.4 Purchase Not for Distribution. Any MC Securities will not
be acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act, and in compliance with
applicable state securities laws.
2.1.5 Tax Representation. Each of the Shareholders has no
present intention to transfer any MC Securities.
2.2 Representations and Warranties of MC. MC represents and warrants
to the Shareholders as follows:
2.2.1 Binding Agreement. MC is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by MC and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of MC. MC has duly and validly executed this Agreement and
this Agreement constitutes a legal, valid and binding obligation of MC,
enforceable against MC in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
2.2.2 No Conflict. Neither the execution and delivery of this
Agreement, the consummation by MC of the transactions contemplated hereby, nor
the compliance by MC with any of the provisions hereof will (a) conflict with
or result in a breach of any provision of its Certificate of Incorporation or
By-laws, (b) require any permit, authorization, consent or approval of, or
filing (except for filings under the 1934 Act, the Securities Act, the HSR Act,
the Communications Act, or state public utility or public service laws (if
any)) with, or notification to, any governmental entity, (c) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any contract, agreement, instrument, commitment,
arrangement or understanding, (d) require any material consent, authorization
or approval of any person other than a governmental entity, or (e) violate any
order, writ, injunction, decree or law applicable to MC, excluding from the
foregoing clauses (b)-(e) such
5
<PAGE> 9
violations, breaches or defaults which would not, individually or in the
aggregate, prevent the MC from consummating the transactions contemplated
hereby.
2.2.3 Purchase Not for Distribution. The AN Securities are not
being acquired with a view to the public distribution thereof (except as
provided in Section 5.16 of the Merger Agreement) and will not be transferred
or otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act and in compliance with applicable state
securities laws.
2.2.4 MC Securities.
The MC Securities have been duly authorized, and, if issued, will be
validly issued, and any MC Shares issuable pursuant hereto will be fully paid
and nonassessable and not subject to preemptive (or similar) rights; and any
VCRs issuable pursuant hereto will represent unsecured obligations of MC
ranking pari passu with all other general obligations of MC.
3. Transactions for Shares
3.1 Certain Prohibited Transfers. Each Shareholder agrees not, during
the term of this Agreement, to:
(a) grant any proxies or enter into a voting agreement or
other arrangement with respect to any Owned Shares (other than the RR Option
Shares) owned by such Shareholder, other than this Agreement;
(b) deposit any Owned Shares owned by such Shareholder into a
voting trust;
(c) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any Owned Shares held by such Shareholder,
other than pursuant to this Agreement or, with respect to Mr. Russenberger,
pursuant to the exercise of options to purchase the RR Option Shares; provided,
that each Shareholder may pledge its Owned Shares pursuant to a bona fide
pledge to secure indebtedness of such Shareholder, and may transfer Shares by
gift to or for the benefit of immediate family members, provided further, that
as a condition to any such pledge or gift the pledgee or donee must acknowledge
and agree to be bound by the provisions of this Agreement with respect to such
Owned Shares; nor
(d) tender any Owned Shares pursuant to the Offer or any other
tender offer.
6
<PAGE> 10
3.2 Scenario I Transactions.
3.2.1 Cash Purchase of Shares. (a) Subject to and conditioned
upon the consummation of the Offer, each Shareholder agrees to sell and MC
agrees to purchase from the Shareholders on a pro rata basis the Cash Purchase
Shares for a cash purchase price of $21.10 per Share, or such higher price as
shall be paid for Shares tendered pursuant to the Offer.
(b) The Closing of the sale of the Cash Purchase Shares shall
occur no later than the first business day after which payment is made for any
Shares MC has accepted for payment under the Offer. At the Closing each
Shareholder will deliver to MC a certificate or certificates representing the
Cash Purchase Shares owned by such Shareholder, and MC shall make payment of
the purchase price therefor to each Shareholder in immediately available
funds.
3.2.2 Scenario I Option.
(a) Each Shareholder hereby grants to MC the exclusive and
irrevocable option to purchase all, but not less than all, the Scenario I
Option Shares, upon the terms and subject to conditions set forth herein (the
"Scenario I Option").
(b) The Scenario I Option may be exercised by MC in whole, but
not in part, following satisfaction of the Exercise Conditions, for a period
commencing upon the later to occur of (i) 61 days after MC has delivered the
Evidence of Financing and (ii) the receipt by MC of a Regulatory Order from the
FCC, and ending on the earlier of six months after the Closing of the purchase
by MC of the Cash Purchase Shares or the termination of this Agreement in
accordance with its terms (the "Option Period").
(c) For purposes hereof, the Exercise Conditions, each of
which is required to be satisfied prior to the exercise of the Scenario I
Option, shall be: (i) the occurrence of the Closing of the purchase by MC of
the Cash Purchase Shares; (ii) the approval and adoption of the Merger
Agreement by the requisite vote of the holders of capital stock of MC in
accordance with the provisions of the Delaware General Corporation Law and the
Certificate of Incorporation and By-Laws of MC and the requirements of the
Nasdaq National Market System; and (iii) the absence of any material breach by
MC of its obligations and agreements in the Merger Agreement that is continuing
and has not been cured.
(d) In the event MC is entitled to and wishes to exercise the
Scenario I Option, MC shall send a written notice to the Shareholders
specifying a date (not less than five nor more than ten business days from the
date such notice is given) for the Closing of the purchase of all, but not less
than all, the Scenario I Option Shares.
(e) The consideration to be paid to each Shareholder upon
exercise by MC of the Scenario I Option shall equal (i) such number of MC
Shares equal to the Conversion Ratio as of the date of the Closing of the
Scenario I Option, multiplied by the number of
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<PAGE> 11
Scenario I Option Shares owned by such Shareholder, (ii) a number of VCRs to
become effective upon the Effective Time, in an amount equal to the number of
MC Shares to be received pursuant to clause (i), plus cash, if any, for
fractional MC Shares and VCRs calculated pursuant to the formula in Section
2.3(f) of the Merger Agreement.
(f) At the Closing of the Scenario I Option, each Shareholder
will deliver to MC a certificate or certificates representing the Scenario I
Option Shares owned by such Shareholder, duly endorsed for transfer or
accompanied by appropriate stock powers, and MC shall issue or deliver to such
Shareholder certificates representing the number of MC Shares and VCRs to which
such Shareholder is entitled, and payment will be made in immediately available
funds representing any cash for fractional MC Shares or VCRs to which such
Shareholder is entitled. MC shall pay any transfer tax arising out of the
exercise of the Scenario I Option.
(g) In the event that the Merger Consideration per Share (as
defined in the Merger Agreement) includes a greater number of MC shares or VCRs
than has been or would otherwise be paid pursuant to Section 3.2.2(e), with
respect to each Scenario I Option Share held by a Shareholder immediately prior
to the closing of the Scenario I Option, MC shall pay each Shareholder such
additional MC Shares and VCRs, together with cash for fractional Shares and
VCRs as are necessary to provide each Shareholder the same Merger Consideration
per Share as all shareholders of AN receive in the Merger.
3.3 Scenario II Transactions.
3.3.1 Scenario II Trigger Event
(a) In the event of a Scenario II Trigger Event, MC shall have
the right, but not the obligation, to purchase from the Shareholders on a pro
rata basis all, but not less than all, the Adjusted Owned Shares, as follows:
(i) all, but not less than all, of the Cash Purchase Shares,
for a purchase price of $21.10 per Share in cash, or, if higher, the
highest price per Share as had been offered by MC pursuant to the Offer
prior to its termination or expiration; and
(ii) the Scenario II Trigger Shares, for consideration to be
paid to each Shareholder equal to (A) such number of MC Shares equal to the
Conversion Ratio as of the date of the Closing of the purchase of the
Scenario II Trigger Shares, multiplied by the number of Scenario II Trigger
Shares, (B) a number of VCRs to become effective upon the Effective Time,
in an amount equal to the number of MC Shares to be received pursuant to
Clause (A), plus cash, if any, for fractional MC Shares and VCRs calculated
pursuant to the formula in Section 2.3(f) of the Merger Agreement.
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<PAGE> 12
(iii) in the event that the Merger Consideration per Share (as
defined in the Merger Agreement) includes a greater number of MC shares or
VCRs than has been or would otherwise be paid pursuant to Section
3.3.1(a)(ii), with respect to each Scenario II Trigger Share held by a
Shareholder immediately prior to the Closing of the sale of the Adjusted
Owned Shares, MC shall pay each Shareholder such additional MC Shares and
VCRs, together with cash for fractional Shares and VCRs as are necessary to
provide each Shareholder the same Merger Consideration per Share as all
shareholders of AN receive in the Merger.
(b) The Closing of the sale of the Adjusted Owned Shares will
take place no later than two business days after the occurrence of the Scenario
II Trigger Event. Notwithstanding the foregoing, if, prior to the date of such
Closing, a court of competent jurisdiction shall have enjoined the consummation
of the transactions contemplated by this Agreement, MC shall have the right to
extend the date of such Closing for up to 60 days and so long as MC is not in
breach of Section 18, to control the proceedings to seek to vacate or remove
the injunction so long as MC is diligently pursuing such remedy, provided, MC
may not settle any litigation involving such injunction in a manner adverse to
any of the Shareholders without the prior consent of all the Shareholders.
(c) At the Closing of the sale of the Adjusted Owned Shares,
each Shareholder will deliver to MC a certificate or certificates representing
the Adjusted Owned Shares, duly endorsed for transfer or accompanied by
appropriate stock powers, and MC shall make payment of cash in immediately
available funds representing the purchase price for the Cash Purchase Shares
owned by such Shareholder and, if applicable, MC shall issue or deliver to such
Shareholder certificates representing the number of MC Shares and VCRs to which
such Shareholder is entitled pursuant to this Section 3.3.1, and shall make
payment in immediately available funds representing any cash for fractional MC
Shares or VCRs to which such Shareholder is entitled.
3.3.2 Scenario II Option. Subject to the Closing of the sale of the
Adjusted Owned Shares, MC shall use its reasonable best efforts, to the extent
permitted by applicable law, including the receipt of a Regulatory Order, to
commence a new tender offer pursuant to which MC shall offer to purchase no
less than the number of Shares constituting the Minimum Condition for the Offer
at a price no less than the highest price offered in the Offer ("Scenario II
Tender Offer"). In such event, and subject to and conditioned upon the
purchase of Shares pursuant to the Scenario II Tender Offer, each Shareholder
hereby grants to MC the exclusive and irrevocable option during the Option
Period, to purchase all, but not less than all, of the Scenario II Option
Shares (the "Scenario II Option"), which Option shall have the same terms and
conditions (other than the number of shares to be purchased) as the Scenario I
Option.
3.3.3 Scenario II Mandatory Share Purchase. Subject to the Closing of
the sale of the Adjusted Owned Shares, in the event that a Scenario II Tender
Offer expires without MC purchasing any shares, MC shall use its reasonable
best efforts to acquire as soon as practicable
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<PAGE> 13
the remainder of the Scenario II Option Shares. In such event, each
Shareholder hereby grants to MC the exclusive and irrevocable option during the
Option Period ("Mandatory Option") to purchase all, but not less than all, of
the remainder of the Scenario II Option Shares and MC shall be required to
exercise such option as promptly as possible. MC shall not effect the Merger
unless prior to the Effective Time, MC shall have exercised the Mandatory
Option, which shall have the same terms and conditions (other than the number
of shares to be purchased) as the Scenario I Option.
3.3.4 Savings Clause. Notwithstanding the Scenario I Option and the
Scenario II Option, each Shareholder shall have the right upon the terms and
conditions of the Merger Agreement, to receive the Merger Consideration for
any Shares owned by such Shareholder as of the Effective Time.
4. Voting Agreement and Proxy. (a) The Owned Shares will be voted
during the term of this Agreement as follows to the extent permitted by
applicable law:
(i) in favor of the transactions contemplated by the
Merger Agreement; and
(ii) against (A) any extraordinary corporate
transaction, such as a merger, rights offering, reorganization,
recapitalization or liquidation involving AN or any of its subsidiaries, or
(B) a sale or transfer of a material amount of assets of AN or any of its
subsidiaries or the issuance of any securities of AN or any subisidiary.
(b) Each Shareholder constitutes and appoints MC or its officers, and
each of them, with full power of substitution, to be his true and lawful proxy
and attorney-in-fact during the Option Period to vote all Owned Shares (other
than Shares purchased by MC) solely with respect to the matters described in,
and in accordance with, Section 4(a). This proxy shall be deemed coupled with
an interest, and is irrevocable. In lieu of MC exercising its proxy, MC may
elect to have each Shareholder vote its respective Owned Shares in accordance
with Section 4 (a), provided that such Shares may be voted in person or by
proxy.
(c) Nothing contained in this Agreement (including without limitation
Sections 3 and 4) shall give MC any control or responsibility for AN's
facilities, including without limitation control of use of the facilities;
daily operations; policy decisions, including preparing and filing applications
with the FCC; employment, supervision and dismissal of personnel; payment of
financing obligations, including expenses arising out of operations. MC shall
not receive any monies and profits derived from the operation of the AN
facilities.
5. Legends. (a) Upon issuance to MC of any Shares upon
purchase thereof pursuant to this Agreement, such Shares shall be endorsed with
a restrictive legend which shall read substantially as follows:
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<PAGE> 14
"THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF MERGER DATED AS OF MAY
15, 1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR."
(b) Upon issuance to each Shareholder of any Shares pursuant to this
Agreement, all certificates representing the MC Securities acquired by such
Shareholder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
6. Registration.
(a) Shelf Registration. As promptly as practicable but no
later than 90 days after the earlier of the first Closing in which MC
Securities are received by the Shareholders, or, if any of the MC Securities
received by the Shareholders in the Merger have not been registered, the
Effective Time, MC shall file and use its best efforts to cause to be declared
effective a "shelf" registration statement (the "Registration Statement") on
any appropriate form pursuant to Rule 415 (or similar rule that may be adopted
by the Securities and Exchange Commission ("SEC")) under the Securities Act for
all such unregistered MC Securities received by the Shareholders (the
"Registrable Securities"), which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof. Except as set forth below, MC agrees to use its best
efforts to keep the Registration Statement continuously effective and usable
for resale of Registrable Securities, for a period of 36 months from the first
Closing in which MC Securities are received by the Shareholders or such shorter
period which will terminate upon the earlier of (i) consummation of the Merger
and the registration on a Registration Statement of all the MC Securities
issued to the Shareholders pursuant to this Agreement or the Merger (ii) when
all the Registrable Securities have been sold pursuant to the Registration
Statement or (iii) in the case of an underwritten public offering, when such
underwriter has completed the distribution of all the Registrable Securities
(the "Effective Period"). MC shall prepare and file with the SEC amendments
and post-effective amendments to the Registration Statement and such amendments
and supplements to the prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration during the
Effective Period or as may be required by the rules, regulations or
instructions applicable to the registration form utilized by MC or by the
Securities Act or rules and regulations thereunder for shelf registration or
otherwise necessary to keep the Registration Statement effective for the
Effective Period and cause the prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, and to otherwise comply with the
provisions of the Securities Act during the Effective Period; provided, that
before filing
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<PAGE> 15
the Registration Statement or a prospectus contained therein, or any amendments
or supplements thereto, MC will furnish to the Shareholders and their counsel
for review and comment, copies of all documents proposed to be filed. The
selling Shareholders shall have the right to select the intended method of
distribution under the Registration Statement.
(b) Blue Sky. MC shall use its best efforts to qualify all
Registrable Securities under any applicable state securities laws; provided,
however, that purchaser shall not be required to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
(c) Selection of Underwriters. If any offering pursuant to
the Registration Statement is an underwritten offering, MC will select a
managing underwriter, which managing underwriter shall be reasonably
satisfactory to the selling Shareholders holding a majority in number of the
Registrable Securities; provided, however, that the selling Shareholders
holding a majority in number of the Registrable Securities shall be entitled to
select one co-managing underwriter, which co-managing underwriter shall be
reasonably satisfactory to MC.
(d) Blackout Period. MC shall be entitled to (i) postpone the
filing or effectiveness of the Registration Statement, or (ii) if effective,
elect that the Registration Statement not be useable and require the
Shareholders to suspend sales pursuant to the prospectus contained therein, for
a reasonable period of time, but not in excess of 60 days (a "Blackout
Period"), if the MC determines in good faith that the registration and
distribution of Registrable Securities (or the use of the Registration
Statement or related prospectus) would interfere with any pending material
acquisition, material corporate reorganization or any other material corporate
development involving the MC or any of its subsidiaries or would require
premature disclosure thereof. MC shall promptly give the Shareholders written
notice of such determination, containing a general statement of the reasons for
such postponement or restriction on use and an approximation of the anticipated
delay; provided, however, that the aggregate number of days included in all
Blackout Periods during any consecutive 12 months during the Effective Period
shall not exceed 120 days.
(e) Holdback Agreement. If during the period commencing 90
days after the effectiveness of the Registration Statement (i) MC shall file a
registration statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act) with respect to MC
Securities and (ii) with reasonable prior notice, MC (in the case of a
non-underwritten offering by MC pursuant to such registration statement)
advises the Shareholders in writing that a public sale or distribution of
Registrable Securities would adversely affect such offering or the managing
underwriter (in the case of an underwritten offering by MC pursuant to such
registration statement) advises MC and the Shareholders in writing that a
public sale or distribution of Registrable Securities would adversely affect
such offering, then each Shareholder shall, to the extent not prohibited by
applicable law, (x) refrain from effecting any
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public sale or distribution of such Registrable Securities commencing on the
effectiveness of such registration statement, (y) be entitled to include such
Registrable Securities in such registration statement, subject to customary
underwriter cut back, and sell such Registrable Securities pursuant thereto,
and (z) sign a customary lock-up agreement with the managing underwriter (in
the case of an underwritten offering) or the MC of scope and duration identical
to the scope and duration of the lock-up agreement signed by the MC and each
director and executive officer of the MC, but in no event to exceed 90 days.
Notwithstanding the foregoing, in the event the Registrable Securities held by
the selling Shareholders are cut back in the registration statement of MC
pursuant to clause (y) and the selling Shareholders may only include in the
registration statement pursuant to clause (y) an amount of Registrable
Securities less than the greater of (A) 250,000 MC Shares and 250,000 VCRs (as
adjusted for stock splits, stock dividends and similar events) and (B) 25% of
the number of MC Securities registered pursuant to such registration statement,
then the provisions of this clause (e) shall not restrict the sale of
Registrable Securities by the selling Shareholders pursuant to the Registration
Statement.
(f) Expenses. The Registration Statement shall be prepared
and filed at MC's expense, including underwriting discounts or commissions,
brokers' fees, "blue sky" fees and the fees and disbursements of purchaser's
counsel and accountants related thereto, and the fees and disbursements of one
counsel for the Shareholders.
(g) Shareholders Information. The Shareholders shall provide
in writing all information reasonably requested by MC for inclusion in or in
connection with the Registration Statement and any such information shall not
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 light of the circumstances under which they were made, not
misleading.
(h) Underwriting Agreement. In connection with any
underwritten registration pursuant to this Section 6, (i) MC and the
Shareholders shall provide each other and any underwriter of the offering, if
any, with customary representations, warranties, covenants, indemnification and
contribution in connection with such registration, (ii) MC shall obtain
opinions of counsel to the MC and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Shareholders) addressed to each selling
Shareholder and the underwriters, if any, covering the matters customarily
covered in opinions requested in comparable offerings, and (iii) MC shall
obtain "cold comfort" letters and updates thereof from the MC's independent
certified public accountants addressed to the selling Shareholders and the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters by independent
certified public accountants in connection with comparable offerings.
(i) Listing. MC will promptly file an application to
authorize for quotation the MC Shares to be acquired hereunder on the Nasdaq
National Market or such other securities exchange on which MC shares are then
listed and will use its best efforts to obtain approval of such listing as soon
as practicable.
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(j) Copies. MC shall furnish to each Shareholder such number
of copies of the Registration Statement and of each amendment and
post-effective amendment thereto, the prospectus and prospectus supplement, as
applicable, in order to facilitate the disposition of the Registrable
Securities by such Shareholder in accordance with this Section 6.
(k) Notifications. MC shall notify each Shareholder if MC
becomes aware that the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements there if not misleading in light of the circumstances then existing,
and subject to Section 6 (d), at the request of any such Shareholder, prepare
and furnish to such Shareholder a reasonable number of copies of an amendment
or Supplement to the Registration Statement or related prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
(l) Due Diligence. Upon reasonable notice, MC shall afford
access, during normal business hours, to any Shareholder, any underwriter
participating in any disposition pursuant to the Registration Statement, and
any attorney, accountant or other agent retained by any such Shareholder or
underwriter, to all historical financial and other records and other pertinent
information and corporate documents and properties of any of MC and its
subsidiaries and affiliates, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility with respect to the Registration
Statements.
(m) Rule 144. MC shall file all reports required to be filed
by it pursuant to the 1934 Act, such that the condition set forth in Rule
144(c) under the Securities Act, applying to the sale of MC Shares by the
Shareholders pursuant to Rules 144 and/or 145, shall be satisfied.
(n) Indemnification; Contribution. (i) Indemnification by MC.
MC agrees to indemnify each Shareholder, its officers and directors and each
person who controls such Shareholders (within the meaning of the Securities
Act), and any agent or investment adviser thereof against all losses, claims,
damages, liabilities and expenses (including reasonable attorneys' fees and
expenses of investigation) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out of or based
upon (a) any untrue or alleged untrue statement of material fact contained in
the Registration Statement, any prospectus or preliminary prospectus, or any
amendment or supplement to any of the foregoing or any document incorporated by
reference therein or (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus or a preliminary prospectus, in light of
the circumstances under which they were made) not misleading, except in each
case insofar as the same arise out of or are based upon, any such untrue
statement or omission made in reliance on and in conformity with information
with respect to such indemnified party furnished in writing to MC by such
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<PAGE> 18
indemnified party or its counsel expressly for use therein. Notwithstanding
the foregoing provisions of this Section 6(n) (i), MC will not be liable to any
Shareholder or any other person, if any, who controls such Shareholder, under
the indemnity agreement in this Section 6(n)(i) for any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense that
arises out of such Shareholder's failure to send or give a copy of the final
prospectus (at or prior to the written confirmation of the sale of the
Registrable Securities to such person) to the person asserting an untrue
statement or alleged untrue statement or omission or alleged omission contained
in any preliminary prospectus if such statement or omission was corrected in
such final prospectus and MC has previously furnished copies thereof in
accordance with this Agreement.
(ii) Indemnification by Shareholders. In connection with
the Registration Statement, each Shareholder will furnish to MC in writing such
information, including with respect to the name, address and the amount of
Registrable Securities held by such Shareholder, as MC reasonably requests for
use in such Registration Statement or the related prospectus and agrees to
indemnify and hold harmless severally and not jointly (in the same manner and to
the same extent as set forth in Section 6(n)(i)) MC and its affiliates,
directors, officers and controlling persons against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission of a material fact or any omission or alleged
omission of a material fact required to be stated in the Registration Statement
or prospectus or any amendment or supplement to either of them or necessary to
make the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, but only to the extent
that any such untrue statement or omission is made in reliance on and in
conformity with information with respect to such Shareholder furnished in
writing to purchaser by such Shareholder or its counsel specifically for
inclusion therein.
(iii) Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such indemnified party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such indemnified
party may claim indemnification or contribution pursuant to this Agreement
(provided that failure to give such notification shall not affect the
obligations of the indemnifying person pursuant to this Section 6(n) except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure). In case any such action shall be brought against any
indemnified party and such indemnified party shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under these indemnification provisions for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party. Notwithstanding the foregoing, the
indemnified party shall have the right to employ its own counsel in any such
case, but the fees
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<PAGE> 19
and expenses of such counsel shall be at the expense of such indemnified party
unless (a) the employment of such counsel shall have been authorized in writing
by the indemnifying party in connection with the defense of such action, (b)
the indemnifying party shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (c) the defendants in such action include both an indemnified
party and an indemnifying party and such indemnified party shall have
reasonably concluded that representation by the same counsel would present a
conflict of interest due to the availability to it of defenses which are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any
of which events all indemnified parties shall have the right to employ not more
than one counsel to represent all indemnified parties and the fees and expenses
of no more than one such separate counsel shall be borne by the indemnifying
party. The indemnifying party will not be subject to any liability for any
settlement made without its consent (which will not be unreasonably withheld).
(iv) Contribution. If the indemnification from the
indemnifying party provided for in this Section 6(n) is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages,
liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 6(n)(iii), any legal and other fees and
expenses reasonably incurred by such indemnified party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(n) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6(n), no
Shareholder shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities of such
Shareholder were offered to the public exceeds the amount of any damages which
such Shareholder has otherwise been required to pay by reason of such untrue
statement or omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
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If indemnification is available under this Section 6(n), the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 6(n)(i) or (ii), as the case may be, without regard to the
relative fault of said indemnifying parties or indemnified party or any other
equitable consideration provided for in this Section 6(n)(iv).
7. Specific Enforcement. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach of this Agreement and
that the obligations of the parties hereto shall be specifically enforceable,
in addition to any other remedy which may be available at law or in equity.
8. Commissions. Each Shareholder and MC in connection
with the transactions contemplated hereby, severally agree to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any brokerage fees, commissions or finders' fees
asserted by any person on the basis of any act or statement alleged to have
been made by such party or its affiliate. MC acknowledges that Shareholders
shall have no liability for any fees of the AN Financial Adviser as described
in the Merger Agreement.
9. Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, provided that AN shall pay all expenses of the Shareholders in
connection with the preparation, negotiation and execution of this Agreement.
10. Amendment. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
11. Scope of Agreement. Nothing in this Agreement shall,
is intended to, or shall be construed to, limit or in any way restrict the
ability of any Shareholder to act in such Shareholder's capacity as an officer
or director of AN or to exercise or carry out such Shareholder's fiduciary
duties as an officer or director of AN, so long as such Shareholder fulfills
his obligations under this Agreement.
12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand or (c) the expiration
of five business days after the day when mailed by certified or registered
mail, postage prepaid, addressed at the following addresses (or at such other
address for a party as shall be specified by like notice).
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If to MC, to:
Metrocall, Inc.
6910 Richmond Highway
Alexandria, Virginia 22306
Attention: Vincent D. Kelly
Telecopy: (703) 768-9625
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: George P. Stamas and Thomas W. White
Telecopy: (202) 663-6363
If to any Shareholder, to the address listed under such
Shareholder's name on Annex II hereto with copies to:
Waller Lansden Dortch & Davis
511 Union Street
Suite 2100
Nashville, TN 37219
Attention: Ralph W. Davis
Telecopy: (615) 244-6804
And
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Attention: James Westra
Telecopy: (617) 951-1295
13. Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
14. Successors and Assigns. This Agreement shall not be
assigned by operation of law or otherwise without the prior written consent of
the other parties hereto, except that the rights of the parties under Section 6
hereof may be assigned to any transferee of 50,000 or more Registrable
Securities, provided such transferee assumes the transferor's obligations
thereunder. This Agreement will be binding upon, inure to the benefit of and
be enforceable by
18
<PAGE> 22
each party and such party's respective heirs, beneficiaries, executors,
representatives and permitted assigns.
15. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating to
conflicts of law).
17. Termination. This Agreement shall terminate on the
earliest of (i) the expiration of the Option Period, (ii) the purchase by MC of
all Owned Shares (other than the RR Option Shares) pursuant to this Agreement,
(iii) the agreement of the parties hereto to terminate this Agreement (iv)
consummation of the Merger, (v) two business days after termination or
expiration of the Offer without the purchase of any Shares pursuant thereto
unless a Scenario II Trigger Event shall have occured and MC shall have
purchased Shares in accordance with this Agreement, and (vi) termination of the
Merger Agreement pursuant to its terms, provided that in any event this
Agreement shall terminate on March 16, 1997, and provided further that the
provisions of Sections 8, 9 and 18 hereof shall survive indefinitely and the
provisions of Section 6 shall survive for the period provided therein.
18. Indemnification. Except as otherwise provided in
Section 6(n), MC shall indemnify, defend and hold harmless each Shareholder and
each officer, director, employee, affiliate or agent of each Shareholder from
and against all losses, claims, damages, liabilities, costs and expenses
(including attorney's fees and expenses) judgments, fines, losses, and amounts
paid in settlement in connection with any actual or threatened action, suit,
claim, proceeding or investigation (each a "Claim") to the extent that any such
Claim is based on, or arises out of, this Agreement or any of the transactions
contemplated hereby except to the extent such Claim arises from the gross
negligence or willful misconduct of such Shareholder. Such indemnification
shall be provided in the manner set forth in Section 6(n)(iii) hereof.
19. No Solicitation. Each Shareholder in its capacity
as shareholder of AN acknowledges and agrees for himself or itself to comply
with the provisions of Section 5.9 of the Merger Agreement regarding AN
Acquisition Proposals.
19
<PAGE> 23
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the Shareholders and a duly authorized officer of MC on the day and year
first written above.
METROCALL, INC.
By:/s/ VINCENT D. KELLY
-------------------------
Name: Vincent D. Kelly
Title: Vice President and
Chief Financial Officer
<PAGE> 24
ANNEX I
Signatures
/s/ RAY D. RUSSENBERGER
- ----------------------------------
Ray D. Russenberger
/s/ ELLIOTT H. SINGER
- ----------------------------------
Elliott H. Singer
/s/ IRBY C. SIMPKINS, JR.
- ----------------------------------
Irby C. Simpkins, Jr.
/s/ BROWNLEE O. CURRY
- ----------------------------------
Brownlee O. Curry
/s/ CHARLES A. EMLING, III
- ----------------------------------
Charles A. Emling, III
/s/ SUMMIT INVESTORS II, L.P.
- ----------------------------------
Summit Investors II, L.P.
/s/ SUMMIT VENTURES III, L.P.
- ----------------------------------
Summit Ventures III, L.P.
<PAGE> 25
ANNEX II
The Shareholders
<TABLE>
<S> <C> <C>
Number of Cash Purchase Shares
------------------------------
Name and Address: Number of Owned Shares (40%)
----------------- ---------------------- -----
Ray Russenberger 3,010,833(1)/ 1,204,333
c/o A+ Network, Inc.
40 South Palafox Street
Pensacola, FL 3250l
Fax: (904) 432-0308
Elliott H. Singer 1,229,170 491,668
c/o A+ Network, Inc.
2416 Hillsboro Rd.
Nashville, TN 37212
Fax: (615) 385-4265
Irby C. Simpkins 131,704 52,682
c/o Nashville Banner
1100 Broadway
Nashville, TN 37203
Fax: (615) 259-8871
Brownlee O. Curry 131,704 52,682
c/o Nashville Banner
1100 Broadway
Nashville, TN 37203
Fax: (615) 259-8871
</TABLE>
-----------------------
(1)/ Includes 299,375 shares subject to options granted by Mr. Russenberger.
Mr. Russenberger retains voting power with respect to these shares.
<PAGE> 26
<TABLE>
<S> <C> <C>
Chuck Emling 369,512(2)/ 147,805
c/o A+ Network, Inc.
40 South Palafox Street
Pensacola, FL 32501
Fax: (904) 432-0308
Summit Investors II, L.P. 8,223 3,288
c/o Bruce Evans
600 Atlantic Avenue
Suite 2800
Boston, MA 02210-2227
Fax: (617) 824-1100
Summit Ventures III, L.P. 644,397 257,759
c/o Bruce Evans
600 Atlantic Avenue
Suite 2800
Boston, MA 02210-2227
Fax: (617) 824-1100
</TABLE>
- ---------------
(2)/ Certain shares held by these individuals are subject to an
escrow agreement.
<PAGE> 1
EXHIBIT 11(C)(3)
METROCALL STOCKHOLDERS VOTING AGREEMENT
METROCALL STOCKHOLDERS VOTING AGREEMENT, dated as of May 16, 1996
(this "Agreement"), by and among A+ Network Inc., a Tennessee corporation
("AN"), and the stockholders identified on Annex A hereto (each, an "MC
Stockholder" and collectively, the "MC Stockholders") of Metrocall, Inc., a
Delaware corporation ("MC").
WHEREAS, MC and AN have entered into an Agreement and Plan of Merger
of even date herewith (the "Merger Agreement"), pursuant to which the parties
thereto have agreed, upon the terms and subject to the conditions set forth
therein, to merge AN with and into MC (the "Merger");
WHEREAS, as of the date hereof, each of the MC Stockholders is the
beneficial owner of, and has the sole right to vote and dispose of, the number
of shares (the "MC Owned Shares") of the common stock, par value $.01 per
share, of MC (the "MC Shares") which is set forth opposite such MC
Stockholder's name in Annex A; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, AN has required that each of the MC
<PAGE> 2
Stockholders agree to vote their MC Owned Shares as described herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, the parties hereto agree as follows:
1. Representation and Warranty of the MC Stockholders. Each of
the MC Stockholders, individually and not jointly, represents and warrants to
AN with respect to itself that such MC Stockholder is the beneficial owner of
the number of MC Shares set forth opposite such MC Stockholder's name in Annex
A hereto, free and clear of any security interests, liens, charges,
encumbrances, equities, claims, options (other than pledges pursuant to
commercially customary brokers margin accounts) or limitations of whatever
nature and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of the MC Owned
Shares), other than those arising under the Securities Act of 1933, as amended,
and applicable state securities laws or as disclosed in Section 4.2 of the
Merger Agreement.
2. Voter Agreement and Proxy. (a) Each MC Stockholder
constitutes and appoints AN or its officers, and each of them, with full power
of substitution, to be its true and lawful proxy and attorney-in-fact from the
date hereof until
<PAGE> 3
conclusion of the meeting of stockholders of MC to be called pursuant to
Section 5.2 of the Merger Agreement (including any adjournment thereof)
("Meeting") to vote all MC Shares then beneficially owned by such MC
Stockholder in accordance with clause (b). This proxy shall be deemed coupled
with an interest, and is irrevocable during the term of this Agreement.
(b) The MC Shares beneficially owned by each MC
Stockholder will be voted as follows:
(i) in favor of the transactions contemplated by
the Merger Agreement; and
(ii) against any extraordinary corporate
transaction, such as a merger, rights offering, reorganization,
recapitalization or liquidation involving MC or any of its
subsidiaries, or the issuance of any securities of MC or any
subsidiary, in each case, to the extent prohibited by the Merger
Agreement.
(c) In lieu of AN exercising its proxy, AN may elect to
have each MC Stockholder vote its respective shares in accordance with clause
(b), provided that such shares may be voted in person or by proxy.
3. Specific Enforcement. The parties hereto acknowledge that
damages would be an inadequate remedy for a
<PAGE> 4
breach of this Agreement and that the obligations of the parties hereto shall
be specifically enforceable, in addition to any other remedy which may be
available at law or in equity.
4. Termination. This Agreement shall terminate on the earliest
of (i) the conclusion of the Meeting (including any adjournment thereof), (ii)
the agreement of the parties hereto to terminate this Agreement, (iii)
termination or expiration of the Offer (as defined in the Merger Agreement)
without the purchase of any shares of AN pursuant thereto except in a case in
which the provisions of Section 2.6 of the Merger Agreement are satisfied, and
termination of the Merger Agreement pursuant to Section 7.1.
5. Successors and Assigns. This Agreement shall not be assigned
by operation of law or otherwise without the prior written consent of the other
parties hereto. This Agreement will be binding upon, inure to the benefit of
and be enforceable by each party and such party's respective heirs,
beneficiaries, executors, representatives and permitted assigns. Nothing in
this Agreement shall prohibit any MC Stockholder from transferring any MC Owned
Shares, provided that any shares transferred shall remain subject to this
Agreement in the hands of any transferee.
<PAGE> 5
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the MC Stockholders and a duly authorized officer of AN on the day
and year first written above.
A+ NETWORK INC.
By:/s/ CHARLES A. EMLING III
--------------------------------------
Name: Charles A. Emling III
Title: President and Chief Executive
Officer
<PAGE> 6
ANNEX A
The MC Stockholders
<TABLE>
<CAPTION>
Number of
Signature: MC Owned Shares
---------------
<S> <C>
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Juliet Lea Hillman
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Audrey Hilliard
Hillman
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for Henry Lea
Hillman, Jr.
C.G. Grefenstette and Thomas G. 14,130
Bigley, Trustees U/A/T Dated
8/28/68 for William Talbott
Hillman
By:/s/ C.G. GREFENSTETTE
----------------------------------
C.G. Grefenstette, Trustee
By:/s/ THOMAS G. BIGLEY
----------------------------------
Thomas G. Bigley, Trustee
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Henry L. Hillman, Elsie Hilliard 42,391
Hillman and C.G. Grefenstette,
Trustees of the Henry L. Hillman
Trust U/A Dated November 18, 1985
By:/s/ C.G. GREFENSTETTE
------------------------------
C.G. Grefenstette, Trustee
Wilmington Securities, Inc. 1,154,185
By:/s/ DARLENE CLARK
-----------------------------------
Darlene Clark
/s/ WILLIAM L. COLLINS, III
- -------------------------------------- 347,515
William L. Collins, III
/s/ STEVEN D. JACOBY
- ------------------------------------- 61,235
Steven D. Jacoby
/s/ HARRY L. BROCK, JR.
- ------------------------------------- 2,931,200
Harry L. Brock, Jr.
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
/s/ SUZANNE S. BROCK
- ------------------------------------- 200,000
Suzanne S. Brock
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
/s/ VINCENT D. KELLY
- ------------------------------------- 95,000
Vincent D. Kelly
</TABLE>
<PAGE> 1
EXHIBIT 11(C)(4)
AGREEMENT
This Agreement by and among Metrocall, Inc., a Delaware corporation
("Metrocall"), Elliott H. Singer and Ray D. Russenburger is entered into as of
May 16, 1996.
RECITALS
1. As of the date of this Agreement, Metrocall and A+ Network have
entered into an Agreement and Plan of Merger between Metrocall and A+ Network
(the "Merger Agreement") pursuant to which A+ Network will be merged with and
into Metrocall, with Metrocall as the surviving corporation (the "Merger").
2. Each of Mr. Singer and Mr. Russenburger are shareholders of A+
Network, and are expected to become shareholders of Metrocall on or prior to
the Effective Time of the Merger (as defined in the Merger Agreement).
3. Pursuant to and as a condition to the Merger Agreement, each of
the parties to this Agreement agrees to take the actions set forth herein.
In consideration of the foregoing and other good and valuable
consideration, the undersigned hereby agree as follows.
AGREEMENT
1. ELECTION OF MS. BROCK. Mr. Singer and Mr. Russenburger agree
that, provided they are directors of Metrocall at the time of the election of
directors at the first annual meeting of Metrocall occurring after the date of
this Agreement, they shall vote all shares of common stock of Metrocall they
own at the time of such election in favor of Suzanne S. Brock as a director.
In Witness Whereof, the undersigned have executed this Agreement as of
the date set forth in the first paragraph of this Agreement.
Metrocall, Inc.
By:/s/ WILLIAM L. COLLINS, III
-------------------------------------------
William L. Collins, III
President and Chief Executive Officer
/s/ ELLIOTT H. SINGER
----------------------------------------------
Elliott H. Singer
/s/ RAY D. RUSSENBERGER
----------------------------------------------
Ray D. Russenburger
<PAGE> 1
EXHIBIT 11(C)(5)
NONDISCLOSURE / NO CONFLICT AGREEMENT
This AGREEMENT is made and entered into as of May 16, 1996, by and between
METROCALL, INC., a Delaware corporation (the "Company"), and RAY D.
RUSSENBERGER ("Russenberger").
STATEMENT OF PURPOSE
Russenberger has been employed as Vice Chairman of A+ Network, Inc.
("A+ Network") since October 24, 1995, and previously served as Chairman of the
Board of Directors and Chief Executive Officer of Florida-Network USA, Inc.
from December 1988 until October 1995. His most recent service has been
pursuant to an employment agreement dated as of March 21, 1996 and effective as
of November 1, 1995 between Russenberger and A+ Network (the "Employment
Agreement"). Russenberger will terminate the Employment Agreement and his
employment with A+ Network as of the Effective Time ("Effective Time") of the
Agreement and Plan of Merger of even date herewith ("Merger Agreement") by and
between A+ Network and the Company. Russenberger will agree not to compete with
the Company (which will be the successor, through merger, of A+ Network) for
the term described herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the Company and
Russenberger hereby agree as follows:
1. ACKNOWLEDGMENTS. Russenberger acknowledges that A+ Network's and the
Company's business and services are highly specialized, that the
identity and particular needs of their customers and suppliers are not
generally known, and that the documents and information regarding
their customers, suppliers, services, methods of operation, sales,
pricing, and costs are highly confidential and constitute trade
secrets. Russenberger further acknowledges that the services he has
rendered to A+ Network have been of a special and unusual character
that have a unique value to A+ Network and the Company, and that
Russenberger has had access to trade secrets and confidential
information belonging to A+ Network and the Company, the loss of which
cannot adequately be compensated by damages in an action at law.
<PAGE> 2
2. DATE AND NATURE OF TERMINATION. Russenberger's employment with A+
Network and its subsidiaries is hereby terminated as of Effective Time
(the "Termination Date"), and Russenberger hereby tenders his
resignation from any positions he now has with A+ Network, including
as an officer, director, or member of any advisory boards or
committees, all such resignations to be effective as of the
Termination Date. Russenberger acknowledges and agrees that his
termination shall be treated as a "voluntary resignation" as described
in paragraph 4(b) of the Employment Agreement and with the effect set
forth in the Employment Agreement as of March 21, 1996. This
Agreement is contingent on and subject to the Closing under the Merger
Agreement, and neither party shall be bound by it unless and until the
Closing occurs.
3. ACCRUED BONUSES. Russenberger acknowledges that he is not entitled to
any accrued but unpaid bonuses as of the date hereof.
4. PAYMENT. Subject to Russenberger's full compliance with the terms of
this Agreement including the conditions set forth below, the Company
shall pay to Russenberger periodic payments at a rate equal to
$325,000 per year from the Termination Date until the third
anniversary of the Termination Date, payable no less frequently than
monthly. All amounts paid under this paragraph 4 shall be subject to
and reduced by applicable federal and state withholding taxes, if any.
5. BENEFIT PLANS AND FRINGE BENEFITS. Between the Termination Date and
the third anniversary of the Termination Date, Russenberger shall be
entitled to participate in the life, medical, and disability benefits
programs of the Company to the extent (i) (I) the Company can arrange
such participation at a cost to the Company comparable to that
applicable to covering a current employee and (II) the Company can
obtain the agreement of its third- party insurers and stop-loss
carriers and (ii) such participation is not prohibited by law or such
as to call into question the otherwise applicable tax treatment for
plans coverning employees. Except as provided in the foregoing
sentence, as of the Termination Date, Russenberger shall not have the
right to participate in or receive any benefit under any employee
benefit plan of A+ Network, the Company, or any of their affiliates,
any fringe benefit plan of the Company or A+ Network, or any other
plan, policy, or arrangement of the Company or A+ Network providing
benefits or perquisites to employees of the Company or A+ Network
generally or individually. Russenberger
- 2 -
<PAGE> 3
acknowledges and agrees that any medical coverage provided hereunder
shall be in lieu of and not in addition to any coverage required by
Section 4980B of the Internal Revenue Code ("COBRA") (with respect to
which the Company will provide Russenberger with a separate notice as
required by COBRA). Notwithstanding the foregoing, Russenberger may
elect the payment of benefits to which he is entitled under any 401(k)
plan of A+ Network as provided under the terms of any such plan. The
provision by the Company of benefits (other than the 401(k) payments)
described in this paragraph are conditional upon Russenberger's
compliance with all conditions to receipt of payments specified in
paragraph 4 above.
6. NONCOMPETITION. From the Termination Date until Russenberger ceases
to be a member of the Board of Directors of the Company (the "Board"),
Russenberger will not:
(a) serve as or be a consultant to or employee, officer, agent,
director, or owner of more than three percent of another
corporation, partnership, or other entity that competes with
the paging, voicemail, telemessaging, or cellular operations
of the Company; or
(b) solicit for employment or endeavor in any way to entice away
from employment with the Company or its affiliates any
employee of the Company or its affiliates who is an officer or
a manager of any department.
The Company's obligations under paragraphs 4 and 5 hereof are
expressly conditioned upon Russenberger's strict compliance with the
provisions of this paragraph 6.
7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required by
the lawful order of a court or agency of competent jurisdiction,
Russenberger agrees to keep secret and confidential indefinitely all
non-public information concerning A+ Network, the Company, or their
affiliates that was acquired by or disclosed to Russenberger during
the course of his employment by A+ Network or any of its affiliates or
predecessors or during his dealings with the Company and its
affiliates, including information relating to customers (including,
without limitation, credit history, repayment history, financial
information, and financial statements), costs and operations,
financial data and plans, whether past, current or planned and not to
disclose the same, either directly or indirectly,
- 3 -
<PAGE> 4
to any other person, firm, or business entity, or to use it in any
way; provided, however, that the provisions of this paragraph 7 shall
not apply to information that is in the public domain or that was
disclosed to Russenberger by independent third parties who were not
bound by an obligation of confidentiality; and provided, further, that
the Company recognizes that Russenberger has, during the course of his
employment with A+ Network, acquired certain general information
regarding the financial condition and borrowing trends of A+ Network's
customers and agrees that the provisions of this paragraph 7 shall not
apply to the use of such general information provided the use thereof
does not violate applicable Federal or state laws or the provisions of
paragraph 6 hereof. Russenberger further agrees that he will not make
any statement or disclosure that would be prohibited by applicable
Federal or state laws and, for twelve months from the Termination
Date, he will not make any statement or disclosure or express any
opinion or interpretation regarding A+ Network or the Company or their
financial condition or operations that is intended or reasonably
likely to be detrimental to the Company or any of its subsidiaries or
affiliates.
Russenberger acknowledges that a violation of this covenant is a
material breach of this Agreement.
8. REMEDIES. Russenberger hereby acknowledges that the remedies at law
for any breach of the covenants and obligations contained in this
Agreement will be inadequate and that, in the event of a breach or a
threatened breach of any of the provisions of this Agreement, the
Company shall be entitled to preliminary restraining orders,
injunctions, or such equitable remedies as may be appropriate, in
addition to all other remedies available to the Company. In addition,
Russenberger agrees that a breach by him of any of the covenants and
agreements contained herein shall be deemed a breach of all such
covenants and agreements and shall entitle the Company, among other
things, to cease payments under paragraph 4 hereof and take such steps
as may be necessary to recover payments previously made to
Russenberger under paragraph 4 hereof.
Should a court of competent jurisdiction determine that the character,
duration, or geographical scope of any provision of this Agreement is
unreasonable in light of the circumstances as they then exist, then
the Company and Russenberger intend and agree that the court shall
construe this Agreement in such a manner as to impose only those
- 4 -
<PAGE> 5
restrictions on the conduct of Russenberger that are reasonable in
light of the circumstances as they then exist and as are necessary to
assure the Company of the intended benefit of this Agreement. If, in
any judicial proceeding, a court shall refuse to enforce all of the
separate covenants deemed included herein because, taken together,
they are more extensive than necessary to assure the Company of the
intended benefit of this Agreement, then it is expressly understood
and agreed by the Company and Employee that those covenants that, if
eliminated, would permit the remaining separate covenants to be
enforced in such proceeding, shall, for the purpose of such
proceeding, be deemed eliminated from the provision hereof.
9. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws of Delaware, without giving effect
to any conflicts of law provisions.
10. BINDING EFFECT. This Agreement shall bind and inure to the benefit of
A+ Network, the Company, its successors and assigns, and Russenberger
and his heirs and legal representatives. Russenberger may not assign
this Agreement and the rights hereunder.
11. VOLUNTARY AGREEMENT; REASONABLENESS. Russenberger hereby represents
that he has carefully read and completely understands the provisions
of this Agreement and that he has entered into this Agreement
voluntarily. Russenberger has carefully considered the provisions
hereof and consulted with counsel of his own choosing, and, having
done so, agrees that the restrictions set forth in paragraphs 6 and 7
hereof (including, but not limited to, the time periods of restriction
in each such paragraphs and the geographical area of restriction set
forth in paragraph 6 hereof) are fair and reasonable and are
reasonably required for the protection of the interests of the
Company.
12. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a
series of separate covenants.
13. LITIGATION ASSISTANCE. Russenberger agrees to cooperate with and
provide assistance to the Company and its legal counsel in connection
with any litigation (including arbitration or administrative hearings)
or investigation affecting A+ Network, its predecessors, the Company,
or their affiliates in which -- in the reasonable judgment of the
Company's counsel -- Russenberger's assistance or cooperation is
needed. Russenberger shall, when
- 5 -
<PAGE> 6
the Company requests, provide testimony or other assistance and shall
travel at the Company's request in order to fulfill this obligation.
In connection with such litigation or investigation, the Company shall
attempt to accommodate Russenberger's schedule, shall provide him with
reasonable notice in advance of the times in which his cooperation or
assistance is needed, and shall reimburse Russenberger for any
reasonable expenses (other than legal fees) incurred in connection
with such matters.
14. ADMISSIONS. Russenberger acknowledges that the Company's payment of
the consideration described herein is made in good faith and shall
never for any purpose be considered an admission of liability on the
part of the Company, by whom liability is expressly denied, and no
past or present wrongdoing on the part of the Company shall be implied
by such payment.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Russenberger and supersedes all prior
agreements relating to the subject matter hereof (including the
Employment Agreement), and may be changed only by a writing signed by
the parties hereto. Any and all prior representations, statements,
and discussions regarding the subject matter of this Agreement have
been merged into and/or replaced by the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or
caused this Agreement to be duly executed by their authorized representatives,
under seal and with the intent that this Agreement shall constitute a sealed
instrument, as of the day and year first above written.
METROCALL, INC.
Date: 5/16/96 By: /s/ VINCENT D. KELLY
------------ ---------------------------
Vincent D. Kelly
Chief Financial Officer
Date: 5/16/96 By: /s/ RAY D. RUSSENBERGER
------------ ---------------------------
Ray D. Russenberger
- 6 -
<PAGE> 1
EXHIBIT 11(C)(6)
NONDISCLOSURE / NO CONFLICT AGREEMENT
This AGREEMENT is made and entered into as of May 16, 1996, by and between
METROCALL, INC., a Delaware corporation (the "Company"), and ELLIOTT H. SINGER
("Singer").
STATEMENT OF PURPOSE
Singer has been Chairman of the Board of Directors for A+
Communications, Inc., now A+ Network, Inc. ("A+ Network") since 1985, and
served as its Chief Executive Officer from 1985 to January 15, 1996. His most
recent service has been pursuant to an employment agreement dated as of and
effective as of November 1, 1995 between Singer and A+ Network (the "Employment
Agreement"). Singer will terminate the Employment Agreement and his employment
with A+ Network as of the Effective Time ("Effective Time") of the Agreement
and Plan of Merger of even date herewith ("Merger Agreement") by and between A+
Network and the Company. Singer will agree not to compete with the Company
(which will be the successor, through merger, of A+ Network) for the term
described herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the Company and
Singer hereby agree as follows:
1. ACKNOWLEDGMENTS. Singer acknowledges that A+ Network's and the
Company's business and services are highly specialized, that the
identity and particular needs of their customers and suppliers are not
generally known, and that the documents and information regarding
their customers, suppliers, services, methods of operation, sales,
pricing, and costs are highly confidential and constitute trade
secrets. Singer further acknowledges that the services he has
rendered to A+ Network have been of a special and unusual character
that have a unique value to A+ Network and the Company, and that
Singer has had access to trade secrets and confidential information
belonging to A+ Network and the Company, the loss of which cannot
adequately be compensated by damages in an action at law.
<PAGE> 2
2. DATE AND NATURE OF TERMINATION. Singer's employment with A+ Network
and its subsidiaries is hereby terminated as of Effective Time (the
"Termination Date"), and Singer hereby tenders his resignation from
any positions he now has with A+ Network, including as an officer,
director, or member of any advisory boards or committees, all such
resignations to be effective as of the Termination Date. Singer
acknowledges and agrees that his termination shall be treated as a
"voluntary resignation" as described in paragraph 4(b) of the
Employment Agreement and with the effect set forth in the Employment
Agreement as of November 1, 1995. This Agreement is contingent on and
subject to the Closing under the Merger Agreement, and neither party
shall be bound by it unless and until the Closing occurs.
3. ACCRUED BONUSES. Singer acknowledges that he is not entitled to any
accrued but unpaid bonuses as of the date hereof.
4. PAYMENT FOR NONCOMPETITION. Subject to Singer's full compliance with
the terms of this Agreement including the conditions set forth below,
the Company shall pay to Singer periodic payments at a rate equal to
$325,000 per year from the Termination Date until the third
anniversary of the Termination Date, payable no less frequently than
biweekly. All amounts paid under this paragraph 4 shall be subject to
and reduced by applicable federal and state withholding taxes, if any.
5. BENEFIT PLANS AND FRINGE BENEFITS. Between the Termination Date and
the third anniversary of the Termination Date, Singer shall be
entitled to participate in the life, medical, and disability benefits
programs of the Company to the extent (i) (I) the Company can arrange
such participation at a cost to the Company comparable to that
applicable to covering a current employee and (II) the Company can
obtain the agreement of its third- party insurers and stop-loss
carriers and (ii) such participation is not prohibited by law or such
as to call into question the otherwise applicable tax treatment for
plans coverning employees. Except as provided in the foregoing
sentence, as of the Termination Date, Singer shall not have the right
to participate in or receive any benefit under any employee benefit
plan of A+ Network, the Company, or any of their affiliates, any
fringe benefit plan of the Company or A+ Network, or any other plan,
policy, or arrangement of the Company or A+ Network providing benefits
or perquisites to employees of the Company or A+ Network generally or
individually. Singer
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<PAGE> 3
acknowledges and agrees that any medical coverage provided hereunder
shall be in lieu of and not in addition to any coverage required by
Section 4980B of the Internal Revenue Code ("COBRA") (with respect to
which the Company will provide Singer with a separate notice as
required by COBRA). Notwithstanding the foregoing, Singer may elect
the payment of benefits to which he is entitled under any 401(k) plan
of A+ Network as provided under the terms of any such plan. The
provision by the Company of benefits (other than the 401(k) payments)
described in this paragraph are conditional upon Singer's compliance
with all conditions to receipt of payments specified in paragraph 4
above.
6. NONCOMPETITION. From the Termination Date until Singer ceases to be a
member of the Board of Directors of the Company (the "Board"), Singer
will not:
(a) serve as or be a consultant to or employee, officer, agent,
director, or owner of more than three percent of another
corporation, partnership, or other entity that competes with
the one-way or two-way paging operations of the Company; or
(b) solicit for employment or endeavor in any way to entice away
from employment with the Company or its affiliates any
employee of the Company or its affiliates who is an officer or
a manager of any department.
The Company's obligations under paragraphs 4 and 5 hereof are
expressly conditioned upon Singer's strict compliance with the
provisions of this paragraph 6.
7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required by
the lawful order of a court or agency of competent jurisdiction,
Singer agrees to keep secret and confidential indefinitely all
non-public information concerning A+ Network, the Company, or their
affiliates that was acquired by or disclosed to Singer during the
course of his employment by A+ Network or any of its affiliates or
predecessors or during his dealings with the Company and its
affiliates, including information relating to customers (including,
without limitation, credit history, repayment history, financial
information, and financial statements), costs and operations,
financial data and plans, whether past, current or planned and not to
disclose the same, either directly or indirectly, to any other person,
firm, or business entity, or to use it in any way; provided, however,
that the provisions of this paragraph 7 shall not apply to information
that is in the public domain or that was
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<PAGE> 4
disclosed to Singer by independent third parties who were not bound by
an obligation of confidentiality; and provided, further, that the
Company recognizes that Singer has, during the course of his
employment with A+ Network, acquired certain general information
regarding the financial condition and borrowing trends of A+ Network's
customers and agrees that the provisions of this paragraph 7 shall not
apply to the use of such general information provided the use thereof
does not violate applicable Federal or state laws or the provisions of
paragraph 6 hereof. Singer further agrees that he will not make any
statement or disclosure that would be prohibited by applicable Federal
or state laws and, for twelve months from the Termination Date, he
will not make any statement or disclosure or express any opinion or
interpretation regarding A+ Network or the Company or their financial
condition or operations that is intended or reasonably likely to be
detrimental to the Company or any of its subsidiaries or affiliates.
Singer acknowledges that a violation of this covenant is a material
breach of this Agreement.
8. REMEDIES. Singer hereby acknowledges that the remedies at law for any
breach of the covenants and obligations contained in this Agreement
will be inadequate and that, in the event of a breach or a threatened
breach of any of the provisions of this Agreement, the Company shall
be entitled to preliminary restraining orders, injunctions, or such
equitable remedies as may be appropriate, in addition to all other
remedies available to the Company. In addition, Singer agrees that a
breach by him of any of the covenants and agreements contained herein
shall be deemed a breach of all such covenants and agreements and
shall entitle the Company, among other things, to cease payments under
paragraph 4 hereof and take such steps as may be necessary to recover
payments previously made to Singer under paragraph 4 hereof.
Should a court of competent jurisdiction determine that the character,
duration, or geographical scope of any provision of this Agreement is
unreasonable in light of the circumstances as they then exist, then
the Company and Singer intend and agree that the court shall construe
this Agreement in such a manner as to impose only those restrictions
on the conduct of Singer that are reasonable in light of the
circumstances as they then exist and as are necessary to assure the
Company of the intended benefit of this Agreement. If, in any
judicial proceeding, a court shall refuse to enforce all of the
separate covenants
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<PAGE> 5
deemed included herein because, taken together, they are more
extensive than necessary to assure the Company of the intended benefit
of this Agreement, then it is expressly understood and agreed by the
Company and Employee that those covenants that, if eliminated, would
permit the remaining separate covenants to be enforced in such
proceeding, shall, for the purpose of such proceeding, be deemed
eliminated from the provision hereof.
9. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws of Delaware, without giving effect
to any conflicts of law provisions.
10. BINDING EFFECT. This Agreement shall bind and inure to the benefit of
A+ Network, the Company, its successors and assigns, and Singer and
his heirs and legal representatives. Singer may not assign this
Agreement and the rights hereunder.
11. VOLUNTARY AGREEMENT; REASONABLENESS. Singer hereby represents that he
has carefully read and completely understands the provisions of this
Agreement and that he has entered into this Agreement voluntarily.
Singer has carefully considered the provisions hereof and consulted
with counsel of his own choosing, and, having done so, agrees that the
restrictions set forth in paragraphs 6 and 7 hereof (including, but
not limited to, the time periods of restriction in each such
paragraphs and the geographical area of restriction set forth in
paragraph 6 hereof) are fair and reasonable and are reasonably
required for the protection of the interests of the Company.
12. SEPARATE COVENANTS. This Agreement shall be deemed to consist of a
series of separate covenants.
13. LITIGATION ASSISTANCE. Singer agrees to cooperate with and provide
assistance to the Company and its legal counsel in connection with any
litigation (including arbitration or administrative hearings) or
investigation affecting A+ Network, its predecessors, the Company, or
their affiliates in which -- in the reasonable judgment of the
Company's counsel -- Singer's assistance or cooperation is needed.
Singer shall, when the Company requests, provide testimony or other
assistance and shall travel at the Company's request in order to
fulfill this obligation. In connection with such litigation or
investigation, the Company shall attempt to accommodate Singer's
schedule, shall provide him with
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<PAGE> 6
reasonable notice in advance of the times in which his cooperation or
assistance is needed, and shall reimburse Singer for any reasonable
expenses incurred in connection with such matters.
14. ADMISSIONS. Singer acknowledges that the Company's payment of the
consideration described herein is made in good faith and shall never
for any purpose be considered an admission of liability on the part of
the Company, by whom liability is expressly denied, and no past or
present wrongdoing on the part of the Company shall be implied by such
payment.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Singer and supersedes all prior agreements
relating to the subject matter hereof (including the Employment
Agreement), and may be changed only by a writing signed by the parties
hereto. Any and all prior representations, statements, and
discussions regarding the subject matter of this Agreement have been
merged into and/or replaced by the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or
caused this Agreement to be duly executed by their authorized representatives,
under seal and with the intent that this Agreement shall constitute a sealed
instrument, as of the day and year first above written.
METROCALL, INC.
Date: 5/16/96 By: /s/ VINCENT D. KELLY
-------------- ------------------------
Vincent D. Kelly
Chief Financial Officer
Date: 5/16/96 By: /s/ ELLIOTT H. SINGER
-------------- ------------------------
Elliott H. Singer
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<PAGE> 1
EXHIBIT 11(C)(7)
EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement") dated as of May 16, 1996 by and between
METROCALL, INC., a Delaware corporation (the "Company"), and Charles A. Emling,
III ("Emling").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Emling, and Emling desires to
be employed by the Company, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs Emling beginning with
the Effective Time and Emling agrees upon the terms and
conditions herein set forth to serve as President of the
Company in the Southeast Region, and in such capacity
Emling agrees to perform such duties as his supervisor or
the officers of the Company may from time to time assign to
him. In such capacity, Emling shall report to the Chief
Executive Officer of the Company. Emling will be
responsible for all aspects of the day to day operations in
the Southeast Region of the Company and will be part of the
Company's executive management team. Emling's principal
place of employment will be Pensacola, Florida (or any
other office the Company may establish in its discretion
for its Southeast Region operations after the third
anniversary of the Effective Date); provided, however, that
Emling understands and agrees that he will be required to
travel from time to time for business reasons.
(b) Exclusive Services. For so long as the Company employs
Emling, he shall, except as a duly authorized officer of
the Company may otherwise agree from time to time in
writing, devote substantially all of his business time and
attention to the performance of his duties hereunder, shall
faithfully serve the Company, shall in all respects conform
to and comply with the lawful and good faith
<PAGE> 2
directions and instructions given to him by the Company,
and shall use his best efforts to promote and serve the
interests of the Company.
(c) No Other Employment and No Conflicts of Interest. Except
for services disclosed on Exhibit A hereto, for so long as
the Company employs Emling, he shall not, directly or
indirectly, render services to any other person or
organization for which he receives compensation (except, at
the direction of the Company, as part of a joint venture
between the Company and another entity) or otherwise engage
in activities that would interfere significantly with his
faithful performance of his duties hereunder without the
written consent of a duly authorized officer. Emling may
perform inconsequential services without direct
compensation therefor in connection with the management of
personal investments, provided that such activity does not
contravene the provisions of Section 6 hereof.
Emling confirms that he has fully disclosed to the Company
all circumstances in respect of which, to the best of his
knowledge, there are, or there might be, a material
conflict of interest between the Company (or any affiliate
or subsidiary thereof) and Emling or Emling's spouse,
children, relatives, or any of such persons' spouses,
children, or relatives, and Emling agrees to fully disclose
to the Company any such circumstances that may arise during
the Term (as hereinafter defined). Except with the express
written consent of the Company or pursuant to the terms of
lease arrangements disclosed in Schedule 3.15 to the
Agreement and Plan of Merger of even date herewith ("Merger
Agreement") by and between A+ Network, Inc. and the
Company, neither Emling nor the relatives listed in the
foregoing sentence shall be entitled to receive or obtain,
directly or indirectly, any discount, rebate, commission,
or other benefit in respect of any business transacted
(whether or not by Emling) by or on behalf of the Company
or any affiliated company, and, if he, such relatives, or
any company or business entity in which he or they are
interested shall, directly or indirectly, obtain any such
discount, rebate, commission, or other benefit, he shall
immediately pay the Company or its affiliate an amount
equal to the amount received or the value of the benefit so
obtained.
Employment Agreement with Charles A. Emling, III Page 2
<PAGE> 3
(d) No Payments to Government Officials. Emling shall neither
pay nor permit payment of remuneration to or on behalf of
any governmental official other than payments required by
applicable law.
(e) Travel and Other Business-Related Expenses; Reimbursements.
The Company shall reimburse Emling for reasonable travel
and other business-related expenses Emling incurs in
fulfilling his duties hereunder. All requests for payment
of third parties or reimbursements under this Agreement,
whether as business expenses or compensation, require
itemization and substantiation, and requests for
reimbursement must be submitted within 60 days after the
expense is incurred.
2. Term of Employment. The Company shall retain Emling and Emling shall
serve in the employ of the Company for the period commencing as of the
Effective Time ("Effective Time") under the Merger Agreement (such
Effective Time being referred to herein as the "Effective Date") and
ending at 11:59 p.m. EST on the first anniversary of the Effective
Date (the "Initial Term"). Unless notice is given by either party to
the other no less than 90 days before each anniversary of the
Effective Date, the term shall be extended an additional year
(together collectively with the Initial Term, constituting the
"Term"). This Agreement is contingent on and subject to the Closing
under the Merger Agreement, and neither party shall be bound by it
unless and until the Effective Time occurs.
3. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following
compensation and other benefits to Emling during the Term as
compensation for services rendered hereunder:
(a) Salary. For services rendered, the Company shall pay to
Emling an annual salary (the "Salary") from the Effective
Date at the rate of $200,000 per annum, payable in
accordance with the Company's payroll practices as
established from time to time.
(b) Employee Benefits. The Company shall provide Emling with
medical and life insurance and business travel accident
insurance under the terms of the Company's plans, programs,
and policies (as these arrangements may be amended from
time to time).
Employment Agreement with Charles A. Emling, III Page 3
<PAGE> 4
(c) Vacation. Emling shall accrue paid vacation at a rate of
four weeks each year of employment during the Term but
cannot take more than two consecutive weeks of vacation.
4. Termination of Employment. Subject to the provisions of this Section
4, the Company shall have the right to terminate Emling's employment,
and Emling shall have the right to resign from his employment with the
Company, at any time.
(a) Termination for Cause; Resignation Without Good Reason.
(i) If, before the expiration of the Term, the Company
terminates Emling's employment for Cause, as
defined in Section 4(a)(ii) hereof, or if Emling
resigns from his employment hereunder, other than
for Good Reason, as defined in Section 4(a)(iii)
hereof, Emling shall be entitled to payment of the
pro rata portion of his Salary under Section 3(a)
through and including the date of termination or
resignation. Within 45 days after termination for
Cause or resignation other than for Good Reason,
the Company shall reimburse Emling for any
expenses incurred but not theretofore reimbursed.
Except to the extent required by applicable law or
by Section 3(b), Emling shall have no right under
this Agreement or otherwise to receive any other
compensation, or to participate in any other plan,
arrangement, or benefit, after such termination or
resignation of employment with respect to the year
of such termination or resignation and later
years.
(ii) Termination by the Company of Emling's employment
for "Cause" shall mean termination because of (A)
any act or omission that constitutes a material
breach, as determined, in good faith, by the Board
of Directors of the Company (the "Board") by
Emling of his obligations or agreements under this
Agreement or the failure or refusal of Emling to
satisfactorily perform any material duties
reasonably required hereunder (other than by
reason of the incapacity of Emling due to physical
or mental illness), (B) the commission by Emling
of a felony (other than a felony resulting
Employment Agreement with Charles A. Emling, III Page 4
<PAGE> 5
from a traffic violation), or the perpetration by
Emling of a dishonest act or common law fraud
resulting in material harm to the Company or to
any affiliate or subsidiary thereof, or (C)
Emling's being absent (and not traveling on
business) for more than 30 consecutive days for
reasons not related to illness, disability, sick
leave, or vacation. Before termination for
"Cause" pursuant to Section 4(a)(ii)(A) above, the
Company shall specify in writing to Emling the
nature of the act, omission, refusal, or failure,
and give Emling the opportunity to correct such
act, omission, refusal, or failure (and thus avoid
termination for "Cause") within 30 days after his
receipt of such written specification.
(iii) Resignation by Emling of his employment for "Good
Reason" shall mean his resignation after (A) an
act or omission by the Company that is a material
breach of this Agreement; (B) Emling specifies to
the Company in writing the nature of such act or
omission set forth in clause (A); and (C) the
Company does not correct such act or omission
(other than a failure to make payments to Emling
provided for herein) within 30 days after its
receipt of such written specification.
(iv) The date of termination of employment by the
Company under this Section 4(a) shall be the
future date set forth in the written notice of
termination the Company delivers to Emling, unless
no such date is specified in such notice, in which
case the date of termination shall be the date
Emling receives the written notice of termination.
The date of resignation under this Section 4(a)
shall be 10 business days after the Company
receives the written notice of resignation.
(b) Termination Without Cause; Resignation for Good Reason.
(i) Subject to the provisions of Section 4(b)(ii), if,
before the expiration of the Term, Emling resigns
from his employment hereunder for Good Reason or
the Company terminates his employment without
Cause, the Company shall continue to pay to
Emling, at the time such payments would otherwise
be due, the Salary (at the rate in effect on the
date of such
Employment Agreement with Charles A. Emling, III Page 5
<PAGE> 6
termination) for one year. Within 45 days after
termination without Cause or resignation for Good
Reason, the Company shall reimburse him for any
expenses incurred but not theretofore reimbursed.
(ii) If, following a termination of employment without
Cause or a resignation for Good Reason, Emling
breaches the provisions of Section 5 hereof,
Emling shall not be eligible, as of the date of
such breach, for the payments described in this
Section 4(b) (other than reimbursements for
expenses), and any and all obligations and
agreements of the Company with respect to such
payments shall thereupon cease.
(iii) The date of termination of employment by the
Company under this Section 4(b) shall be the
future date the Company specifies in a written
notice of termination to Emling or, if no such
date is specified therein, the date on which the
Company gives such notice to Emling. The date of
resignation under this Section 4(b) shall be 10
business days after the Company receives written
notice of resignation.
(c) Termination Due to Death or Disability. In the event of
Emling's disability, as defined below, the Company shall be
entitled to terminate his employment. Notwithstanding
anything contained in this Agreement to the contrary, if
Emling's employment should terminate due to death or
disability, Emling shall earn no further Salary, and the
Company shall pay any Salary Emling earned to the date of
death or determination of disability to Emling or Emling's
estate, as the case may be, within 30 days of death or such
determination. Within 45 days after termination due to
death or disability, the Company shall reimburse him or his
estate for any expenses incurred but not theretofore
reimbursed. As used in this Section, the term "disability"
shall mean the inability of Emling to perform his services
as President, Southeast Region of the Company as required
hereunder due to physical or mental incapacity or illness
for more than 60 consecutive days.
(d) Emling agrees that in the event of any termination
hereunder at the end of the Term, Emling shall have no
claims against the Company under any law, rule, or
Employment Agreement with Charles A. Emling, III Page 6
<PAGE> 7
regulation in respect of an unfair dismissal or severance,
other than such termination payment as may be provided for
herein.
5. Secrecy and Noncompetition.
(a) No Competing Employment. For so long as the Company
employs Emling and continuing for 12 months after the
termination of such employment or resignation therefrom and
assuming the Company remains in compliance with terms
hereof (such period being referred to hereinafter as the
"Restricted Period"), Emling agrees as follows:
(i) Emling shall not, directly or indirectly, promote,
be employed by, participate, lend money to, invest
in, or engage in any activity or business that is
in competition with the one-way and two-way paging
and telemessaging business of the Company, or any
of its subsidiaries and affiliated companies
within any Market Areas (as hereinafter defined).
The foregoing prohibition includes, but is not
limited to, acting, either singly or jointly or as
agent for, or as an employee of or consultant to,
any person or persons, firm, entity, or
corporation directly or indirectly (as a director,
shareholder, investor, partner, lessor, lessee,
proprietor, principal agent, independent
contractor, representative, consultant, member, or
otherwise) in such competition with the business.
Ownership by Emling of 3% or less of the
outstanding capital stock of any corporation that
is actively publicly traded will not be a
violation of this covenant. For purposes of the
foregoing:
(I) Market Areas (as further defined below)
are locations in which A+ Network, its
predecessors, the Company, or their
affiliates had or have an office, sold
or sell products, or delivered or
deliver services to customers during the
"Market Period."
(II) The "Market Period" shall begin at the
beginning of Emling's employment with A+
Network and its predecessors and shall
run through the Restricted Period.
Employment Agreement with Charles A. Emling, III Page 7
<PAGE> 8
(III) If the location where one or more of the
relevant companies has or is engaged in
business is within a standard
metropolitan statistical area, as
designated by the federal government,
the term "Market Area" shall be that
standard metropolitan statistical area.
In all other cases, the term "Market
Area" shall mean the county where A+
Network, the Company, or their
affiliates have or had an office, sell
or sold products, or provide or provided
services to customers.
(b) No Interference. During the Restricted Period,
(i) Emling agrees that he will not, directly or
indirectly, whether for his own account or for the
account of any other individual, partnership, firm,
corporation, or other business organization (other
than the Company), intentionally solicit or endeavor
to entice away from the Company or its affiliates any
person whom the Company or its affiliates employs or
otherwise engages to perform services (including, but
not limited to, any independent sales representatives
or organizations); and
(ii) Emling agrees that he will not, directly or
indirectly, whether for his own account or for the
account of any other individual, partnership, firm,
corporation, or other business organization (other
than the Company), intentionally solicit or endeavor
to entice away from the Company or its affiliates or
make any sales contact with any person or entity who
is, or was within the Market Period, a customer or
client of the Company or its affiliates.
(c) Secrecy. Emling recognizes that the services he will perform
hereunder are special, unique, and extraordinary in that, by
reason of his employment hereunder, he may acquire
confidential information and trade secrets concerning the
operation of the Company, or its affiliates or subsidiaries,
the use or disclosure of which could cause the Company or its
affiliates or subsidiaries substantial loss and damages that
could not be readily calculated and for which no remedy at law
would be adequate. Accordingly, Emling covenants and agrees
with the Company that he will not at any time, except in
performance of Emling's obligations to the Company hereunder
or with the prior written consent of the
Employment Agreement with Charles A. Emling, III Page 8
<PAGE> 9
Company pursuant to authority granted by a resolution of the
Board, directly or indirectly, disclose any secret or
confidential information that he may learn or has learned by
reason of his employment under this Agreement with the
Company, or any of its subsidiaries and affiliates, or use any
such information in a manner detrimental to the interests of
the Company. The term "confidential information" includes,
without limitation, information not previously disclosed to
the public or to the trade by the Company's management with
respect to the Company's, or any of its affiliates' or
subsidiaries', products, facilities, and methods, trade
secrets and other intellectual property, software, source
code, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information
(including the revenues, costs, or profits associated with any
of the Company's products), business plans, prospects, or
opportunities but shall exclude any information already in the
public domain. Emling understands and agrees that the rights
and obligations set forth in this Section 5(c) shall continue
for one year beyond Emling's employment hereunder; provided,
however, that it shall not be applicable if and to the extent
Emling is required to testify in a judicial or regulatory
proceeding pursuant to an order of a judge or administrative
law judge issued after Emling and his legal counsel urge that
the confidential information remain confidential.
(d) Exclusive Property. Emling confirms that all confidential
information is and shall remain the exclusive property of the
Company. All business records, business papers, and business
documents kept or made by Emling in the course of Emling's
employment by the Company shall be and remain the property of
the Company other than personal correspondence that in no way
relates to the business of the Company. Upon the termination
of his employment with the Company or upon the request of the
Company at any time, Emling shall promptly deliver to the
Company, and shall not without the consent of the Company
retain, copies of any confidential information or other
materials (written or otherwise) not available to the public
(except for materials made available to the public in a manner
known to Emling to be unauthorized by the Company) and records
and documents made by Emling or coming into his possession in
the course of Emling's employment by the Company. Emling
understands and agrees that the rights and obligations set
Employment Agreement with Charles A. Emling, III Page 9
<PAGE> 10
forth in this Section 5(d) are perpetual and, in any case,
shall extend beyond the Restricted Period and Emling's
employment hereunder.
(e) Injunctive Relief. Without intending to limit the remedies
available to the Company, Emling acknowledges that a breach of
any of the covenants contained in this Section 5 may result in
material irreparable injury to the Company or its affiliates
or subsidiaries for which there is no adequate remedy at law,
that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent
injunction restraining Emling from engaging in activities
prohibited by this Section 5 or such other relief as may be
required to specifically enforce any of the covenants in this
Section 5. Such injunction shall be available without the
posting of any bond or other security.
(f) Extension of Restricted Period. In addition to the remedies
the Company may seek and obtain pursuant to Section 5(e), the
Restricted Period shall be extended by any and all periods
during which Emling shall be found by a court possessing
personal jurisdiction over him to have been in violation of
the covenants contained in this Section 5.
(g) Copyright and Inventions. Emling acknowledges that all
records, documents, papers (including copies and summaries
thereof) and other copyright protected works made or acquired
by Emling in the course of employment hereunder shall,
together with all the worldwide copyright and design rights in
all such works, be and at all times remain the absolute
property of the Company. Emling hereby irrevocably and
unconditionally waives all rights that vest in Emling (whether
before, on, or after the date hereof) in connection with
Emling's authorship of any copyright works in the course of
Emling's employment with the Company, wherever in the world
enforceable, including without limitation the right to be
identified as the author of any such works and the right not
to have any such works subjected to derogatory treatment.
Emling recognizes that the services to be performed by Emling
hereunder are deemed to be "work for hire."
Employment Agreement with Charles A. Emling, III Page 10
<PAGE> 11
6. Source of Payments. All payments provided under this Agreement, other
than payments made pursuant to a plan that provides otherwise, shall
be paid in cash from the general funds of the Company, and no special
or separate fund shall be established, and no other segregation of
assets made, to ensure payment. Emling shall have no right, title, or
interest whatever in or to any investments that the Company may make
to aid the Company in meeting its obligations hereunder. To the
extent that any person acquires a right to receive payments from the
Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
Employment Agreement with Charles A. Emling, III Page 11
<PAGE> 12
7. Nonassignability; Binding Agreement; Arbitration
(a) By Emling. Without the prior written consent of the Company
pursuant to authority granted by a resolution of the Board,
Emling shall not assign or delegate this Agreement and any and
all rights, duties, obligations or interests hereunder, nor
shall any right of Emling (or Emling's estate or beneficiary,
as the case may be) to any payment or benefit hereunder be
subject to any manner of alienation or assignment.
(b) By the Company. The Company may assign or delegate this
Agreement and any and all of its rights, duties, obligations,
or interests hereunder to any affiliate of the Company or to
any business entity that at any time by merger, consolidation,
or otherwise acquires all or substantially all of the assets
of the Company or to which the Company transfers all or
substantially all of its assets. Upon such assignment,
delegation, or transfer, any such business entity shall be
deemed to be substituted for all purposes as the Company
hereunder.
(c) Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, any successors to
or assigns of the Company and Emling's heirs and the personal
representatives of Emling's estate.
(d) Arbitration.
(i) Except for actions brought under Section 5 of this
Agreement, any disputes, controversies, or claims
arising out of or related to this Agreement
("Disputes") shall be resolved by binding
arbitration, which shall be administered by the
American Arbitration Association ("AAA"), and shall
be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association (the "Rules"), as such Rules may be
amended from time to time, with the hearing locale to
be Atlanta, Georgia, unless some other location
and/or arbitrator are chosen by mutual consent of the
Company and Emling.
Employment Agreement with Charles A. Emling, III Page 12
<PAGE> 13
(ii) A single neutral arbitrator shall preside over the
arbitration and decide the Dispute (the "Decision").
The AAA shall use its normal procedures pursuant to
the Rules for selection of an arbitrator.
(iii) The Decision shall be binding, and the prevailing
party may enforce such decision in any court of
competent jurisdiction.
(iv) The parties shall cooperate with each other in
causing the arbitration to be held in as efficient
and expeditious a manner as practicable and in this
connection to furnish such documents and make
available such persons as the Arbitrator may request.
(v) The parties have selected arbitration in order to
expedite the resolution of Disputes and to reduce the
costs and burdens associated with litigation. The
parties agree that the Arbitrator should take these
concerns into account when determining whether to
authorize discovery and, if so, the scope of
permissible discovery and other hearing and
pre-hearing procedures.
(vi) Without limiting any other remedies that may be
available under applicable law, the Arbitrator shall
have no authority to award punitive damages.
(vii) The Arbitrator shall render a Decision within ninety
(90) days after accepting an appointment to serve as
Arbitrator unless the parties otherwise agree or the
Arbitrator makes a finding that a party has carried
the burden of showing good cause for a longer period.
(viii) Notwithstanding anything herein to the contrary,
either party may seek a temporary restraining order
or a preliminary injunction from any court of
competent jurisdiction in order to prevent immediate
and irreparable injury, loss, or damage pending the
selection of an arbitrator to render a Decision on
the ultimate merits of any Dispute.
Employment Agreement with Charles A. Emling, III Page 13
<PAGE> 14
(ix) All proceedings and decisions of the Arbitrator shall
be maintained in confidence, to the extent legally
permissible, and shall not be made public by any
party or any Arbitrator without the prior written
consent of all parties to the arbitration, except as
may be required by law.
(x) Each party shall bear its own costs and attorneys'
fees, and the parties shall equally bear the fees,
costs, and expenses of the Arbitrator and the
arbitration proceedings; provided, however, that the
Arbitrator may exercise discretion to award costs,
but not attorneys' fees, to the prevailing party.
8. Severability. If the final determination of the Arbitrator or a court
of competent jurisdiction declares, after the expiration of the time
within which judicial review (if permitted) of such determination may
be perfected, that any term or provision hereof is invalid or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired and (b) the invalid or unenforceable term or provision
shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
9. Amendment; Waiver. This Agreement may not be modified, amended or
waived in any manner except by an instrument in writing signed by both
parties hereto; provided, however, that any such modification,
amendment or waiver on the part of the Company shall have been
previously approved by the Board. The waiver by either party of
compliance with any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other provision
of this Agreement or of any subsequent breach by such party of a
provision of this Agreement.
10. Tax and Tax-Related Withholding. Payments to Emling of all
compensation contemplated under this Agreement shall be subject to all
applicable legal requirements with respect to the withholding of taxes
and social security contributions, and such payments will be offset by
any obligations of Emling to the Company or its predecessor referenced
in the letter attached as Exhibit B hereto.
Employment Agreement with Charles A. Emling, III Page 14
<PAGE> 15
11. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, and interpreted and construed
in accordance with, the laws of the State of Florida applicable to
contracts executed in and to be performed in that State.
12. Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery or certified mail, return
receipt requested. If addressed to Emling, the notice shall be
delivered or mailed to Emling to 605 Chesapeake Drive, Gulf Breeze,
Florida 32501, or if addressed to the Company, the notice shall be
delivered or mailed to Metrocall, Inc., 6910 Richmond Highway,
Alexandria, VA 22306, Attn: William L. Collins, III, with a copy to
George P. Stamas and John B. Watkins, Wilmer, Cutler & Pickering,
2445 M Street, NW, Washington, DC 20037, or such other address as the
Company or Emling may designate by written notice at any time or from
time to time to the other party. A notice shall be deemed given, if
by personal delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
13. Supersedes Previous Agreements. Subject to Section 2, this Agreement
supersedes any prior oral or written employment agreements between
Emling and the Company or A+ Network (including that certain
employment agreement between Emling and A+ Network dated as of March
20, 1996), and all prior or contemporaneous negotiations, commitments,
agreements, and writings with respect to the subject matter hereof;
all such other negotiations, commitments, agreements, and writings
will have no further force or effect; and the parties to any such
other negotiation, commitment, agreement, or writing will have no
further rights or obligations thereunder.
14. Counterparts. Either of the parties hereto may execute this Agreement
in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same
instrument.
15. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
Employment Agreement with Charles A. Emling, III Page 15
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by its
officer pursuant to the authority of its Board, and Emling has executed this
Agreement, as of the day and year first written above.
METROCALL, INC.
5/16/96 By /s/ WILLIAM L. COLLINS, III
---------------- ------------------------------
Date William L. Collins, III
President and CEO
5/16/96 /s/ CHARLES A. EMLING, III
---------------- ------------------------------
Date Charles A. Emling, III
[___] Company's Copy
[___] Emling's Copy
Employment Agreement with Charles A. Emling, III Page 16
<PAGE> 17
EXHIBIT A
Services Rendered by Emling
None.
Employment Agreement with Charles A. Emling, III Page 17
<PAGE> 18
EXHIBIT B
That certain letter agreement by and among Metrocall, A+ Network, and Emling
dated as of May 15, 1996 relating to withholding on option exercises
Employment Agreement with Charles A. Emling, III Page 18
<PAGE> 1
EXHIBIT 11(c)(8)
[WHEAT FIRST BUTCHER SINGER LETTERHEAD]
May 14, 1996
CONFIDENTIAL
The Board of Directors
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Members of the Board:
It is our understanding that Metrocall, Inc. ("Metrocall") and A+ Network, Inc.
("A+ Network") have entered into an Agreement and Plan of Merger (the
"Agreement") which provides for the acquisition pursuant to a tender offer
(the "Offer") by Metrocall of up to 2,140,526 shares of common stock, par value
$.01 per share, of A+ Network (the "A+ Network Common Stock"), at a price of
$21.10 per share, in cash, subject to there being tendered in the Offer, and
not withdrawn, 2,140,526 shares of A+ Network Common Stock. Simultaneously with
the closing of the Offer, Metrocall will purchase for cash from the principal
shareholders of A+ Network the number of shares of A+ Network Common Stock
provided for in the A+ Shareholders' Option and Sale Agreement (the
"Shareholders Agreement"), to be followed by a merger of A+ Network with and
into Metrocall (the "Merger"). In the Merger, each shares of A+ Network Common
Stock issued and outstanding at the Effective Time will be converted into the
right to receive (a) the number of shares of common stock, par value $.01 per
share, of Metrocall (the "Metrocall Common Stock") determined by dividing
$21.10 by the average of the last reported closing price per Metrocall share
for the 50 consecutive trading days ending on the trading day that is five
trading days prior to the transaction closing date (the "Average Share Price"),
provided that the Average Share Price shall not exceed $21.88 or be less than
$17.90, and rounding the result to the nearest 1/100,000 of a share; plus (b)
Indexed Variable Common Rights issued by Metrocall ("VCRs") in an amount equal
to the number of shares to be received pursuant to clause (a) which, as more
fully described in the Agreement, entitles the holder to consideration in
certain circumstances in the form of cash or shares of Metrocall Common Stock,
the form of which consideration may be determined by Metrocall (the Metrocall
Common Stock and VCRs to be issued in the Merger being collectively referred to
as the "Merger Consideration"). The terms set forth in the preceding two
sentences are referred to in this letter as the "Financial Terms of the
Acquisition."
Wheat, First Securities, Inc. ("Wheat"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and
<PAGE> 2
acquisitions, negotiated underwritings, competitve biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In the ordinary course of
our business as a broker-dealer, we may, from time to time, have a long or
short position in, and buy or sell, debt or equity securities of Metrocall or
A+ Network for our own account or for the accounts of our customers. Wheat has
acted as financial advisor to the Board of Directors of Metrocall in connection
with this transaction and will receive a fee for such services. Wheat will also
receive a fee from Metrocall for rendering this opinion.
In arriving at the Opinion, we, among other things:
(1) reviewed the financial and other information contained in A+ Network's
Annual Reports to Shareholders and Annual Reports on Form 10-K for the
fiscal years ended December 31, 1995, December 31, 1994, and December 31,
1993, and certain interim reports to Shareholders and Quarterly Reports
on Form 10-Q;
(2) reviewed the financial and other information contained in Metrocall's
Annual Reports to Shareholders and Annual Reports on Form 10-K for the
fiscal years ended December 31, 1995, December 31, 1994 and December 31,
1993, and certain interim reports to Shareholders and Quarterly Reports
on Form 10-Q;
(3) reviewed the audited consolidated balance sheet of Metrocall as of
December 31, 1995, and the audited consolidated statement of earnings,
stockholders' equity, and cash flows for the fiscal year then ended,
together with the notes thereto;
(4) conducted discussions with members of senior management of A+ Network and
Metrocall concerning their respective business and prospects;
(5) took into account certain long-term strategic benefits expected to occur
from the Acquisition, both operational and financial, that were described
to us by Metrocall and A+ Network senior management;
(6) reviewed certain publicly available information with respect to historical
market prices and trading activity for A+ Network Common Stock and
Metrocall Common Stock and for certain publicly traded companies which we
deemed relevant;
(7) compared the results of operations of A+ Network and Metrocall with those
of certain publicly traded companies which we deemed relevant;
(8) compared the proposed Financial Terms of the Acquisition with the financial
terms of certain other mergers and acquisitions which we deemed to be
relevant;
(9) performed a discounted cash flow analysis of A+ Network based upon
estimates of projected financial performance prepared by A+ Network and
Metrocall;
(10) evaluated the pro forma financial impact of consummation of the Agreement
on Metrocall;
2
<PAGE> 3
(11) reviewed other financial information concerning the business and
operations of A+ Network and Metrocall, including certain internal
financial analyses and forecasts for A+ Network and Metrocall prepared by
the senior management of each entity, as well as certain pro forma
financial projections for the combined company prepared by the senior
management of Metrocall;
(12) reviewed the Agreement (including the Annexes thereto) and the
Shareholders Agreement; and
(13) reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we deemed
necessary.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
Metrocall and A+ Network, and we have not assumed any responsibility for
independent verification of such information or any independent valuation or
appraisal of any of the assets of Metrocall or A+ Network. We have relied upon
the management of Metrocall and A+ Network as to the reasonableness and
achievability of their financial and operational forecasts and projections, and
the assumptions and bases therefor, provided to us, and we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgements of such management and that such forecasts and projections will
be realized in the amounts and in the time periods currently estimated by such
management. This opinion does not address the Financial Terms of the
Acquisition in the Offer and in the Merger independent of each other. We
express no opinion as to what the value of the Merger Consideration actually
will be when issued to A+ Network shareholders pursuant to the Merger or the
price at which the Metrocall Common Stock or the VCRs will trade subsequent to
the Merger. Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof. Our opinion, in any
event, is directed only to the fairness, from a financial point of view, of the
Financial Terms of the Acquisition and does not constitute a recommendation to
any shareholder as to how such shareholder should vote with respect to the
Merger. Our opinion does not address the relative merits of the Merger as
compared to any alternative business strategies that might exist for Metrocall,
nor does it address the effect of any other business combination in which
Metrocall might engage.
Our advisory services and the opinion expressed herein are provided solely for
the use of Metrocall's Board of Directors in evaluation the Merger and are not
on behalf of, and are not intended to confer rights or rememdies upon A+
Network, any stockholder or Metrocall or A+ Network or any person other than
Metrocall's Board of Directors. It is understood that this opinion letter is
for the information on the Board of Directors of Metrocall and, without our
prior written consent, is not to be quoted or referred to, in whole or in part,
in connection with the offering or sale of securities, nor shall this letter be
used for any other purpose, but may be referred to in, and filed as an exhibit
to, the Tender Offer Statement on Schedule 14D-1 and any amendments thereto to
be filed by Metrocall with the Securities and Exchange Commission in connection
with the Merger and the respective proxy statement of A+ Network and the proxy
statement/prospectus of Metrocall relating to the Merger and any Registration
Statement of which any such proxy statement or proxy statement/prospectus forms
a part.
3
<PAGE> 4
On the basis of, and subject to the foregoing, we are of the opinion that as of
the date hereof the Financial Terms of the Acquisition are fair, from a
financial point of view, to Metrocall and to its shareholders.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
By: /s/ Wayne L. Hunter
--------------------------------
Managing Director
4
