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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 0-21924
METROCALL, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 54 - 1215634
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6677 RICHMOND HIGHWAY, ALEXANDRIA, VIRGINIA 22306
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(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 660-6677
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES / X / NO / /
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE:
CLASS OUTSTANDING AT MAY 1, 1996
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COMMON STOCK, $.01 PAR VALUE 14,626,255
Information has been deleted pursuant to request for confidential treatment.
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METROCALL, INC.
INDEX TO FORM 10-Q/A
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PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, December 31, 1995 and March 31, 1996 3
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1995 and 1996 3
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1995 and 1996 3
Notes to Condensed Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and Results 3
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 3
Items 2-5. None or Not Applicable 3
Item 6. Exhibits and Reports on Form 8-K 3
SIGNATURES 7
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
No change.
ITEM 2. No change.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No change.
ITEM 2. CHANGES IN SECURITIES
No change.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No change.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No change.
ITEM 5. OTHER INFORMATION
No change.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K.
1.1 Underwriting Agreement. (a)
2.1 Agreement and Plan of Reorganization among Metrocall, FPGE
Acquisition Corp., FirstPAGE, Wilmington Securities, Inc.,
First Century Partnership III and Omega Partners, L.P., dated
March 15, 1994 (the "FirstPAGE Reorganization Agreement").(b)
2.2 Certificate of Merger between FirstPAGE and FPGE Acquisition
Corp. executed upon approval of the merger by the
stockholders of Metrocall and FirstPAGE. (b)
2.3 Supplemental Agreement executed in connection with the
FirstPAGE Reorganization Agreement.(b)
2.4 Indemnification and Escrow Agreement executed in connection
with FirstPAGE Reorganization Agreement. (c)
2.5 Voting Agreement among Metrocall, FirstPAGE and certain
principal stockholders of Metrocall and FirstPAGE executed
in connection with the FirstPAGE Reorganization Agreement. (c)
2.6 First Amendment to FirstPAGE Reorganization Agreement. (b)
2.7 Agreement of Merger by and among Metrocall, Inc., PPI
Acquisition Corp., Parkway Paging, Inc. certain shareholders
of Parkway Paging, Inc., and George W. Bush, dated
February 26, 1996.*
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2.8 Asset Purchase Agreement by and among O.R. Estman, Inc.
d/b/a Satellite Paging, Dana Panging, Inc. d/b/a Message
Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D.
Bloomgren and Metrocall, Inc., dated February 28, 1996.
(A portion of this Exhibit has been omitted pursuant to a
request for confidential treatment. The omitted material
has been filed separately with the Commission.)**
3.1 Amended and Restated Certificate of Incorporation of
Metrocall. (d)
3.2 Third Amended and Restated Bylaws of Metrocall (e)
4.1 Indenture, including form of 10 3/8% Senior Subordinated
Notes due 2007. (a)
10.1 Loan Agreement by and among Metrocall, certain lenders and
Toronto Dominion Bank as agent, dated August 31, 1994
(the "Loan Agreement"). (c)
10.2 First Amendment to Loan Agreement dated November 30, 1994. (f)
10.3 Second Amendment to Loan Agreement dated April 28, 1995. (e)
10.4 Third Amendment to Loan Agreement dated October 2, 1995. (i)
10.5 Amended and Restated 1993 Stock Option Plan of Metrocall. (d)
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10.6 Directors' Stock Option Plan of Metrocall. (d)
10.7 Deed of Lease between Douglas and Joyce Jemal, as landlord,
and Metrocall, as tenant, dated April 14, 1994. (c)
10.8 Lease Agreement dated December 20, 1983, between a
predecessor of Metrocall and Beacon Communications
Associates, Ltd. (g)
10.9 Employment Agreement between Metrocall and Christopher A.
Kidd. (g)
10.10 Employment Agreement between Metrocall and Vincent D.
Kelly. (g)
10.11 Employment Agreement between Metrocall and William L. Collins,
III executed in connection with the FirstPAGE Reorganization
Agreement. (b)
10.12 Employment Agreement between Metrocall and Steven D. Jacoby
executed in connection with the FirstPAGE Reorganization
Agreement. (b)
10.13 Tax Indemnification Agreement by and among Metrocall,
Harry L. Brock, Jr., Christopher A. Kidd, Vincent D. Kelly
and Suzanne S. Brock. (d)
10.14 Metrocall Savings and Retirement Plan, as amended and
restated dated April 1, 1995. (j)
10.15 Agreement and Plan of Merger among Metrocall; ACPI Acquisition
Corporation; AllCity Paging, Norman H. Minkow; Nancy
Minkow; Brian David Minkow, Karen Lynn Mercer and Steven
Andrew Minkow, as Trustees of the Brian David Minkow
Irrevocable Trust dated November 1, 1993; David Minkow,
Karen Lynn Mercer and Steven Andrew Minkow, as Trustees of
the Karen Lynn Minkow Irrevocable Trust dated November 1,
1993; Brian David Minkow, Karen Lynn Mercer and Steven
Andrew Minkow, as Trustees of the Steven Andrew Minkow
Irrevocable Trust dated November 1, 1993; Barry F. Hobbs;
and Tom J. Hull, dated April 20, 1994 ("Agreement and Plan
of Merger").(h)
10.16 First Amendment to Agreement and Plan of Merger dated
November 28, 1994. (h)
13.1 Metrocall 1995 Annual Report to Shareholders. (j)
21.1 Subsidiaries of Metrocall. (j)
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* Exhibit filed with Report on Form 10-Q filed May 14, 1996.
** Amended exhibit filed herewith.
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(a) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042),
filed with the Commission on September 27, 1995.
(b) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 33-79818), filed
with the Commission on July 19, 1994.
(c) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994, filed
with the Commission on November 14, 1994.
(d) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A as amended, for the year ended December 31,
1993, filed with the Commission on July 21, 1994.
(e) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042).
(f) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A for the year ended December 31, 1994, filed with
the Commission on July 26, 1995.
(g) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-63886),
filed with the Commission on July 12, 1993.
(h) Incorporated by reference to Metrocall's Current Report on
Form 8-K, dated April 20, 1994, filed with the Commission on
April 26, 1994.
(i) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995, filed
with the Commission on November 14, 1995.
(j) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1995 filed with
the Commission on April 1, 1996.
(b) REPORTS ON FROM 8-K
No change.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 15, 1996 METROCALL, INC.
/s/ Vincent D. Kelly
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Vincent D. Kelly
Chief Financial Officer, Treasurer
and Vice President
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EXHIBIT INDEX
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Exhibit
Number Exhibit Description
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1.1 Underwriting Agreement. (a)
2.1 Agreement and Plan of Reorganization among Metrocall, FPGE Acquisition Corp., FirstPAGE,
Wilmington Securities, Inc., First Century Partnership III and Omega Partners, L.P., dated
March 15, 1994 (the "FirstPAGE Reorganization Agreement"). (b)
2.2 Certificate of Merger between FirstPAGE and FPGE Acquisition Corp. executed upon approval
of the merger by the stockholders of Metrocall and FirstPAGE. (b)
2.3 Supplemental Agreement executed in connection with the FirstPAGE Reorganization Agreement.(b)
2.4 Indemnification and Escrow Agreement executed in connection with FirstPAGE Reorganization
Agreement. (c)
2.5 Voting Agreement among Metrocall, FirstPAGE and certain principal stockholders of Metrocall
and FirstPAGE executed in connection with the FirstPAGE Reorganization Agreement. (c)
2.6 First Amendment to FirstPAGE Reorganization Agreement. (b)
2.7 Agreement of Merger by and among Metrocall, Inc., PPI Acquisition Corp., Parkway Paging, Inc.
certain shareholders of Parkway Paging, Inc., and George W. Bush, dated February 26, 1996.*
2.8 Asset Purchase Agreement by and among O.R. Estman, Inc. d/b/a Satellite Paging, Dana Panging,
Inc. d/b/a Message Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D. Bloomgren and
Metrocall, Inc., dated February 28, 1996. (A portion of this Exhibit has been omitted
pursuant to a request for confidential treatment. The omitted material has been filed
separately with the Commission.)**
3.1 Amended and Restated Certificate of Incorporation of Metrocall. (d)
3.2 Third Amended and Restated Bylaws of Metrocall (e)
4.1 Indenture, including form of 10 3/8% Senior Subordinated Notes due 2007. (a)
10.1 Loan Agreement by and among Metrocall, certain lenders and Toronto Dominion Bank as agent,
dated August 31, 1994 (the "Loan Agreement"). (c)
10.2 First Amendment to Loan Agreement dated November 30, 1994. (f)
10.3 Second Amendment to Loan Agreement dated April 28, 1995. (e)
10.4 Third Amendment to Loan Agreement dated October 2, 1995. (i)
10.5 Amended and Restated 1993 Stock Option Plan of Metrocall. (d)
10.6 Directors' Stock Option Plan of Metrocall. (d)
10.7 Deed of Lease between Douglas and Joyce Jemal, as landlord, and Metrocall, as tenant,
dated April 14, 1994. (c)
10.8 Lease Agreement dated December 20, 1983, between a predecessor of Metrocall and Beacon
Communications Associates, Ltd. (g)
10.9 Employment Agreement between Metrocall and Christopher A. Kidd. (g)
10.10 Employment Agreement between Metrocall and Vincent D. Kelly. (g)
10.11 Employment Agreement between Metrocall and William L. Collins, III executed in connection with
the FirstPAGE Reorganization Agreement. (b)
10.12 Employment Agreement between Metrocall and Steven D. Jacoby executed in connection with the
FirstPAGE Reorganization Agreement. (b)
10.13 Tax Indemnification Agreement by and among Metrocall, Harry L. Brock, Jr., Christopher A. Kidd,
Vincent D. Kelly and Suzanne S. Brock. (d)
10.14 Metrocall Savings and Retirement Plan, as amended and restated dated April 1, 1995. (j)
10.15 Agreement and Plan of Merger among Metrocall; ACPI Acquisition Corporation; AllCity Paging,
Norman H. Minkow; Nancy Minkow; Brian David Minkow, Karen Lynn Mercer and Steven
Andrew Minkow, as Trustees of the Brian David Minkow Irrevocable Trust dated
November 1, 1993; David Minkow, Karen Lynn Mercer and Steven Andrew Minkow, as Trustees
of the Karen Lynn Minkow Irrevocable Trust dated November 1, 1993; Brian David Minkow,
Karen Lynn Mercer and Steven Andrew Minkow, as Trustees of the Steven Andrew Minkow
Irrevocable Trust dated November 1, 1993; Barry F. Hobbs; and Tom J. Hull, dated April 20, 1994
("Agreement and Plan of Merger").(h)
10.16 First Amendment to Agreement and Plan of Merger dated November 28, 1994. (h)
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Exhibit
Number Exhibit Description
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13.1 Metrocall 1995 Annual Report to Shareholders. (j)
21.1 Subsidiaries of Metrocall. (j)
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* Exhibit filed with Report on Form 10-Q filed May 14, 1996.
** Exhibit filed herewith.
(a) Incorporated by reference to Metrocall's Registration Statement
on Form S-1, as amended (File No. 33-96042), filed with the
Commission on September 27, 1995.
(b) Incorporated by reference to Metrocall's Registration Statement
on Form S-4, as amended (File No. 33-79818), filed with the
Commission on July 19, 1994.
(c) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994, filed with
the Commission on November 14, 1994.
(d) Incorporated by reference to Metrocall's Annual Report on Form
10-K/A as amended, for the year ended December 31, 1993, filed
with the Commission on July 21, 1994.
(e) Incorporated by reference to Metrocall's Registration Statement
on Form S-1, as amended (File No. 33-96042).
(f) Incorporated by reference to Metrocall's Annual Report on Form
10-K/A for the year ended December 31, 1994, filed with the
Commission on July 26, 1995.
(g) Incorporated by reference to Metrocall's Registration Statement
on Form S-1, as amended (File No. 33-63886), filed with the
Commission on July 12, 1993.
(h) Incorporated by reference to Metrocall's Current Report on Form
8-K, dated April 20, 1994, filed with the Commission on
April 26, 1994.
(i) Incorporated by reference to Metrocall's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, filed with
the Commission on November 14, 1995.
(j) Incorporated by reference to Metrocall's Annual Report on Form
10-K for the year ended December 31, 1995, filed with the
Commission on April 1, 1996.
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EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
BY AND AMONG
O.R. ESTMAN, INC. D/B/A SATELLITE PAGING,
DANA PAGING, INC. D/B/A MESSAGE NETWORK,
BERTRAM M. WACHTEL,
EDWARD R. DAVALOS,
KEVAN D. BLOOMGREN,
AND
METROCALL, INC.
Dated as of February 28, 1996
A portion of this Exhibit has been omitted pursuant to request for
confidential treatment. The omitted material has been filed separately
with the Commission.
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TABLE OF CONTENTS
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SCHEDULES ................................................................................. iv
ARTICLE 1 DEFINITIONS ..................................................................... 1
ARTICLE 2 PURCHASE AND SALE OF ASSETS ..................................................... 4
2.1 Conveyance of Assets.................................................................. 4
2.2 Excluded Assets....................................................................... 5
2.3 Liabilities........................................................................... 6
2.4 Excluded Liabilities.................................................................. 6
ARTICLE 3 CLOSING.......................................................................... 7
3.1 Determination of Closing Date......................................................... 7
3.2 Place of Closing...................................................................... 7
3.3 Closing Documents..................................................................... 7
ARTICLE 4 PURCHASE PRICE, METHOD OF PAYMENT,ALLOCATION OF PURCHASE PRICE................... 8
4.1 Purchase Price for Assets............................................................. 8
4.2 Allocation of the Purchase Price...................................................... 8
4.3 Preliminary Closing Adjustment........................................................ 9
4.4 Post-Closing Adjustment to the Purchase Price......................................... 9
4.5 Escrow Agreement...................................................................... 11
4.6 Tel-Air Litigation.................................................................... 11
ARTICLE 5 REPRESENTATIONS AND WARRANTIES .................................................. 12
5.1 Representations and Warranties of the Seller.......................................... 12
5.2 Representations and Warranties of the Buyer........................................... 19
ARTICLE 6 CONDUCT PRIOR TO CLOSING ........................................................ 20
6.1 Filing of Assignment Applications..................................................... 20
6.2 Antitrust Laws and the Seller......................................................... 20
6.3 Antitrust Laws and the Buyer.......................................................... 21
6.4 Access to Information Concerning Seller's Business.................................... 21
6.5 Confidentiality....................................................................... 22
6.6 Control of the Seller's Business...................................................... 22
6.7 The Seller's Pre-Closing Covenants.................................................... 22
6.8 The Buyer's Pre-Closing Covenants..................................................... 24
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6.9 No Solicitation of Offers............................................................. 24
6.10 Risk of Loss...................................................................... 24
ARTICLE 7 COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE MATTERS............................ 25
7.1 Offer of Employment................................................................... 25
7.2 Wage and Withholding Reporting Obligations............................................ 25
ARTICLE 8 CONDITIONS PRECEDENT............................................................. 26
8.1 Conditions Precedent to Obligations of Parties........................................ 26
8.2 Conditions Precedent to Obligations of the Buyer...................................... 26
8.3 Conditions Precedent to the Obligations of the Seller and the
Stockholders.......................................................................... 28
8.4 Waiver of Conditions.................................................................. 29
ARTICLE 9 TERMINATION AND DEFAULT.......................................................... 29
9.1 General. ............................................................................. 29
9.2 Procedure Upon Termination............................................................ 30
9.3 Effect of Termination................................................................. 30
9.4 Disposition of First Deposit Upon Termination......................................... 30
ARTICLE 10 POST-CLOSING TRANSACTIONS....................................................... 30
10.1 Transition........................................................................ 30
10.2 Access to Books and Records....................................................... 31
10.3 Assignment and Further Assurances................................................. 31
10.4 Non-Competition and Non-Interference.............................................. 31
10.5 Confidentiality of Customer Lists................................................. 32
ARTICLE 11 INDEMNIFICATION AND SURVIVAL.................................................... 33
11.1 Indemnification by the Seller..................................................... 33
11.2 Indemnification by the Buyer...................................................... 34
11.3 Claims for Indemnification........................................................ 34
11.4 Defense by Indemnifying Party..................................................... 34
11.5 Manner of Indemnification......................................................... 35
11.6 Survival of Representations and Warranties........................................ 35
11.7 Limitation of Liability........................................................... 35
ARTICLE 12 MISCELLANEOUS................................................................... 36
12.1 Brokers........................................................................... 36
12.2 Notices........................................................................... 36
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12.3 Expenses of Transfer........................................... 37
12.4 Assignment..................................................... 38
12.5 Counterparts................................................... 38
12.6 Entire Agreement............................................... 38
12.7 Governing Law.................................................. 38
12.8 Headings....................................................... 38
12.9 Severability................................................... 39
12.10 Modification and Amendment..................................... 39
12.11 Waiver......................................................... 39
12.12 Parties Obligated and Benefited................................ 39
12.13 Attorneys' Fees................................................ 39
12.14 Rights to Specific Performance................................. 39
12.15 Actions........................................................ 39
12.16 Terms.......................................................... 40
12.17 Construction................................................... 40
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SCHEDULES
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Schedule 1.19 Pro Forma Defined Operating Cash Flow
Schedule 1.25 Office Locations
Schedule 1.29 Liabilities Included in Calculation of Working Capital Adjustment
Schedule 2.1 Assets
Schedule 2.3 Liabilities
Schedule 4.2 Allocation of Purchase Price
Schedule 4.4(a) Specified Accounting Principles
Schedule 4.4(b) Capital Expenditures From January 1, 1996 to Date
Schedule 4.5 Escrow Agreement
Schedule 5.1.4(a) Licenses; Actions
Schedule 5.1.5 Existing Liens
Schedule 5.1.6 Tax Audits and Waivers
Schedule 5.1.7 Litigation
Schedule 5.1.10 Proforma Financial Information; Variations from GAAP
Schedule 5.1.11 Real Property; Exceptions to Title
Schedule 5.1.14 Contracts
Schedule 5.1.15 Transferability of Contract Rights
Schedule 5.1.16 Personnel Benefits; Bonuses
Schedule 5.1.18 Transactions with Affiliates
Schedule 8.2.4 Form of Opinion of Seller's Counsel
Schedule 8.3.4 Form of Opinion of Buyer's Counsel
Schedule 11.7 Ownership Interests of the Stockholders
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of February
28, 1996, by and among O.R. ESTMAN, INC., a New Jersey corporation D/B/A
SATELLITE PAGING ("Satellite"), DANA PAGING, INC., a Florida corporation D/B/A
MESSAGE NETWORK ("Message Network," and collectively with Satellite, the
"Seller"), BERTRAM M. WACHTEL, EDWARD R. DAVALOS and KEVAN D. BLOOMGREN
(collectively the "Stockholders" and individually a "Stockholder"), and
METROCALL, INC., a Delaware corporation (the "Buyer").
W I T N E S S E T H:
Seller is engaged in the radio paging business and related businesses.
Buyer wishes to purchase, and Seller wishes to sell, certain of Seller's assets
and properties as hereinafter described relating to the Seller's Business.
In consideration of the foregoing and of the covenants, agreements,
representations and warranties hereinafter contained, and intending to be
legally bound, Seller and Buyer hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 Affiliate means, as to a Stockholder or a Seller, any entity
that is controlled by, under common control with, or controlling the Seller or
a Stockholder (other than the other Seller) and as to a Stockholder, any
spouse, parent, child, spouse of a child, sibling or spouse of a sibling of
such Stockholder.
1.2 Assets means the Assets as such term is defined in Article 2
hereof.
1.3 Assignment Applications means the applications to be jointly
prepared by the Seller and the Buyer and filed with the FCC and/or any PUC
requesting its written consent to the assignment or transfer of control of the
Licenses from the Seller to the Buyer.
1.4 Capital Expenditures means the acquisition by purchase, lease,
or otherwise of buildings, equipment, leased pagers or other tangible or fixed
assets capitalized on the books of the Seller, all in accordance with GAAP
(defined in Section 4.3).
1.5 Closing means the consummation of the sale and purchase of the
Assets in accordance herewith by the assignment and conveyance thereof by the
Seller to the Buyer, and the payment by the Buyer to the Seller of the portion
of the Purchase Price to be paid at the Closing.
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1.6 Closing Date means the date and time on which the Closing
occurs, as provided by Section 3.1.
1.7 Confidential Information means all data and information which
the Seller and its agents and representatives make available to the Buyer, its
agents, or representatives in accordance with this Agreement prior to Closing
and which:
(a) is not information which is a matter of public knowledge
or which has heretofore been or is hereafter made available, without any
requirement of confidentiality, with the Seller's consent to third parties
other than the Buyer, its agents, or representatives, or filed as public
information with any governmental authority other than as a result of a breach
of the covenant set forth in Section 6.5 hereof; and
(b) is proprietary information relating to the Seller's
Business or the Transaction.
1.8 DOJ means the United States Department of Justice.
1.9 Environmental Laws. Environmental laws shall mean the
Resource Conservation and Recovery Act of 1976, U.S.C. Section Section
6901-6987, as amended by the Hazardous and Solid Waste Amendments of 1984, the
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section Section 9601-9657, the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. Section Section 1801-1812, the
Toxic Substances Control Act, the Clean Air Act, 42 U.S.C. Section Section
7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section Section 136 et seq., the Clean Water Act, 33 U.S.C. Section Section
1251 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section Section et seq., and any substantially similar
state or local environmental laws.
1.10 Excluded Assets shall have the meaning given in Section 2.2
hereof.
1.11 FCC means the Federal Communications Commission.
1.12 Final Order means an action by the FCC or any PUC asserting
authority over this transaction granting its consent and approval to the
assignment or transfer of control of the Licenses or the Transaction that has
not been reversed, stayed, enjoined, set aside, annulled or suspended and with
respect to which no action, request for stay, petition for review or rehearing,
reconsideration or appeal is pending, and as to which the time for filing any
request, petition, or appeal has expired and the time for agency action to set
aside its consent on its own motion has expired.
1.13 FTC means the Federal Trade Commission.
1.14 Hazardous Substance means any pollutant, contaminant,
chemical, industrial, toxic, hazardous, or noxious substances or waste which is
regulated by any governmental authority under any Environmental Law.
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1.15 Liabilities means all debts, claims, liabilities, obligations,
damages, and expenses of the Seller of every kind and nature, whether known,
unknown, contingent, absolute, determined, indeterminable, or otherwise.
1.16 Licenses means and includes with respect to the Seller's
Business all licenses, permits, franchises and authorizations issued by the FCC
and/or any PUC, and/or other relevant government agencies (including pending
applications for any of the foregoing), for the construction or operation of
the Seller's Business, including all renewals and extensions thereof and all
additional licenses, permits, franchises, and authorizations obtained or
applied for by the Seller from the date of this Agreement to the Closing Date.
1.17 Lien means any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind.
1.18 Material Adverse Effect or Material Adverse Change means any
change or effect that is, or is reasonably likely to be, materially adverse to
the business, financial condition, assets, liabilities or results of operations
of the Seller's Business, other than a change in national economic conditions
or which affects the paging industry generally.
1.19 Pro Forma Defined Operating Cash Flow means for the period
from January 1, 1996 through the Closing Date, the net income of the Seller for
such period, determined on a consolidated basis and before extraordinary and
nonrecurring items and gain or loss on disposal of capital assets, plus any
amount of interest expense, federal and state income taxes, depreciation and
amortization deducted, less any amount of interest income included in
determining such income, and plus all of Seller's expenses deducted in
determining such earnings that shall not be assumed or survive the Closing,
within the categories set forth on Schedule 1.19 and to the extent incurred
from January 1, 1996 through the Closing Date.
1.20 Pro Forma Net Revenue means the Seller's total paging
operations revenue less only the Seller's actual cost of pagers and accessories
sold.
1.21 PUC means a Public Utilities Commission, or any substantially
similar state regulatory agency of any state which exercises jurisdiction over
the Seller or the Seller's Business.
1.22 Purchase Price shall have the meaning set forth in Section
4.1.
1.23 Purchase Price Adjustment shall have the meaning set forth in
Section 4.3 hereof.
1.24 Real Property means all Assets consisting of interests in real
property, including, without limitation, appurtenances, improvements, and
fixtures located on such real property, leasehold interests therein and any
other interests in real property.
1.25 Seller's Business means the radio paging and related
businesses of the Seller and its Subsidiaries, the principal places of business
of which are in Fairfield, New Jersey and Boca Raton, Florida, and at its or
their branch offices as set forth in Schedule 1.25, attached hereto.
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1.26 Subscribers shall mean all pagers for which service has not
been permanently terminated by the Seller. The term Subscriber shall expressly
include any pager for which service has been only temporarily suspended by the
Seller. The term Subscriber shall expressly exclude pagers permanently
terminated by the Seller for non-payment, those for which a notice of
cancellation has been received by the Seller from the customer, and those
pagers with a delinquent balance (not in reasonable dispute) for services
previously rendered which balance is more than ninety days past due, except
that those pagers associated with governmental and historically slow-paying
accounts will not be excluded by reason of delinquent balances more than ninety
days past due provided that they are paying regularly and that their balances
are not more than 30 days more delinquent than their payment history.
1.27 To Seller's Knowledge or To the Knowledge of the Seller with
respect to a fact or matter shall mean knowledge of any executive officer of
the Seller. For such purposes, such persons shall be conclusively deemed to
have knowledge of any fact or matter that would have or should have come to the
attention of such persons in the course of discharging their duties in a
reasonable and prudent manner consistent with sound business practice.
1.28 Transaction means the assignment of the Licenses and the sale
of the Assets subject to the obligations and conditions set forth herein.
1.29 Working Capital Adjustment shall mean, as of a date, the
consolidated current assets of the Seller (not including the assets received
from the sale of the Assets contemplated by this Agreement) (but including all
accounts receivable less (i) the amount of any accounts receivable that have
been outstanding for a period of at least 90 days (other than governmental and
historically slow-paying accounts, provided that they are paying regularly and
that their balances are not more than 30 days more delinquent than their
payment history) and (ii) a reasonable reserve for uncollectibles in respect of
all other accounts receivable, based upon the Seller's historical collection
rate) minus the consolidated current liabilities of the Seller set forth in
Schedule 1.29. Any liabilities included in the calculation of the Working
Capital Adjustment and set forth in Schedule 1.29 as of the Closing Date shall
be deemed Assumed Liabilities
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 CONVEYANCE OF ASSETS.
In exchange for the consideration specified herein and upon the terms
and subject to the conditions set forth in this Agreement, on the Closing Date,
the Buyer will purchase from the Seller and the Seller will sell, convey,
transfer, assign, and deliver up to the Buyer on an "as-is," "where is" basis
and without warranty except as expressly provided by this Agreement, all of
Seller's right, title and interest in all assets, properties and rights of the
Seller, of every type and description, real, personal and mixed, tangible and
intangible, known or unknown, fixed or unfixed, choate or inchoate, accrued,
absolute, contingent or otherwise, wherever located and whether or not
reflected on the books and records of the Seller, and used or held for use in
connection with the Seller's Business at any time prior to the date hereof,
together with additional
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assets acquired in the ordinary course of business from the date hereof to the
Closing Date (all such assets, properties and rights are hereinafter
collectively referred to as the "Assets"). A list of such Assets is attached
hereto as Schedule 2.1 and includes, without limitation: (a) all capitalized
equipment and other fixed assets used in the Seller's Business; (b) the
corporate logos, tradenames, trademarks, copyrights, customer lists and
goodwill of the Seller and any other intellectual property owned by or licensed
to the Seller; (c) the Licenses; (d) all accounts receivable of the Seller; (e)
contract rights; (f) all items of inventory and supplies owned by the Seller;
(g) the Real Property; and (h) books and records (whether in hard copy or
computerized) kept in the ordinary course and reasonably necessary for the
continued conduct of the Seller's Business, other than minute books and similar
official corporate records.
2.2 EXCLUDED ASSETS.
Notwithstanding Section 2.1 above, the Seller is not selling,
transferring, or conveying to the Buyer any of the following all of which are
hereinafter referred to as "Excluded Assets":
(a) The Seller's original corporate minute books and
stock records and any other books and records the
Seller is required by law to retain after
consummation of the Transaction for itself, but not
any books and records described in Section 2.1 above;
provided, however, that copies of any such books and
records that are Excluded Assets and that reasonably
relate to the Seller's Business or the Assets shall
be transferred and conveyed to the Buyer as part of
the Assets.
(b) any claim for reimbursement or indemnification or any
claim for damages of any nature which has arisen or
will arise out of the Seller's Business prior to the
Closing Date, including any claim of the Seller
associated with litigation described in Schedule
5.1.7;
(c) all rights, claims, credits, causes of action or
rights of set-off relating to or arising out of
Excluded Assets;
(d) all rights to tax refunds and other tax attributes
(including the right to use net operating losses
("NOL's") to which the Seller is entitled arising out
of or relating to the Seller's Business prior to the
Closing Date, including the rights to use any NOL
carry-forward, and excluding any refunds attributable
to taxes for which the Buyer is responsible pursuant
to this Agreement;
(e) any Assets sold or otherwise disposed of in the
ordinary course of business from the date hereof to
the Closing Date;
(f) insurance policies, proceeds or claims relating to
the operation of the Seller's Business prior to the
Closing;
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(g) any material contracts, oral or written, to which the
Seller is a party, including contracts set forth in
Schedules 5.1.14 and 5.1.18, and as to which the
Buyer notifies the Seller, within 30 days after the
date of this Agreement, that the Buyer does not
intend to assume; and
(h) the Seller's corporate names "O.R. Estman, Inc." and
"Dana Paging, Inc."
2.3 LIABILITIES.
On and after the Closing Date, the Buyer shall assume those
Liabilities set forth in Schedule 2.3 attached hereto, including any current
liabilities used to calculate the Working Capital Adjustment (the "Assumed
Liabilities").
2.4 EXCLUDED LIABILITIES.
Except for Assumed Liabilities specifically set forth in Section 2.3,
the Buyer shall not be required to assume, pay, fulfill, perform or otherwise
discharge any liabilities or obligations of the Seller. Without limiting the
generality of the foregoing, the Buyer shall not assume or be liable for and
the Seller shall indemnify the Buyer against and hold the Buyer harmless from
any of the following liabilities or obligations (herein referred to as
"Excluded Liabilities"):
(a) any of the Seller's liabilities or obligations under
this Agreement and the other agreements with the
Buyer contemplated hereby (it is understood that this
Section 2.4(a) is not intended to expand or alter the
parties' respective rights under such other
agreements.);
(b) any of the Seller's liabilities or obligations for
expenses or fees incident to or arising out of the
negotiation, preparation, approval, or authorization
of this Agreement or the consummation (or preparation
for the consummation) of the transactions
contemplated hereby, including without limitation,
brokers', attorneys' and accountants' fees;
(c) any liability or obligation of the Seller, at any
time, prior to the Closing, with respect to federal,
state, local or foreign taxes; and any liability for
interest, penalties or additions to any of such taxes
(except prorated taxes);
(d) any liabilities or obligations in connection with any
facilities formerly used by the Seller's Business
which are not included in the Assets;
(e) any obligations or liabilities which relate to any
group health plan, bonus, retirement, retiree,
disability, pension, profit sharing, stock bonus,
thrift, severance, incentive, deferred or other
compensation, welfare benefit, or other plan, program
or arrangement with respect to any employee, former
employee or beneficiary of such employee or former
employee, of the
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Seller or any person that, together with the Seller,
would be treated as a single employer under Section
414 of the Internal Revenue Code;
(f) any liability or obligation of the Seller which
relates to the Excluded Assets;
(g) any liability or obligation arising out of the
operation of the Seller's Business before Closing;
(h) costs and damages arising out of the litigation
described on Schedule 5.1.7; and
(i) any other liability or obligation of the Seller not
specifically assumed by the Buyer under Section 2.3
hereof.
ARTICLE 3
CLOSING
3.1 DETERMINATION OF CLOSING DATE.
Subject to the satisfaction or waiver of the conditions set forth in
Article 8, the Closing shall occur on or before the fifth banking day after the
later to occur of: (a) the consents of the FCC and any required PUC to the
Assignment Applications becoming Final Orders, or (b) if applicable, the
expiration of the waiting period pertaining to the purchase of the Assets under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Antitrust Improvements Act"); but in no event later than January 31, 1997.
The parties may mutually agree to waive the requirement that any FCC or PUC
consent shall have become a Final Order. If Closing does not occur on or
before January 31, 1997, this Agreement shall be terminable in accordance with
the provisions set forth in Article 9 hereof. The parties shall endeavor to
hold the Closing on the last day of a calendar month.
3.2 PLACE OF CLOSING.
The Closing shall take place at the offices of Piper & Marbury L.L.P.,
36 South Charles Street, Baltimore, Maryland 21201 at 10:00 a.m. or at such
other place agreed to by the Seller and the Buyer. The physical presence of
any party or their representatives shall not be a required condition of the
Closing if such party has performed all acts and delivered to an escrow agent
all items and documents necessary for the Closing, together with written
instructions of the party which permit such escrow agent to complete the
obligations of the party in connection with the Closing.
3.3 CLOSING DOCUMENTS.
The Seller shall sell the Assets by delivering to the Buyer at the
Closing appropriately executed assignments, bills of sale, endorsements,
releases, termination statements, consents and
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other documents and instruments of transfer necessary to transfer to the Buyer
good and marketable title to the Assets, except as set forth in Schedule
5.1.11, and free and clear of all Excluded Liabilities (the "Closing
Documents"). Likewise, the Buyer shall purchase the Assets by delivery to the
Seller at the place and time of Closing, payments as provided herein, and all
other documents necessary to carry out the Buyer's obligations hereunder
including the assumption of the Assumed Liabilities as provided herein.
ARTICLE 4
PURCHASE PRICE, METHOD OF PAYMENT,
ALLOCATION OF PURCHASE PRICE
4.1 PURCHASE PRICE FOR ASSETS.
Subject to and upon the terms and conditions set forth herein, the
Buyer shall pay to the Seller aggregate cash consideration in the amount of
Twenty Eight Million Dollars ($28,000,000) (the "Purchase Price"), payable as
follows:
(a) Within seven (7) business days after the execution of
this Agreement by all parties, the Buyer shall deliver the sum of One Million
Dollars ($1,000,000) (together with all interest and other income accruing
thereon, the "First Deposit") in escrow as provided by the Escrow Agreement
(defined in Section 4.5) and as otherwise agreed by the parties pending the
execution of the Escrow Agreement;
(b) At the Closing, the First Deposit shall remain in escrow
as provided by the Escrow Agreement, and the Buyer shall deliver such
additional sum as shall be required to deposit a total of Two Million Five
Hundred Thousand Dollars ($2,500,000) (together with all interest and other
income accruing thereon, the "Second Deposit") in escrow as provided by the
Escrow Agreement; and
(c) At the Closing, the Buyer shall pay the remainder of the
Purchase Price, i.e., Twenty-Five Million Five Hundred Thousand Dollars
($25,500,000), by wire transfer of immediately available funds. The Purchase
Price shall be subject to such further adjustments as are specified in Sections
4.3 and 4.4.
4.2 ALLOCATION OF THE PURCHASE PRICE.
The Purchase Price shall be allocated among the individual Assets and
the non-competition and non-interference covenants set forth in Section 10.4 in
accordance with the procedures set forth in Schedule 4.2. The parties
acknowledge that the Purchase Price allocated to each of the Assets was
negotiated and agreed to by each party, and there shall be no claim or basis
for any cause of action by the Buyer or the Seller against any other party
based upon or arising out of the allocation of the Purchase Price to any Asset.
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4.3 PRELIMINARY CLOSING ADJUSTMENT.
Not less than five days prior to the Closing Date the Seller shall
prepare and deliver to the Buyer (a) an unaudited balance sheet of the Seller
as of the last day of the month immediately preceding the Closing for which
financial information is available (the "Preliminary Closing Balance Sheet");
(b) a calculation of the Working Capital Adjustment as of such date (the
"Preliminary Working Capital Adjustment"); and (c) an estimate of the Purchase
Price, adjusted as provided by Section 4.4(b), as of such date. At the
Closing, in addition to the payments required pursuant to Section 4.1, the
Buyer shall pay to the Seller the amount of the Preliminary Working Capital
Adjustment by wire transfer of immediately available funds.
4.4 POST-CLOSING ADJUSTMENT TO THE PURCHASE PRICE.
(a) (i) Within 60 days after the Closing Date, the
Seller shall prepare and deliver to the Buyer an unaudited pro forma income
statement of the Seller for the period from January 1, 1996 through the Closing
Date (the "Closing Income Statement"), including the Pro Forma Net Revenue and
Pro Forma Defined Operating Cash Flow, and a balance sheet of the Seller as of
the Closing Date (the "Closing Balance Sheet") and a calculation of the Working
Capital Adjustment as of the Closing Date. The Closing Income Statement and
Closing Balance Sheet shall be prepared in accordance with generally accepted
accounting principles ("GAAP"), except the Closing Income Statement and Closing
Balance Sheet shall reflect or not reflect, as the case may be, the accounting
principles, reserves and items set forth in Schedule 4.4(a). Schedule 4.4(a)
also sets forth any material variations from GAAP used in preparing the
statements and balance sheets described in this Section.
(ii) The Closing Income Statement shall be final and
binding on the parties unless the Buyer objects, by giving written notice
within 45 days after the Buyer's receipt of the Closing Income Statement, to
any items in the Closing Income Statement or the computation of Pro Forma Net
Revenue or Pro Forma Defined Operating Cash Flow. The Buyer shall have the
right to cause its accountants to conduct certain procedures specified by the
Buyer with respect to the accounts and records of the Seller in order to
confirm the Seller's determination of the Closing Income Statement and the
Closing Balance Sheet. The Closing Balance Sheet shall be final and binding on
the parties unless the Buyer objects, by giving written notice within 45 days
after the Buyer's receipt of the Closing Balance Sheet, to any items in the
Closing Balance Sheet or the calculation of the Working Capital Adjustment as
of the Closing Date. Such notice or notices shall state in reasonable detail
the item or items in dispute, and shall state the amount, if any, of any
adjustment that should be made to the Closing Income Statement, the Closing
Balance Sheet or the Working Capital Adjustment as of the Closing Date.
(iii) In the event of a dispute, Buyer and Seller
will use their reasonable efforts to resolve any such dispute and any
resolution by them shall be final and binding on them. If Buyer and Seller do
not resolve any such dispute within 30 days after receipt by Buyer of Seller's
written notice of dispute, then Buyer and Seller shall, within five business
days, submit any such unresolved dispute to the Roseland, New Jersey office of
Arthur Andersen LLP (the "Accountant") which firm shall, within 30 days of such
submission, resolve such remaining dispute
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and such resolution shall be binding and conclusive on the parties. The fees
and expenses of the Accountant shall be shared equally by Buyer and Seller. If
issues in dispute are submitted to the Accountant for resolution, each party
will furnish to the Accountant such workpapers and other documents and
information relating to the disputed issues as the Accountant may request and
are available to that party, and each party will be afforded the opportunity to
present to the Accountant any material relating to the determination and to
discuss the determination with the Accountant. The determination by the
Accountant of the Closing Income Statement, including the Pro Forma Net Revenue
and Pro Forma Defined Operating Cash Flow, and Closing Balance Sheet, including
the Working Capital Adjustment as of the Closing Date, as set forth in a notice
delivered by the Accountant to both parties will be final and binding on the
parties.
(b) The Purchase Price shall be subject to the following
post-closing adjustments:
(i) The Purchase Price shall be reduced by an
amount equal to the greatest of the following:
(A) The product of (1) the shortfall, (if
any) between the actual number of the Seller's Subscribers on the Closing Date
and 104,724, multiplied by (2) $254;
(B) The product of (1) the shortfall (if
any) between the Seller's Pro Forma Net Revenue (annualized) and $9,962,547,
multiplied by (2) 2.67; or
(C) The product of (1) the shortfall (if
any) between the Seller's Pro Forma Defined Operating Cash Flow (annualized)
and $3,325,000, multiplied by (2) 8.
(ii) If, but only if, the Closing occurs on or after
September 1, 1996 and if all of the "Minimum Conditions" (defined below) are
satisfied, the Purchase Price shall be increased by an amount equal to the
greatest of the following:
(A) The product of (1) the excess (if
any) of the actual number of the Seller's Subscribers on the Closing Date over
115,748, multiplied by (2) $254;
(B) The product of (1) the excess (if
any) of the Seller's Pro Forma Net Revenue (annualized) over $11,011,236,
multiplied by (2) 2.67;
(C) The product of (1) the excess (if
any) of the Seller's Pro Forma Defined Operating Cash Flow (annualized) over
$3,675,000, multiplied by (2) 8.
The "Minimum Conditions" will be satisfied if (A) the actual number of
the Seller's paging subscribers on the Closing Date is at least 110,236, (B)
the Seller's Pro Forma Net Revenue (annualized) is at least $10,486,892 and (C)
the Seller's Pro Forma Defined Operating Cash Flow (annualized) is at least
$3,500,000.
(iii) The Purchase Price shall be increased by the
excess, if any, of the Working Capital Adjustment as of the Closing Date over
the Preliminary Working Capital
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Adjustment. The Purchase Price shall be reduced by the excess, if any, of the
Preliminary Working Capital Adjustment over the Working Capital Adjustment as
of the Closing Date.
(iv) The Purchase Price shall be increased by the
amount of any Capital Expenditures made by the Seller in connection with the
Seller's Business (A) during the period commencing with January 1, 1996 and
ending on the day immediately preceding the date of this Agreement, as set
forth on Schedule 4.4(b); and (B) during the period commencing with the date of
this Agreement and ending on the Closing Date; provided, however, that any
expenditure which exceeds $5,000 and any expenditures, regardless of size
which, in the aggregate with all prior expenditures, would cause the total
adjustment under this subsection (B) to exceed $50,000, in either case
exclusive of the leasing of pagers in the ordinary course of the Seller's
business, will only be included if such expenditure has been approved in
advance in writing by the Buyer, such approval not to be unreasonably withheld.
(v) The net adjustment to the Purchase Price
resulting from the adjustments described in this Section 4.3(b) is referred to
herein as the "Purchase Price Adjustment."
(c) The Purchase Price Adjustment shall be determined and
paid on the fifth day following final determination of the Closing Income
Statement and the Closing Balance Sheet. All payments pursuant to Section 4.4
shall be made by wire transfer of immediately available funds and shall be
accompanied by accrued interest (compounded monthly) from the Closing Date to
the date of payment at a rate equal to the Prime Rate. The term "Prime Rate"
means the rate published in the "Money Rates" column of The Wall Street Journal
as a guide to the Prime Rate, which is currently defined as the base rate on
corporate loans posted by at least 75% of the nation's 30 largest banks. If a
range is published, the highest rate shall be the Prime Rate. The Prime Rate
will increase or decrease each time and as of the date the Prime Rate changes.
4.5 ESCROW AGREEMENT.
Within seven (7) business days after the execution of this Agreement,
the Seller and the Buyer shall enter into an Escrow Agreement in a form to be
agreed upon (the "Escrow Agreement").
4.6 TEL-AIR LITIGATION.
(a) If, as a result of, and pursuant to, any Final Order of
the court in the Tel-Air Communications, Inc. ("Tel-Air") Litigation pending
in Federal District Court (styled as O.R. Estman, Inc. vs. Tel-Air
Communications, Inc., Case No. 91-5273), the Seller exercises its right to
specific performance of its Purchase Agreement for Tel-Air assets, and as a
result thereof obtains additional Subscribers and paging assets and/or
licenses from Tel-Air, then the Seller shall convey the Tel-Air assets to the
Buyer and the Purchase Price shall be increased by an amount (the "Tel-Air
Consideration") equal to (i) the [________________] generated by the Tel-Air
assets (or, if the Seller has acceded to the Tel-Air assets, by the Seller) in
the operation of the business during the [__________] period ending on the date
of the Closing of the purchase of the
CONFIDENTIAL TREATMENT
REQUESTED FOR
BRACKETED MATERIAL
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Tel-Air assets, multiplied by (ii) [_____] plus or minus, as the case may be,
(iii) a Working Capital Adjustment based exclusively on the Closing Balance
Sheet for the Tel-Air assets. The amount of the Tel-Air Consideration shall be
determined in accordance with the principles and procedures set forth in
Section 4.4(a) based upon the best available information and shall be paid by
the Buyer on the fifth day following the final determination of the Pro Forma
Net Revenue and Working Capital Adjustment for the Tel-Air assets. The results
of operations of the Tel-Air assets shall not be taken into account in
determining the adjustments to the Purchase Price set forth in Section 4.4.
(b) The Closing of the purchase of the Tel-Air assets shall
be consummated on the tenth day following the date on which such order for
specific performance [________________________________] or the date on which
Seller exercises its rights to specific performance, whichever date is later,
except that, if any FCC or PUC approval is required prior to transferring any
of Tel-Air's licenses to the Buyer, such closing may be postponed until the
fifth day following the date on which such approvals become Final Orders, and
in no event later than [___________]. If the Closing of such purchase cannot,
for any reason other than the breach by either party of its obligations under
this Section 4.6, be consummated on or before [___________], neither party
shall be further obligated to consummate such Closing. In no event shall the
above-cited litigation with Tel-Air, the calculation or payment of the Tel-Air
Consideration or the Closing of the purchase of the Tel Air assets extend the
Closing Date or otherwise delay the Closing of the purchase of the Assets.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
As of the date hereof and as of the Closing Date (unless another date
or period of time is specifically stated herein for a representation or
warranty), the Seller and each of the Stockholders jointly and severally
represent and warrant to the Buyer as follows:
5.1.1 Qualification of the Seller. Satellite and Message
Network are corporations duly organized, validly existing and in good standing
under the laws of the State of New Jersey and the State of Florida,
respectively. The Seller has all requisite corporate power and authority to
own and operate the Seller's Business as it currently is being conducted, to
own and lease the properties and assets owned or leased by it and to enter into
this Agreement and perform the obligations hereunder. Each Seller is licensed
or qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary.
5.1.2 Authorization and Validity of Agreement. The
execution, delivery and performance by the Seller of this Agreement, the
Closing Documents, and the other agreements, certificates, documents, and
instruments contemplated hereby or referred to herein and the consummation by
it of the Transaction contemplated hereby have been duly authorized by all
CONFIDENTIAL TREATMENT
REQUESTED FOR
BRACKETED MATERIAL
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necessary corporate action of the Seller. This Agreement has been duly
executed and delivered by the Seller and, assuming the due authorization,
execution, and delivery hereof by the Buyer, is a legal, valid and binding
obligation of the Seller, enforceable against the Seller, in accordance with
its terms, except as and to the extent such enforceability may be subject to
bankruptcy or similar laws affecting creditors rights.
5.1.3 No Violation of Law; No Approvals or Notices
Required; No Conflict with Instruments to which the Seller is a Party. The
Seller has complied with and is currently in compliance in all material
respects with all laws, rules, regulations, ordinances, decrees, judgments, and
orders (collectively, "Laws") applicable to the operation of its Business and
the ownership of its assets. The execution, delivery and performance by the
Seller of this Agreement and the consummation by it of the Transaction
contemplated hereby: (i) will not violate (with or without the giving of
notice or lapse of time or both) any Law applicable to the Seller or the
Seller's Business, except for violations that would not, individually or in the
aggregate, have a Material Adverse Effect; (ii) will not be in conflict with,
or result in the breach of, or constitute a default under, or cause
acceleration of the maturity of amounts outstanding or other obligations
pursuant to, or require the consent of or give rise to any rights of first
refusal of any third party under, any agreement or other instrument to which
the Seller is a party or by which its properties or business is bound or
affected; (iii) will not require any consent or approval of, or filing or
notice to, any governmental or regulatory authority under any Law applicable to
the Seller or the Seller's Business, except for (a) the Assignment
Applications, (b) filing under the Antitrust Improvements Act, and (c) any
consent, approval, filing or notice that would not, if not given or made,
individually or in the aggregate, have a Material Adverse Effect; (iv) will not
result in the creation of any Liens except Permitted Liens (as such term is
defined in Section 5.1.5) upon any of the Assets, which Liens, in the aggregate
with all other such Liens so created, would have a Material Adverse Effect; and
(v) will not violate any provision of the charter or bylaws of the Seller.
5.1.4 Licenses, Compliance with Law.
(a) The Seller is the holder of the Licenses listed
in Schedule 5.1.4(a). The Licenses so listed constitute all of the Licenses
issued or required by the FCC, any PUC, and all material Licenses and other
authorizations issued by any other governmental agency that are required for
and/or used in the operation of the Seller's Business as currently operated.
Each of the Licenses is in full force and effect and, except as disclosed in
Schedule 5.1.4(a), the Seller is in compliance in all material respects with
the terms and requirements thereof and all FCC, PUC and other governmental
regulations pertaining thereto. The discrepancies listed in Schedule 5.1.4(a)
do not and would not constitute a Material Adverse Effect. There is not
pending or, to the Seller's Knowledge, threatened, any action, investigation,
complaint or other proceeding by or before the FCC, any PUC or any other
governmental agency to revoke, cancel, suspend, modify or refuse to renew, or
otherwise relating to, any of the Licenses (except such actions,
investigations, complaints, or other proceedings which relate to the paging
industry generally and do not relate to any specific License). There is not
issued, pending or, to the Seller's Knowledge, threatened, any notice of
violation or complaint by the FCC, any PUC or any other governmental
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agency against the Seller with respect to the Seller's Business or the
Transaction contemplated hereby.
(b) Accurate and complete copies of all of the
Licenses have been delivered to the Buyer. Accurate and complete copies of all
of the Licenses granted by the FCC and any PUC after the date hereof and prior
to Closing, will be delivered to the Buyer by the Seller prior to the Closing
Date. All of the Licenses previously delivered to the Buyer contain and, upon
delivery to the Buyer as provided above, the Licenses granted by the FCC and
any PUC after the date hereof and prior to Closing will contain no defect which
would cause a Material Adverse Effect.
(c) The Seller has complied with, and is in
compliance with, all federal, state, county, and local laws, regulations, and
orders that are applicable to the Seller's Business, including, but not limited
to, the rules and regulations of the FCC, the FAA, and the states and
municipalities in which the Seller's Business is located, and has timely filed
with the proper authorities all statements and reports required by the laws,
regulations, and orders to which the Seller and the Seller's Business are
subject, except where the failure to file or comply would not have a Material
Adverse Effect. To the Seller's knowledge, none of the owners or lessors of
any of the towers or structures on which the Seller leases transmitter site
space has failed to comply in any material respect with any of the aforesaid
laws, regulations, and orders of the FCC and the FAA.
5.1.5 Title to Properties, Liens and Encumbrances. Except
as disclosed on Schedule 5.1.11, the Seller is the true and lawful owner of the
Assets, has good and marketable title to the Real Property interests described
in Schedule 2.1 (for those properties which, as indicated on Schedule 2.1, are
owned by the Seller), holds by valid and subsisting lease or license those Real
Property interests described on Schedule 5.1.11 that are not indicated on such
Schedule to be owned by Seller, has good and marketable title to all of the
other Assets (subject, with respect to the Licenses, to procuring the consent
of the FCC and, if applicable, any PUC to the transfer or assignment of such
Licenses as described in clause (iii)(a) of Section 5.1.3) in each case, free
and clear of any Lien other than (a) Liens for taxes not yet delinquent, (b)
Liens set forth in Schedule 5.1.5, (c) purchase money security interests
securing liabilities that will be Assumed Liabilities after the Closing, and
(d) Liens and defects in title that are not, in the aggregate, material to the
Seller's Business (the Liens identified in clauses (a), (c) and (d) above being
herein referred to as "Permitted Liens"). The Seller has all necessary power
and authority to sell the Assets to the Buyer free and clear of all Liens other
than Permitted Liens. Upon delivery to the Buyer of the Closing Documents, on
the Closing Date, the Seller will transfer good title to the Assets free and
clear of any Liens, equities, covenants, and restrictions other than Permitted
Liens which have been disclosed to the Buyer.
5.1.6 Taxes. With respect to the sales, excise or use
taxes, property taxes, income taxes, state and federal income tax withholding,
social security, and unemployment compensation taxes and all other taxes
relating to the operation of the Seller's Business prior to Closing, the Seller
has filed, or shall have filed, on or before the Closing Date, proper and
timely
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tax returns with respect thereto except only for such returns as shall be final
returns for the last tax period for each such tax, which returns shall be filed
by the Seller on or before their respective due dates, as extended. All taxes,
fees, and assessments of whatever nature due and payable by the Seller have
been paid, except such amounts (i) as are being contested diligently and in
good faith and are not in the aggregate material to the Seller's Business and
(ii) as relate to final returns described in the preceding sentence, which
shall be paid by the Seller. Except as set forth on Schedule 5.1.6, there are
no outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local, or foreign income tax
return for any period, and except as set forth on Schedule 5.1.6, there are no
tax audits pending.
5.1.7 Litigation. Except as described in Schedule 5.1.7,
there is no litigation, claim, action, suit, proceeding or governmental
investigation pending or, to the Seller's Knowledge, threatened against the
Seller which (i) could reasonably be expected to have, individually or in the
aggregate with all such other litigation, claims, actions, suits, proceedings
and governmental investigations, a Material Adverse Effect or (ii) seeks to
restrain or enjoin the consummation of the Transaction. The Seller is not in
violation of any term of any judgment, decree, injunction or order outstanding
against it, which violation could reasonably be expected to have, individually
or in the aggregate with all such other violations, a Material Adverse Effect.
5.1.8 Insurance. The Seller maintains adequate insurance
with respect to the Business, and the Seller is in compliance with all material
requirements and provisions thereof.
5.1.9 Condition of System. All antennas, pager equipment,
facilities and installations that are included in the Assets have in all
material respects been constructed, completed and maintained in a proper
manner, are in all material respects in good operating condition, ordinary wear
and tear excepted, and are in all material respects operable.
5.1.10 Financial Statements. Attached hereto as Schedule
5.1.10 are true and complete copies of the audited balance sheets of the Seller
as of December 31, 1993 and 1994 and the unaudited balance sheets of the Seller
as of December 31, 1995 (collectively, the "Balance Sheets"), and the related
pro forma consolidated statements of operations and (except as to the December
31, 1995 Financial Statement) cash flows for each of the fiscal years in the
three fiscal-year period ending December 31, 1995 (collectively, including the
notes thereto, the "Financial Statements"). The Financial Statements are true
and complete in all material respects, have been prepared in accordance with
the books and records of the Seller and present fairly the financial position
and the results of operations and cash flows of the Seller as of the dates or
for the periods set forth therein. Schedule 5.1.10 sets forth the material
variations from GAAP used in preparing the Financial Statements.
5.1.11 Interests in Real Property. The Seller does not have
fee simple title to any Real Property. Schedule 5.1.11 attached hereto
comprises a true and complete list and a brief description of all Real Property
leased or otherwise used by the Seller which is material to the Seller's
Business, including all structures thereon. Except as otherwise disclosed on
Schedule 5.1.11, the Seller has valid leasehold interests in the Real Property
leased by the Seller and, with respect to other Real Property not leased by the
Seller, the Seller has the right to use all
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such other Real Property which is material to the Seller's Business pursuant to
the easements, licenses, rights-of-way or other rights described on Schedule
5.1.11. The documents listed on Schedule 5.1.11 by the Seller (the Seller's
rights to which will be conveyed to the Buyer at the Closing as part of the
Assets and which have been made available to the Buyer for review prior to the
date hereof) as evidence of each lease of Real Property constitute the entire
agreement with the landlord in question. All easements, rights-of-way and
other rights appurtenant to, or which are necessary for the Seller's current
(through the Closing Date) use of, any Real Property which is material to the
Seller's Business are valid and in full force and effect, and the Seller has
not received any notice with respect to the termination or breach of any of
such rights. Each parcel of Real Property which is material to the Seller's
Business, any improvements constructed thereon and their current use conform in
all material respects to (a) all applicable legal requirements, including
zoning requirements and the Americans with Disabilities Act, and (b) all
restrictive covenants, if any, or other encumbrances affecting all or part of
such parcel.
5.1.12 Interest in Personal Property. Schedule 2.1 contains
a true and complete list and brief description of all capitalized inventory,
equipment, machinery, and furniture, and other personal property of the Seller,
which comprises in all material respects all personal property presently used
by the Seller in the ordinary course of its business, all such personal
property is free and clear of title defects, Liens (other than Permitted Liens
and those Liens described in Schedule 5.1.5) and objections, of any nature
whatsoever, and the Seller has good and marketable title thereto. The Seller's
interest in all other personal property used in the ordinary course of the
Seller's Business which is material to the Seller's Business will be conveyed
to the Buyer when the Buyer takes possession of the Assets upon the Closing.
All such inventory, equipment, machinery, furniture and other personal property
described in this Section 5.1.12 are in safe, fully operable condition, normal
wear and tear excepted.
5.1.13 Environmental Matters/Representations and Warranties.
(a) The Seller's Business has been operated by the
Seller in compliance with, all Environmental Laws except for any noncompliance
which would not result individually or in the aggregate in a Material Adverse
Effect. Neither the Seller nor, to the Seller's knowledge, any third party has
generated, released, stored, used, treated, handled, discharged or disposed of
any Hazardous Substances at, on, under, in or about, or in any other manner
materially affecting any Real Property, transported any Hazardous Substances to
or from any Real Property in violation of an Environmental Law or discharged
any Hazardous Substances from any Real Property into any body of water in
violation of an Environmental Law. To the Seller's knowledge, no release of
Hazardous Substances outside the Real Property has entered or threatens to
enter the Real Property. To the Seller's knowledge, no claim or investigation
by the United States Environmental Protection Agency or a similar state agency,
based on Environmental Laws which relate to any Real Property or any operation
on the Real Property, (i) has been asserted or conducted in the past or is
currently pending against or with respect to the Seller or (ii) to the Seller's
Knowledge, is threatened or contemplated.
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<PAGE> 22
(b) To the Seller's knowledge, (i) no underground
storage tanks are currently located on any of the Real Property, (ii) no Real
Property has been used since the property was leased by the Seller as a
gasoline service station or any other facility for storing, pumping,
dispensing, or producing gasoline or any other petroleum products or waste.
(c) The Seller will provide the Buyer with complete
and correct copies of (i) any environmental assessments the Seller has obtained
with respect to any of its paging transmitter sites, (ii) all notices or other
materials in the Seller's possession that were received from any governmental
authority having the power to administer or enforce any Environmental Laws
relating to current or past ownership, use or operation of Real Property or
activities at the Real Property and (iii) all materials in the Seller's
possession relating to any claims, allegations, or actions by any private third
party under any Environmental Law which would materially affect this Agreement.
5.1.14 Contracts. Schedule 5.1.14 attached hereto describes
all currently effective material contracts, oral or written, to which the
Seller is a party and which (i) relate to a reseller contract involving more
than 250 paging units or a direct contract involving more than 50 paging units,
(ii) involve the payment of more than $15,000, (iii) have a duration of more
than one year after the Closing Date, (iv) are financing documents, or (v) are
not for the purchase, sale or license of goods or services in the ordinary
course of business consistent with past practice. True and complete copies of
all such contracts have been provided to the Buyer. Neither the Seller nor, to
the Seller's knowledge, any other party to any such contract is in material
default in the performance of, or is not in compliance with any material
provision of any such contract relating to the Seller's Business. The Seller
has no intention, and has no knowledge of any intention by any other party, not
to perform its obligations under any such contract.
5.1.15 Transferability of Contract Rights. Except as set
forth on Schedule 5.1.15, the Seller has the right to assign all material
leases, accounts receivable, and other contractual rights of the Seller set
forth on Schedules 5.1.11 and 5.1.14. Except as set forth on Schedule 5.1.15,
neither the assignment of such rights nor the consummation of the Transaction
contemplated by this Agreement would give any party to a contract listed on
Schedule 5.1.14 the right to terminate or alter the terms of such contract. The
Seller shall use reasonable efforts to obtain, on or before the Closing Date,
the right to assign the items set forth on Schedule 5.1.15
5.1.16 Personnel Benefits; Bonuses. Schedule 5.1.16
attached hereto comprises a complete and correct list of: (a) all contractual
employment, bonus, welfare benefit (as that term is defined in the Employee
Retirement Income Security Act ("ERISA")), percentage compensation, contracts
or agreements with directors, officers, shareholders or employees, collective
bargaining or consulting agreements, to which the Seller is a party or is
subject, (ii) the names and current compensation rates and planned increases in
compensation for 1996 of all salaried employees of the Seller who are eligible
to become Transferred Employees pursuant to Article 7 hereof, (iii) the wage
rates for the non-salaried employees of the Seller by classification, and (iv)
all group insurance programs in effect for employees of the Seller. Schedule
5.1.16 sets forth a listing of all bonuses paid to management employees of the
Seller in calendar year 1995
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who are eligible to become transferred Employees hereunder and all bonuses in
excess of $1,000 per individual paid to other employees of the Seller in
calendar year 1995 who are eligible to become Transferred Employees hereunder.
5.1.17 Assets. (a) The Assets (as set forth in Section
2.1) include all assets and properties necessary to operate the Seller's
Business in all material respects in the manner it has been operated prior to
the date hereof and prior to the Closing Date.
(b) The Seller shall deliver to the Buyer, on or
before the Closing Date, a true and complete list of the Subscribers and the
number and type (digital, alpha, etc.) of pagers in service on the Seller's
system as of the Closing Date. All of such pagers shall be operating pursuant
to valid and binding rental and/or service agreements with the Seller or its
agents and representatives.
5.1.18 Transactions with Affiliates. Except as set forth on
Schedule 5.1.18, there are no transactions, contracts, understanding or
agreements ("Affiliated Transactions") of any kind between the Seller and any
Affiliate of Seller.
5.1.19 Absence of Certain Changes or Events. From December
31, 1994 to the date hereof, except as disclosed in the Financial Statements or
as to matters relating to the bankruptcy and plan of reorganization of the
Seller or as otherwise consented to in writing by the Buyer, the Seller's
Business has been operated only in the ordinary course (except as expressly
contemplated by this Agreement), and there has not been any:
(a) Material Adverse Change;
(b) sale, assignment or transfer, other than in the
ordinary course of business and consistent with past practice, of any of the
Assets, which Assets are material individually or in the aggregate to the
Seller;
(c) acquisition by merger, consolidation with,
purchase of substantially all of the assets or capital stock of, or any other
acquisition of any material assets or business of, any corporation,
partnership, association or other business organization or division thereof;
(d) change in accounting methods or practices by the
Seller, except as required by GAAP;
(e) entry into, or termination, amendment or
modification of, any contract, agreement, commitment, transaction, License,
permit or other instrument (including, without limitation, any borrowing,
capital expenditure, capital contribution or capital financing) which is or was
material to the Seller's Business; or
(f) agreement by the Seller to do any of the
foregoing.
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<PAGE> 24
(g) any action taken by Seller that, if taken after
the date hereof, would constitute a breach of any of the covenants set forth in
Section 6.7.
5.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER.
As of the date hereof and as of the Closing Date (unless another date
or period of time for a representation or warranty is specifically stated
herein), the Buyer represents and warrants to the Seller as set forth below:
5.2.1 Qualification of the Buyer. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Buyer has all requisite corporate power and
authority to own and operate its business as it currently is being conducted,
to own and lease the properties and assets owned or leased by it and to enter
into this Agreement and perform the obligations hereunder. The Buyer is
licensed or qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary.
5.2.2 Authorization and Validity of Agreement. The
execution, delivery and performance by the Buyer of this Agreement, the Closing
Documents, and the other agreements, certificates, documents, and instruments
contemplated hereby or referred to herein and the consummation by it of the
Transaction contemplated hereby have been duly authorized by all necessary
corporate action of the Buyer. This Agreement has been duly executed and
delivered by the Buyer and, assuming the due authorization, execution, and
delivery hereof by the Seller, is a legal, valid and binding obligation of the
Seller, enforceable against the Buyer, in accordance with its terms, except as
and to the extent such enforceability may be subject to bankruptcy or similar
laws affecting creditors rights.
5.2.3 No Violation of Law; No Approvals or Notices
Required; No Conflict with Instruments to which the Buyer is a Party. The
Buyer has complied with and is currently in compliance in all material respects
with all laws, rules, regulations, ordinances, decrees, judgments, and orders
(collectively, "Laws") applicable to the operation of its business and the
ownership of its assets. The execution, delivery and performance by the Buyer
of this Agreement and the consummation by it of the Transaction contemplated
hereby: (i) will not violate (with or without the giving of notice or lapse of
time or both) any Law applicable to the Buyer or its business, except for
violations that would not, individually or in the aggregate, have a material
adverse effect on the Buyer's business; (ii) will not be in conflict with, or
result in the breach of, or constitute a default under, or cause acceleration
of the maturity of amounts outstanding or other obligations pursuant to, or
require the consent of or give rise to any rights of first refusal of any third
party under, any agreement or other instrument to which the Buyer is a party or
by which its properties or business is bound or affected; (iii) will not
require any consent or approval of, or filing or notice to, any governmental or
regulatory authority under any Law applicable to the Buyer or its business,
except for (a) the Assignment Applications and other notice filings at the
PUC's in the states as set forth on Schedule 5.1.3 hereof, (b) filing under the
Antitrust Improvements Act, and (c) any consent, approval, filing or notice
that would not, if not given or
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<PAGE> 25
made, individually or in the aggregate, have a material adverse effect on the
Buyer's business; and (iv) will not violate any provision of the charter or
bylaws of the Buyer.
5.2.4 Litigation. There is no litigation, claim, action,
suit, proceeding or governmental investigation pending or, to the Buyer's
knowledge, threatened against the Buyer which (i) could reasonably be expected
to have, individually or in the aggregate with all such other litigation,
claims, actions, suits, proceedings and governmental investigations, a material
adverse effect on the Buyer's business or (ii) seeks to restrain or enjoin the
consummation of the Transaction. The Buyer is not in violation of any term of
any judgment, decree, injunction or order outstanding against it, which
violation could reasonably be expected to have, individually or in the
aggregate with all such other violations, a material adverse effect on the
Buyer's business.
5.2.5 Qualification. The Buyer is fully qualified under
the Communications Act of 1934, as amended, and all FCC rules and regulations,
to be the licensee of the Seller's Business. The Buyer has not taken, and will
not take, any knowing or voluntary action to render the Buyer disqualified
under the FCC's rules and regulations to purchase the Assets on the Closing
Date. There are no actions pending or, to the Buyer's knowledge, threatened
against the Buyer or any director or officer of the Buyer that challenge the
qualifications of the Buyer to hold the Licenses.
5.2.6 Financial Capabilities. The Buyer has the financial
ability to consummate the Transaction, and has uncommitted cash or cash
equivalents or commitments from financial institutions or its shareholders for
funds in amounts equal to or greater than the Purchase Price.
ARTICLE 6
CONDUCT PRIOR TO CLOSING
6.1 FILING OF ASSIGNMENT APPLICATIONS.
As soon as practicable but in no event later than ten (10) business
days after the date hereof, unless a later date is agreed upon by the parties,
the Buyer and the Seller shall join in and file the Assignment Applications
with the FCC, any PUC and any similar applications required by other agencies.
The parties will cooperate and use best efforts to prosecute such applications
diligently and expeditiously to a favorable conclusion. The Seller and the
Buyer mutually agree to provide, in a timely manner, whatever additional
information the FCC, any PUC or other agency may request in processing such
applications.
6.2 ANTITRUST LAWS AND THE SELLER.
The Seller will, or will cause its "ultimate parent" to, timely and
promptly make all filings which are required under the Antitrust Improvements
Act. The Seller will furnish to the Buyer such information and assistance as
the Buyer may reasonably request in connection with its preparation of
necessary filings or submissions to any governmental agency, including, without
limitation, any filings necessary under the provisions of the Antitrust
Improvements Act. The Seller will supply the Buyer with a copy of any
correspondence, filing or communication (or memorandum setting for the
substance thereof) between the Seller or its "ultimate parent" or their
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respective representatives, on the one hand, and the FTC, the DOJ or any other
governmental agency or authority or members of their respective staffs, on the
other hand, with respect to this Agreement or the Transaction contemplated
hereby to the extent that any such correspondence, filing, communication or
memorandum is required by the Buyer to meet its obligations under the Antitrust
Improvements Act.
6.3 ANTITRUST LAWS AND THE BUYER.
The Buyer will, or will cause its "ultimate parent" to, timely and
promptly make all filings which are required under the Antitrust Improvements
Act. The Buyer will furnish to the Seller such information and assistance as
the Seller may reasonably request in connection with its preparation of
necessary filings or submissions to any governmental agency, including, without
limitation, any filings necessary under the provisions of the Antitrust
Improvements Act. The Buyer will supply the Seller with a copy of any
correspondence, filing or communication (or memorandum setting for the
substance thereof) between the Buyer or its "ultimate parent" or their
respective representatives, on the one hand, and the FTC, the DOJ or any other
governmental agency or authority or members of their respective staffs, on the
other hand, with respect to this Agreement or the Transaction contemplated
hereby to the extent that any such correspondence, filing, communication or
memorandum is required by the Seller to meet its obligations under the
Antitrust Improvements Act.
6.4 ACCESS TO INFORMATION CONCERNING SELLER'S BUSINESS.
Prior to the Closing Date, the Seller shall, upon reasonable request,
afford to the Buyer, its counsel, accountants and other authorized
representatives, reasonable access during normal business hours to all plants,
properties, books, accounts, contracts, documents, and records of the Seller to
the extent they relate to the Seller's Business, the Assets or the Transaction
in order that they may have the opportunity to make such reasonable
investigations as they shall desire to make of the affairs of the Seller's
Business. The Seller will furnish to the Buyer such existing data and
information concerning the Seller's Business, finances and properties that the
Buyer may reasonably request and such additional existing financial, operating
data and billing information as the Buyer shall from time to time reasonably
request to facilitate the efficient transfer of billing and other accounting
and management functions. Prior to Closing, the Seller will afford the Buyer
with reasonable access to the vendors, employees, and officers of the Seller
and the Subsidiaries and will otherwise cooperate in all measures reasonably
necessary to ensure the uninterrupted continuation of the business under
Buyer's control after the Closing, provided that the Buyer will give the Seller
reasonable notice prior to the Buyer's contacting any vendor, employee, or
officer. At the request of the Buyer for a period of two years after the
Closing Date, the Seller shall provide to the Buyer any historical financial
information requested by the Buyer concerning the Seller and the Subsidiaries
and in the possession of the Seller, and shall cooperate with the Buyer and
assist the Buyer, at the Buyer's reasonable request and at the Buyer's expense,
in preparing any such financial information that is not in the possession of
the Seller, in each case to permit the Buyer (or an affiliate of the Buyer) to
meet any requirements that are or may become applicable to the Buyer (or such
affiliate) under the Securities Act of
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<PAGE> 27
1933, as amended, and/or the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated under such acts, and/or any other Law.
6.5 CONFIDENTIALITY.
(a) The Buyer agrees that it will, and will cause its
associates, affiliates, officers, other personnel and authorized
representatives to, hold in strictest confidence all Confidential Information,
and will not, and will ensure that such other persons do not, disclose such
information to others without the prior written consent of the Seller; provided
that the Buyer and such other persons may provide such data and information (i)
to lenders, subject to the same requirements of confidentiality as set forth in
this Agreement; or (ii) which is legally required to be furnished, and provided
that the Buyer or such other person, as the case may be, notifies the Seller in
advance of its obligation to provide such confidential information and fully
cooperates with the Seller to protect the confidentiality of such data and
information.
(b) The Seller agrees that it will, and will cause its
associates, affiliates, officers, other personnel and authorized
representatives to, hold in strictest confidence all confidential information
related to the Buyer's business, and will not, and will ensure that such other
persons do not, disclose such information to others without the prior written
consent of the Buyer; provided that the Seller and such other persons may
provide such data and information which is legally required to be furnished,
and provided that the Seller or such other person, as the case may be, notifies
the Buyer in advance of its obligation to provide such confidential information
and fully cooperates with the Buyer to protect the confidentiality of such data
and information.
(c) Notwithstanding the foregoing provisions of this Section
6.5, the parties have agreed that any press release or public announcement with
respect to the Transaction will be issued at such time after the execution of
the Agreement and in such manner as the Buyer shall determine after notice to
the Seller.
6.6 CONTROL OF THE SELLER'S BUSINESS.
The Transaction contemplated by this Agreement shall not be
consummated until the Closing Date. Between the date of this Agreement and the
Closing Date, the Buyer and its employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the conduct or operation of the Seller's Business, and notwithstanding
any other provision of this Agreement, such operation and conduct shall be the
sole responsibility, and in the complete discretion, of the Seller; provided,
however, that this Section 6.6 shall not limit the specific rights and
obligations of the Buyer and the Seller set forth in this Agreement, none of
which are intended to confer control of the Seller or of the Seller's Business
to the Buyer.
6.7 THE SELLER'S PRE-CLOSING COVENANTS.
Except as otherwise consented to in writing by the Buyer, the Seller
covenants that, throughout the period commencing on the date hereof and ending
on the Closing Date, it shall:
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(a) conduct the Seller's Business only in the ordinary
course;
(b) maintain and keep its material properties, machinery
and equipment used in the Seller's Business in good
repair and condition in all material respects as at
present, except for ordinary wear and tear;
(c) not enter into any agreement for the purchase, sale
or other disposition, or purchase, sell or dispose
of, any equipment, supplies, inventory, investments
or other assets, except for sales of inventory and
purchases of equipment, materials and supplies in the
ordinary course of business consistent with past
practices;
(d) consistent with its past business practices, perform
all its material obligations under material
contracts, leases and documents relating to or
affecting the Seller's Business and, consistent with
past practices, pay all Accounts Payable which become
due according to their terms prior to the Closing
Date;
(e) consistent with its past practices, use its
reasonable efforts to maintain and preserve the
Seller's Business including, but not limited to,
maintaining and preserving the Licenses and
prosecuting diligently all applications for Licenses,
including any renewal applications;
(f) use its reasonable efforts to comply with and perform
in all material respects all material obligations and
duties imposed upon it by all federal, state and
local laws and all rules, regulations and orders
imposed by federal, state or local governmental
authorities;
(g) maintain its existence as a corporation validly
existing and in good standing under the laws of its
state of incorporation;
(h) use its best efforts to assure, to the extent within
its control, as soon as is reasonably practicable,
the satisfaction of the conditions required to
consummate the Transaction contemplated in this
Agreement, including but not limited to, the filing
and prosecution of all requests for regulatory
approvals, and obtaining necessary third party
consent;
(i) use its best efforts to obtain, as soon as
practicable after the date hereof, the approvals
described in Section 8.2.6 below;
(j) at its sole cost and expense, attempt to cure all
noncompliance by the Seller with the terms and
conditions of Licenses issued by the FCC, including
such noncompliance as is set forth on Schedule
5.1.4(a), and pay when due all costs (including
attorneys' fees), damages, liabilities, fines and
penalties arising out of such noncompliance; and
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<PAGE> 29
(k) promptly notify the Buyer upon the Seller's knowledge
thereof of any fact, event, circumstance, or action
(i) which, if known on the date hereof would have
been required to be disclosed to the Buyer, or (ii)
the existence or occurrence of which would cause any
of the Seller's representations or warranties not to
be correct and complete in any material respect.
6.8 THE BUYER'S PRE-CLOSING COVENANTS.
Except as otherwise consented to in writing by the Seller, the Buyer
covenants that, throughout the period commencing on the date hereof and ending
on the Closing Date, it shall:
(a) consistent with its past practices, use its
reasonable efforts to maintain and preserve its
business;
(b) maintain its existence as a corporation validly
existing and in good standing under the laws of its
state of incorporation;
(c) use its best efforts to assure, to the extent within
its control, as soon as is reasonably practicable,
the satisfaction of the conditions required to
consummate the Transaction contemplated in this
Agreement, including but not limited to, the filing
and prosecution of all requests for regulatory
approvals, and obtaining necessary third party
consent; and
(d) use its best efforts to obtain, as soon as
practicable after the date hereof, the approvals
described in Section 8.2.6 below.
6.9 NO SOLICITATION OF OFFERS.
The Seller covenants that following the date hereof will not (i)
solicit or encourage in any manner any discussion with, or furnish or cause to
be furnished any information to, any person other than the Buyer with respect
to the sale of the Seller's Business, except as either party would be permitted
to disclose such information under the provisions of Section 6.5 hereof, (ii)
negotiate for or otherwise pursue the sale of all or substantially all of the
Assets or any portion of the Seller's Business, or (iii) merge the Seller into
another corporation or cause any other business combination of the Seller's
Business with any other party. Notwithstanding the foregoing, the Seller may
not enter into a definitive agreement to transfer the Assets or any portion of
the Seller's Business to any third party until and unless this Agreement has
been terminated pursuant to Article 9 hereof.
6.10 RISK OF LOSS.
The Seller will bear the risk of loss or damage to the Assets
resulting from fire, theft, or other casualty at all times prior to Closing.
If any such loss or damage is so substantial as to prevent normal operation of
any material portion of the Seller's Business or the replacement or restoration
of the lost or damaged material Asset within 30 days after the occurrence of
the event
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resulting in such loss or damage, the Seller will immediately notify the Buyer
and the Buyer, at any time within 10 days after receipt of such notice, may
elect by written notice to the Seller either (a) to waive such defect and
proceed toward consummation of the acquisition of the Assets in accordance with
the terms hereof, or (b) terminate this Agreement. If the Buyer elects to so
terminate this Agreement, the Buyer and the Seller will be discharged of any
and all obligations hereunder, except those under Section 6.5 and Article 9
hereof. If the Buyer elects to consummate the Transaction contemplated by this
Agreement, there will be no separate adjustment in the Purchase Price related
to such loss or damage but all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage will be delivered by
the Seller to the Buyer, or the rights to such proceeds will be assigned by the
Seller to the Buyer and the Seller will pay to the Buyer (or the Buyer may
withhold from the Purchase Price) an amount equal to any deductible amount
charged to the Seller against the proceeds due for such loss.
ARTICLE 7
COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE MATTERS
7.1 OFFER OF EMPLOYMENT.
The Buyer shall make an offer of ongoing employment to the persons
selected by the Buyer on or before the Closing Date. Such offer shall be for
comparable employment and shall be effective as of the Closing Date under
substantially the same compensation arrangements including benefits (but
excluding pension plans) and with job duties located within a reasonable
commuting distance of the work location to which each person was assigned prior
to the Closing Date. Employees of Seller who accept said offer and become
employees of the Buyer are hereinafter referred to as "Transferred Employees."
Included among the Buyer's Employee Benefit Plans shall be a "group health
plan" as defined in Section 5000(b)(1) of the Internal Revenue Code, which plan
shall contain no exclusion or limitation with respect to any preexisting
condition of any Transferred Employee or Transferred Employee's spouse or
dependents provided that such Transferred Employee has been enrolled in the
Seller's group health plan. For purposes of the preceding sentence, the phrase
"exclusion or limitation with respect to any preexisting condition" shall have
the same meaning as in Section 602(2)(D) of ERISA, except that an "exclusion or
limitation with respect to any preexisting condition" which is currently
applicable to such Transferred Employee or his or her spouse or dependents need
not be considered by the Buyer an "exclusion or limitation with respect to any
preexisting condition" for such purposes.
7.2 WAGE AND WITHHOLDING REPORTING OBLIGATIONS.
The Seller and the Buyer agree that, pursuant to the "Alternative
Procedure" provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753,
with respect to filing and furnishing forms W-2, W-3, and 941, (a) the Seller
and the Buyer shall each report on a predecessor-successor basis as set forth
therein, (b) the Seller shall be relieved from furnishing Forms W-2 to the
Transferred Employees, and (c) the Buyer shall assume the obligations of the
Seller to furnish Forms W-2 to the Transferred Employees (without regard to the
actual length of employment
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with the Buyer) for the full calendar year in which the Closing occurs. The
Seller shall fully cooperate with the Buyer to allow it to fulfill its
obligations hereunder.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES.
The respective obligations of the Buyer, on the one hand, and the
Seller, on the other, to consummate the Transaction to be consummated at
Closing are subject to the satisfaction, at or prior to the Closing Date, of
each of the following conditions:
8.1.1 No Injunction, Etc. No preliminary or permanent
injunction or other order shall have been issued by any federal or state court
of competent jurisdiction in the United States or by any United States federal
or state governmental or regulatory body nor any statute, rule, regulation or
executive order promulgated or enacted by any United States federal or state
governmental authority which restrains, enjoins or otherwise prohibits the
Transaction contemplated hereby and shall remain in effect.
8.1.2 FCC and Other Approvals. The FCC, and if required,
any PUC, shall have granted its consent and approval to the assignment or
transfer of the Licenses from Seller to the Buyer. This condition shall be
deemed to be satisfied once all such consents and approvals have become Final
Orders.
8.1.3 Antitrust Improvements Act. Any waiting period under
the Antitrust Improvements Act applicable to the consummation of the
Transaction contemplated hereby shall have expired.
8.1.4 No Proceeding or Litigation. No suit, action or
proceeding before any court or any governmental or regulatory authority shall
have been commenced and be pending by any governmental or regulatory authority,
no investigation by any governmental or regulatory authority shall have been
commenced and be pending, against any of the parties hereto or any of their
affiliates, associates, officers or directors seeking to restrain, prevent or
change in any material respect the Transaction contemplated hereby or seeking
material damages in connection with any such Transaction.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
In addition to the conditions set forth in Section 8.1, the
obligations of the Buyer to consummate the Transaction to be consummated at the
Closing are subject to the satisfaction, at or prior to the Closing Date, of
each of the additional conditions set forth below:
8.2.1 Accuracy of Representations and Warranties. The
representations and warranties of the Seller and the Stockholders contained
herein shall be deemed made again at
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Closing and shall be true in all material respects at and as of the Closing
Date, shall be deemed made again at and as of the Closing Date and be true in
all material respects as so made again.
8.2.2 Performance of Agreements. Each of the Seller and
the Stockholders shall have performed in all material respects, all obligations
and agreements, and complied in all material respects with all covenants and
conditions contained in this Agreement, to be performed or complied with by it
prior to or at the Closing Date.
8.2.3 Certificates. The Buyer shall have received a
certificate of the Seller, dated the Closing Date, signed by the President or
any authorized Vice President of the Seller, to the effect that, to the best of
the knowledge, information and belief of such officer, the conditions specified
in Section 8.2.1 and Section 8.2.2 have been satisfied.
8.2.4 Opinion of Counsel for the Seller. The Buyer shall
have received an opinion of the Seller's counsel and the Seller's FCC Counsel,
in each case dated the Closing Date, addressed to the Buyer and in each case in
a form substantially as provided in Schedule 8.2.4.
8.2.5 Other Deliveries. The Seller shall have delivered to
the Buyer at the Closing the following:
(a) a certificate of incumbency for the officers
executing documents on behalf of the Seller
and certified copies of the resolutions duly
adopted by the directors of the Seller, and
signed by the Secretary or Assistant
Secretary, each authorizing the Transaction
contemplated by this Agreement;
(b) a certificate of the Secretary or Assistant
Secretary certifying the resolutions referred
to in Section 8.2.5(a) have not been
rescinded, modified, or withdrawn and that
such resolutions are in full force and effect
as of the Closing Date;
(c) accurate and complete copies of all Licenses
listed on Schedule 5.1.4(b) and all Licenses
acquired after the date hereof and prior to
the Closing;
(d) evidence satisfactory to Buyer of the release
of any and all Liens not constituting
Permitted Liens; and
(e) such further certificates and documents
evidencing consummation by the Seller of the
transactions contemplated hereby as the Buyer
shall reasonably request.
8.2.6 Consents and Filings. The Seller shall have made
each of the notice filings described in clause (iii) (a) of Section 5.1.3.
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8.2.7 Pagers in Service. The Seller shall have at least
100,000 Subscribers as of the Closing Date.
8.2.8 Audited Financial Statement for 1995. The Seller
shall have delivered to the Buyer a true and complete copy of the audited
balance sheets of the Seller as of December 31, 1995 and related consolidated
statements of operations and cash flow, which statements shall be true and
complete in all material respects and shall present fairly in accordance with
GAAP the financial position and results of operations and cash flows of the
Seller as of the date and for the period set forth therein.
8.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER AND THE
STOCKHOLDERS.
In addition to the conditions set forth in Section 8.1, the
obligations of the Seller and the Stockholders to consummate the Transaction to
be consummated at the Closing are subject to the satisfaction, at or prior to
the Closing Date, of each of the additional conditions set forth below.
8.3.1 Accuracy of Representations and Warranties. The
representations and warranties of the Buyer contained herein shall be deemed
made again at Closing and shall be true in all material respects at and as of
the Closing Date, shall be deemed made again at and as of the Closing Date and
be true in all material respects as so made again.
8.3.2 Performance of Agreements. The Buyer shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement, to be performed or complied with by it prior to or at the Closing
Date.
8.3.3 Payment of Estimated Purchase Price. The Seller
shall have received satisfactory evidence of consummation of a bank wire
transfer to an account designated by the Seller in an amount equal to the
unpaid Purchase Price and the Preliminary Working Capital Adjustment due upon
Closing.
8.3.4 Opinion of Counsel for the Buyer. The Seller shall
have received an opinion of the Buyer's Counsel, dated the Closing Date, in a
form substantially as provided in Schedule 8.3.4.
8.3.5 Other Deliveries. The Buyer shall have delivered to
the Seller at the Closing the following:
(a) a certificate of incumbency for the officers
executing the documents on behalf of the
Buyer and certified copies of the resolutions
duly adopted by the directors of the Buyer,
and signed by the Secretary or Assistant
Secretary, each authorizing the Transaction
contemplated by this Agreement;
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(b) a certificate of the Secretary or Assistant
Secretary certifying that the resolutions
referred to in Section 8.3.5(a) have not been
rescinded, modified or withdrawn and that
such resolutions are in full force and effect
as of the Closing Date; and
(c) such further certificates and documents
evidencing the consummation by the Buyer of
the transactions contemplated hereby as the
Seller shall reasonably request.
8.4 WAIVER OF CONDITIONS.
The Buyer, in its discretion, may waive, in whole or in part, at or
prior to the Closing Date, the failure of satisfaction of any of the conditions
precedent to its obligations set forth herein. The Seller may, in its
discretion, waive, in whole or in part, at or prior to the Closing Date, the
failure of satisfaction of any of the conditions precedent to its obligations
set forth herein. No such waiver by the Buyer or the Seller shall be effective
unless made in writing.
ARTICLE 9
TERMINATION AND DEFAULT
9.1 GENERAL.
This Agreement may be terminated and the Transaction contemplated
hereby may be abandoned at any time, but not later than the Closing Date, as
set forth below.
9.1.1 Mutual Consent. This Agreement may be terminated by
the mutual consent of the Buyer and the Seller.
9.1.2 Order or Decree. This Agreement may be terminated by
the Seller or the Buyer, if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Transaction contemplated hereby and such order, decree, ruling
or other action shall have become final and nonappealable.
9.1.3 Failure of Conditions.
(a) The Agreement may be terminated by the Seller upon five
(5) days written notice to the Buyer, in the event that any of the conditions
precedent to the Seller's obligations set forth in Section 8.1 and Section 8.3
with respect to the Buyer are not satisfied at or during the respective times
therein indicated (other than by reason of the material breach by such
terminating party of any of its representations, warranties, covenants, or
agreements set forth herein) and such conditions are not either (i) cured by
the Buyer within five (5) days after the Seller gives the Buyer such notice, or
(ii) waived by the Seller at or prior to the Closing Date.
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(b) This Agreement may be terminated by the Buyer upon five
(5) days written notice to the Seller, in the event that any of the conditions
precedent to the Buyer's obligations set forth in Section 8.1 and Section 8.2
with respect to the Seller are not satisfied at or during the respective times
therein indicated (other than by reason of the material breach by such
terminating party of any of its representations, warranties, covenants, or
agreements set forth herein) and such conditions are not either (i) cured by
the Seller within five (5) days after the Buyer gives the Seller such notice,
or (ii) waived by the Buyer at or prior to the Closing Date.
9.1.4 Casualty Loss. This Agreement may be terminated by
the Buyer as set forth in Section 6.10.
9.2 PROCEDURE UPON TERMINATION.
In the event of the termination and abandonment of this Agreement,
written notice thereof shall promptly be given to the other parties hereto and
this Agreement shall terminate, all further obligations of the parties
hereunder to satisfy the conditions precedent to the Closing shall terminate,
and the Transaction contemplated hereby shall be abandoned without further
action by any of the parties hereto except that Section 6.5 (Confidentiality)
shall survive such termination or abandonment.
9.3 EFFECT OF TERMINATION.
Nothing in this Article 9 shall relieve any party hereto of any
liability for breach of this Agreement.
9.4 DISPOSITION OF FIRST DEPOSIT UPON TERMINATION.
If this Agreement is terminated by reason of a material breach by the
Buyer of its obligations hereunder, the Buyer and the Seller shall promptly
thereafter execute and deliver written instructions directing the Escrow Agent
(as defined in the Escrow Agreement) to disburse the First Deposit to the
Seller. If this Agreement is terminated for any reason other than a material
breach by the Buyer of its obligations hereunder, the Buyer and the Seller
shall promptly thereafter execute and deliver written instructions directing
the Escrow Agent to disburse the First Deposit to the Buyer.
ARTICLE 10
POST-CLOSING TRANSACTIONS
10.1 TRANSITION.
The Seller and the Stockholders shall cooperate with the Buyer and
agree to use their best efforts to assist the Buyer in a smooth transition of
the ownership of the Assets on the Closing Date, including the preservation of
the continued services of the employees of the Seller that the Buyer wishes to
retain and the preservation for the Buyer of the goodwill of the Seller's
suppliers, customers and others having business relations with the Seller.
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10.2 ACCESS TO BOOKS AND RECORDS.
After the Closing, the Seller shall allow representatives of the Buyer
reasonable opportunity from time to time during normal business hours to
inspect and copy records which pertain to the operation of the Seller's
Business prior to the Closing Date and which are not transferred to the Buyer
hereunder. After the Closing, the Buyer shall allow representatives of the
Seller reasonable opportunity from time to time during normal business hours to
inspect and copy records which pertain to the operation of the Seller's
Business prior to the Closing Date and which are transferred to the Buyer
hereunder.
10.3 ASSIGNMENT AND FURTHER ASSURANCES.
To the extent that all real property interests, contractual rights and
other Assets used in the Seller's Business are not effectually transferred at
Closing to the Buyer, the Seller will take all reasonably necessary action to
effectuate such assignments. In the event the Seller is unable to obtain any
consent to assignment or otherwise is not reasonably able to effectuate such
assignments (including, but not limited to, the assignment of those contracts
listed on Schedule 5.1.15), the Seller shall take reasonable action necessary
to give the Buyer the substantial benefit of such property interests,
contractual rights, or other Assets. The Seller will take all reasonably
necessary action to effectuate the assignment and transfer to the Buyer of the
additional paging subscribers (if any) as and when the Buyer may be able to
obtain them pursuant to an order for specific performance in the Tel-Air
Litigation, as described in Section 4.6.
10.4 NON-COMPETITION AND NON-INTERFERENCE.
(a) The following terms when used in this Section 10.4
shall have the following meanings:
"Competitor" means a business whose primary business
is providing one-way paging services to tone only, numeric or alphanumeric
display pocket pagers of a type curently marketed by the Seller, and shall not
include businesses engaged primarily in cellular radio, personal communications
services or specialized mobile radio or business radio licensees which offer
such one-way paging services ancillary to their primary service offerings.
"Directly or Indirectly" shall mean directly, or
through intervening corporations, trusts, partnerships, or other entities and
for such purpose, the interests of an immediate family member of a Stockholder
shall be attributed to the Stockholder.
"Restricted Territory" shall mean the area in which
the Seller is currently provide a paging signal through the facilities
authorized under the Licenses.
(b) As a further inducement to the Buyer to enter into
this Agreement, each of the Stockholders agrees that he shall not, for a period
of two years after the Closing, directly or indirectly become a substantial
partner, substantial shareholder, chief executive or chief operating officer,
general manager, managing director or managing member of any Competitor doing
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business in the Restricted Territory; provided, however, that employment by a
Competitor doing business in the Restricted Territory shall not be prohibited
so long as the Stockholder is not involved in any of the Competitor's
operations within the Restricted Territory and provided further that activities
related to Stockholders' operation of the Tel-Air assets pursuant to an order
of specific performance as described in Section 4.6 shall not be prohibited
hereunder.
(c) The Stockholders shall not, Directly or Indirectly, for
themselves or on behalf of any other person induce or attempt to induce any
Transferred Employee to leave his or her employment with the Buyer at any time
within two (2) years from the Closing Date.
(d) The Stockholders further covenant and agree that they
will not, at any time after the Closing, Directly or Indirectly, for whatever
reason, within two (2) years after the Closing Date (i) interfere with any of
the Seller's Business or its existing or potential contracts or relationships
with any affiliate, employee, officer, director or any independent contractor
whether or not the person is employed by or associated with the Seller on the
Closing Date or at any time thereafter; (ii) interfere with the continuance of
supplies to the Seller's Business (or the terms relating to such supplies),
from any suppliers who have been supplying goods, materials or services to the
Seller at any time during the last five years prior to the date of this
Agreement; or (iii) interfere with the Seller's Business or its existing or
potential contracts or relationships with any independent contractor, customer,
client or consultant of the Seller, or any person who is a bona fide or
prospective independent contractor, customer, client or consultant thereof.
(e) The Stockholders acknowledge that in view of the nature
of the Seller's Business and the business objectives of the Buyer in acquiring
it, and the consideration paid to the Seller there for, the foregoing
territorial and time limitations are reasonable and properly required for the
adequate protection of the Buyer and that in the event that any such
territorial or time limitation is deemed to be unreasonable and is then reduced
by a court of competent jurisdiction, then, as reduced, the territorial and/or
time limitation shall be enforced.
(f) The Stockholders further acknowledge that the remedy at
law for any breach by them of the agreements contained in this Section 10.4
will be inadequate and that the Buyer will be entitled to seek injunctive
relief without being required to prove actual damages or post bond. This
Section 10.4 constitutes an independent and severable covenant and if any or
all of the provisions of this Section 10.4 are held to be unenforceable for any
reason whatsoever, it will not in any way invalidate or affect the remainder of
this Agreement which will remain in full force and effect.
10.5 CONFIDENTIALITY OF CUSTOMER LISTS.
All documents and computer files containing the names and addresses of
the paging customers of the Seller shall become Buyer's property as of the
Closing, and all copies thereof shall be turned over to the Buyer, and shall
not be retained or used in whole or part by the Seller, or any of its
affiliates after the Closing.
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ARTICLE 11
INDEMNIFICATION AND SURVIVAL
11.1 INDEMNIFICATION BY THE SELLER.
Satellite, Message Network and the Stockholders shall, jointly and
severally, indemnify and hold harmless the Buyer from and against any and all
claims, losses, damages, liabilities and expenses (including, without
limitation, settlement costs and any legal, accounting and other expenses for
investigating or defending any actions or threatened actions) ("Damages")
incurred by the Buyer, in connection with each and all of the following:
(a) Any breach of any representation or warranty made by
Seller or the Stockholders in this Agreement (unless
waived in writing by the Buyer prior to the Closing);
(b) The breach of any covenant, agreement or obligation
of the Seller or the Stockholders contained in this
Agreement or any other certificate or document
delivered pursuant to this Agreement (unless waived
in writing by the Buyer prior to the Closing);
(c) Claims arising out of the operation of the Seller's
Business before Closing;
(d) Costs and damages arising out of that litigation
described on Schedule 5.1.7;
(e) The failure of the Seller to obtain the protection
afforded by compliance with the notification
requirements of the Bulk Sales Laws in force in the
jurisdictions in which such laws may be applicable to
either the Seller or the Transaction contemplated by
this Agreement. The Seller covenants and agrees to
pay and discharge, in due course, all claims of
creditors which may be asserted against the Buyer by
reason of such noncompliance, to the extent, and in
the respective dollar amounts, if any, that such
liabilities or obligations are not assumed by the
Buyer under this Agreement; and the Seller shall
indemnify the Buyer against and hold it harmless with
respect to any losses suffered by the Buyer by reason
of the failure of the Seller to pay or discharge such
claims;
(f) Costs (including reasonable attorneys' fees),
damages, liabilities, fines and penalties arising out
of any noncompliance by the Seller with the terms and
conditions of Licenses issued by the FCC, including
such noncompliance as is set forth on Schedule
5.1.4(a); and
(g) any Excluded Liability.
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11.2 INDEMNIFICATION BY THE BUYER.
Except as otherwise set forth herein, the Buyer shall indemnify and
hold harmless the Seller in respect of any and all Damages reasonably incurred
by the Seller, in connection with each and all of the following:
(a) Any breach of any representation or warranty made by
the Buyer in this Agreement (unless waived in writing
by the Seller prior to the Closing);
(b) The breach of any covenant, agreement or obligation
of the Buyer contained in this Agreement or any other
instrument contemplated by this Agreement (unless
waived in writing by the Seller prior to the
Closing);
(c) any claim arising out of the operation of the Assets
after Closing; and
(d) any Assumed Liabilities.
11.3 CLAIMS FOR INDEMNIFICATION.
Whenever any claim shall arise for indemnification hereunder, the
party entitled to indemnification (the "indemnified party") shall promptly
notify the other party (the "indemnifying party") of the claim and, when known,
the facts constituting the basis for such claim In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the indemnifying party shall
specify, if known, the amount of the liability arising therefrom. The
indemnified party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder, without the prior written
consent of the indemnifying party (which shall not be unreasonably withheld)
unless suit shall have been entered against it and the indemnifying party shall
not have taken control of such suit after notification thereof as provided in
this Section 11.3.
11.4 DEFENSE BY INDEMNIFYING PARTY.
In connection with any claim giving rise to a right of indemnification
hereunder resulting from or arising out of any claim or legal proceeding by a
person who is not a party to this Agreement, the indemnifying party at its sole
cost and expense may, upon written notice to the indemnified party assume the
defense of any such claim or legal proceeding if it acknowledges to the
indemnified party in writing its obligations to indemnify the indemnified party
with respect to all elements of such claim. The indemnified party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense. If the indemnifying party does not
assume the defense of any such claim or litigation resulting therefrom, (a) the
indemnified party may defend against such claim or litigation, in such manner
as it may deem appropriate, including, but not limited to, settling such claim
or litigation, after giving notice of the same to the indemnifying party, on
such terms as the indemnified party may deem appropriate, and (b) the
indemnifying party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
indemnifying party
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thereafter seeks to question the manner in which the indemnified party defended
such third party claim or the amount or nature of any such settlement, the
indemnifying party shall have the burden to prove by a preponderance of the
evidence that the indemnified party did not defend or settle such third party
claim in a reasonably prudent manner.
11.5 MANNER OF INDEMNIFICATION.
Subject to Section 11.4 above, the obligations of the indemnifying party
hereunder shall be effected by payment of cash or delivery of a certified or
cashier's check in the amount of the indemnification liability. If the Buyer is
the indemnified party under this Article 11, the Buyer shall recover the amount
of its Damages from the Second Deposit in accordance with the terms of the
Escrow Agreement before seeking any recovery from the Seller or the
Stockholders, and the Buyer and the Seller shall promptly execute and deliver
to the Escrow Agent written instructions directing the Escrow Agent to disburse
to the Buyer a portion of the Second Deposit in the amount of the Buyer's
Damages.
11.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All covenants and obligations contained in this Agreement or in any
other certificate or document delivered pursuant to this Agreement shall
survive the Closing. All representations and warranties contained in this
Agreement or in any other certificate or document delivered pursuant to this
Agreement shall survive the Closing for a period of two (2) years, except that
all representations and warranties as to tax matters shall survive for the
period of the applicable statute of limitations. The waiver of any condition,
other than as provided by Section 8.4, based upon the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification,
reimbursement, or other remedy based upon such representations, warranties,
covenants or obligations.
11.7 LIMITATION OF LIABILITY.
(a) Except in connection with a breach of the covenant set forth in
Section 6.7(j) or the indemnification provided for by Section 11.1(f), the
indemnified party shall have no right to indemnification unless the amount of
the Damages for which claims may be made exceeds $50,000 (individually or in
the aggregate), but if the Damages do exceed such amount, then the indemnified
party shall be entitled to indemnification for the full claim(s). The
preceding sentence shall not be applicable to the obligations to pay the
Purchase Price or the adjustments to the Purchase Price set forth in Article 4.
The aggregate amount of any Stockholder's liability to Buyer for
indemnification under this Article 11 shall not exceed the product resulting
from the multiplication of the aggregate of the Purchase Price as adjusted by
such Stockholder's percentage ownership interest in Seller as set forth in
Schedule 11.7, plus attorneys' fees and expenses to which Buyer would be
entitled under this Agreement.
(b) The Seller shall not make any claims for Damages, indemnification
or otherwise against the Buyer except in the amount that such claims, in the
aggregate, exceed the aggregate amount of the First Deposit disbursed to the
Seller.
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ARTICLE 12
MISCELLANEOUS
12.1 BROKERS.
Except for a fee and reasonable expenses due to Brenner Securities
Corp. from the Seller, the Transaction has been and shall be carried on by the
Buyer directly with the Seller and in such manner as not to give rise to any
valid claims against the Seller or the Buyer for a brokerage commission,
finder's fee or other like payment and each party agrees to indemnify and hold
the other harmless from and against any claims for brokerage commissions or
finder's fees insofar as such claims shall be alleged to be based upon
arrangements or agreements made by the indemnifying party or in its behalf.
Such indemnity shall include the cost of reasonable counsel fees in connection
with the defense of any such claims.
12.2 NOTICES.
Except as otherwise provided, all notices which are permitted or
required under this Agreement shall be in writing and shall be deemed given
when delivered personally, by fax, telex or telegram, or if sent by mail, five
(5) business days after being mailed by registered or certified mail, postage
prepaid, or by such other method (including air courier) which provides for a
signed receipt upon delivery, addressed as follows, or to such other person or
address as may be designated by notice to the other party:
If to the Buyer, to:
Vincent D. Kelly, Chief Financial Officer
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Fax Number: (703) 768-9625
with a copy (which shall not constitute notice) to:
George P. Stamas, Esquire
Piper & Marbury L.L.P.
36 South Charles Street
Baltimore, Maryland 21201
Fax Number: (410) 576-1688
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or if to the Seller before the Closing, at:
O.R. ESTMAN, INC. D/B/A/ SATELLITE PAGING
Two Industrial Road
Fairfield, New Jersey 07004
Attn: President
Fax Number: (201) 227-0921
DANA PAGING, INC. D/B/A MESSAGE NETWORK
301 Yamato Road, Suite 4100
Boca Raton, Florida 33431
Attn: President
Fax Number: (407) 998-0912
or if to the Seller on or after the Closing, at:
Mr. Bertram M. Wachtel
1831 N.E. 65th Court
Ft. Lauderdale, Florida 33308
Fax Number: (305) 493-9065
Mr. Edward R. Davalos
13092 Bamboo Street
Springhill, Florida 34609
Fax Number: (904) 688-4204
Mr. Kevan D. Bloomgren
51 Alpine Trail
Sparta, New Jersey 07871
Fax Number: (201) 729-3064
with a copy (which shall not constitute notice) to:
Lawrence J. Movshin, Esquire
Wilkinson, Barker, Knauer & Quinn
1735 New York Avenue, N.W.
Washington, D.C. 20006.
Fax Number: (202) 783-5851
12.3 EXPENSES OF TRANSFER.
All transfer, documentary, recordation, sales or other taxes or fees
assessed or levied in connection with the sale of the Assets shall be borne as
follows: (a) by the Buyer, in the amount of the first $50,000 of such taxes and
fees actually assessed or levied by any state or local jurisdictions within any
state (collectively, "Transaction Taxes"), as evidenced by appropriate
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documentation thereof delivered to the Buyer; and (b) by the Seller, in the
amount of all Transaction Taxes in excess of $50,000, in any case regardless
whether Seller or Buyer is obligated for collection and remittance of the
Transaction Taxes. Notwithstanding the foregoing, the Seller shall not be
responsible for the payment of any Transaction Taxes assessed or levied as a
result of the Buyer's failure to timely file for any exemption from Transaction
Taxes available to the Buyer. The Seller shall cooperate with the Buyer in the
filing for any such available exemptions. The Seller and the Buyer shall share
equally the filing fees, if any, required by the FCC or any PUC. All other
expenses incurred in connection with the negotiation, preparation, execution,
and performance of this Agreement shall be paid by the party incurring such
expenses.
12.4 ASSIGNMENT.
This Agreement and the Transaction contemplated herein may not be
assigned or otherwise transferred, in whole or in part, by operation of law or
otherwise without the prior written consent of the other party; provided
however that the Buyer may assign any or all of its rights to purchase the
Assets under this Agreement to a subsidiary of the Buyer but such assignment
shall not release, affect or reduce in any way the Buyer's obligations to the
Seller and the Stockholders hereunder.
12.5 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered, shall be an original instrument, but such
counterparts together shall constitute a single agreement.
12.6 ENTIRE AGREEMENT.
This Agreement, including all schedules and exhibits hereto, and all
certificates and documents executed and delivered in connection with this
Agreement, when executed and delivered, constitute the entire agreement of the
parties, superseding and extinguishing all prior agreements and understandings,
representations and warranties, relating to the subject matter hereof.
12.7 GOVERNING LAW.
This Agreement and the rights and obligations of the parties hereunder
shall be governed by the substantive laws of the State of Delaware applicable
to contracts made and to be performed therein, without reference to the
principles of conflicts of laws.
12.8 HEADINGS.
The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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<PAGE> 44
12.9 SEVERABILITY.
Any provision of this Agreement which is invalid or unenforceable
shall be ineffective to the extent of such invalidity or unenforceability,
provided that such invalidity or unenforceability does not deny any party the
material benefits of the transaction for which it has bargained, such
invalidity or unenforceability shall not affect in any way the remaining
provisions hereof.
12.10 MODIFICATION AND AMENDMENT.
This Agreement may not be modified or amended except by written
agreement specifically referring to this Agreement and signed by the parties
hereto.
12.11 WAIVER.
No waiver of a breach or default hereunder shall be considered valid
unless in writing and signed by the party giving such waiver, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the same
or similar nature.
12.12 PARTIES OBLIGATED AND BENEFITED.
Subject to the limitations set forth below, this Agreement will be
binding upon the parties hereto and their respective assignees and successors
in interest and will inure solely to the benefit of such parties and their
respective assigns and successors in interest, and no other person will be
entitled to any of the benefits conferred by this Agreement.
12.13 ATTORNEYS' FEES.
In the event of any action or suit based upon or arising out of any
alleged breach by any party of any representation, warranty, covenant, or
agreement contained in this Agreement, the prevailing party will be entitled to
recover reasonable attorneys' fees and other costs of such action or suit from
the other party.
12.14 RIGHTS TO SPECIFIC PERFORMANCE.
The Seller acknowledges that the unique nature of the Assets to be
purchased by the Buyer pursuant to this Agreement renders money damages an
inadequate remedy for the breach by the Seller of its obligations under this
Agreement, and the Seller agrees that in the event of such breach, the Buyer
will upon proper action instituted by it, be entitled to a decree of specific
performance of this Agreement in lieu of any monetary damages for such breach.
12.15 ACTIONS.
The parties will execute and deliver to the other, from time to time
at or after the Closing, for no additional consideration and at no additional
cost to the requesting party, such further assignments, certificates,
instruments, records, or other documents, assurances or things as may
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<PAGE> 45
be reasonably necessary to give full effect to this Agreement and to allow each
party fully to enjoy and exercise the rights accorded and acquired by it under
this Agreement.
12.16 TERMS.
Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. The word "include" and derivatives of that word are used in
this Agreement in an illustrative sense rather than limiting sense.
12.17 CONSTRUCTION.
This Agreement has been negotiated by the parties and their respective
legal counsel, and legal or equitable principles that might require the
construction of this Agreement or any provision of this Agreement against the
party drafting will not apply in any construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, each of the Buyer, Satellite, Message Network and
the Stockholders has caused this Agreement to be executed under seal
individually or by its duly authorized representatives, officers or agents on
the date first written above.
<TABLE>
<S> <C>
WITNESS: METROCALL, INC., a Delaware corporation, Buyer
/s/ VINCENT D. KELLY By: /s/ WILLIAM L. COLLINS, III (SEAL)
- ----------------------- ---------------------------
Its: Chief Executive Officer and President
-------------------------------------
WITNESS: O.R. ESTMAN, INC., a New Jersey corporation
doing business as SATELLITE PAGING, Seller
/s/ EDWARD R. DAVALOS By: /s/ KEVAN D. BLOOMGREN (SEAL)
- ----------------------- -------------------------
Secretary
Its: Vice President & CFO
-------------------------
</TABLE>
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<PAGE> 46
<TABLE>
<S> <C>
WITNESS: DANA PAGING, INC., a Florida corporation
doing business as MESSAGE NETWORK, Seller
/s/ EDWARD R. DAVALOS By: K. D. BLOOMGREN (SEAL)
- ------------------------------ -----------------------------
Secretary
Its: Vice President & CFO
-----------------------------
WITNESS:
/s/ JUDITH WRIGHT /s/ BERTRAM M. WACHTEL (SEAL)
- ------------------------------ ---------------------------------------
BERTRAM M. WACHTEL, Stockholder
WITNESS:
K. D. BLOOMGREN /s/ EDWARD R. DAVALOS (SEAL)
- -------------------------- ------------------------------------
EDWARD R. DAVALOS, Stockholder
WITNESS:
/s/ EDWARD R. DAVALOS /s/ K. D. BLOOMGREN (SEAL)
- -------------------------- -------------------------------------
Secretary KEVAN D. BLOOMGREN, Stockholder
</TABLE>
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