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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 7, 1999
ARCH COMMUNICATIONS GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23232 31-1358569
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1800 West Park Drive, Suite 250
Westborough, MA 01581
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code: (508) 870-6700
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
5.1 On November 7, 1999, Arch Communications Group, Inc. ("Arch")
signed a definitive agreement (the "Merger Agreement") with Paging Network, Inc.
("PageNet") pursuant to which PageNet will merge with a wholly owned subsidiary
of Arch (the "Merger"). The combined company will retain the name Arch
Communications Group, Inc.
The Merger Agreement requires a recapitalization of the
combined company. In the recapitalization, Arch will make an exchange offer of
shares of Arch common stock for all of its Senior Discount Notes, which as of
September 30, 1999 had an accreted value of approximately $384 million. Arch
will also convert outstanding shares of Series C Convertible Preferred Stock,
with a value of approximately $28 million as of September 30, 1999, into shares
of its common stock. PageNet will make an exchange offer of PageNet common stock
for Senior Notes having an aggregate outstanding principal amount of $1.2
billion. Owners of common stock of Arch and PageNet will receive common stock in
the combined company, with shareholders of Arch retaining one share of common
stock in the combined company for each share of Arch, and shareholders of
PageNet receiving 0.1247 shares of common stock in the combined company for each
share of PageNet. In addition, owners of PageNet's common stock and Senior Notes
will receive a pro rata distribution of 80.5 percent of PageNet's interest in
Vast Solutions, which will become a separate entity upon the close of the
Merger.
5.2 In connection with the Merger, the Board of Directors of Arch
has approved an amendment to its Rights Agreement, dated as of November 15,
1999.
5.3 On November 8, 1999, Arch and PageNet issued a joint press
release relating to the Merger Agreement.
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EXHIBIT INDEX
99.1 Agreement and Plan of Merger, dated as of November 7, 1999,
among Paging Network, Inc., Arch Communications Group, Inc.
and St. Louis Acquisition Corp.
99.2 Amendment No. 5 to the Rights Agreement, dated as of
November 15, 1999, between Arch Communications Group, Inc.
and the Bank of New York as Rights Agent.
99.3 Text of Joint Press Release, dated November 8, 1999, issued by
Arch Communications Group, Inc. and Paging Network, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 19, 1999 ARCH COMMUNICATIONS GROUP, INC.
By: /s/ Gerald J. Cimmino
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Title: Vice President and Treasurer
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Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
among
PAGING NETWORK, INC.,
ARCH COMMUNICATIONS GROUP, INC.
and
ST. LOUIS ACQUISITION CORP.
Dated as of November 7, 1999
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TABLE OF CONTENTS
ARTICLE I.
The Merger; Closing; Effective Time
1.1. The Merger............................................................ 1
1.2. Closing............................................................... 2
1.3. Effective Time........................................................ 2
ARTICLE II.
Certificate of Incorporation and Bylaws of the Surviving Corporation
2.1. The Certificate of Incorporation...................................... 2
2.2. The Bylaws............................................................ 2
ARTICLE III.
Directors & Officers
3.1. Directors of Arch..................................................... 3
3.2. Directors of the Surviving Corporation................................ 3
3.3. Officers of the Surviving Corporation................................. 3
ARTICLE IV.
Effect of the Merger on Capital Stock; Exchange of Certificates
4.1. Effect on Capital Stock............................................... 3
4.2. Exchange of Certificates for Shares................................... 4
4.3. Dissenters' Rights.................................................... 7
4.4. Adjustments to Prevent Dilution....................................... 7
4.5. Alternate Transaction Structure....................................... 7
ARTICLE V.
Representations and Warranties
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5.1. Representations and Warranties of PageNet, Arch and Merger Sub........ 8
ARTICLE VI.
Covenants
6.1. Interim Operations.................................................... 23
6.2. Acquisition Proposals................................................. 28
6.3. The Certificate Amendments............................................ 30
6.4. Information Supplied.................................................. 30
6.5. Stockholders Meetings................................................. 31
6.6. Filings; Other Actions; Notification.................................. 33
6.7. Access; Consultation.................................................. 35
6.8. Affiliates............................................................ 35
6.9. Stock Exchange Listing................................................ 35
6.10. Publicity............................................................. 36
6.11. Benefits.............................................................. 36
6.12. Expenses.............................................................. 37
6.13. Indemnification; Directors' and Officers' Insurance................... 37
6.14. Takeover Statute...................................................... 39
6.15. Confidentiality....................................................... 39
6.16. Tax-Free Reorganization............................................... 39
6.17. Senior Credit Facilities.............................................. 39
6.18. The Exchange Offers................................................... 40
6.19. Bankruptcy Provisions................................................. 45
6.20. Rights Agreement...................................................... 51
6.21. Preferred Stock....................................................... 51
6.22. Spinoff .............................................................. 52
ARTICLE VII.
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger............ 52
7.2. Conditions to Obligations of Arch and Merger Sub...................... 54
7.3. Conditions to Obligation of PageNet................................... 56
ARTICLE VIII.
Termination
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8.1. Termination by Mutual Consent......................................... 57
8.2. Termination by Either Arch or PageNet................................. 58
8.3. Termination by PageNet................................................ 58
8.4. Termination by Arch................................................... 58
8.5. Effect of Termination and Abandonment................................. 59
ARTICLE IX.
Miscellaneous and General
9.1. Survival.............................................................. 61
9.2. Modification or Amendment............................................. 61
9.3. Waiver of Conditions.................................................. 62
9.4. Counterparts.......................................................... 62
9.5. Governing Law and Venue; Waiver of Jury Trial......................... 62
9.6. Notices............................................................... 63
9.7. Entire Agreement...................................................... 64
9.8. No Third Party Beneficiaries.......................................... 64
9.9. Obligations of Arch and of PageNet.................................... 64
9.10. Severability.......................................................... 65
9.11. Interpretation........................................................ 65
9.12. Captions.............................................................. 65
9.13. Assignment............................................................ 65
Exhibits
Certificate of Incorporation of the Surviving Corporation............. Exhibit A
Arch Rights Agreement Amendment....................................... Exhibit B
PageNet Affiliates Agreement.......................................... Exhibit C
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Index of Defined Terms
Term Section
- ---- -------
Acquisition Proposal..................................................... 6.2(a)
Agreement.............................................................. preamble
Alternative Merger.......................................................... 4.5
Alternative Merger Notice................................................... 4.5
Arch.................................................................. preamble
Arch Class B Common Stock............................................ 5.1(b)(ii)
Arch Common Stock........................................................ 4.1(a)
Arch Companies........................................................... 4.1(a)
Arch Conditions to the Prepackaged Plan.................................... 6.19
Arch Disclosure Letter...................................................... 5.1
Arch Exchange Offer..................................................... 6.18(a)
Arch Exchange Prospectus................................................ 6.18(d)
Arch Exchange Registration Statement.................................... 6.18(d)
Arch Minimum Condition.................................................. 6.18(b)
Arch Notes.............................................................. 6.18(a)
Arch Preferred Shares................................................ 5.1(b)(ii)
Arch Required Consents............................................... 5.1(d)(i)
Arch Requisite Vote.................................................. 5.1(c)(ii)
Arch Rights Agreement................................................ 5.1(b)(ii)
Arch Series B Preferred Share........................................ 5.1(b)(ii)
Arch Series C Preferred Share........................................ 5.1(b)(ii)
Arch Stock Plans..................................................... 5.1(b)(ii)
Arch Stockholders Approval............................................... 6.5(b)
Arch Stockholders Meeting................................................ 6.5(b)
Arch Termination Fee..................................................... 8.5(c)
Audit Date............................................................... 5.1(f)
Bankruptcy and Equity Exception....................................... 5.1(c)(i)
Bankruptcy Case............................................................ 6.19
Bankruptcy Code............................................................ 6.19
Bankruptcy Court........................................................... 6.19
Bylaws...................................................................... 2.2
Certificate............................................................. 4.1(a)
Certificate Amendments................................................. recitals
Certificate of Merger....................................................... 1.3
Charter..................................................................... 2.1
Closing..................................................................... 1.2
Closing Date................................................................ 1.2
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Code................................................................... recitals
Communications Act.................................................... 5.1(d)(i)
Compensation and Benefit Plans........................................ 5.1(h)(i)
Confidentiality Agreement.................................................. 6.15
Contracts............................................................ 5.1(d)(ii)
Costs................................................................... 6.13(a)
Current Premium......................................................... 6.13(c)
D&O Insurance........................................................... 6.13(c)
Delaware Courts.......................................................... 9.5(a)
DGCL........................................................................ 1.1
Disclosure Letter........................................................... 5.1
Dismissal Order...................................................... 6.19(a)(v)
Distributed Interests...................................................... 6.22
Distributed Subsidiary..................................................... 6.22
Effective Time.............................................................. 1.3
Environmental Law........................................................ 5.1(n)
ERISA................................................................. 5.1(h)(i)
ERISA Affiliate....................................................... 5.1(h)(i)
Exchange Act.......................................................... 5.1(b)(i)
Exchange Agent........................................................... 4.2(a)
Exchange Offers......................................................... 6.18(a)
Exchange Offers Expiration Date......................................... 6.18(h)
Exchange Ratio........................................................... 4.1(a)
Exchange Prospectus..................................................... 6.18(d)
Exchange Registration Statements........................................ 6.18(d)
Excluded PageNet Shares.................................................. 4.1(a)
Exclusivity Provision................................................... 6.19(d)
Exit Financing............................................................. 6.19
Extended Determination Date........................................ 6.19(a)(iii)
FCC................................................................... 5.1(d)(i)
FCC Regulations....................................................... 5.1(d)(i)
Final Confirmation Order................................................... 6.19
Final Order.............................................................. 7.1(c)
GAAP..................................................................... 5.1(e)
Governmental Entity................................................... 5.1(d)(i)
Governmental Regulations.............................................. 5.1(d)(i)
Hazardous Substance...................................................... 5.1(n)
HSR Act............................................................... 5.1(d)(i)
Indemnified Parties..................................................... 6.13(a)
Indenture Amendments.................................................... 6.18(c)
Initial Determination Date................................................. 6.19
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Initial Merger Motion................................................... 6.19(d)
Initial Merger Order.................................................... 6.19(d)
Interim Financing.......................................................... 6.19
Involuntary Insolvency Event......................................... 6.19(a)(v)
Involuntary Insolvency Event Date.................................... 6.19(a)(v)
IRS.................................................................. 5.1(h)(ii)
Knowledgeable Executives................................................. 5.1(g)
Laws..................................................................... 5.1(i)
Material Adverse Effect.................................................. 5.1(a)
Merger................................................................. recitals
Merger Consideration..................................................... 4.1(a)
Merger Sub............................................................. preamble
NASDAQ...................................................................... 6.9
Note Consents........................................................... 6.18(b)
Note Waivers............................................................ 6.18(c)
Notes................................................................... 6.18(a)
Notes Exchange Agent.................................................... 6.18(i)
Order.................................................................... 7.1(d)
PageNet................................................................ preamble
PageNet Affiliates Agreement................................................ 6.8
PageNet Conditions to the Prepackaged Plan................................. 6.19
PageNet Disclosure Letter................................................... 5.1
PageNet Exchange Offer.................................................. 6.18(a)
PageNet Exchange Prospectus............................................. 6.18(d)
PageNet Minimum Condition............................................... 6.18(b)
PageNet Notes........................................................... 6.18(a)
PageNet Option....................................................... 6.11(a)(i)
PageNet Required Consents............................................. 5.1(d)(i)
PageNet Rights Agreement.............................................. 5.1(b)(i)
PageNet Secured Creditors.................................................. 6.17
PageNet Share............................................................ 4.1(a)
PageNet Stock Plans................................................... 5.1(b)(i)
PageNet Stockholders Approval............................................ 6.5(a)
PageNet Stockholders Meeting............................................. 6.5(a)
PageNet Termination Fee.................................................. 8.5(b)
Pension Plan......................................................... 5.1(h)(ii)
Permits.................................................................. 5.1(i)
Person................................................................... 4.2(a)
Prepackaged Plan........................................................... 6.19
Prospectus/Proxy Statement.................................................. 6.4
PUC................................................................... 5.1(d)(i)
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Reports.................................................................. 5.1(e)
Representatives.......................................................... 6.2(a)
Requisite Bankruptcy Vote of the PageNet Notes............................. 6.19
Requisite Bankruptcy Vote of the PageNet Secured Creditors................. 6.19
Requisite Conditions to the Prepackaged Plan............................... 6.19
Rule 145 Affiliates......................................................... 6.8
S-4 Registration Statement.................................................. 6.4
SEC...................................................................... 5.1(e)
Section 16 Person ................................................. 6.11(a)(iii)
Securities Act........................................................ 5.1(d)(i)
Series C Consent Agreement ............................................. 6.21(a)
Series C Consideration ................................................. 6.21(a)
Series C Exchange Ratio ................................................ 6.21(a)
Significant Investees ............................................... 5.1(d)(ii)
Significant Subsidiaries.............................................. 5.1(b)(i)
Spinoff.................................................................... 6.22
Spinoff Dividend........................................................... 6.22
Spinoff Record Date........................................................ 6.22
State Laws............................................................ 5.1(d)(i)
Subsidiary............................................................... 5.1(a)
Substitute Option.................................................... 6.11(a)(i)
Superior Proposal........................................................ 6.2(a)
Surviving Corporation....................................................... 1.1
Takeover Statute......................................................... 5.1(j)
Tax...................................................................... 5.1(l)
Tax Return............................................................... 5.1(l)
Taxable.................................................................. 5.1(l)
Termination Date............................................................ 8.2
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("AGREEMENT"), dated as of November
7, 1999, is among PAGING NETWORK, INC., a Delaware corporation ("PAGENET"), ARCH
COMMUNICATIONS GROUP, INC., a Delaware corporation ("ARCH"), and ST. LOUIS
ACQUISITION CORP., a Delaware corporation that is a wholly owned subsidiary of
Arch ("MERGER SUB").
RECITALS
WHEREAS, the respective Boards of Directors of each of Arch, Merger Sub
and PageNet have approved, recommended and declared advisable this Agreement and
the merger of Merger Sub with and into PageNet (the "MERGER") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the parties hereto intend, by executing and delivering this
Agreement, to adopt a plan of reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and to
cause the Merger and the other transactions which are part of this plan of
reorganization to qualify as a "reorganization" as therein defined;
WHEREAS, the Arch Board of Directors has approved, recommended and
declared advisable certain amendments to its Certificate of Incorporation to
effectuate the actions described herein (the "CERTIFICATE AMENDMENTS"),
contemporaneously upon and in connection with the Merger;
WHEREAS, Arch, Merger Sub and PageNet desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I.
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3),
Merger Sub shall be merged with and into PageNet and the separate corporate
existence of Merger Sub shall thereupon cease. PageNet shall be the surviving
corporation in the Merger (sometimes referred to as the "SURVIVING CORPORATION")
and shall continue to be governed by the laws of the State of Delaware, and the
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separate corporate existence of PageNet with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in Article III of this Agreement. The Merger shall have the
effects specified in the Delaware General Corporation Law, as amended (the
"DGCL").
1.2. CLOSING. The closing of the Merger (the "CLOSING") shall take
place: (i) at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, at 9:00 A.M., local time, on the second business day after the
date on which the last to be fulfilled or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement; or
(ii) at such other place and time and/or on such other date as Arch and PageNet
may agree in writing (the "CLOSING DATE").
1.3. EFFECTIVE TIME. At the Closing, Arch and PageNet will cause a
Certificate of Merger (the "CERTIFICATE OF MERGER") to be executed,
acknowledged, and filed with the Secretary of State of the State of Delaware as
provided in Section 251 of the DGCL. The Merger shall become effective at the
time when the Certificate of Merger has been duly filed with the Secretary of
State of the State of Delaware or such other later time as shall be agreed upon
by the parties and set forth in the Certificate of Merger in accordance with the
DGCL (the "EFFECTIVE TIME").
ARTICLE II.
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION
2.1. THE CERTIFICATE OF INCORPORATION. The certificate of
incorporation of PageNet, amended and restated in its entirety as set forth in
EXHIBIT A, shall be the certificate of incorporation of the Surviving
Corporation (the "CHARTER"), until duly amended as provided therein or by
applicable law.
2.2. THE BYLAWS. The bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the bylaws of the Surviving Corporation
(the "BYLAWS"), until thereafter amended as provided therein or by applicable
law.
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ARTICLE III.
DIRECTORS & OFFICERS
3.1. DIRECTORS OF ARCH. Arch shall take all actions necessary
(subject to applicable law and any necessary stockholder approval) to cause, at
the Effective Time, the number of directors comprising the full Board of
Directors of Arch to be comprised of twelve directors, six of which shall be
nominated by the Board of Directors of Arch, and six of which shall be nominated
by the Board of Directors of PageNet, each such person to serve from the
Effective Time until his or her successor has been duly elected and qualified,
or until his or her earlier death, resignation, or removal in accordance with
the Charter and the Bylaws; PROVIDED, HOWEVER, that of the six directors
nominated by the Board of Directors of PageNet, one shall be designated by each
of the three holders of PageNet Notes holding the greatest percentage in
aggregate principal amount of the PageNet Notes; and if and to the extent that
any such holder declines to make such designation, the number of directors
nominated by the Board of Directors of PageNet shall be decreased and the number
of directors nominated by the Board of Directors of Arch shall be increased. The
directors nominated by PageNet shall be divided as nearly evenly as is possible
among the classes of directors of Arch.
3.2. DIRECTORS OF THE SURVIVING CORPORATION. The directors of
Merger Sub at the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until his or her successor has been
duly elected and qualified, or until his or her earlier death, resignation, or
removal in accordance with the Charter and the Bylaws;
3.3. OFFICERS OF THE SURVIVING CORPORATION. The officers of PageNet
at the Effective Time shall at the Effective Time, be the officers of the
Surviving Corporation until his or her successor has been duly elected and
qualified, or until their earlier death, resignation, or removal in accordance
with the Charter and the Bylaws.
ARTICLE IV.
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. EFFECT ON CAPITAL STOCK. At the Effective Time, the Merger
shall have the following effects on the capital stock of Arch, Merger Sub and
PageNet, without any action on the part of the holder of any capital stock of
Arch, Merger Sub or PageNet:
(a) MERGER CONSIDERATION. Each share of common stock, par
value $0.01 per share, of PageNet (each, a "PAGENET SHARE") issued and
outstanding immediately prior to the Effective Time (excluding PageNet
Shares (collectively, "EXCLUDED PAGENET SHARES") that are owned by
Arch, Merger Sub or any direct or indirect, wholly owned subsidiary of
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Arch or Merger Sub (collectively, the "ARCH COMPANIES")), shall be
converted into and become exchangeable for 0.1247 of a share (the
"EXCHANGE RATIO") of common stock, par value $0.01 per share, of Arch
(the "ARCH COMMON STOCK"), subject to adjustment as provided in Section
4.4, (the "MERGER CONSIDERATION"). At the Effective Time, all PageNet
Shares shall no longer be outstanding, shall be canceled and retired
and shall cease to exist, and each certificate (a "CERTIFICATE")
formerly representing any of such PageNet Shares (other than Excluded
PageNet Shares) shall thereafter represent only the right to receive
the Merger Consideration and the right, if any, to receive a
distribution or dividend pursuant to Section 4.2(b)(i), in each case
without interest, or to vote pursuant to Section 4.2(b)(ii).
(b) CANCELLATION OF EXCLUDED PAGENET SHARES. At the
Effective Time, each Excluded PageNet Share shall no longer be
outstanding, shall be canceled and retired without payment of any
consideration therefor, and shall cease to exist.
(c) MERGER SUB CAPITAL STOCK. At the Effective Time, each
share of Common Stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation,
and the Surviving Corporation shall thereby become a wholly owned
subsidiary of Arch.
4.2. EXCHANGE OF CERTIFICATES FOR SHARES.
(a) EXCHANGE PROCEDURES. Promptly after the Effective
Time, Arch shall cause its transfer agent or another exchange agent
selected by Arch with PageNet's prior approval (the "EXCHANGE AGENT"),
which shall not be unreasonably withheld, to mail to each holder of
record as of the Effective Time of a Certificate: (i) a letter of
transmittal specifying that delivery of the Certificates shall be
effected, and that risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates (or affidavits of loss in
lieu thereof) to the Exchange Agent in accordance with the terms and
conditions of such letter of transmittal, such letter of transmittal to
be in such form and have such other provisions as Arch and PageNet may
reasonably agree; and (ii) instructions for exchanging the Certificates
for: (A) certificates representing shares of Arch Common Stock; and (B)
any unpaid dividends and other distributions due to such holder with
respect to such shares, including, with respect to holders of PageNet
Shares at the Spinoff Record Date (as defined in Section 6.22), the
Distributed Interests (as defined in Section 6.22). Subject to Section
4.2(g), upon proper surrender of a Certificate for cancellation (or
affidavits of loss in lieu thereof) to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor: (x) a
certificate representing that number of shares of Arch Common Stock
that such holder is entitled to receive pursuant to this Article IV
and, with respect to PageNet Shares at the Spinoff Record Date,
certificates representing the Distributed Interests that such holder is
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entitled pursuant to Section 6.22; and (y) a check in the amount (after
giving effect to any required tax withholdings) of any dividends or
other distributions that such holder has the right to receive pursuant
to the provisions of this Article IV. The Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any
amount payable upon due surrender of any Certificate. In the event of a
transfer of ownership of PageNet Shares that is not registered in the
transfer records of PageNet, a certificate representing the proper
number of shares of Arch Common Stock and, with respect to PageNet
Shares at the Spinoff Record Date, certificates representing the
Distributed Interests, together with a check for any dividends or
distributions with respect thereto, may be issued and/or paid to such a
transferee if the Certificate formerly representing such PageNet Shares
is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that all
applicable stock transfer taxes have been paid. If any certificate for
shares of Arch Common Stock is to be issued in a name other than that
in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Person
(as defined below) requesting such exchange shall pay all transfer and
other taxes required by reason of the issuance of certificates for
shares of Arch Common Stock and/or Distributed Interests in a name
other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of Arch or the
Exchange Agent that such tax has been paid or is not applicable.
The term "PERSON" means any individual, corporation (including
not-for-profit), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, Governmental Entity (as
defined in Section 5.1(d)(i)), or other entity of any kind or nature.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES;
VOTING.
(i) Whenever a dividend or other distribution is
declared by Arch with respect to Arch Common Stock, the record date for
which is at or after the Effective Time, that declaration shall include
dividends or other distributions with respect to all shares of Arch
Common Stock issuable pursuant to this Agreement. No dividends or other
distributions with respect to such Arch Common Stock shall be paid to
any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Article IV. Subject to
the effect of applicable Laws, following surrender of any such
Certificate, there shall be issued or paid to the holder of the
certificates representing shares of Arch Common Stock issued in
exchange therefor, without interest: (A) at the time of such surrender,
the dividends or other distributions with a record date after the
Effective Time and a payment date on or prior to the date of issuance
of such shares of Arch Common Stock and not previously paid; and (B) at
the appropriate payment date, the dividends or other distributions
payable with respect to such shares of Arch Common Stock with a record
date after the Effective Time and prior to the date of issuance of such
shares of Arch Common Stock but with a payment date subsequent to
surrender. For
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purposes of dividends or other distributions with respect to shares of
Arch Common Stock, all such shares to be issued pursuant to the Merger
shall be deemed issued and outstanding as of the Effective Time.
(ii) At any meeting of stockholders of Arch with
a record date at or after the Effective Time, registered holders of
unsurrendered Certificates shall be entitled to vote the number of
shares of Arch Common Stock represented by such Certificates,
regardless of whether such holders have exchanged their Certificates;
PROVIDED, HOWEVER, that any such vote shall be at the times, upon the
conditions, and in the manner prescribed by the certificate of
incorporation and bylaws of Arch.
(c) TRANSFERS. From and after the Effective Time, there
shall be no transfers of PageNet Shares or Arch Series C Preferred
Shares that were outstanding immediately prior to the Effective Time
recorded on the stock transfer books of PageNet or Arch, as the case
may be.
(d) FRACTIONAL SHARES. Notwithstanding any other
provision of this Agreement to the contrary, no certificates or scrip
representing fractional shares of Arch Common Stock will be issued in
the Merger, but in lieu thereof, each holder of Certificates otherwise
entitled to a fractional share of Arch Common Stock will be entitled to
receive, from the Exchange Agent in accordance with the provisions of
this Section 4.2(d), a cash payment in lieu of such fractional shares
of Arch Common Stock determined by multiplying such fraction (rounded
to the nearest one-hundredth of a share) by the average closing price
of a share of Arch Common Stock, as reported in The Wall Street
Journal, New York City edition, on the ten (10) days immediately prior
to the Effective Time. As soon as practicable after the determination
of the amount of cash, if any, to be paid to the holders of
Certificates in lieu of any fractional shares of Arch Common Stock, the
Exchange Agent shall make available such amounts of cash to such
holders of Certificates, without interest thereon.
(e) TERMINATION OF EXCHANGE PERIOD; UNCLAIMED STOCK. Any
shares of Arch Common Stock, and any portion of the dividends or other
distributions with respect to the Arch Common Stock deposited by Arch
with the Exchange Agent (including the proceeds of any investments
thereof) that remain unclaimed by the holders of Certificates 180 days
after the Effective Time shall be re-delivered to Arch. Any holders of
Certificates who have not theretofore complied with this Article IV
shall thereafter be entitled to look only to the Surviving Corporation
for exchange of shares of Arch Common Stock, and any dividends and
other distributions with respect thereto issuable and/or payable
pursuant to Section 4.1, Section 4.2(b), and Section 4.2(d) upon due
surrender of their Certificates (or affidavits of loss in lieu
thereof), in each case, without any interest thereon. Notwithstanding
the foregoing, none of Arch, the Exchange Agent, nor any other Person
shall be liable to
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any former holder of Certificates for any amount properly delivered to
a public official pursuant to applicable abandoned property, escheat or
similar laws.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event
any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, and the posting by such
Person of a bond in the form customarily required by Arch as indemnity
against any claim that may be made against it with respect to such
Certificate, Arch will issue the shares of Arch Common Stock and the
Exchange Agent will issue stock and any dividends and other
distributions with respect thereto issuable or payable in exchange for
such lost, stolen, or destroyed Certificate pursuant to Section 4.1,
Section 4.2(b) and Section 4.2(d), in each case, without interest.
(g) AFFILIATES. Notwithstanding anything in this
Agreement to the contrary, Certificates surrendered for exchange by any
Rule 145 Affiliate (as determined pursuant to Section 6.8) of PageNet
shall not be exchanged until Arch has received a written agreement from
such Person as provided in Section 6.8.
4.3. DISSENTERS' RIGHTS. In accordance with Section 262 of the
DGCL, no appraisal rights will be available to holders of PageNet Shares in
connection with the Merger.
4.4. ADJUSTMENTS TO PREVENT DILUTION. In the event that prior to
the Effective Time, solely as a result of a distribution, reclassification,
stock split (including a reverse split), stock dividend or stock distribution,
or other similar transaction, there is a change in the number of PageNet Shares,
Arch Series C Preferred Shares, Arch Common Stock, or securities convertible or
exchangeable into, or exercisable for, PageNet Shares, Arch Series C Preferred
Shares or Arch Common Stock issued and outstanding, the Exchange Ratio and the
Series C Exchange Ratio shall be equitably adjusted to eliminate the effects of
such event.
4.5. ALTERNATE TRANSACTION STRUCTURE. At any time prior to the
effectiveness of the S-4 Registration Statement (as defined herein), either Arch
or PageNet may notify the other party (the "ALTERNATIVE MERGER NOTICE") that it
desires to restructure the Merger or the other transactions contemplated hereby
in a manner contemplated to (i) increase the likelihood that the Merger would be
treated as a tax-free reorganization within the meaning of Section 368(a) of the
Code, (ii) decrease any potential tax liability of PageNet, Arch or the
Surviving Corporation after the Effective Time, (iii) provide greater
operational flexibility to Arch and the Surviving Corporation after the
Effective Time, or (iv) increase the number of PageNet Shares (or Distributed
Interests) offered to holders of PageNet Notes or the number of shares of Arch
Common Stock offered to holders of Arch Notes in the Exchange Offers (with a
corresponding reduction in the number of shares offered to the holders of
PageNet Shares (or Distributed Interests) or the holders of Arch Common Stock,
respectively). Upon delivery of the Alternative Merger Notice, the parties to
this Agreement shall
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<PAGE> 16
cooperate with each other and use their respective reasonable best efforts to
determine the manner in which the Merger, the Agreement and the transactions
contemplated hereby shall be restructured (the Merger, restructured as
contemplated by the parties pursuant to this Section 4.5, shall be referred to
herein as the "ALTERNATIVE MERGER"). With the written consent of each of the
parties to this Agreement (such consent not to be unreasonably withheld), the
Merger, this Agreement and the other transactions contemplated hereby may be
modified to reflect the Alternative Merger with a view to ensuring that the
parties hereto are not adversely affected by the restructuring.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF PAGENET, ARCH AND MERGER
SUB. Except as set forth in the corresponding sections or subsections of the
respective disclosure letters, dated as of the date of this Agreement, and
delivered by PageNet to Arch or by Arch to PageNet (each a "DISCLOSURE LETTER,"
and the "PAGENET DISCLOSURE LETTER" and the "ARCH DISCLOSURE LETTER,"
respectively), as the case may be, PageNet (except for subparagraphs (b)(ii),
(c)(ii), (j)(ii) and (o)(ii) below and references in subparagraphs (a) and (e)
below to documents made available by Arch to PageNet) represents and warrants to
Arch and Merger Sub, and Arch, on behalf of itself and Merger Sub (except for
subparagraphs (b)(i), (c)(i), (j)(i), and (o)(i) below, and references in
subparagraphs (a) and (e) below to documents made available by PageNet to Arch)
represents and warrants to PageNet, that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each
of it and its Subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of its respective
jurisdiction of organization and has all requisite corporate or similar
power and authority to own and operate its properties and assets and to
carry on its business as presently conducted, and is qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or operation of its properties or
conduct of its business requires such qualification, except when the
failure to be so qualified or in good standing, when taken together
with all other such failures, is not reasonably likely to have a
Material Adverse Effect (as defined below) on it. It has made available
to Arch, in the case of PageNet, and to PageNet, in the case of Arch, a
complete and correct copy of its certificate of incorporation and
bylaws, each as amended to date. Such certificates of incorporation and
bylaws are in full force and effect.
The term "SUBSIDIARY" means, with respect to PageNet or Arch, as the
case may be, any entity, whether incorporated or unincorporated, of which at
least a majority of the securities or other ownership interests having by their
terms ordinary voting power to elect at least a majority of the Board of
Directors or other persons performing similar functions is directly or
indirectly owned by such party.
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<PAGE> 17
The term "MATERIAL ADVERSE EFFECT" means, with respect to any Person, a
material adverse effect on the business, assets (including licenses, franchises
and other intangible assets), financial condition and results of operations of
such Person and its Subsidiaries, taken as a whole; PROVIDED, HOWEVER, that
Material Adverse Effect shall exclude any effect resulting from, or related to,
changes or developments involving: (1) a prospective change arising out of any
proposed or adopted legislation, or any other proposal or enactment by any
governmental, regulatory, or administrative authority; (2) general conditions
applicable to the U.S. economy, including changes in interest rates; or (3)
conditions affecting the U.S. wireless telecommunications industry, in each case
taken as a whole.
Reference to "the other party" means, with respect to PageNet, Arch and
means, with respect to Arch, PageNet.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of PageNet
consists of 250,000,000 PageNet Shares, of which 103,960,240 PageNet
Shares were issued and outstanding and no PageNet Shares were held in
treasury as of the close of business on November 5, 1999, and
25,000,000 shares of preferred stock, of which no shares were issued
and outstanding as of the close of business on November 5, 1999. All of
the outstanding PageNet Shares have been duly authorized and are
validly issued, fully paid and nonassessable. There are no PageNet
Shares reserved for issuance pursuant to the Shareholder Rights
Agreement, dated as of September 8, 1994, between PageNet and The First
National Bank of Boston, as Rights Agent, as amended (the "PAGENET
RIGHTS AGREEMENT"), and PageNet Shares subject to issuance as set forth
below, as of the date of this Agreement, and PageNet has no PageNet
Shares or preferred stock reserved for, or subject to, issuance. As of
November 5, 1999, there were 9,887,588 PageNet Shares that PageNet was
obligated to issue pursuant to PageNet's stock plans, at a weighted
average exercise price of $9.2637 per PageNet Share, and each of such
plans is listed in Section 5.1(b)(i) of the PageNet Disclosure Letter
(collectively, the "PAGENET STOCK PLANS"). Each of the outstanding
shares of capital stock or other securities of each of PageNet's
"SIGNIFICANT SUBSIDIARIES" (as defined in Rule 1.02(w) of Regulation
S-X promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), including any Subsidiaries that, if
aggregated, would together constitute a Significant Subsidiary) is duly
authorized, validly issued, fully paid and nonassessable and owned by
PageNet or a direct or indirect wholly owned subsidiary of PageNet,
free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, as of the date of this
Agreement there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to
issue or to sell any shares of capital stock or other securities of
PageNet or any of its Significant Subsidiaries or any securities or
obligations convertible or
9
<PAGE> 18
exchangeable into, or exercisable for, or giving any Person a right to
subscribe for or acquire, any securities of PageNet or any of its
Significant Subsidiaries, and no securities or obligation evidencing
such rights are authorized, issued or outstanding. As of the date
hereof, PageNet does not have outstanding any bonds, debentures, notes
or other debt obligations, the holders of which have the right to vote
(or convertible into or exercisable for securities having the right to
vote) with the stockholders of PageNet on any matter. No PageNet Shares
are held by a Subsidiary of PageNet.
(ii) The authorized capital stock of Arch
consists of 65,000,000 shares of Arch Common Stock, of which 45,837,186
shares of Arch Common Stock were issued and outstanding and no shares
of Arch Common Stock were held in treasury as of the close of business
on November 5, 1999, 10,000,000 shares of Class B common stock, par
value $0.01 per share, of Arch (the "ARCH CLASS B COMMON STOCK") of
which 5,360,261 shares of Arch Class B Common Stock were issued and
outstanding as of the close of business on November 5, 1999, and
10,000,000 shares of preferred stock, of which (x) 250,000 were
designated Series C Convertible Preferred Stock, par value $0.01 per
share (each a "ARCH SERIES C PREFERRED SHARE"), of which 250,000 shares
were issued and outstanding as of the close of business on November 5,
1999, and (y) 300,000 shares of which were designated Series B Junior
Participating Preferred Stock, par value $0.01 per share (each a "ARCH
SERIES B PREFERRED SHARE," collectively the "ARCH SERIES B PREFERRED
SHARES"), none of which were outstanding as of the close of business on
November 5, 1999 (the Arch Series B Preferred Shares together with the
Arch Series C Preferred Shares, the "ARCH PREFERRED SHARES"). All of
the outstanding shares of Arch Common Stock, Arch Class B Common Stock
and Arch Preferred Shares have been duly authorized and are validly
issued, fully paid and nonassessable. Other than 300,000 Arch Series B
Preferred Shares reserved for issuance pursuant to the Rights
Agreement, dated as of October 13, 1995, between Arch and The Bank of
New York, as Rights Agent, as amended (the "ARCH RIGHTS AGREEMENT"),
and Arch Common Stock subject to issuance as set forth below, and Arch
Preferred Shares, Arch has not authorized, issued, or reserved for
issuance any common stock, preferred stock, or other shares of capital
stock as of the date of this Agreement. As of November 5, 1999, there
were 1,834,253 shares of Arch Common Stock that Arch was obligated to
issue pursuant to Arch' stock plans, at a weighted average exercise
price of $10.18 per share of Arch Common Stock, each of such plans is
listed in Section 5.1(b)(ii) of the Arch Disclosure Letter
(collectively the "ARCH STOCK PLANS"), and 5,902,702 shares of Arch
Common Stock that Arch was obligated to issue pursuant to outstanding
warrants having an expiration date of September 1, 2001 and an
effective exercise price of $9.03 per Share of Arch Common Stock. As of
the date hereof, each outstanding Arch Series C Preferred Share is
convertible into 6.7444 shares of Arch Common Stock. Each of the
outstanding shares of capital stock or other securities of each of
Arch' Significant Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and owned by Arch or a direct or indirect
wholly owned Subsidiary of Arch,
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free and clear of any lien, pledge, security interest, claim, or other
encumbrance. Except as set forth above and except pursuant to the Arch
Series B Preferred Shares or the Arch Series C Preferred Shares, there
are no preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or
sell any shares of capital stock or other securities of Arch or any of
its Significant Subsidiaries or any securities or obligations
convertible or exchangeable into, or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of Arch or
any of its Significant Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. Arch does
not have outstanding any bonds, debentures, notes or other debt
obligations, the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of Arch on any matter. No shares of Arch
Common Stock or Arch Preferred Shares are held by a Subsidiary of Arch.
The authorized capital stock of Merger Sub consists of 1,000 shares of
Common Stock, par value $0.01 per share, all of which are validly
issued and outstanding. All of the issued and outstanding capital stock
of Merger Sub is, and at the Effective Time will be, owned by Arch, and
there are (i) no other shares of capital stock or other voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible
into or exchangeable for shares of capital stock or other voting
securities of Merger Sub and (iii) no options or other rights to
acquire from Merger Sub, and no obligations of Merger Sub to issue, any
capital stock, other voting securities or securities convertible into
or exchangeable for capital stock or other voting securities of Merger
Sub. Merger Sub has not conducted any business prior to the date of
this Agreement and has no, and prior to the Effective Time will have
no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and the Merger
and the other transactions contemplated by this Agreement.
(c) CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
(i) PageNet has all requisite corporate power
and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and,
subject only to adoption of this Agreement and approval of the Merger
and the amendment to the PageNet certificate of incorporation to
increase the number of PageNet Shares authorized to the amount
sufficient to complete the transactions contemplated by this Agreement
by the holders of a majority of the PageNet Shares in accordance with
applicable law and PageNet's bylaws and charter and to the receipt of
PageNet Required Consents (as defined in Section 5.1(d)(i)), to
consummate the Merger. This Agreement has been duly executed and
delivered by PageNet and is a valid and binding agreement of PageNet,
enforceable against PageNet in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general
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equity principles (the "BANKRUPTCY AND EQUITY EXCEPTION"). The Board of
Directors of PageNet: (A) has unanimously approved and declared
advisable this Agreement and the other transactions contemplated by
this Agreement; and (B) has received the opinion of each of its
financial advisors, Houlihan Lokey Howard & Zukin Capital, Goldman,
Sachs & Co. and Morgan Stanley Dean Witter, in a customary form and to
the effect that the Merger Consideration and the Distributed Interests,
taken as a whole, to be received by the holders of PageNet Shares, on
the date of such opinion, is fair to such holders from a financial
point of view. The PageNet Shares when issued pursuant to the PageNet
Exchange Offer (as defined in Section 6.18(a)), will be validly issued,
fully paid and nonassessable, and no stockholder of PageNet will have
any preemptive right of subscription or purchase with respect thereto.
(ii) Arch and Merger Sub each has all requisite
corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations
under this Agreement and the Series C Consent Agreement and, subject
only to adoption of the Certificate Amendments (or this Agreement and
the Alternative Merger if Arch is a party to the Alternative Merger)
and the other transactions contemplated by this Agreement pursuant to
this Agreement by a majority of the votes of the Arch Common Stock and
Arch Series C Preferred Shares voting together and a majority of the
votes of the Arch Series C Preferred Shares (for certain of the
Certificate Amendments) in accordance with applicable law and Arch
certificate of incorporation and bylaws (the "ARCH REQUISITE VOTE"),
and to the receipt of the Arch Required Consents (as defined in Section
5.1(d)(i)), to consummate the Merger. This Agreement has been duly
executed and delivered by Arch and Merger Sub and is a valid and
binding agreement of Arch and Merger Sub, enforceable against Arch and
Merger Sub in accordance with its terms, subject to the Bankruptcy and
Equity Exception. The Board of Directors of Arch: (A) has unanimously
approved and declared advisable this Agreement and the Series C Consent
Agreement and the other transactions contemplated by this Agreement and
the Series C Consent Agreement; and (B) has received the opinion of its
financial advisor, Bear, Stearns & Co. Inc., in a customary form and to
the effect that the Exchange Ratio, as of the date of such opinion, is
fair to the public stockholders of Arch from a financial point of view.
The shares of Arch Common Stock, when issued pursuant to this Agreement
or the Arch Exchange Offer, will be validly issued, fully paid and
nonassessable, and no stockholder of Arch will have any preemptive
right of subscription or purchase with respect thereto.
(d) GOVERNMENT FILINGS; NO VIOLATIONS.
(i) Other than the filings, notices and/or
approvals: (A) pursuant to Section 1.3 of this Agreement, or, in
connection with the Bankruptcy Case and the Prepackaged Plan, the Final
Confirmation Order; (B) under the Hart-Scott-Rodino
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Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the
Exchange Act, and the Securities Act of 1933, as amended (the
"SECURITIES ACT"); (C) of the Federal Communications Commission (the
"FCC") pursuant to the Communications Act of 1934, as amended (the
"COMMUNICATIONS ACT"), or the rules, regulations, and policies of the
FCC (the "FCC REGULATIONS"); (D) of any state public utility
commissions or similar state regulatory bodies (each, a "PUC")
identified in its respective Disclosure Letter pursuant to applicable
state Laws (as defined in Section 5.1(i)) regulating the paging or
other telecommunications business ("STATE LAWS"); (E) to comply with
state securities or "blue- sky" laws; and (F) of any local, state or
federal governmental authorities required for a change in ownership of
transmission sites (all of such filings and/or notices of Arch being
referred to as the "ARCH REQUIRED CONSENTS" and of PageNet being
referred to as the "PAGENET REQUIRED CONSENTS"), no notices, reports or
other filings are required to be made by it with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by it from, any governmental or regulatory authority, court,
agency, commission, body or other governmental entity ("GOVERNMENTAL
ENTITY"), in connection with the execution and delivery of this
Agreement by it and the consummation by it of the Merger and the other
transactions contemplated by this Agreement, except those that the
failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to (x) consummate the
transactions contemplated by this Agreement or (y) operate its business
following the Effective Time.
The term "GOVERNMENTAL REGULATIONS" includes the HSR Act, the
Communications Act, the FCC Regulations, State Laws, and any other antitrust,
competition, or telecommunications Law of the United States of America or any
other nation, province, territory or jurisdiction that must be satisfied or
complied with in order to consummate and make effective the Merger and the other
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of
this Agreement by it do not, and the consummation by it of the Merger
and the other transactions contemplated by this Agreement will not,
constitute or result in: (A) a breach or violation of, or a default
under, its certificate of incorporation or bylaws or the comparable
governing instruments of any of its Significant Subsidiaries or any
entity in which it has an equity interest of 20% or more (collectively,
with Significant Subsidiaries, "SIGNIFICANT INVESTEES"); (B) a breach
or violation of, or a default under, the acceleration of any
obligations or the creation of a lien, pledge, security interest or
other encumbrance on its assets or the assets of any of its Significant
Investees (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement
or other obligation ("CONTRACTS") binding upon it or any of its
Significant Investees or any Law or governmental or non-governmental
permit or license to which it or any of its Significant Investees is
subject or is a party; or (C) any change in the rights or obligations
of any party under any
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Contracts to which it or any of its Significant Investees is subject or
is a party, except for such defaults, breaches, violations or
accelerations as may result from the Bankruptcy Case or the Prepackaged
Plan, and except, in the case of clauses (B) or (C) above for any
breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on it or prevent, materially delay or
materially impair its ability to (x) consummate the transactions
contemplated by this Agreement or (y) operate its business following
the Effective Time. The PageNet Disclosure Letter, with respect to
PageNet, and the Arch Disclosure Letter, with respect to Arch, sets
forth a correct and complete list of Contracts to which it or any of
its Significant Investees is a party, pursuant to which consents or
waivers are or may be required prior to consummation of the
transactions contemplated by this Agreement, other than as may be
required in connection with the Bankruptcy Case or the Prepackaged
Plan, or those where the failure to obtain such consents or waivers is
not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on it or prevent or materially impair its (x)
ability to consummate the transactions contemplated by this Agreement
or (y) operate its business following the Effective Time.
(e) REPORTS; FINANCIAL STATEMENTS. It has made available
to the other party each registration statement, report, proxy statement
or information statement prepared by it since December 31, 1996,
including without limitation its Annual Report on Form 10-K for the
years ended December 31, 1996, December 31, 1997 and December 31, 1998
in the form (including exhibits, annexes and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed subsequent to the date
of this Agreement, its "REPORTS"). As of their respective dates, its
Reports complied, as to form, with all applicable requirements under
the Securities Act, the Exchange Act, and the rules and regulations
thereunder, and (together with any amendments thereto filed prior to
the date hereof) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in, or incorporated by reference
into, its Reports (including the related notes and schedules) fairly
presents the consolidated financial position of it and its Subsidiaries
as of its date and each of the consolidated statements of income,
stockholders' equity, and of cash flows included in, or incorporated by
reference into, its Reports (including any related notes and schedules)
fairly presents the consolidated results of operations, retained
earnings and cash flows, as the case may be, of it and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as may be noted therein. It has
made available to the other party all correspondence since December 31,
1996 between it or its representatives, on the one hand, and the SEC,
on
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<PAGE> 23
the other hand. To its knowledge, as of the date of this Agreement,
there are no pending or threatened SEC inquiries or investigations
relating to it or any of its Reports. To its knowledge and except as
disclosed in its Reports or in filings by its holders with the SEC, as
of the date of this Agreement, no Person or "group" "beneficially owns"
5% or more of its outstanding voting securities, with the terms
"beneficially owns" and "group" having the meanings ascribed to them
under Rule 13d-3 and Rule 13d-5 under the Exchange Act.
(f) ABSENCE OF CERTAIN CHANGES. Except as disclosed in
its Reports filed prior to the date of this Agreement or as expressly
contemplated by this Agreement, since December 31, 1998 (the "AUDIT
DATE"), it and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such
businesses and there has not been: (i) any change in the business,
assets (including licenses, franchises and other intangible assets),
financial condition and results of operations of it and its
Subsidiaries, except those changes that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it;
(ii) any damage, destruction or other casualty loss with respect to any
asset or property owned, leased or otherwise used by it or any of its
Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on it; (iii) any
declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock; or (iv) any change by
it in accounting principles, practices or methods, except as required
by GAAP. Since the Audit Date, except as provided for in this
Agreement, in its respective Disclosure Letter, or as disclosed in its
Reports filed prior to the date of this Agreement, there has not been
any increase in the salary, wage, bonus, grants, awards, benefits or
other compensation payable or that could become payable by it or any of
its respective Subsidiaries, to directors, officers or key employees as
identified in the corresponding section of each party's Disclosure
Letter or any amendment of any of its Compensation and Benefit Plans
(as defined in Section 5.1(h)(i)), other than increases or amendments
in the ordinary and usual course of its business (which may include
normal periodic performance reviews and related compensation and
benefit increases and the provision of new individual compensation and
benefits for promoted or newly hired officers and employees on terms
consistent with past practice).
(g) LITIGATION AND LIABILITIES. Except as disclosed in
its Reports filed prior to the date of this Agreement, there are no:
(x) (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the actual
knowledge of its executive officers identified in the corresponding
section of each party's Disclosure Letter ("KNOWLEDGEABLE EXECUTIVES"),
threatened against it or any of its Affiliates (as defined in Rule
12b-2 under the Exchange Act); or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise, and whether or not
required to be disclosed, including those relating to matters involving
any Environmental Law, or (y) any other facts or
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<PAGE> 24
circumstances, in any such case, of which the Knowledgeable Executives
have actual knowledge and that are reasonably likely to result in any
claims against or obligations or liabilities of it or any of its
Affiliates, except, in the case of (x) or (y), those that are not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on it or prevent, materially delay or materially impair
its ability to consummate the transactions contemplated by this
Agreement.
(h) EMPLOYEE BENEFITS.
(i) Neither it nor any of its respective ERISA
Affiliates (as defined below) maintains, is a party to, participates
in, or has any liability or contingent liability with respect to, any
employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or any bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
change-of-control, stock purchase, restricted stock, stock option,
employment, consulting, termination, severance, compensation, medical,
health or fringe benefit plan, or other plan, program, agreement,
policy or arrangement for any of its agents, consultants, employees,
directors, former employees or former directors and/or any of its
respective ERISA Affiliates which does not constitute an employee
benefit plan under ERISA (which employee benefit plans and other plans,
programs, agreements, policies and arrangements are collectively
referred to as the "COMPENSATION AND BENEFIT PLANS"). A true and
correct copy of each Compensation and Benefit Plan which have been
reduced to writing and, to the extent applicable, copies of the most
recent annual report, actuarial report, accountant's opinion of the
plan's financial statements, summary plan description and Internal
Revenue Service determination letter with respect to any Compensation
and Benefit Plans and any trust agreements or insurance contracts
forming a part of such Compensation and Benefit Plans has been made
available by PageNet and Arch to the other party prior to the date of
this Agreement. In the case of any Compensation and Benefit Plan which
is not in written form, PageNet and Arch has supplied to the other
party an accurate description of such Compensation and Benefit Plan as
in effect on the date of this Agreement. For purposes of this
Agreement, the term "ERISA AFFILIATE" means any corporation or trade or
business which, together with PageNet or Arch, as applicable, is a
member of a controlled group of Persons or a group of trades or
businesses under common control with PageNet or Arch, as applicable,
within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
(ii) All Compensation and Benefit Plans, other
than a multiemployer plan (as defined in Section 3(37) of ERISA), are
in substantial compliance with all requirements of applicable law,
including the Code and ERISA and no event has occurred which will or
could cause any such Compensation and Benefit Plan to fail to comply
with such requirements and no notice has been issued by any
governmental authority questioning
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or challenging such compliance. There have been no acts or omissions by
it or any of its respective ERISA Affiliates, which have given rise to
or may give rise to material fines, penalties, taxes or related charges
under Section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code
for which PageNet, Arch, as applicable, or any of its respective ERISA
Affiliates may be liable. Each of the Compensation and Benefit Plans
that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA, other than a multiemployer plan (each a "PENSION
PLAN"), and that is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the
Internal Revenue Service (the "IRS") which covers all changes in law
for which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired and neither
it, nor any of its respective ERISA Affiliates is aware of any
circumstances reasonably likely to result in revocation of any such
favorable determination letter. There is no pending or, to the actual
knowledge of PageNet's or Arch', as applicable, Knowledgeable
Executives, threatened material litigation relating to its Compensation
and Benefit Plans. Neither it, nor any of its respective ERISA
Affiliates, has engaged in a transaction with respect to any of the
Compensation and Benefit Plans that, assuming the taxable period of
such transaction expired as of the date of this Agreement, would
subject it or any of the ERISA Affiliates to a material tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date of this Agreement, no
liability under Title IV of ERISA (other than the payment of
prospective premium amounts to the Pension Benefit Guaranty Corporation
in the normal course) has been or is expected to be incurred by it or
any of its respective ERISA Affiliates with respect to any Compensation
and Benefit Plan. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Pension Plans
within the 12-month period ending on the date of this Agreement or will
be required to be filed in connection with the transactions
contemplated by this Agreement.
(iv) All contributions required to be made under
the terms of any of the Compensation and Benefit Plans as of the date
of this Agreement have been timely made or have been reflected on the
most recent consolidated balance sheet filed or incorporated by
reference in its Reports prior to the date of this Agreement. None of
the Pension Plans has an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. Neither it, nor any of its respective ERISA Affiliates
has provided, or is required to provide, security to any Pension Plans
pursuant to Section 401(a)(29) of the Code or to the PBGC pursuant to
Title IV or ERISA.
(v) Under each of the Pension Plans as of the
last day of the most recent plan year ended prior to the date of this
Agreement, the actuarially determined
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present value of all "benefit liabilities," within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such Pension Plan's most recent
actuarial valuation), did not exceed the then current value of the
assets of such Pension Plan, and there has been no material change in
the financial condition of such Pension Plan since the last day of the
most recent plan year.
(vi) Neither it, nor any of its respective ERISA
Affiliates, have any obligations for post-termination health and life
benefits under any of the Compensation and Benefit Plans, except as set
forth in its Reports filed prior to the date of this Agreement or as
required by applicable law.
(vii) The consummation of the Merger (or the
approval thereof by its respective stockholders) and the other
transactions contemplated by this Agreement, will not (except as may
result from, or be contemplated by, the Bankruptcy Case or the
Prepackaged Plan): (x) entitle any of its employees or directors or any
employees of any of its ERISA Affiliates, as applicable, to severance
pay, directly or indirectly, upon termination of employment or
otherwise; (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, or increase the amount
payable or trigger any other material obligation pursuant to, any of
the Compensation and Benefit Plans; or (z) result in any breach or
violation of, or a default under, any of the Compensation and Benefit
Plans.
(viii) None of the Compensation and Benefit Plans
is a multiemployer plan and neither it, nor any of its respective ERISA
Affiliates, have contributed or been obligated to contribute to a
multiemployer plan at any time.
(i) COMPLIANCE WITH LAWS. Except as set forth in its
Reports filed prior to the date of this Agreement, the businesses of
each of it and its Subsidiaries have not been, and are not being,
conducted in violation of any law, statute, ordinance, regulation,
judgment, order, decree, injunction, arbitration award, license,
authorization, opinion, agency requirement or permit of any
Governmental Entity or common law (collectively, "LAWS"), except for
violations or possible violations that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or
prevent, materially delay or materially impair its ability to
consummate the transactions contemplated by this Agreement. Except as
set forth in its Reports filed prior to the date of this Agreement, no
investigation or review by any Governmental Entity with respect to it
or any of its Subsidiaries is pending or, to the actual knowledge of
the Knowledgeable Executives, threatened, nor has any Governmental
Entity indicated an intention to conduct the same, except for those the
outcome of which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it or prevent, materially
delay or materially impair its ability to consummate the transactions
contemplated by this Agreement. To the actual knowledge of
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the Knowledgeable Executives, no material change is required in its or
any of its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and it has not received any notice or
communication of any material noncompliance with any such Laws that has
not been cured as of the date of this Agreement, except for such
changes and noncompliance that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or
prevent, materially delay or materially impair its ability to
consummate the transactions contemplated by this Agreement. Each of it
and its Subsidiaries has all permits, licenses, franchises, variances,
exemptions, orders, operating rights, and other governmental
authorizations, consents and approvals (collectively, "PERMITS"),
necessary to conduct their business as presently conducted, except for
those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to consummate the
transactions contemplated by this Agreement.
(j) TAKEOVER STATUTES; CHARTER AND BYLAW PROVISIONS.
(i) The PageNet Board of Directors has taken all
appropriate and necessary actions to exempt the Merger, this Agreement
and the other transactions contemplated hereby from the restrictions of
Section 203 of the DGCL. No other "control share acquisition," "fair
price," "moratorium" or other anti-takeover laws or regulations enacted
under U.S. stated or federal laws (each a "TAKEOVER STATUTE") apply to
the Merger, this Agreement, or any of the other transactions
contemplated hereby. PageNet and the PageNet Board of Directors have
taken all appropriate and necessary actions to (A) render the PageNet
Rights Agreement inapplicable to the Merger and the other transactions
contemplated by this Agreement, (B) provide that (I) neither Arch nor
Merger Sub shall be deemed an Acquiring Person (as defined in the
PageNet Rights Agreement) as a result of this Agreement or the
transactions contemplated hereby and thereby, (II) no Distribution Date
(as defined in the PageNet Rights Agreement) shall be deemed to have
occurred as a result of this Agreement or the transactions contemplated
hereby and (III) the rights issuable pursuant to the PageNet Rights
Agreement will not separate from the shares of PageNet Common Stock, as
a result of the approval, execution or delivery of this Agreement or
the consummation of the transactions contemplated hereby, and (C)
render any anti-takeover or other provision contained in the
certificate of incorporation or by-laws of PageNet inapplicable to the
Merger, this Agreement and the other transactions contemplated hereby.
(ii) The Arch Board of Directors has taken all
appropriate and necessary actions to exempt the Merger, this Agreement
and the transactions contemplated hereby from the restrictions of
Section 203 of the DGCL. No other Takeover Statute applies to this
Agreement or any of the transactions contemplated hereby. Arch and the
Arch Board of Directors have taken all appropriate and necessary
actions to (A) amend the
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Arch Rights Agreement as set forth in Exhibit B to this Agreement, (B)
provide that (I) PageNet shall not be deemed an Acquiring Person (as
defined in the Arch Rights Agreement) as a result of this Agreement or
the transactions contemplated thereby, (II) no Distribution Date (as
defined in the Arch Rights Agreement) shall be deemed to have occurred
as a result of this Agreement or the transactions contemplated thereby
unless the ownership threshold set forth in Exhibit B shall be
exceeded, and (III) the rights issuable pursuant to the Arch Rights
Agreement will not separate from the shares of Arch Common Stock, as a
result of the approval, execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby unless the
ownership threshold set forth in Exhibit B shall be exceeded, and (C)
render any anti-takeover or other provision contained in the
certificate of incorporation or by-laws of Arch inapplicable to the
Merger, this Agreement and the other transactions contemplated hereby.
(k) TAX MATTERS. As of the date of this Agreement,
neither it nor any of its Subsidiaries has taken or agreed to take any
action, nor do the Knowledgeable Executives have any actual knowledge
of any fact or circumstance (excluding possible uncertainties regarding
valuation of securities to be issued in the Merger and Exchange
Offers), that would prevent the Merger and the other transactions
contemplated by this Agreement from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code.
(l) TAXES. It and each of its Subsidiaries have prepared
in good faith and duly and timely filed (taking into account any
extension of time within which to file) all material Tax Returns
required to be filed by any of them at or before the Effective Time and
all such filed Tax Returns are complete and accurate in all material
respects. It and each of its Subsidiaries as of the Effective Time: (x)
will have paid all Taxes and estimated Taxes (including all amounts
shown to be due on all filed Tax Returns) that they are required to pay
prior to the Effective Time; and (y) will have withheld or collected
all federal, state and local income taxes, FICA, FUTA and other Taxes,
including, without limitation, similar foreign Taxes, required to be
withheld from amounts owing to any employee, creditor, or third party,
and to the extent required, will have paid such amounts to the proper
governmental authority. As of the date of this Agreement, (i) there are
not pending or threatened in writing, any audits, examinations,
investigations or other proceedings with respect to Taxes or Tax
matters, and (ii) there are not, to the actual knowledge of its
Knowledgeable Executives, any unresolved questions, claims or
outstanding proposed or assessed deficiencies concerning its or any of
its Subsidiaries' Tax liability which, if determined adversely would
have a Material Adverse Effect on it. Neither it nor any of its
Subsidiaries has any liability with respect to income, franchise or
similar Taxes in excess of the amounts accrued with respect to such
Taxes that are reflected in the financial statements included in its
Reports. Neither it nor any of its Subsidiaries has executed any waiver
of any statute of limitations on, or extended the period for the
assessment or collection of, any Tax. There are no tax liens (other
than liens for current Taxes not yet due and payable)
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upon its assets or the assets of any Subsidiary. There is no "Section
382 limitation," as defined in Section 382(b) of the Code, currently
applicable to its or its Subsidiaries' net operating loss, investment
credit, or other tax attribute carryforwards. Neither it nor any of its
Subsidiaries: (A) is a party to any tax sharing agreement; or (B) is
liable for the Tax obligations of any person other than it or one of
its Subsidiaries.
The term "TAX" (including, with correlative meaning, the terms "TAXES,"
and "TAXABLE") includes all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties, charges, fees, or assessments of any nature whatsoever, together
with all interest, penalties and additions imposed with respect to such amounts
and any interest with respect to such penalties and additions. The term "TAX
RETURN" includes all federal, state, local and foreign returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(m) LABOR MATTERS. Neither it nor any of its Subsidiaries
is the subject of any material proceeding asserting that it or any of
its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization, nor
is there pending or, to the actual knowledge of its Knowledgeable
Executives, threatened, nor has there been for the past five years, any
labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving it or any of its Subsidiaries, except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on it. None of the employees of PageNet or Arch or any
of their respective Subsidiaries is subject to a collective bargaining
agreement, no collective bargaining agreement is currently being
negotiated, and no attempt is currently being made or during the past
three (3) years has been made to organize any of its employees to form
or enter into any labor union or similar organization.
(n) ENVIRONMENTAL MATTERS. Except as disclosed in its
Reports filed prior to the date of this Agreement and except for such
matters that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on it: (i) each of it and its
Subsidiaries has complied with all applicable Environmental Laws; (ii)
the properties currently owned or operated by it or any of its
Subsidiaries (including soils, groundwater, surface water, buildings,
or other structures) do not contain any Hazardous Substances; (iii) the
properties formerly owned or operated by it or any of its Subsidiaries
did not contain any Hazardous Substances during the period of ownership
or operation by it or any of its Subsidiaries; (iv) neither it nor any
of its Subsidiaries is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither it
nor any Subsidiary has been associated with any release or threat of
release of any Hazardous Substance; (vi) neither it nor any Subsidiary
has received any notice, demand, letter, claim,
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or request for information alleging that it or any of its Subsidiaries
may be in violation of or liable under any Environmental Law; (vii)
neither it nor any of its Subsidiaries is subject to any orders,
decrees, injunctions, or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third
party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (viii) there are no circumstances or
conditions involving it or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability,
investigations, costs, or restrictions on the ownership, use, or
transfer of any of its properties pursuant to any Environmental Law.
The term "ENVIRONMENTAL LAW" means any Law relating to: (A) the
protection, investigation or restoration of the environment, health, safety, or
natural resources; (B) the handling, use, presence, disposal, release, or
threatened release of any Hazardous Substance; or (C) noise, odor, wetlands,
pollution, contamination, or any injury or threat of injury to persons or
property or notifications to government agencies or the public in connection
with any Hazardous Substance.
The term "HAZARDOUS SUBSTANCE" means any substance that is listed,
classified, or regulated pursuant to any Environmental Law, including any
petroleum product or by-product, asbestos- containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, electromagnetic fields, microwave
transmission, radioactive materials, or radon.
(o) BROKERS AND FINDERS. Neither it nor any of its
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the Merger or the other transactions
contemplated in this Agreement or, the Series C Consent Agreement, as
applicable, except that: (i) PageNet has employed Houlihan Lokey Howard
& Zukin Capital, Goldman, Sachs & Co. and Morgan Stanley Dean Witter as
its financial advisors, the arrangements with which have been disclosed
to Arch prior to the date of this Agreement; and (ii) Arch has employed
Bear, Stearns & Co. Inc. as its financial advisor, the arrangements
with which have been disclosed to PageNet prior to the date of this
Agreement.
(p) COMPUTER SYSTEMS. Except as set forth in its Reports:
(i) its computer system performs and shall perform properly all
date-sensitive functions with respect to dates prior to and after
December 31, 1999; and (ii) it has developed feasible contingency plans
to ensure uninterrupted and unimpaired business operation in the event
of a failure of its own or a third party's computer system or equipment
on or about January 1, 2000 (including, those of vendors, customers,
and suppliers, and a general failure of, or interruption in, its
communications and delivery infrastructure).
(q) FCC LICENSES. Each of Arch and PageNet, and each of
its respective Subsidiaries, is the authorized and legal holder of, or
otherwise has all rights to, all Permits issued under or pursuant to
the Communications Act, the FCC Regulations, and State
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Laws which are necessary for the operation of their respective
businesses as presently operated, except as would not, individually or
in aggregate, have a Materially Adverse Effect on it. All such Permits
and licenses are validly issued and in full force and effect, except as
would not, individually or in the aggregate, have a Material Adverse
Effect on it. Each of Arch and PageNet, and each of its respective
Subsidiaries, is in compliance in all respects with the terms and
conditions of each such Permit and with all applicable Governmental
Regulations, except where the failure to be in compliance would not
have a Material Adverse Effect on it. There is not pending, and to the
actual knowledge of the Knowledgeable Executives of Arch and PageNet,
as applicable, any threatened, action by or before the FCC or any
governmental or regulatory authority to revoke, suspend, cancel,
rescind, or modify in any material respect any of such party's Permits
rights under the Communications Act, the FCC Regulations or State Laws.
Each party has made all regulatory filings required, and paid all fees
and assessments imposed, by any Governmental Entity, and all such
filings and the calculation of such fees, are accurate in all material
respects, except where the failure to make such filing or pay such fees
or assessments would not have a Material Adverse Effect on such party.
ARTICLE VI.
COVENANTS
6.1. INTERIM OPERATIONS.
(a) PageNet covenants and agrees as to itself and its
Subsidiaries that, from and after the date of this Agreement and prior
to the Effective Time (unless Arch shall otherwise approve in writing,
and except as otherwise expressly contemplated by this Agreement,
disclosed in the PageNet Disclosure Letter, or required by applicable
Law):
(i) Its business and the business of its
Subsidiaries shall be conducted only in the ordinary and usual course
and, to the extent consistent therewith, it and its Subsidiaries shall
use their reasonable best efforts to preserve their respective business
organizations intact and maintain their respective existing relations
and goodwill with customers, suppliers, regulators, distributors,
creditors, lessors, employees and business associates;
(ii) It shall not: (A) amend its certificate of
incorporation or bylaws; (B) split, combine, subdivide or reclassify
its outstanding shares of capital stock; (C) declare, set aside or pay
any dividend payable in cash, stock or property with respect to any
capital stock; or (D) repurchase, redeem or otherwise acquire, except
in connection with existing commitments under PageNet Stock Plans but
subject to PageNet's obligations
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under subparagraph (iii) below, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its capital stock or any
securities convertible into, or exchangeable or exercisable for, any
shares of its capital stock;
(iii) Neither it nor any of its Subsidiaries shall
take any action that would prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or
that would cause any of its representations and warranties in this
Agreement to become untrue in any material respect;
(iv) Neither it nor any of its ERISA Affiliates
shall: (A) accelerate, amend or change the period of exercisability of
or terminate, establish, adopt, enter into, make any new grants or
awards of stock-based compensation or other benefits under any
Compensation and Benefit Plans; (B) amend or otherwise modify any
Compensation and Benefit Plan; or (C) increase the salary, wage, bonus
or other compensation of any directors, officers or key employees,
except: (x) for grants or awards to directors, officers and employees
of it or its Subsidiaries under existing Compensation and Benefit Plans
in such amounts and on such terms as are consistent with past practice;
(y) in the ordinary and usual course of its business (which may include
normal periodic performance reviews and related compensation and
benefit increases and the provision of individual PageNet Compensation
and Benefit Plans consistent with past practice for promoted or newly
hired officers and employees on terms consistent with past practice);or
(z) for actions necessary to satisfy existing contractual obligations
under Compensation and Benefit Plans existing as of the date of this
Agreement;
(v) Neither it nor any of its Subsidiaries shall
incur, repay or retire prior to maturity or refinance any indebtedness
for borrowed money or guarantee any such indebtedness or issue, sell,
repurchase or redeem prior to maturity any debt securities or warrants
or rights to acquire any debt securities or guarantee any debt
securities of others, except (A) in the ordinary and usual course of
its business, (B) for any refinancing of such indebtedness or debt
securities on terms no less favorable in the aggregate to PageNet and
which would not prevent, materially delay or materially impair
PageNet's ability to consummate the transactions contemplated by this
Agreement, and (C) for any retirement in exchange for PageNet Shares
consistent with past practice;
(vi) Neither it nor any of its Subsidiaries shall
make any capital expenditures in an aggregate amount in excess of the
aggregate amount reflected in PageNet's capital expenditure budget for
the fiscal years ending December 31, 1999 and 2000, a copy of which has
been provided to Arch;
(vii) Neither it nor any of its Subsidiaries shall
issue, deliver, sell, pledge or encumber shares of any class of its
capital stock or any securities convertible or
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exchangeable into, or any rights, warrants or options to acquire, or
any bonds, debentures, notes, or other debt obligations having the
right to vote or that are convertible or exercisable for, any such
shares, except PageNet may issue PageNet Shares in exchange for
indebtedness or debt securities pursuant to clause (v) above;
(viii) Neither it nor any of its Subsidiaries shall
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), or any purchase, sale,
lease, license or other acquisition or disposition of any business or
of a material amount of assets or securities, except for transactions
entered into in the ordinary and usual course of its business, except
for any acquisition of assets or any investment having a cash purchase
price of $25,000,000 or less in any single instance and $50,000,000 or
less in the aggregate where such acquisition or investment would not
prevent, materially delay or materially impair PageNet's ability to
consummate the transactions contemplated by this Agreement;
(ix) PageNet shall not make any material change
in its accounting policies or procedures, other than any such change
that is required by GAAP;
(x) PageNet shall not release, assign, settle or
compromise any material claims or litigation in excess of $300,000 or
make any material tax election or settle or compromise any material
federal, state, local or foreign tax liability; and
(xi) Neither it nor any of its Subsidiaries shall
authorize or enter into any agreement to do any of the foregoing.
(b) Arch covenants and agrees as to itself and its
Subsidiaries that, from and after the date of this Agreement and prior
to the Effective Time (unless PageNet shall otherwise approve in
writing and except as otherwise expressly contemplated by this
Agreement, disclosed in the Arch Disclosure Letter, or required by
applicable Law):
(i) Its business and the business of its
Subsidiaries shall be conducted only in the ordinary and usual course
and, to the extent consistent therewith, it and its Subsidiaries shall
use their reasonable best efforts to preserve their respective business
organizations intact and maintain their respective existing relations
and goodwill with customers, suppliers, regulators, distributors,
creditors, lessors, employees and business associates;
(ii) It shall not: (A) amend its certificate of
incorporation or bylaws; (B) split, combine, subdivide or reclassify
its outstanding shares of capital stock; (C) declare, set aside or pay
any dividend payable in cash, stock or property with respect to
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<PAGE> 34
any capital stock, except for a dividend that would be received by
holders of PageNet Shares on an equivalent post-Merger basis per share
of Arch Common Stock after the Effective Time; or (D) repurchase,
redeem or otherwise acquire, except in connection with existing
commitments under Arch Stock Plans but subject to Arch' obligations
under subparagraph (iii) below, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its capital stock or any
securities convertible into, or exchangeable or exercisable for, any
shares of its capital stock;
(iii) Neither it nor any of its Subsidiaries shall
take any action that would prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or
that would cause any of its representations and warranties in this
Agreement to become untrue in any material respect;
(iv) Neither it nor any of its ERISA Affiliates
shall: (A) accelerate, amend or change the period of exercisability of
or terminate, establish, adopt, enter into, make any new grants or
awards of stock-based compensation or other benefits under any
Compensation and Benefit Plans; (B) amend or otherwise modify any
Compensation and Benefit Plan; or (C) increase the salary, wage, bonus
or other compensation of any directors, officers or key employees,
except: (x) for grants or awards to directors, officers and employees
of it or its Subsidiaries under existing Compensation and Benefit Plans
in such amounts and on such terms as are consistent with past practice;
(y) in the ordinary and usual course of its business (which may include
normal periodic performance reviews and related compensation and
benefit increases and the provision of individual Arch Compensation and
Benefit Plans consistent with past practice for promoted or newly hired
officers and employees on terms consistent with past practice); or (z)
for actions necessary to satisfy existing contractual obligations under
its Compensation and Benefit Plans existing as of the date of this
Agreement;
(v) Neither it nor any of its Subsidiaries shall
incur, repay or retire prior to maturity or refinance any indebtedness
for borrowed money or guarantee any such indebtedness or issue, sell,
repurchase or redeem prior to maturity any debt securities or warrants
or rights to acquire any debt securities or guarantee any debt
securities of others, except in (A) the ordinary and usual course of
its business, (B) for any refinancing of such indebtedness or debt
securities on terms no less favorable in the aggregate to Arch and
which would not prevent, materially delay or materially impair Arch' or
Merger Sub's ability to consummate the transactions contemplated by
this Agreement, and (C) for any retirement in exchange for shares of
Arch Common Stock consistent with past practice;
(vi) Neither it nor any of its Subsidiaries shall
make any capital expenditures in an aggregate amount in excess of the
aggregate amount reflected in Arch'
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<PAGE> 35
capital expenditure budget for the fiscal years ending December 31,
1999 and 2000, a copy of which has been provided to PageNet;
(vii) Neither it nor any of its Subsidiaries shall
issue, deliver, sell, pledge or encumber shares of any class of its
capital stock or any securities convertible or exchangeable into, or
any rights, warrants or options to acquire, or any bonds, debentures,
notes, or other debt obligations having the right to vote or that are
convertible or exercisable for, any such shares, except Arch may issue
shares of Arch Common Stock issued in exchange for indebtedness or debt
securities pursuant to clause (v) above;
(viii) Neither it nor any of its Subsidiaries shall
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), or any purchase, sale,
lease, license or other acquisition or disposition of any business or
of a material amount of assets or securities, except for transactions
entered into in the ordinary and usual course of its business, except
for any acquisition of assets or any investment having a cash purchase
price of $25,000,000 or less in any single instance and $50,000,000 or
less in the aggregate where such acquisition or investment would not
prevent, materially delay or materially impair Arch' or Merger Sub's
ability to consummate the transactions contemplated by this Agreement;
(ix) Arch shall not make any material change in
its accounting policies or procedures, other than any such change that
is required by GAAP;
(x) Arch shall not release, assign, settle or
compromise any material claims or litigation in excess of $300,000 or
make any material tax election or settle or compromise any material
federal, state, local or foreign tax liability; and
(xi) Neither it nor any of its Subsidiaries shall
authorize or enter into any agreement to do any of the foregoing.
(c) Arch and PageNet agree that any written approval
obtained under this Section 6.1 must be signed, if on behalf of Arch,
by the Chief Executive Officer or the Chief Financial Officer of Arch,
or if on behalf of PageNet, by the Chairman of the Board and Chief
Executive Officer or President and Chief Operating Officer of PageNet.
(d) Notwithstanding any other provision hereof to the
contrary, PageNet may, after the date hereof (i) issue, deliver, sell,
pledge or encumber in arms-length transactions with unaffiliated third
parties shares of any class of capital stock of the Distributed
Subsidiary or any securities convertible or exchangeable into, or any
rights, warrants or options to acquire, or any bonds, debentures,
notes, or other debt obligations having the
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right to vote or that are convertible or exercisable for, any such
shares of the Distributed Subsidiary, (ii) cause the Distributed
Subsidiary to incur any indebtedness for borrowed money, if all
proceeds thereof are used solely by the Distributed Subsidiary, (iii)
transfer the assets set forth in the corresponding section of the
PageNet Disclosure Letter to the Distributed Subsidiary, (iv) determine
the form of security or securities representing the equity ownership of
the Distributed Subsidiary to be distributed to the holders of PageNet
Shares or PageNet Notes pursuant to Sections 6.18 and 6.22 of this
Agreement and designate the rights and restrictions applicable to such
securities, (v) establish an employee stock option, stock ownership or
other similar plan and set aside common equity (of the same type as the
Distributed Interests or any securities underlying such Distributed
Interests) representing up to 15% of the equity ownership of the
Distributed Subsidiary for such purpose, or (vi) enter into such
transactions, arrangements or agreements with the Distributed
Subsidiary on terms and conditions approved by Arch or cause the
Distributed Subsidiary to enter into arms-length transactions,
arrangements or agreements with third parties, in each case, as are
reasonably necessary and appropriate to permit the Distributed
Subsidiary to continue its business and operations in the ordinary
course following the Merger; PROVIDED, that the taking of such action
shall not cause Arch or the Surviving Corporation (other than through
its ownership of capital stock in the Distributed Subsidiary after the
Effective Time) to incur any liability or obligation which would not
have been incurred by the Surviving Corporation pursuant to the Merger
or the other transactions contemplated hereby. It is understood and
agreed by the parties to this Agreement, that in the event that, prior
to or at the Effective Time, PageNet shall take any action set forth in
(i), (ii), (v) or (vi) above that reduces the aggregate amount of
Distributed Interests available to be distributed to the parties, the
distribution of the Distributed Interests will be ratably adjusted such
that holders of PageNet Shares at the Spinoff Record Date and holders
of PageNet Notes immediately prior to the Effective Time receive 80.5%
of the remaining interests in the Distributed Subsidiary and the
Surviving Corporation receives 19.5% of the remaining interests in the
Distributed Subsidiary.
6.2. ACQUISITION PROPOSALS.
(a) Except as set forth in Section 6.1(d) of this
Agreement, PageNet and Arch each agree that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that each shall direct and use its best efforts
to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) (PageNet or Arch,
as the case may be, its respective Subsidiaries and their officers,
directors, employees, agents and representatives being referred to as
its "REPRESENTATIVES") not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer with respect to a merger, reorganization,
acquisition, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving
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it, or any purchase or sale of the consolidated assets (including
without limitation stock of Subsidiaries) of it or any of its
Subsidiaries, taken as a whole, having an aggregate value equal to 10%
or more of its assets, or any purchase or sale of, or tender or
exchange offer for, 15% or more of its equity securities (any such
proposal or offer being referred to as an "ACQUISITION PROPOSAL").
PageNet and Arch further agree that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts
to cause its Representatives not to, directly or indirectly, have any
discussion with, or provide any confidential information or data to,
any Person relating to, or in contemplation of, an Acquisition Proposal
or engage in any negotiations concerning an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent PageNet, Arch or their respective Board of
Directors from: (A) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal; (B) engaging in
any discussions or negotiations with or providing any information to,
any Person in response to an unsolicited bona fide written Acquisition
Proposal by any such Person; or (C) subject to the obligation of (x)
PageNet pursuant to Section 6.5(a) to duly convene a PageNet
Stockholders Meeting at which a vote of the stockholders of PageNet
shall be taken regarding the adoption of this Agreement and the
approval of the Merger and the other transactions contemplated by this
Agreement, and (y) Arch pursuant to Section 6.5(b) to duly convene a
Arch Stockholders Meeting at which a vote of the stockholders of Arch
shall be taken with respect to the matters set forth in Section 6.5(b)
of this Agreement, recommending such an unsolicited bona fide written
Acquisition Proposal to its stockholders if, and only to the extent
that, with respect to the actions referred to in clauses (B) or (C):
(i) its Board of Directors concludes in good faith (after consultation
with its outside legal counsel and its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed, taking
into account all legal, financial, regulatory and other aspects of the
proposal and the Person making the proposal, and would, if consummated,
result in a transaction more favorable to its stockholders from a
financial point of view than the transaction contemplated by this
Agreement (any such Acquisition Proposal being referred to herein as a
"SUPERIOR PROPOSAL"); (ii) its Board of Directors determines in good
faith after consultation with outside legal counsel that such action is
necessary for the Board of Directors to comply with its fiduciary duty
to its stockholders under applicable Law; and (iii) prior to providing
any information or data to any Person in connection with a Superior
Proposal by any such Person, its Board of Directors shall receive from
such Person an executed confidentiality agreement on terms
substantially similar to those contained in the Confidentiality
Agreement (as defined in Section 6.15); PROVIDED, that such
confidentiality agreement shall contain terms that allow it to comply
with its obligations under this Section 6.2.
(b) PageNet and Arch each agree that it will immediately
cease and cause to be terminated any existing activities, discussions
or negotiations with any parties conducted
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heretofore with respect to any Acquisition Proposal. PageNet and Arch
each agree that it will take the necessary steps to promptly inform
each of its Representatives of the obligations undertaken in Section
6.2(a). PageNet and Arch each agree that it will notify the other party
immediately if any such inquiries, proposals or offers are received by,
any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
Representatives indicating, in connection with such notice, the name of
such Person making such inquiry, proposal, offer or request and the
substance of any such inquiries, proposals or offers. Such party
thereafter shall keep the other informed, on a current basis, of the
status and terms of any such inquiries, proposals or offers and the
status of any such discussions or negotiations. PageNet and Arch each
also agree that it will promptly request each Person that has
heretofore executed a confidentiality agreement in connection with its
consideration of any Acquisition Proposal to return all confidential
information heretofore furnished to such Person by, or on behalf of, it
or any of its Subsidiaries.
6.3. THE CERTIFICATE AMENDMENTS. Arch shall take all actions
necessary (subject to applicable law and any necessary stockholder approval) to
adopt the Certificate Amendments. The Certificate Amendments shall provide for
(i) an increase in the authorized number of shares of Arch Common Stock to an
amount sufficient to effectuate the actions contemplated hereby and (ii) the
conversion of each Arch Series C Preferred Share into shares of Arch Common
Stock as described in this Agreement. Some or all of the Certificate Amendments
may, in the discretion of Arch, be made contingent upon the consummation of the
Merger or the Alternative Merger (as the case may be).
6.4. INFORMATION SUPPLIED. PageNet and Arch each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in: (i) the Registration Statement on Form S-4 to be filed with the SEC by Arch
in connection with the issuance of shares of Arch Common Stock in the Merger
(including the joint proxy statement and prospectus (the "PROSPECTUS/PROXY
STATEMENT") constituting a part thereof) (the "S-4 REGISTRATION STATEMENT")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act; and (ii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the time
of each of the PageNet Stockholders Meeting and the Arch Stockholders Meeting to
be held in connection with the Merger, in any such case, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Effective Time any information relating to Arch or PageNet, or any
of their respective affiliates (as defined in SEC Rule 12b-2), officers or
directors, is discovered by Arch or PageNet which should be set forth in an
amendment or supplement to any of the S-4 Registration Statement or the
Prospectus/Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or would omit to state any material fact
required to be stated therein
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or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties to this Agreement and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of PageNet and Arch.
6.5. STOCKHOLDERS MEETINGS.
(a) PageNet will take, in accordance with applicable Law
and its certificate of incorporation and bylaws, all action necessary
to convene a meeting of its stockholders (the "PAGENET STOCKHOLDERS
MEETING") as promptly as practicable after the S-4 Registration
Statement is declared effective to consider and vote upon the adoption
of this Agreement, and to approve the Merger, an amendment to the
PageNet certificate of incorporation to increase the number of PageNet
Shares authorized to an amount sufficient to complete the transactions
contemplated by this Agreement and the other transactions contemplated
by this Agreement. PageNet will take all necessary action to obtain the
adoption of this Agreement, the approval of the Merger, the amendment
to the PageNet certificate of incorporation to increase the number of
PageNet Shares authorized to the amount sufficient to complete the
transactions contemplated by this Agreement and the other transactions
contemplated by this Agreement by the holders of the PageNet Shares
(the "PAGENET STOCKHOLDERS APPROVAL"). The Board of Directors of
PageNet shall: (i) recommend that the stockholders adopt this Agreement
and thereby approve the Merger and the other transactions contemplated
by this Agreement (including without limitation adoption of the
Prepackaged Plan and authorization of the Bankruptcy Case) and the
amendment to the PageNet certificate of incorporation to increase the
number of PageNet Shares authorized to the amount sufficient to
complete the transactions contemplated by this Agreement; and (ii) take
all lawful action to solicit such adoption and approval; PROVIDED,
HOWEVER, that PageNet's Board of Directors may, at any time prior to
the Effective Time, withdraw, modify or change any such recommendation
to the extent that PageNet's Board of Directors determines in good
faith, after consultation with outside legal counsel, that such
withdrawal, modification or change of its recommendation is required by
its fiduciary duties to PageNet's stockholders under applicable Law;
PROVIDED, FURTHER, that, unless this Agreement is terminated by Arch
pursuant to Section 8.4, PageNet shall, as promptly as practicable
after the S-4 Registration Statement is declared effective, duly
convene and complete the PageNet Stockholders Meeting regarding the
adoption of this Agreement and the approval of the Merger, the
amendment to the PageNet certificate of incorporation set forth above
and the other transactions contemplated by this Agreement, regardless
of whether PageNet's Board of Directors has withdrawn, modified, or
changed its recommendation to the stockholders regarding the adoption
of this Agreement or the approval of the Merger, the amendment to the
PageNet certificate of incorporation set forth above or the other
transactions contemplated by this Agreement prior to such PageNet
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Stockholders Meeting. Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, PageNet shall not be
required to convene a PageNet Stockholders Meeting after (x) the
Bankruptcy Case has commenced or (y) PageNet stipulates to bankruptcy
relief after the occurrence of an Involuntary Insolvency Event pursuant
to Section 6.19(a)(v) hereof.
(b) Arch will take, in accordance with applicable Law and
its certificate of incorporation and bylaws, all action necessary to
convene a meeting of its stockholders (the "ARCH STOCKHOLDERS MEETING")
as promptly as practicable after the S-4 Registration Statement is
declared effective to (i) consider and vote upon (A) the Certificate
Amendments and the issuance of shares of Arch Common Stock pursuant to
the Merger, the conversion of the Arch Series C Preferred Shares and
the Arch Exchange Offer or (B) if the Alternative Merger is elected
pursuant to Section 4.5 and Arch is a party to the Alternative Merger,
the adoption of this Agreement and the approval of the Alternative
Merger and the other transactions contemplated by this Agreement
(including the actions contemplated by the Certificate Amendments,
which may be effectuated pursuant to a certificate of merger filed in
connection with such Alternative Merger); and (ii) to approve any
actions necessary pursuant to Section 3.1 hereof (the "ARCH
STOCKHOLDERS APPROVAL"). Arch will take all necessary action to obtain
such consents and approvals. The Board of Directors of Arch shall: (i)
recommend that the stockholders adopt the Certificate Amendments and
approve the issuance of Arch Common Stock pursuant to the Merger, the
conversion of the Arch Series C Preferred Shares and the Arch Exchange
Offer (or this Agreement and the Alternative Merger if Arch is a party
to the Alternative Merger) and the other transactions contemplated by
this Agreement; and (ii) take all lawful action to solicit such
adoption; PROVIDED, HOWEVER, that Arch' Board of Directors may, at any
time prior to the Effective Time, withdraw, modify or change any such
recommendation to the extent that Arch' Board of Directors determines
in good faith, after consultation with outside legal counsel, that such
withdrawal, modification or change of its recommendation is required by
its fiduciary duties to Arch' stockholders under applicable Law;
PROVIDED, FURTHER, that, unless this Agreement is terminated by PageNet
pursuant to Section 8.3, Arch shall, as promptly as practicable after
the S-4 Registration Statement is declared effective, duly convene and
complete the Arch Stockholders Meeting regarding the adoption of the
Certificate Amendments and the issuance of shares of Arch Common Stock
pursuant to the Merger, the conversion of the Arch Series C Preferred
Shares and the Arch Exchange Offer (or this Agreement and the
Alternative Merger if Arch is a party to the Alternative Merger) and
the other transactions contemplated by this Agreement, regardless of
whether Arch' Board of Directors has withdrawn, modified, or changed
its recommendation to the stockholders regarding the adoption of the
Certificate Amendments and the issuance of shares of Arch Common Stock
pursuant to the Merger, the conversion of the Arch Series C Preferred
Shares and the Arch Exchange Offer (or this Agreement and the
Alternative
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Merger if Arch is a party to the Alternative Merger) or the other
transactions contemplated by this Agreement prior to such Arch
Stockholders Meeting.
6.6. FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) Arch and PageNet shall promptly prepare and file with
the SEC the Prospectus/Proxy Statement, and Arch shall prepare and file
with the SEC the S-4 Registration Statement as promptly as practicable.
Arch and PageNet each shall use its reasonable best efforts to have the
S-4 Registration Statement declared effective under the Securities Act
as promptly as practicable and on the same day as each of the Exchange
Registration Statements, and promptly thereafter mail the
Prospectus/Proxy Statement to the stockholders of Arch and PageNet.
Arch shall also use its reasonable best efforts to obtain prior to the
effective date of the S-4 Registration Statement all necessary state
securities law or "blue sky" permits and approvals required in
connection with the Merger and the other transactions contemplated by
this Agreement and will pay all expenses incident thereto. Each party
shall notify the other of the receipt of the comments of the SEC and of
any requests by the SEC for amendments or supplements to the
Prospectus/Proxy Statement or the S-4 Registration Statement or for
additional information and shall promptly supply one another with
copies of all correspondence between any of them (or their
Representatives) and the SEC (or its staff) with respect thereto. If,
at any time prior to either of the Arch Stockholders Meeting or the
PageNet Stockholders Meeting, any event shall occur relating to or
affecting Arch, PageNet, or their respective officers or directors,
which event should be described in an amendment or supplement to the
Prospectus/Proxy Statement or the S-4 Registration Statement, the
parties shall promptly inform one another and shall cooperate in
promptly preparing filing and clearing with the SEC and, if required by
applicable securities laws, mailing to Arch' or PageNet's stockholders,
as the case may be, such amendment or supplement.
(b) PageNet and Arch each shall use its respective
reasonable best efforts to cause to be delivered to the other party and
its directors a letter of its independent auditors, dated: (i) the date
on which the S-4 Registration Statement and the Exchange Registration
Statements shall become effective; and (ii) the Closing Date, and
addressed to the other party and its directors, in form and substance
customary for "comfort" letters delivered by independent public
accountants in connection with registration statements similar to the
S-4 Registration Statement and the Exchange Registration Statements.
(c) PageNet and Arch shall cooperate with each other and
use (and shall cause their respective Subsidiaries to use) their
respective reasonable best efforts: (i) to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper
or advisable on its part under this Agreement and applicable Laws to
consummate and make effective the Merger, the Exchange Offers and the
other transactions contemplated by this
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Agreement (including, if necessary, the Prepackaged Plan) as soon as
practicable, including: (A) obtaining opinions of their respective
attorneys referred to in Article VII below; (B) preparing and filing as
promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents; and (C)
instituting court actions or other proceedings necessary to obtain the
approvals required to consummate the Merger, the Exchange Offers or the
other transactions contemplated by this Agreement or defending or
otherwise opposing all court actions or other proceedings instituted by
a Governmental Entity or other Person under the Governmental
Regulations for purposes of preventing the consummation of the Merger,
the Exchange Offers and the other transactions contemplated by this
Agreement; and (ii) to obtain as promptly as practicable all consents,
registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental
Entity in order to consummate the Merger, the Exchange Offers or any of
the other transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that nothing in this Section 6.5 shall require either Arch or
PageNet to agree to any divestitures or hold separate or similar
arrangements if such divestitures or arrangements would reasonably be
expected to have a material adverse effect on Arch or PageNet, or a
material adverse effect on the expected benefits of the Merger to it.
Neither Arch nor PageNet will agree to any divestitures or hold
separate or similar arrangements without the prior written approval of
the other party. Subject to applicable laws relating to the exchange of
information, Arch and PageNet shall have the right to review in
advance, and to the extent practicable each will consult the other
party on, all the information relating to Arch or PageNet, as the case
may be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party
and/or any Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement. In exercising the
foregoing right, each of PageNet and Arch shall act reasonably and as
promptly as practicable.
(d) PageNet and Arch each shall, upon request by the
other party, furnish the other party with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in connection
with the Prospectus/Proxy Statement, the S-4 Registration Statement,
the Exchange Registration Statements or any other statement, filing,
notice or application made by, or on behalf of, Arch, PageNet or any of
their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger, the Exchange Offers
and the transactions contemplated by this Agreement.
(e) PageNet and Arch each shall keep the other party
apprised of the status of matters relating to completion of the
transactions contemplated by this Agreement, including promptly
furnishing the other party with copies of notices or other
communications received by Arch or PageNet, as the case may be, or any
of its Subsidiaries, from any third party and/or any Governmental
Entity with respect to the Merger, the Exchange Offers and the
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other transactions contemplated by this Agreement. Each of PageNet and
Arch shall give prompt notice to the other party of any change that is
reasonably likely to result in a Material Adverse Effect on it or of
any failure of any conditions to the other party's obligations to
effect the Merger set forth in Article VII.
(f) Each of PageNet and Arch agrees that if a bona fide
Acquisition Proposal is made to acquire shares of the other party to
this Agreement, then upon the request of the party not receiving the
Acquisition Proposal, the party receiving the Acquisition Proposal will
cooperate with the other party to this Agreement to make such filings
and take such other actions as may be permitted or required under the
FCC's Policy Statement in Tender Offers and Proxy Contests, in order to
allow the parties to this Agreement to take all steps as are necessary
to consummate the transactions contemplated hereby pending FCC approval
of the transaction.
6.7. ACCESS; CONSULTATION. Upon reasonable notice, and except as
may be prohibited by applicable Law, PageNet and Arch each shall (and shall
cause its Subsidiaries to) afford the other and its respective Representatives,
reasonable access, during normal business hours throughout the period prior to
the Effective Time, to its properties, books, contracts and records and, during
such period, each shall (and shall cause its Subsidiaries to) furnish promptly
to the other party all information concerning its business, properties and
personnel as may reasonably be requested; PROVIDED that no investigation
pursuant to this section shall affect or be deemed to modify any representation
or warranty made by PageNet or Arch under this Agreement; and PROVIDED, FURTHER,
that the foregoing shall not require PageNet or Arch to permit any inspection,
or to disclose any information, that in the reasonable judgment of PageNet or
Arch, as the case may be, would result in the disclosure of any trade secrets of
it or third parties, or violate any of its obligations with respect to
confidentiality if PageNet or Arch, as the case may be, shall have used all
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. All requests for information made pursuant to this section shall
be directed to an executive officer of PageNet or Arch, as the case may be, or
such Person as may be designated by any such executive officer, as the case may
be.
6.8. AFFILIATES. PageNet shall deliver to Arch a letter identifying
all Persons whom PageNet believes to be, at the date of its Stockholders
Meeting, affiliates of PageNet for purposes of Rule 145 under the Securities Act
("RULE 145 AFFILIATES"). PageNet shall use all reasonable efforts to cause each
Person who is identified as a Rule 145 Affiliate in the letter referred to above
to deliver to Arch on or prior to the date of such party's respective
Stockholders Meeting a written agreement, in the form attached as EXHIBIT C (the
"PAGENET AFFILIATES AGREEMENT"). Prior to the Effective Time, PageNet shall use
all reasonable efforts to cause each additional Person who is identified as a
Rule 145 Affiliate after the date of its Stockholders Meeting to execute the
applicable written agreement as set forth in this Section 6.8, as soon as
practicable after such Person is identified.
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6.9. STOCK EXCHANGE LISTING. To the extent they are not
already listed, Arch shall use its reasonable best efforts to cause the shares
of Arch Common Stock to be issued pursuant to the Merger, Arch Exchange Offer
and pursuant to the Certificate Amendments to be approved for listing on the
Nasdaq National Market (the "NASDAQ") and on all other stock exchanges on which
shares of Arch Common Stock are then listed, subject to official notice of
issuance, prior to the Closing Date.
6.10. PUBLICITY. The initial press release with respect to
the Merger shall be a joint press release. Thereafter PageNet and Arch shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger, the Exchange Offers and the
other transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity (including any
securities exchange) with respect thereto, except as may be required by Law or
by obligations pursuant to any listing agreement with, or rules of, any
securities exchange.
6.11. BENEFITS.
(a) STOCK OPTIONS.
(i) At the Effective Time, each outstanding
option to purchase PageNet Shares (a "PAGENET OPTION") under PageNet
Stock Plans, and which has not vested prior to the Effective Time,
shall become fully exercisable and vested as of the Effective Time. At
the Effective Time, each PageNet Option shall be converted to an option
to acquire, on the same terms and conditions as were applicable under
such PageNet Option, the same number of shares of Arch Common Stock as
the holder of such PageNet Option would have been entitled to receive
pursuant to the Merger had such holder exercised such PageNet Option in
full immediately prior to the Effective Time (rounded down to the
nearest whole number) (a "SUBSTITUTE OPTION"), at an exercise price per
share (rounded to the nearest whole cent) equal to: (y) the aggregate
exercise price for PageNet Shares otherwise purchasable by such holder
pursuant to such PageNet Option; divided by (z) the number of full
shares of Arch Common Stock deemed purchasable pursuant to such PageNet
Option in accordance with the foregoing.
(ii) Notwithstanding the foregoing provisions, in
the case of any option to which Code Section 421 applies, the option
price, the number of shares subject to such option, and the terms and
conditions of exercise of such option shall be determined in order to
comply with Code Section 424(a). As promptly as practicable after the
Effective Time, Arch shall deliver to the participants in PageNet Stock
Plans appropriate notices setting forth such participants' rights
pursuant to the Substitute Options.
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(iii) With respect to each of the directors and
officers of PageNet identified in Section 6.11(a)(iii) of the PageNet
Disclosure Letter (each, a "SECTION 16 PERSON"), the full Board of
Directors of PageNet shall approve the disposition by each such Section
16 Person of the PageNet equity securities (including derivative
securities) set forth next to such Section 16 Person's name in Section
6.11(a)(iii) of the PageNet Disclosure Letter and the full Board of
Directors of Arch shall approve the acquisition by each such Section 16
Person of the Arch equity securities (including derivative securities)
set forth next to such Section 16 Person's name in Section 6.11(a)(iii)
of the PageNet Disclosure Letter. Each such approval shall specify, in
the form set forth in Section 6.11(a)(iii) of the PageNet Disclosure
Letter, the material terms of the derivative securities and each such
approval shall specify that the approval is granted for purposes of
exempting the transaction under Rule 16b-3 under the Exchange Act.
(b) CONVERSION AND REGISTRATION. At or prior to the
Effective Time, PageNet shall make all necessary arrangements with
respect to PageNet Stock Plans to permit the conversion of the
unexercised PageNet Options into Substitute Options pursuant to this
section and, as soon as practicable after the Effective Time, Arch
shall use its reasonable best efforts to register under the Securities
Act on Form S-8 or other appropriate form (and use its best efforts to
maintain the effectiveness thereof) shares of Arch Common Stock
issuable pursuant to all Substitute Options.
(c) AMENDMENT TO 401(K) PLAN. Prior to the Effective
Time, PageNet shall (i) amend the PageNet Employees Savings Plan and
the related trust to prohibit the investment of Employer Salary
Reduction Contributions in equity securities of PageNet (ii) deregister
interests under such plan and any registered but unsold equity
securities of PageNet under the Securities Act of 1933 and the Exchange
Act.
6.12. EXPENSES. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement, the Merger, the
Exchange Offers and the other transactions contemplated by this Agreement shall
be paid by the party incurring such cost and expense, except that costs and
expenses incurred in connection with the filing fee for the S-4 Registration
Statement and the Exchange Registration Statements, printing and mailing the
Prospectus/Proxy Statement, the S-4 Registration Statement and the Exchange
Registration Statements, and the filing fees under the HSR Act, any other
filings fees under any Governmental Regulations, and any filings fees in
connection with obtaining approvals under the Communications Act, FCC
Regulations and State Laws shall be shared equally by Arch and PageNet.
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6.13. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) For six years from and after the Effective Time, Arch
will indemnify and hold harmless each present and former director and
officer of PageNet (solely when acting in such capacity) determined as
of the Effective Time (the "INDEMNIFIED PARTIES"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "COSTS") incurred
in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or
occurring at, or prior to, the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
that PageNet would have been permitted under Delaware law and its
certificate of incorporation or bylaws in effect on the date of this
Agreement to indemnify such Person (and the Surviving Corporation shall
also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 6.13 shall promptly
notify Arch, upon learning of any such claim, action, suit, proceeding
or investigation, but the failure to so notify shall not relieve Arch
of any liability it may have to such Indemnified Party if such failure
does not materially prejudice the ability of Arch to defend such
claims. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i)
Arch shall have the right to assume the defense thereof and Arch shall
not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that
if Arch elects not to assume such defense or counsel for the
Indemnified Parties advises that there are actual conflicts of interest
between Arch and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Arch shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly
as statements therefor are received; PROVIDED, HOWEVER, that Arch shall
be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction (unless there
is such an actual conflict of interest), (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) Arch shall
not be liable for any settlement effected without its prior written
consent.
(c) Arch shall maintain a policy of officers' and
directors' liability insurance for acts and omissions occurring prior
to the Effective Time ("D&O INSURANCE") with coverage in amount and
scope at least as favorable as PageNet's existing directors' and
officers' liability insurance coverage for a period of six years after
the Effective Time; provided, however, if the existing D&O Insurance
expires, is terminated or canceled, or if the annual
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premium therefor is increased to an amount in excess of 200% of the
last annual premium paid prior to the date of this Agreement (the
"CURRENT PREMIUM"), in each case during such six year period, Arch will
use its best efforts to obtain D&O Insurance in an amount and scope as
great as can be obtained for the remainder of such period for a premium
not in excess (on an annualized basis) of 200% of the Current Premium.
The provisions of this Section 6.13(c) shall be deemed to have been
satisfied if prepaid policies shall have been obtained by PageNet prior
to the Closing, which policies provide such directors and officers with
coverage for an aggregate period of six years with respect to claims
arising from facts or events that occurred on, or prior to, the
Effective Time, including, without limitation, with respect to the
transactions contemplated by this Agreement. If such prepaid policies
shall have been obtained by PageNet prior to the Closing, then Arch
shall maintain such policies in full force and effect and shall
continue to honor PageNet's obligations thereunder.
(d) If Arch or any of its successors or assigns: (i)
shall consolidate with, or merge into, any other corporation or entity
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger; or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Arch
shall assume all of the obligations set forth in this section. At the
Effective Time, Arch shall assume and be bound by all of PageNet's
indemnity obligations with respect to officers, directors and employees
of corporations it previously acquired that are identified in the
corresponding section of the PageNet Disclosure Letter.
(e) The provisions of this section are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
6.14. TAKEOVER STATUTE. If any Takeover Statute or similar statute
or regulation is or may become applicable to this Agreement or to the other
transactions contemplated hereby or thereby, each of the parties and its Board
of Directors shall grant such approvals and take all such actions as are legally
permissible so that the transactions contemplated under such agreements may be
consummated as promptly as practicable on the terms contemplated under such
agreements and otherwise act to eliminate or minimize the effects of any such
statute or regulation on the transactions contemplated under such agreements.
6.15. CONFIDENTIALITY. PageNet and Arch each acknowledges and
confirms that it has entered into a Confidentiality Agreement, dated as of
August 26, 1999 (the "CONFIDENTIALITY AGREEMENT"), and that the Confidentiality
Agreement shall remain in full force and effect in accordance with its terms.
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6.16. TAX-FREE REORGANIZATION. Arch, Merger Sub and PageNet shall
each use its best efforts to cause the Merger to be treated as a reorganization
with the meaning of Section 368(a) of the Code and to obtain an opinion of its
respective counsel as contemplated by Sections 7.2(d) and 7.3(d), respectively.
6.17. SENIOR CREDIT FACILITIES. PageNet and Arch shall use their
reasonable best efforts to secure, through the amendment or restatement of their
respective current credit facilities, through a new credit facility or through
the operation of the Prepackaged Plan, or any combination of the foregoing,
senior secured debt financing in an amount not less than $1.5 billion on terms
reasonably acceptable to the parties to this Agreement. Simultaneously with the
Exchange Offers, PageNet shall solicit the consent of the holders of PageNet's
senior credit facilities (the "PAGENET SECURED CREDITORS") to the Prepackaged
Plan. The solicitation of the PageNet Secured Creditors shall be made in
accordance with the standards and requirements set forth in Section 6.18(e).
6.18. THE EXCHANGE OFFERS.
(a) Provided that nothing shall have occurred that would
result in a failure to satisfy any other conditions set forth in
Section 6.18(b) of this Agreement, Arch and PageNet shall, as promptly
as practicable, commence separate exchange offers (the "ARCH EXCHANGE
OFFER" and the "PAGENET EXCHANGE OFFER" and together, the "EXCHANGE
OFFERS") to issue an aggregate of up to: (i) 29,651,980 shares of Arch
Common Stock in exchange for the $448.4 million in aggregate principal
amount of Arch' 107/8% Senior Discount Notes due March 15, 2008 issued
under and pursuant to an Indenture, dated as of March 12, 1996, between
Arch and IBJ Schroder Bank & Trust Company, as Trustee (the "ARCH
NOTES"); and (ii) in the case of PageNet, 616,830,757 PageNet Shares
and, subject to Section 6.1(d) of this Agreement, Distributed Interests
representing 68.9% of the equity ownership in the Distributed
Subsidiary in exchange for the $1.2 billion in aggregate principal
amount, together with all accrued interest thereon, of: (x) 10% Senior
Subordinated Notes Due October 15, 2008 issued under and pursuant to an
Indenture, dated as of July 15, 1995, between PageNet and Shawmut Bank,
N.A., as Trustee, as supplemented by a Second Supplemental Indenture,
dated as of October 15, 1996, between PageNet and Fleet National Bank;
(y) 10.125% Senior Subordinated Notes Due August 1, 2007 issued under
and pursuant to an Indenture, dated as of July 15, 1995, between
PageNet and Shawmut Bank, N.A., as Trustee, as supplemented by a First
Supplemental Indenture, dated as of July 15, 1995, between PageNet and
Shawmut Bank, N.A.; and (z) 8.875% Senior Subordinated Notes Due
February 1, 2006 issued under and pursuant to an Indenture, dated as of
January 15, 1994, between PageNet and Shawmut Bank, N.A., as Trustee,
as supplemented by a First Supplemental Indenture, dated as of January
15, 1994, between PageNet and Shawmut Bank, N.A. (collectively, the
"PAGENET NOTES" and together with the Arch Notes, the "NOTES"). In the
Exchange Offers, (i) Arch will offer to exchange 66.1318 shares of Arch
Common Stock for each $1,000 principal
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amount, together with all accreted or accrued interest thereon, of
outstanding Arch Notes and (ii) PageNet will offer to exchange a pro
rata portion of 616,830,757 PageNet Shares and, subject to Section
6.1(d) of this Agreement, Distributed Interests representing the
portion of such equity ownership in the Distributed Subsidiary equal to
68.9% of the total equity ownership of the Distributed Subsidiary for
each PageNet Note (such pro rata portion to be computed immediately
prior to the Effective Time by dividing the principal amount, together
with all accrued interest thereon, of each PageNet Note by the
principal amount, together with all accrued interest thereon, of all
PageNet Notes). Calculations of share amounts for such purpose will be
rounded down to the nearest whole share and no fractional shares of
Arch Common Stock or PageNet Shares will be issued for Notes.
(b) The obligations of Arch and PageNet under the
Exchange Offers shall be subject to the satisfaction of the conditions
to the consummation of the Merger set forth in Article VII of this
Agreement and, to the further condition that, (i) in the case of the
PageNet Exchange Offer, not less than 97.5% of the aggregate
outstanding principal amount of PageNet Notes and not less than a
majority of the outstanding principal amount of each series of PageNet
Notes shall have been validly tendered in accordance with the terms of
the PageNet Exchange Offer prior to the expiration date of the PageNet
Exchange Offer and not withdrawn (such 97.5% of the outstanding
principal amount of the PageNet Notes and no less than a majority of
the outstanding principal amount of each series of PageNet Notes
tendered and not withdrawn being herein referred to as the "PAGENET
MINIMUM CONDITION") and (ii) in the case of the Arch Exchange Offer,
not less than 97.5% (the "ARCH MINIMUM PERCENT") of the aggregate
outstanding principal amount of Arch Notes shall have been validly
tendered in accordance with the terms of the Arch Exchange Offer prior
to the expiration date of the Arch Exchange Offer and not withdrawn;
PROVIDED, HOWEVER, that (x) PageNet may elect, in its sole discretion,
to waive the Arch Minimum Percent, or to lower such Arch Minimum
Percent to any level, and require the Arch Exchange Offer to be
consummated at such specified level (subject to applicable Law and the
other provisions of this Agreement), and (y) at any time after either
the PageNet Minimum Condition or the PageNet Conditions to the
Prepackaged Plan have been satisfied, Arch may elect, in its sole
discretion, to lower the Arch Minimum Percent to any percentage equal
to or greater than 67% (such amount of Arch Notes tendered and not
withdrawn, as may be adjusted by either PageNet or Arch as set forth
above, being herein referred to as the "ARCH MINIMUM CONDITION").
Except as otherwise provided in this Agreement, no term or condition of
the Exchange Offers may be amended or modified without the written
consent of the parties hereto, which consent shall not be unreasonably
withheld.
(c) Holders of Notes who tender into the Exchange Offers
will be required, as a condition to a valid tender, to give their
consent (the "NOTE CONSENTS") with respect to all Notes tendered by
them to, with respect to the PageNet Notes, the Prepackaged Plan and,
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with respect to all Notes (including the Arch Notes), the following
amendments to the respective indenture or supplemental indentures,
together with such additional amendments thereto or waivers thereof as
shall be determined and consented to by each of Arch and PageNet to be
necessary or desirable (the "INDENTURE AMENDMENTS"): (i) amendment of
each such indenture to the extent necessary, if any, to permit the
completion of the Merger, the Prepackaged Plan and the other
transactions contemplated by this Agreement; and (ii) amendments to
eliminate (A) any covenants which may be modified or eliminated by
majority vote of the Notes, including without limitation any covenants
which restrict (s) the sale of assets, (t) any change of control, (u)
the incurrence of indebtedness, (v) the making of restricted payments,
(w) the existence of limitations on distributions by subsidiaries, (x)
the existence of liens, (y) transactions with affiliates or related
persons or (z) the issuance and sale of stock of subsidiaries, (B) any
events of default which relate to (x) the non-payment or acceleration
of other indebtedness (or notification of foreclosure proceedings with
respect to property secured by other indebtedness), (y) the failure to
discharge judgments for the payment of money, or (z) the bankruptcy or
insolvency of subsidiaries, and (C) any provisions which condition
mergers or consolidations on compliance with any financial criteria.
Such holders will also be required, as a condition to a valid tender,
to waive (the "NOTE WAIVERS") any and all existing defaults on or with
respect to the Notes and any and all rights to rescind their acceptance
of the Exchange Offer after the Exchange Offers Expiration Date (as
defined in Section 6.18(h) hereof), such waiver of rescission rights to
be subject, however, to their withdrawal rights under applicable law
and regulations, or to claim any payments relating to the Notes
tendered under applicable law and regulations, and for any other
relief, legal or equitable, based on any possible future judicial,
administrative or other governmental or legal determination that the
Note Consents or the adoption of any of the Indenture Amendments are
invalid or unenforceable. Notwithstanding anything to the contrary
herein, the Note Waivers shall not be deemed to cover claims for
violations of federal or state securities laws relating to the Exchange
Offers.
(d) PageNet and Arch each agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied
by it or its Subsidiaries for inclusion or incorporation by reference
in: (i) (x) the Registration Statement on Form S-4 to be filed with the
SEC by Arch in connection with the issuance of shares of Arch Common
Stock in the Arch Exchange Offer (including the consent solicitation
and prospectus (the "ARCH EXCHANGE PROSPECTUS" constituting a part
thereof) (the "ARCH EXCHANGE REGISTRATION STATEMENT")) and (y) the
Registration Statement on Form S-4 to be filed with the SEC by PageNet
in connection with the issuance of PageNet Shares and Distributed
Interests in the PageNet Exchange Offer (including the consent
solicitation and prospectus (the "PAGENET EXCHANGE PROSPECTUS" and,
together with the Arch Exchange Statement, the "EXCHANGE PROSPECTUSES"
constituting a part thereof) (the "PAGENET EXCHANGE REGISTRATION
STATEMENT" and, together with the Arch Exchange Registration Statement,
the "EXCHANGE REGISTRATION STATEMENTS")) will, at the time the Exchange
Registration Statements become effective under
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the Securities Act; and (ii) the Exchange Prospectuses and any
amendment or supplement thereto will, at the date of mailing to
noteholders contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time prior to the
Effective Time any information relating to Arch or PageNet, or any of
their respective affiliates (as defined in SEC Rule 12b-2), officers or
directors, is discovered by Arch or PageNet which should be set forth
in an amendment or supplement to any of the Exchange Registration
Statements or the Exchange Prospectuses, so that any of such documents
would not include any misstatement of a material fact or would omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties to this Agreement
and an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the noteholders.
(e) The PageNet Exchange Prospectus sent to the holders
of the PageNet Notes in connection with the PageNet Exchange Offer will
also constitute a disclosure statement for the purpose of soliciting
the acceptances of such holders for the Prepackaged Plan (as defined in
Section 6.19). PageNet and Arch shall consult with each other prior to
sending the PageNet Exchange Prospectus to the holders of the PageNet
Notes for purposes of ensuring that such materials comply with the
disclosure requirements of the Bankruptcy Code and other applicable law
insofar as they relate to prepackaged plans.
(f) Arch and PageNet shall promptly prepare Exchange
Prospectuses, and shall prepare and file with the SEC the Exchange
Registration Statements as promptly as practicable. Arch and PageNet
each shall use its reasonable best efforts to have each of the Exchange
Registration Statements declared effective under the Securities Act as
promptly as practicable and on the same day as the S-4 Registration
Statement, and promptly thereafter mail the Exchange Prospectuses to
the noteholders of Arch and PageNet. Each party shall notify the other
of the receipt of the comments of the SEC and of any requests by the
SEC for amendments or supplements to the Exchange Prospectuses or the
Exchange Registration Statements or for additional information and
shall promptly supply one another with copies of all correspondence
between any of them (or their Representatives) and the SEC (or its
staff) with respect thereto. If, at any time prior to the expiration
date of the Exchange Offers, any event shall occur relating to or
affecting Arch, PageNet, or their respective officers or directors,
which event should be described in an amendment or supplement to the
Exchange Prospectuses or the Exchange Registration Statements, the
parties shall promptly inform one another and shall cooperate in
promptly preparing, filing and clearing with the SEC and, if required
by applicable securities laws,
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mailing to Arch' or PageNet's noteholders, as the case may be, such
amendment or supplement.
(g) Provided the conditions to the Exchange Offers
referred to in Section 6.18(b) above have been satisfied or waived and
Arch or PageNet, as the case may be, has accepted for exchange Notes
properly tendered and not withdrawn, Notes that are not tendered into
or accepted in the Exchange Offers will remain outstanding as
obligations of Arch or the Surviving Corporation, as the case may be,
after consummation of the Merger and Arch or the Surviving Corporation,
as the case may be, alone shall be obligated to comply with the terms
thereof, except as may otherwise be provided in the Prepackaged Plan or
the Final Confirmation Order (as defined in Section 6.19) if the
Bankruptcy Case (as defined in Section 6.19) is commenced. Such Notes
shall be modified only to the extent provided in the Indenture
Amendments and the Note Consents.
(h) The Exchange Offers will expire at 12:00 midnight,
New York City time, on the twentieth business day after such
commencement, or, consistent with this Agreement and the provisions of
Section 6.19, at such later time and date as PageNet and Arch shall
select consistent with applicable law and regulations (the "EXCHANGE
OFFERS EXPIRATION DATE").
(i) The Arch Common Stock or PageNet Shares and
Distributed Interests, as the case may be, to be issued in exchange for
the Notes tendered and accepted in the Exchange Offers will be so
issued only after timely receipt by the exchange agent selected jointly
by Arch and PageNet (the "NOTES EXCHANGE AGENT") of: (i) certificates
for all physically delivered Notes in proper form for transfer, or
timely confirmation of book-entry transfer of such Notes for such
purposes; (ii) a properly completed and duly executed letter of
transmittal in the form provided on behalf of Arch or the Surviving
Corporation, as the case may be, for such purpose; (iii) a duly
executed form of Note Consent and Note Waiver; and (iv) any other
documents required by the letter of transmittal.
(j) For purposes of the Exchange Offers, Arch or PageNet,
as the case may be, shall be deemed to have accepted for exchange the
tendered Notes as, if and when Arch or PageNet, as the case may be,
gives oral or written notice to the Notes Exchange Agent of such
party's acceptance of such Notes for exchange. Each of Arch and PageNet
agree to simultaneously accept for exchange the Notes pursuant to their
respective Exchange Offers. The Notes Exchange Agent will act as agent
for the tendering holders for the purpose of receiving the Notes and
transmitting the Arch Common Stock, PageNet Shares or Distributed
Interests, as the case may be, in exchange therefor.
(k) Arch and PageNet shall jointly establish such
additional procedures and requirements with respect to the conduct of
the Exchange Offers and shall cause the same
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to be communicated to holders of the Notes in such manner as they shall
determine to be necessary or appropriate, including procedures and
requirements as may be necessary to obtain confirmation of the
Prepackaged Plan if the Bankruptcy Case is commenced. All questions
concerning the timeliness, validity, form, eligibility, and acceptance
for exchange or withdrawal of any tender of the Notes pursuant to any
of the procedures described herein or any additional procedures
established by the parties shall be determined jointly by the parties,
whose determinations shall be final and binding. Arch and PageNet, as
the case may be, also reserve in connection with their respective
Exchange Offers, the absolute right to: (i) waive any defect or
irregularity in any tender with respect to any particular Note or any
particular holder; (ii) permit a defect or irregularity to be corrected
within such time as it may determine; or (iii) reject the purported
tender of any Note and interest coupons appertaining thereto. Tenders
shall not be deemed to have been received or accepted until all defects
and irregularities have been cured or waived within such time as Arch
or PageNet, as the case may be, may determine in its sole discretion.
None of Arch, PageNet or the Notes Exchange Agent or any other person
shall be under any duty to give notification of any defects or
irregularities relating to tenders or incur any liability for failure
to give such notification.
(l) Each of PageNet and Arch shall accept the Notes
tendered in their respective Exchange Offer as of immediately prior to
the Effective Time.
(m) Promptly upon receipt of the consents of the holders
of at least a majority of the outstanding principal amount of a series
of Notes, Arch or PageNet, as the case may be, shall execute the
applicable supplemental indenture to be effective as of the Effective
Time.
6.19. BANKRUPTCY PROVISIONS. As used in this Agreement, the term:
"BANKRUPTCY CASE" shall mean the bankruptcy case filed or stipulated to
by PageNet and its Subsidiaries under Chapter 11 of the Bankruptcy Code
pursuant to the terms hereof;
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, 11
U.S.C.ss.101 et seq., as now in effect or hereafter amended;
"BANKRUPTCY COURT" shall mean the court in which the Bankruptcy Case
may be filed or otherwise administered, including any court to which
the Bankruptcy Case may be transferred at any time under applicable
law. PageNet and Arch hereby agree that the U.S. Bankruptcy Court for
the District of Delaware is the appropriate venue for the Bankruptcy
Case and that if the Bankruptcy Case is filed by PageNet it will be
filed in the District of Delaware;
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"EXIT FINANCING" shall mean the senior secured debt financing referred
to in Section 6.17 hereof;
"FINAL CONFIRMATION ORDER" shall mean an order of the Bankruptcy Court
confirming the Prepackaged Plan in form and substance reasonably
acceptable to PageNet and Arch, which has not been amended, modified
and added to without the express consent of PageNet and Arch and as to
which order as of the Effective Time there is no stay or injunction;
"INITIAL DETERMINATION DATE" shall mean the date which is 60 days after
the date upon which the S-4 Registration Statement and the Exchange
Registration Statements are declared effective by the SEC;
"INTERIM FINANCING" shall mean debt financing in an amount and on terms
reasonably acceptable to Arch and appropriate to permit PageNet to
continue its business and operations in the ordinary course following
the filing of the Bankruptcy Case;
"PREPACKAGED PLAN" shall mean the "prepackaged" plan of reorganization
for PageNet and its Subsidiaries that (1) is prepared by PageNet and
its Subsidiaries in accordance with, and intended by PageNet and its
Subsidiaries to be confirmed under, the provisions of Chapter 11 of the
Bankruptcy Code (including the confirmation requirements set forth in
Section 1129 thereof), (2) consists of terms, conditions and provisions
that are mutually acceptable to Arch and PageNet (it being understood
and agreed by PageNet and Arch that neither party will unreasonably
withhold its consent to proposed amendments to non-material provisions
of the Prepackaged Plan) and are not inconsistent with the terms,
conditions and provisions of this Agreement, (3) is included in the SEC
disclosure materials sent to holders of the PageNet Notes in connection
with the Exchange Offers pursuant to Sections 6.18(a) and (e) of this
Agreement and (4) which contains terms intended to implement this
Agreement and other terms which are not inconsistent with this
Agreement, together with any and all changes, amendments or
modifications to, or restatements of, such prepackaged plan which with
respect to material provisions have been agreed to by Arch and PageNet,
without regard to whether such changes, amendments, modifications and
restatements are made to the Prepackaged Plan before or after the
commencement of the Bankruptcy Case;
"PAGENET CONDITIONS TO THE PREPACKAGED PLAN" shall mean (i) the
Requisite Bankruptcy Vote of the PageNet Notes, (ii) the Requisite
Bankruptcy Vote of the PageNet Secured Creditors and (iii) the Interim
Financing;
"REQUISITE BANKRUPTCY VOTE OF THE PAGENET NOTES" shall mean a vote in
favor of the Prepackaged Plan by the holders of at least two-thirds of
the outstanding principal amount
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of the PageNet Notes that are actually voted, and a vote in favor of
the Prepackaged Plan by a majority in number of the holders of the
PageNet Notes that actually vote;
"REQUISITE BANKRUPTCY VOTE OF THE PAGENET SECURED CREDITORS" shall mean
a vote in favor of the Prepackaged Plan by the holders of at least
two-thirds of the outstanding indebtedness owed under the PageNet
senior credit facilities that are actually voted, and a vote in favor
of the Prepackaged Plan by a majority in number of the holders of the
indebtedness under the PageNet senior credit facilities that actually
vote;
"REQUISITE CONDITIONS TO THE PREPACKAGED PLAN" shall mean (i) the
PageNet Conditions to the Prepackaged Plan, (ii) the Arch Conditions to
the Prepackaged Plan, and (iii) that either the Exit Financing has been
obtained or upon entry of the Final Order will be obtained;
"ARCH CONDITIONS TO THE PREPACKAGED PLAN" shall mean the (i) Arch
Minimum Condition and (ii) Arch Stockholders Approval.
(a) Notwithstanding any other provision of this Agreement
to the contrary, in the event that:
(i) prior to or at the Initial Determination
Date the PageNet Minimum Condition and the Arch Minimum Condition are
satisfied, and the PageNet Stockholders Approval and the Arch
Stockholders Approvals are obtained, then the Exchange Offers shall be
consummated pursuant to the terms hereof, the Bankruptcy Case shall not
be filed and the Prepackaged Plan shall be abandoned, unless PageNet
and Arch agree that the filing of the Bankruptcy Case and the
confirmation of the Prepackaged Plan are in the best interests of
PageNet and Arch, notwithstanding satisfaction of the PageNet Minimum
Condition and the Arch Minimum Condition;
(ii) at the Initial Determination Date, the
PageNet Minimum Condition is not satisfied or the PageNet Stockholders
Approval is not obtained but the Requisite Conditions to the
Prepackaged Plan are satisfied, then either (x) (1) PageNet shall file
the Bankruptcy Case (in the U.S. Bankruptcy Court for the District of
Delaware or such other bankruptcy court as PageNet and Arch mutually
agree) and seek confirmation of the Prepackaged Plan by the Bankruptcy
Court, and (2) Arch shall be bound by all of the terms hereof, and
shall consummate the Merger through the Prepackaged Plan if such plan
is confirmed by the Bankruptcy Court by a Final Confirmation Order
within 120 days of the commencement of the Bankruptcy Case, or such
later date as is mutually agreed to in writing by Arch and PageNet, and
if the other conditions to the Merger set forth in Article VII hereof
(other than Section 7.1(a)(2) and 7.1(g)(ii), which shall have been
satisfied by entry of the Final Confirmation Order) are satisfied after
entry of the Final Confirmation Order but prior to the Termination
Date, as such date may be extended in accordance with
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Section 8.2, or (y) PageNet shall terminate this Agreement and
simultaneously pay to Arch the Arch Termination Fee pursuant to Section
8.5(c) hereof. In the event the Bankruptcy Case is commenced, Arch
shall:
(w) support assumption of this Agreement by PageNet as a
debtor-in- possession pursuant to 11 U.S.C. ss. 365;
(x) enter into a new agreement identical to the terms of
this Agreement with PageNet as a debtor-in-possession after
commencement of the Bankruptcy Case, in the event PageNet and
Arch agree (upon the advice of counsel) or the Bankruptcy
Court determines that applicable law prohibits assumption of
this Agreement by PageNet as a debtor-in-possession pursuant
to 11 U.S.C. ss. 365(c)(2);
(y) support confirmation of the Prepackaged Plan and all
actions and pleadings reasonably undertaken by PageNet in the
Bankruptcy Case to achieve confirmation thereof; and
(z) oppose any effort by any party to (1) dismiss the
Bankruptcy Case or convert the Bankruptcy Case to a case under
chapter 7 of the Bankruptcy Code, or (2) defeat confirmation
of the Prepackaged Plan;
(iii) at the Initial Determination Date, the
PageNet Minimum Condition is not satisfied or the PageNet Stockholders
Approval is not obtained and the Requisite Conditions to the
Prepackaged Plan are not satisfied, then the Initial Determination Date
shall be extended to the earlier of (x) the date upon which the PageNet
Minimum Condition and the Arch Minimum Condition are satisfied, and the
PageNet Stockholders Approval and the Arch Stockholders Approval are
obtained, (y) the date upon which the Requisite Conditions to the
Prepackaged Plan are satisfied and (z) June 30, 2000 (the "EXTENDED
DETERMINATION DATE"). If the PageNet Minimum Condition and the Arch
Minimum Condition are satisfied and the PageNet Stockholders Approval
and the Arch Stockholders Approval are obtained prior to June 30, 2000,
then the provisions of Section 6.19(a)(i) of this Agreement shall
apply. If the Requisite Conditions to the Prepackaged Plan are
satisfied prior to June 30, 2000, then the provisions of Section
6.19(a)(ii) of this Agreement shall apply;
(iv) at any time after the date of this
Agreement, the Board of Directors of PageNet determines that the filing
of the Bankruptcy Case is in the best interests of PageNet, then (1)
PageNet may file the Bankruptcy Case and shall seek, to the extent not
already satisfied, to satisfy the PageNet Conditions to the Prepackaged
Plan and otherwise seek confirmation of the Prepackaged Plan by the
Bankruptcy Court, and (2) Arch shall (x)
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seek, to the extent not already satisfied, to satisfy the Arch
Conditions to the Prepackaged Plan and (y) be bound by all of the terms
hereof, and shall consummate the Merger through the Prepackaged Plan if
such plan is confirmed by the Bankruptcy Court by a Final Confirmation
Order (provided that such Final Confirmation Order shall be entered by
no later than December 31, 2000, or such later date as is mutually
agreed to by Arch and PageNet) and if the other conditions to the
Merger set forth in Article VII hereof (other than Section 7.1(a)(2)
and 7.1(g)(ii), which shall have been satisfied by entry of the Final
Confirmation Order) are satisfied after entry of the Final Confirmation
Order but prior to the Termination Date, as such date may be extended
in accordance with Section 8.2;
(v) an Involuntary Insolvency Event occurs prior
to a voluntary commencement of the Bankruptcy Case pursuant to Sections
6.19(a)(ii), (iii) or (iv), (1) (A) if the date of the Insolvency Event
(the "INVOLUNTARY INSOLVENCY EVENT DATE") is prior to the Initial
Determination Date, PageNet shall have up to 120 days after such
Involuntary Insolvency Event Date to obtain from the appropriate court
an order which dismisses such Involuntary Insolvency Event (including,
with respect to an involuntary petition filed in any bankruptcy court,
an order which holds or requires that the court abstain from
adjudicating the petition pursuant to 11 U.S.C. ss. 305) and which
order is not subject to a stay or injunction and is not subject to an
appeal and all periods for taking an appeal shall have expired (the
"DISMISSAL ORDER"), so that the Exchange Offers may be completed, and
this Agreement shall remain in full force and effect and Arch shall be
bound by all of the terms hereof or (B) if an Involuntary Insolvency
Event occurs after the Initial Determination Date, and as of the
Involuntary Insolvency Event Date the PageNet Minimum Condition and the
Arch Minimum Condition have been satisfied and the PageNet Stockholders
Approval and Arch Stockholders Approval have been obtained, then (x)
PageNet shall have up to 120 days after such Involuntary Insolvency
Event Date to obtain entry of the Dismissal Order, and (y) this
Agreement shall remain in full force and effect and Arch shall
consummate the Merger (outside of bankruptcy, unless PageNet and Arch
mutually consent to file the Bankruptcy Case as contemplated by Section
6.19(a)(i) hereof) pursuant to the terms hereof provided that such
Dismissal Order has been obtained before the expiration of such 120-day
period, (2) if on the Involuntary Insolvency Event Date the PageNet
Minimum Condition has not been satisfied or PageNet Stockholders
Approval has not been obtained but the Requisite Conditions to the
Prepackaged Plan have been satisfied, then PageNet shall stipulate to
bankruptcy relief under Chapter 11 of the Bankruptcy Code and the
provisions of Section 6.19(a)(ii)(x)(1) of this Agreement shall apply
(including the provisions therein requiring Arch to be obligated to
consummate the Merger pursuant to the Prepackaged Plan); and (3) if on
the Involuntary Insolvency Event Date the PageNet Minimum Condition has
not been satisfied or PageNet Stockholders Approval or Arch
Stockholders Approval has not been obtained and the Requisite
Conditions to the Prepackaged Bankruptcy have not been obtained, then
PageNet may (but shall not be obligated to) stipulate to bankruptcy
relief under Chapter 11 of the Bankruptcy Code and
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the provisions of Section 6.19(a)(iv) of this Agreement shall apply
(including the provisions therein requiring Arch to be obligated for a
period of time to consummate the Merger pursuant to the Prepackaged
Plan). For purposes hereof, an "INVOLUNTARY INSOLVENCY EVENT" shall
mean any filing of an involuntary bankruptcy petition against PageNet
or any of its Subsidiaries by any party, or the appointment under other
applicable state or federal law of a liquidator or a trustee for
PageNet or any of its Subsidiaries.
(b) As soon as practicable after entering into this
Agreement, PageNet and Arch shall jointly prepare the Prepackaged Plan
in form and substance satisfactory to PageNet and Arch. PageNet shall
include the Prepackaged Plan and related solicitation materials
(including a ballot) in the PageNet Exchange Prospectus, the
solicitation materials sent to the PageNet Secured Creditors, and (to
the extent PageNet and Arch deem necessary) in any materials sent to
the holders of PageNet Shares. PageNet and Arch shall cooperate to
ensure that the Exchange Offers, including the disclosures to holders
of PageNet Notes made in connection therewith, and the solicitation of
PageNet Secured Creditors comply with the disclosure requirements of
the Bankruptcy Code and applicable law. The Prepackaged Plan may not be
amended, modified or added to in any material respect without the
written consent of PageNet and Arch.
(c) Notwithstanding any other provision hereof to the
contrary, (i) the filing of the Bankruptcy Case, the operation of
PageNet's business in accordance with the Bankruptcy Code or the
pendency of the Bankruptcy Case, or (ii) the occurrence of an
Involuntary Insolvency Event with respect to PageNet shall not be
considered in and of itself a Material Adverse Effect for purposes of
this Agreement.
(d) On the same day that the Bankruptcy Case is filed, an
order for relief is consented to under Section 6.19(a)(v) of this
Agreement or an order for relief is entered, as applicable, PageNet
shall file a motion (the "INITIAL MERGER MOTION") for expedited
determination of approval of Section 6.2 hereof concerning Acquisition
Proposals (the "EXCLUSIVITY PROVISION"), Section 8.5(c) concerning the
Arch Termination Fee and Section 8.5(b) concerning the PageNet
Termination Fee in form and substance acceptable to Arch, PageNet shall
use its best efforts to obtain an order approving the Initial Merger
Motion (the "INITIAL MERGER ORDER") within 15 days of the commencement
of the Bankruptcy Case, but in no event not later than 30 days after
the commencement thereof, which order shall be in form and substance
acceptable to Arch.
(e) PageNet shall promptly provide to Arch with drafts of
all documents, motions, orders, filings or pleadings that PageNet
proposes to file with the Bankruptcy Court and will provide Arch with
reasonable opportunity prior to the filing thereof to review such
filings to the extent reasonably practicable. PageNet shall consult and
cooperate with Arch with respect to all such filings.
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(f) PageNet and Arch shall use their best efforts to
cause the transactions contemplated by this Agreement and the
Prepackaged Plan to be consummated in accordance with the terms hereof
and thereof, and without limiting the generality of the foregoing shall
use their best efforts to obtain all necessary approvals, waivers,
consents, permits, licenses, registrations and other authorizations
required in connection with this Agreement and the Prepackaged Plan and
the transactions contemplated hereby and thereby, including without
limitation, entry of the Final Confirmation Order.
(g) PageNet shall cause its Subsidiaries to take all
actions and to execute all agreements and documents which are necessary
or useful in the preparation of and commencement of the Bankruptcy
Case, the preparation, filing and prosecution of the Prepackaged Plan
and the entry of the Final Confirmation Order.
(h) Concurrent with the commencement of the Exchange
Offers, PageNet shall send solicitation and disclosure materials to its
creditors as would bind such creditors to the Prepackaged Plan under
the provisions of the Bankruptcy Code. PageNet shall make such
solicitations of its creditors (in addition to solicitations of holders
of the PageNet Notes) as PageNet and Arch determine is necessary to
facilitate and expedite the confirmation of the Prepackaged Plan in the
event of any potential Bankruptcy Case.
(i) If the Bankruptcy Case is commenced pursuant to
Section 6.19(a)(iv) or (v), then Arch shall not be subject to the
restrictions set forth in Section 6.2 or the restrictions on the
conduct of its business set forth in Section 6.1(b)(viii) with respect
to merger or acquisition transactions or the other restrictions set
forth in Section 6.1(b), to the extent such restrictions would impede
or prohibit Arch from entering into another merger or acquisition
transaction; PROVIDED, HOWEVER, that Arch may not enter into another
merger or acquisition transaction that would prevent, materially impair
or materially delay its ability to consummate the Merger or the other
transactions contemplated hereby; PROVIDED, FURTHER, that if Arch
enters into a merger or acquisition transaction following the
commencement of the Bankruptcy Case pursuant to Section 6.19(a)(iv) or
(v) and as a result of such event PageNet is required to amend its
disclosure statement and resolicit the votes of its creditors, then the
time within which the Final Confirmation Order must be obtained shall
be extended for an additional 90 days.
6.20. RIGHTS AGREEMENT. At or prior to the Effective Time, the Arch
Board of Directors shall take all action required to render inapplicable the
Arch Rights Agreement to the Merger and the transactions contemplated by this
Agreement. At or prior to the Effective Time, the Arch Board of Directors shall
take all action required by Section 5.1(j)(ii) of this Agreement and the PageNet
Board of Directors shall take all action required by Section 5.1(j)(i) of this
Agreement.
6.21. PREFERRED STOCK.
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(a) Arch shall use its reasonable best efforts to obtain,
as soon as practicable after the date of this Agreement, the written
agreement of each holder of Arch Series C Preferred Shares (such
written agreement referred to herein as the "SERIES C CONSENT
AGREEMENT"), pursuant to which: (i) such holder agrees to vote in favor
of an amendment to the Arch certificate of incorporation pursuant to
which each Series C Convertible Preferred Share shall be converted at
the Effective Time into 8.416568 shares (the "SERIES C EXCHANGE RATIO")
of Arch Common Stock, subject to adjustment as provided in Section 4.4
(the "SERIES C CONSIDERATION"), (ii) waive any and all rights such
holder may have under section 7A of the Certificate of Designations,
Preferences and Relative, Participating, Optional or other Special
Rights of Series C Convertible Stock of Arch; and (iii) Arch agrees to
register for sale by such holder and certain transferees, the shares of
Arch Common Stock received by such holder, unless such shares would be
freely tradeable under applicable securities laws. When executed and
delivered by Arch, the Series C Consent Agreement will be a valid and
binding agreement of Arch, enforceable against Arch in accordance with
its terms, subject to the Bankruptcy and Equity Exception.
(b) The exchange of certificates formerly representing
Arch Series C Preferred Shares shall be effected by the Exchange Agent
(as defined in Section 4.2) pursuant to the provisions set forth in
Section 4.2 of this Agreement. The term "Certificate" shall include
certificates formerly representing Arch Series C Preferred Shares.
6.22. SPINOFF. Prior to the Closing, the Board of Directors of
PageNet will declare a dividend (the "SPINOFF DIVIDEND"), payable to those
holders of PageNet Shares who hold PageNet Shares immediately prior to the
acceptance of PageNet Notes in the PageNet Exchange Offer (the "SPINOFF RECORD
DATE"), of interests (the "DISTRIBUTED INTERESTS") representing the portion of
such equity ownership in Silverlake Communications, Inc. (also doing business as
VAST Solutions, Inc. and VAST Solutions) (the "DISTRIBUTED SUBSIDIARY") equal to
(x) subject to Section 6.1(d), 11.6% of the total equity ownership of the
Distributed Subsidiary divided by (y) the number of PageNet Shares issued and
outstanding at the Spinoff Record Date (the issuance of the Spinoff Dividend
shall be referred to herein as the "SPINOFF"). Payment of the Spinoff Dividend
declared by the Board of Directors of PageNet shall be conditioned upon the
occurrence of (i) either (A) the satisfaction of the PageNet Minimum Condition
and the acceptance of the PageNet Notes or (B) the filing of the Final
Confirmation Order and (ii) the consummation of the Merger. PageNet and the
Distributed Subsidiary shall take such action reasonably necessary (including
filings with and no- action requests of the SEC and communications with
stockholders) to effectuate the Spinoff. Upon satisfaction of the conditions to
the Spinoff Dividend, Arch shall use its reasonable best efforts to consummate,
or cause to be consummated the Spinoff as promptly as practicable after the
Effective Time.
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ARTICLE VII.
CONDITIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver, if applicable, at or prior to the Effective Time of each
of the following conditions:
(a) STOCKHOLDER APPROVAL. The Arch Stockholders Approval
shall have been obtained, and PageNet shall have obtained either (1)
the PageNet Stockholders Approval or (2) entry of the Final
Confirmation Order confirming the Prepackaged Plan, such that this
Agreement and the transactions contemplated hereby can be accomplished
without the approval of the holders of the PageNet Shares.
(b) NASDAQ LISTING. The shares of Arch Common Stock
issuable pursuant to this Agreement shall have been approved for
listing (either before or after the execution of this Agreement) on the
NASDAQ.
(c) GOVERNMENTAL REGULATIONS. The waiting period
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated, and all other consents, permits,
licenses, and approvals for the Merger and the other transactions
contemplated by this Agreement required by the Governmental
Regulations, as well as all other material PageNet Required Consents
and Arch Required Consents, shall have been obtained and shall have
become Final Orders. For purposes of this agreement, a "FINAL ORDER"
shall mean an action taken or order issued by the applicable
Governmental Entity as to which (i) no request for stay by such
Governmental Entity of the action or order is pending, no such stay is
in effect, and, if any deadline for filing any such request is
designated by statute or regulation, it is passed; (ii) no petition for
rehearing or reconsideration of the action or order is pending before
the Governmental Entity and the time for filing any such petition is
passed; (iii) the Governmental Entity does not have the action or order
under reconsideration on its own motion and the time for such
reconsideration has passed; (iv) the action or order is not then under
active judicial review, there is no notice of appeal or other
application for judicial review pending, and the deadline for filing
such notice of appeal or other application for judicial review has
passed; and (v) with respect to an action taken or order issued by the
Governmental Entity granting consent to the Merger, such consent shall
be without material adverse conditions, other than conditions that have
been agreed to by PageNet and Arch or that are routine conditions with
respect to transfer of this nature.
(d) LAWS AND ORDERS. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary,
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preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Merger, the Exchange Offers,
the Spinoff or the other transactions contemplated by this Agreement
(collectively, an "ORDER"), and no Governmental Entity shall have
instituted any proceeding or threatened to institute any proceeding
seeking any such Order.
(e) S-4. The S-4 Registration Statement and the Exchange
Registration Statements shall have become effective under the
Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement or the Exchange Registration Statements shall
have been issued, and no proceedings for that purpose shall have been
initiated or be threatened by the SEC.
(f) SENIOR CREDIT FACILITIES. Arch and its subsidiaries,
including PageNet after giving effect to the Merger, will have senior
credit facilities in an amount not less than $1.5 billion.
(g) EXCHANGE OFFERS/BANKRUPTCY. Either (i) the PageNet
Minimum Condition and the Arch Minimum Condition shall have been
satisfied or (ii) if the PageNet Minimum Condition has not been
satisfied, the Final Confirmation Order shall have been entered
confirming the Prepackaged Plan and the Arch Minimum Condition shall
have been obtained and all conditions to the Effective Time occurring
under the Prepackaged Plan shall have been satisfied.
(h) BLUE SKY APPROVALS. Arch shall have received all
state securities and "blue sky" permits and approvals necessary to
consummate the transactions contemplated by this Agreement.
(i) EXPECTED OUT-OF-POCKET INCOME TAX LIABILITY. PageNet,
Arch, Merger Sub and their respective subsidiaries shall not be
reasonably expected to incur out-of-pocket income tax liability in
their respective taxable periods which include the Effective Time
resulting directly from the consummation of the Merger, the Exchange
Offers and the Spinoff in excess of $25 million in the aggregate. In
making this determination the following shall be taken into account:
(1) the amount of cancellation of indebtedness income, if any,
includible in gross income, (2) gain, if any, incurred as a result of
the distribution or transfer of appreciated assets, and (3) the amount
of losses, credits or deductions, including both available net
operating loss or credit carryforwards and losses, deductions or
credits expected to be generated in the taxable periods which include
the Effective Time, but excluding any expected carrybacks from
subsequent taxable periods.
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7.2. CONDITIONS TO OBLIGATIONS OF ARCH AND MERGER SUB. The
obligations of Arch and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Arch at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of PageNet set forth in this Agreement (other than those
representations and warranties which would be breached as a result of
the filing or conduct of the Bankruptcy Case or the occurrence of an
Involuntary Insolvency Event with respect to PageNet): (i) to the
extent qualified by materiality, shall be true and correct; and (ii) to
the extent not qualified by materiality, shall be true and correct
(except that this clause (ii) shall be deemed satisfied so long as any
failures of such representations and warranties to be true and correct,
taken together, would not reasonably be expected to have a Material
Adverse Effect on PageNet and would not reasonably be expected to have
a material adverse effect on the expected benefits of the Merger to
Arch), in the case of each of clauses (i) and (ii), as of the date of
this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, and Arch shall have received
a certificate signed on behalf of PageNet by an executive officer of
PageNet to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PAGENET. PageNet shall
have performed in all material respects all of its covenants,
agreements and obligations set forth in this Agreement at or prior to
the Closing Date, and Arch shall have received a certificate signed on
behalf of PageNet by an executive officer of PageNet to such effect.
(c) CONSENTS UNDER AGREEMENTS. PageNet shall have
obtained the consent or approval of each Person whose consent or
approval shall be required in order to consummate the transactions
contemplated by this Agreement under any Contract to which PageNet or
any of its Subsidiaries is a party (other than consents or waivers
relating to the Bankruptcy Case or the occurrence of an Involuntary
Insolvency Event), except those for which the failure to obtain such
consent or approval, individually or in the aggregate, is not
reasonably likely to have, a Material Adverse Effect on PageNet or a
material adverse effect on the expected benefits of the Merger to Arch.
(d) TAX OPINION. Arch shall have received the opinion of
Hale and Dorr LLP, counsel to Arch, dated the Closing Date, to the
effect that the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code,
and that each of Arch, Merger Sub and PageNet will be a party to that
reorganization within the meaning of Section 368(b) of the Code. Such
opinion shall be based on certain assumptions concerning the fair
market value of stock and securities to be surrendered and issued in
the Merger, the Exchange Offers and the Spinoff, which PageNet, Arch
and, with respect to PageNet, Houlihan Lokey Howard & Zukin Financial
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Advisors, Inc., and, with respect to Arch, Bear, Stearns & Co. Inc.
will certify as being reasonable. In addition, in rendering such
opinions, counsel may rely upon representations and certificates given
for this purpose by responsible officers of PageNet, Arch and Merger
Sub.
(e) CERTIFICATE. PageNet shall have delivered to Arch a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified in
Section 7.2 is satisfied in all respects, that the PageNet Stockholders
Meeting has been convened (unless the Bankruptcy Case precedes the
scheduled date of such meeting), and that the actions set forth in
Section 6.5(a) of this Agreement have been adopted and approved in
accordance with such section (except to the extent such approval is not
required by reason of the entry of the Final Confirmation Order).
7.3. CONDITIONS TO OBLIGATION OF PAGENET. The obligation of PageNet
to effect the Merger is also subject to the satisfaction or waiver by PageNet at
or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Arch and Merger Sub set forth in this Agreement: (i)
to the extent qualified by materiality, shall be true and correct; and
(ii) to the extent not qualified by materiality, shall be true and
correct (except that this clause (ii) shall be deemed satisfied so long
as any failures of such representations and warranties to be true and
correct, taken together, would not reasonably be expected to have a
Material Adverse Effect and would not reasonably be expected to have a
material adverse effect on the expected benefits of the Merger to
PageNet), in the case of each of clauses (i) and (ii), as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, and PageNet shall have
received a certificate signed on behalf of Arch and Merger Sub by an
executive officer of Arch to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ARCH. Each of Arch and
Merger Sub shall have performed in all material respects all of its
covenants, agreements and obligations set forth in this Agreement at or
prior to the Closing Date, and PageNet shall have received a
certificate signed on behalf of Arch and Merger Sub by an executive
officer of Arch to such effect.
(c) CONSENTS UNDER AGREEMENTS. Arch shall have obtained
the consent or approval of each Person whose consent or approval shall
be required in order to consummate the transactions contemplated by
this Agreement under any Contract to which Arch or any of its
Subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not
reasonably likely to have, a
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Material Adverse Effect on Arch or a material adverse effect on the
expected benefits of the Merger to PageNet.
(d) TAX OPINION. PageNet shall have received the opinion
of Mayer, Brown & Platt, counsel to PageNet, dated the Closing Date, to
the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code, and that each of Arch, Merger Sub and PageNet will be a party
to that reorganization within the meaning of Section 368(b) of the
Code. Such opinion shall be based on certain assumptions concerning the
fair market value of stock and securities to be surrendered and issued
in the Merger, the Exchange Offers and the Spinoff, which PageNet, Arch
and, with respect to PageNet, Houlihan Lokey Howard & Zukin Financial
Advisors, Inc., and, with respect to Arch, Bear, Stearns & Co. Inc.
will certify as being reasonable. In addition, in rendering such
opinions, counsel may rely upon representations and certificates given
for this purpose by responsible officers of PageNet and Arch.
(e) CERTIFICATE. Arch shall have delivered to PageNet a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified in
Section 7.3 (a)-(d) is satisfied in all respects, that the Arch
Stockholders Meeting has been convened, and that the actions set forth
in Section 6.5(b) have been adopted and approved in accordance with
such section.
(f) SERIES C CONSENT AGREEMENT. The Series C Consent
Agreement will be in full force and effect, Arch shall not be in breach
or default of the Series C Consent Agreement, and to the actual
knowledge of the Knowledgeable Executives of Arch, there shall not
exist a breach or default under the Series C Consent Agreement by any
other party thereto.
(g) SPINOFF. The Spinoff Dividend may be declared
pursuant to Section 6.22 of this Agreement or the Final Confirmation
Order shall have been entered confirming the Prepackaged Plan.
ARTICLE VIII.
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of PageNet or Arch
referred to in Section 7.1(a), by mutual written consent of PageNet and Arch,
through action of their respective Boards of Directors.
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8.2. TERMINATION BY EITHER ARCH OR PAGENET. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Arch or PageNet if: (i) the
Merger shall not have been consummated by June 30, 2000 if no Bankruptcy Case
has been filed by that date or 30 days following the date by which the Final
Confirmation Order must be entered under Section 6.19(a) (the "TERMINATION
DATE"); PROVIDED, HOWEVER, that either party shall have the option, in its sole
discretion, to extend the Termination Date for an additional period of time not
to exceed 90 days if the sole reason that the Merger has not been consummated by
such date is that the condition set forth in Section 7.1(c) has not been
satisfied due to the failure to obtain the necessary consents and approvals
under applicable Governmental Regulations and Arch or PageNet are still
attempting to obtain such necessary consents and approvals under applicable
Governmental Regulations or are contesting the refusal of the relevant
Government Entities to give such consents or approvals in court or through other
applicable proceedings; (ii) the PageNet Stockholders Meeting and the Arch
Stockholders Meeting shall have been held and completed, but the PageNet
Stockholders Approval or the Arch Stockholders Approval, to the extent required
by Section 7.1(a), shall not have occurred; or (iii) any Order permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after the PageNet
Stockholders Approval or the Arch Stockholders Approval); PROVIDED, FURTHER,
that the right to terminate this Agreement pursuant to clause (i) above shall
not be available to any party that has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure of the Merger to be consummated.
8.3. TERMINATION BY PAGENET. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the PageNet Stockholder Approval referred to in Section 7.1(a), by action
of the Board of Directors of PageNet if:
(a) the Board of Directors of Arch shall have withdrawn
or adversely modified its approval or recommendation of this Agreement;
(b) there has been a breach by Arch or Merger Sub of any
representation, warranty, covenant or agreement contained in this
Agreement which both: (i) would result in a failure of a condition set
forth in Section 7.3(a) or 7.3(b); and (ii) cannot be or is not cured
prior to the Termination Date;
(c) PageNet has received a Superior Proposal, has
otherwise complied with the requirements of Section 6.2, provides Arch
with all of the material terms of Superior Proposal at least two
business days prior to termination and simultaneously with such
termination pays to Arch the Arch Termination Fee required by Section
8.5(c); or
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(d) pursuant to Section 6.19(a)(ii), PageNet shall not
file the Bankruptcy Case and seek confirmation of the Prepackaged Plan
by the Bankruptcy Court and simultaneously pays to Arch the Arch
Termination Fee.
8.4. TERMINATION BY ARCH. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the Arch Stockholder Approval referred to in Section 7.1(a), by action of the
Board of Directors of Arch if:
(a) the Board of Directors of PageNet shall have
withdrawn or adversely modified its approval or recommendation of this
Agreement to do so;
(b) there has been a breach by PageNet of any
representation, warranty, covenant or agreement contained in this
Agreement which both: (i) would result in a failure of a condition set
forth in Section 7.2(a) or 7.2(b); and (ii) cannot be or is not cured
prior to the Termination Date, other than a breach that results solely
from the filing or conduct of the Bankruptcy Case consistent with the
terms of this Agreement or solely from the occurrence of an Involuntary
Insolvency Event with respect to PageNet;
(c) the Initial Merger Order has not been entered within
30 days of the commencement of the Bankruptcy Case;
(d) the Final Confirmation Order is not entered within
the time permitted by Section 6.19(a);
(e) the Prepackaged Plan is amended, modified or added to
in violation of Section 6.19(b); or
(f) Arch has received a Superior Proposal, has otherwise
complied with the requirements of Section 6.2, provides PageNet with
all of the material terms of the Superior Proposal at least two
business days prior to such termination and simultaneously pays to
PageNet the PageNet Termination Fee required by Section 8.5(b).
8.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement
(other than as set forth in Section 9.1) shall become void and of no
effect with no liability (other than as set forth in Section 8.5(b) or
(c), or in the proviso at the end of this sentence) on the part of any
party to this Agreement or of any of its directors, officers,
employees, agents, legal or financial advisors or other
representatives; PROVIDED, HOWEVER, no such termination shall relieve
any party to this Agreement from any liability for damages resulting
from any breach of this Agreement.
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(b) In the event that: (i) an Acquisition Proposal shall
have been made to Arch or have been made directly to Arch' stockholders
or noteholders generally or any Person shall have publicly announced an
intention (whether or not conditional) to make an Acquisition Proposal
and thereafter: (A) Arch' stockholders do not adopt this Agreement or
the other transactions contemplated hereby at the Arch Stockholders
Meeting or Arch' noteholders do not satisfy the Arch Minimum Condition
with respect to the Arch Notes; (B) this Agreement is terminated by
either Arch or PageNet pursuant to the terms of this Agreement and (C)
Arch enters into an agreement with a third party with respect to an
Acquisition Proposal within 12 months of the termination of this
Agreement; (ii) this Agreement is terminated by PageNet pursuant to
Section 8.3(a) or (b) provided that, with respect to Section 8.3(b), it
is terminated solely with respect to a breach of (A) Section 6.2 or (B)
Section 6.5 (but, only with respect to Arch' obligation in accordance
with such Section to duly convene and complete the Arch Stockholders
Meeting regarding the adoption of this Agreement and the matters set
forth in Section 6.5(b) of this Agreement); or (iii) this Agreement is
terminated by Arch pursuant to Section 8.4(f), then Arch and its
Subsidiaries (jointly and severally) shall pay PageNet a fee equal to
$40.0 million (the "PAGENET TERMINATION FEE"), which amount shall be in
addition to any expenses to be paid pursuant to Section 6.12, payable
by wire transfer of same day funds. A PageNet Termination Fee payable
pursuant to Section 8.5(b)(i), or (ii) shall be paid no later than two
days after the date of termination and a PageNet Termination Fee
payable pursuant to Section 8.5(b)(iii) shall be paid simultaneously
with (and such payment shall be a condition of) termination pursuant to
Section 8.4(f). Arch acknowledges that the agreements contained in this
Section 8.5(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, PageNet would not
enter into this Agreement. Accordingly, if Arch fails to pay promptly
the amount due pursuant to this Section 8.5(b), and, in order to obtain
such payment, PageNet commences a suit which results in a judgment
against Arch for the fee set forth in this paragraph (b), Arch shall
pay to PageNet its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
(c) In the event that: (i) an Acquisition Proposal shall
have been made to PageNet or have been made directly to PageNet's
stockholders or noteholders generally or any Person shall have publicly
announced an intention (whether or not conditional) to make an
Acquisition Proposal and thereafter: (A) PageNet's stockholders do not
adopt this Agreement or the other transactions contemplated hereby at
the PageNet Stockholders Meeting or PageNet's noteholders do not
satisfy the PageNet Minimum Condition with respect to the PageNet
Notes, and the Bankruptcy Court fails to enter the Final Confirmation
Order which would otherwise enable the transactions set forth in this
Agreement to occur without approval by the holders of PageNet Shares;
(B) this
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Agreement is terminated by either Arch or PageNet pursuant to the terms
of this Agreement and (C) either (x) PageNet executes and delivers an
agreement with respect to an Acquisition Proposal or (y) an Acquisition
Proposal with respect to PageNet is consummated, in either case, within
12 months of the date this Agreement is terminated; (ii) this Agreement
is terminated by Arch pursuant to Section 8.4(a) or (b) provided that,
with respect to Section 8.4(b), it is terminated solely with respect to
a breach of (A) Section 6.2 or (B) Section 6.5 (but, only with respect
to PageNet's obligation in accordance with such Section to duly convene
and complete the PageNet Stockholders Meeting (unless the Bankruptcy
Case has commenced or PageNet has stipulated to bankruptcy relief after
the occurrence of an Involuntary Insolvency Event pursuant to Section
6.19(a)(iv) hereof) regarding the adoption of this Agreement and the
approval of the matters set forth in Section 6.5(a) of this Agreement);
(iii) the Prepackaged Plan is withdrawn without the prior written
consent of Arch, or PageNet files any other plan of reorganization or
amends, modifies or adds to any material provision of the Prepackaged
Plan in each case without the prior written consent of Arch; (iv) any
other plan of reorganization filed by a person other than PageNet is
confirmed by the Bankruptcy Court; (v) PageNet files a motion to sell
or otherwise transfer all or a substantial portion of its assets as
part of a sale pursuant to Section 363 of the Bankruptcy Code without
the prior written consent of Arch; or (vi) this Agreement is terminated
by PageNet pursuant to Section 8.3(c) or (d), then PageNet and its
Subsidiaries (jointly and severally) shall pay Arch a fee equal to
$40.0 million (the "ARCH TERMINATION FEE"), which amount shall be in
addition to any expenses to be paid pursuant to Section 6.12, payable
by wire transfer of same day funds. A Arch Termination Fee payable
pursuant to Section 8.5(c)(i), (ii), (iii), (iv) or (v) shall be paid
no later than two days after the date of termination and a Arch
Termination Fee payable pursuant to Section 8.5(c)(vi) shall be paid
simultaneously with (and such payment shall be a condition of)
termination pursuant to Section 8.3(c) or (d). PageNet acknowledges
that the agreements contained in this Section 8.5(c) are an integral
part of the transactions contemplated by this Agreement, and that,
without these agreements, Arch and Merger Sub would not enter into this
Agreement. Accordingly, if PageNet fails to pay promptly the amount due
pursuant to this Section 8.5(c) (and in any case in which the
Bankruptcy Case has been commenced, the Initial Merger Order approves
this provision), and, in order to obtain such payment, Arch commences a
suit which results in a judgment against PageNet for the fee set forth
in this paragraph (c), PageNet shall pay to Arch its costs and expenses
(including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made.
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ARTICLE IX.
MISCELLANEOUS AND GENERAL
9.1. SURVIVAL. Article II, Article III, Article IV and this Article
IX (other than Section 9.4 (Counterparts)), and the agreements of PageNet, Arch
and Merger Sub contained in Sections 6.8 (Affiliates), 6.11 (Benefits), 6.12
(Expenses) and 6.13 (Indemnification; Directors' and Officers' Insurance) shall
survive the consummation of the Merger. This Article IX (other than Section 9.2
(Modification or Amendment), Section 9.3 (Waiver of Conditions) and Section 9.13
(Assignment)) and the agreements of PageNet, Arch and Merger Sub contained in
Section 6.12 (Expenses), Section 6.14 (Takeover Statute), Section 6.15
(Confidentiality) and Section 8.5 (Effect of Termination and Abandonment) shall
survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties to this
Agreement may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties.
9.3. WAIVER OF CONDITIONS.
(a) Any provision of this Agreement may be waived prior
to the Effective Time if, and only if, such waiver is in writing and
signed by an authorized representative or the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege under this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. Except as otherwise provided in this
Agreement, the rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by Law.
9.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
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9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) This Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed, and governed by, and in
accordance with, the substantive laws of the State of Delaware, without
regard to the conflict of law principles thereof. The parties hereby
irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United
States of America located in Wilmington, Delaware, including the U.S.
Bankruptcy Court for the District of Delaware (the "DELAWARE COURTS"),
for any litigation arising out of or relating to this Agreement or the
Prepackaged Plan and the transactions contemplated by this Agreement
(and agree not to commence any litigation relating thereto except in
such Delaware Courts), waive any objection to the laying of venue of
any such litigation in the Delaware Courts and agree not to plead or
claim in any Delaware Court that such litigation brought therein has
been brought in an inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, OR RELATING TO, THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii)
EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER; (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
9.5.
9.6. NOTICES. Notices, requests, instructions or other documents to
be given under this Agreement shall be in writing and shall be deemed given: (i)
when sent if sent by facsimile, provided that receipt of the fax is promptly
confirmed by telephone; (ii) when delivered, if delivered personally to the
intended recipient; and (iii) one business day later, if sent by overnight
delivery via a national courier service, and in each case, addressed to a party
at the following address for such party:
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If to Arch or Merger Sub:
Arch Communications Group, Inc.
1800 West Park Drive, Suite 250
Westborough, Massachusetts 01581
Attention: Chief Executive Officer
Fax: (508) 870-6076
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Jay E. Bothwick
Fax: (617) 526-5000
and if to PageNet:
Paging Network, Inc.
14911 Quorum Drive
Dallas, Texas 75240
Attention: Chief Executive Officer
Fax: (972) 801-8950
and
Paging Network, Inc.
14911 Quorum Drive
Dallas, Texas 75240
Attention: Senior Vice President and General Counsel
Fax: (972) 801-8978
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603-3441
Attention: John R. Schmidt
Fax: (312) 701-7711
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<PAGE> 73
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. ENTIRE AGREEMENT. This Agreement (including any exhibits and
annexes to this Agreement), Series C Consent Agreement, the Confidentiality
Agreement, the PageNet Disclosure Letter, and the Arch Disclosure Letter
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, among the
parties with respect to the subject matter of this Agreement. EACH PARTY TO THIS
AGREEMENT AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS AGREEMENT, NEITHER ARCH AND MERGER SUB NOR PAGENET MAKES ANY
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
THE OTHER PARTY OR THE OTHER PARTY'S REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. NO THIRD PARTY BENEFICIARIES. Except as provided in Section
6.11 (Benefits), and Section 6.13 (Indemnification; Directors' and Officers'
Insurance), this Agreement is not intended to confer upon any Person other than
the parties to this Agreement any rights or remedies under this Agreement.
9.9. OBLIGATIONS OF ARCH AND OF PAGENET. Whenever this Agreement
requires a Subsidiary of Arch to take any action, such requirement shall be
deemed to include an undertaking on the part of Arch to cause such Subsidiary to
take such action. Whenever this Agreement requires a Subsidiary of PageNet to
take any action, such requirement shall be deemed to include an undertaking on
the part of PageNet to cause such Subsidiary to take such action and, after the
Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
9.10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions of this Agreement.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable: (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision; and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by
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such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.11. INTERPRETATION. Where a reference in this Agreement is made to
a section or exhibit, such reference shall be to a section of, or exhibit or
annex to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
9.12. CAPTIONS. The table of contents, article, section, and
paragraph captions in this Agreement are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions of this Agreement.
9.13. ASSIGNMENT. This Agreement shall not be assignable by
operation of law or otherwise, provided, that the parties agree that this
Agreement may be assumed by PageNet as a debtor-in-possession in the Bankruptcy
Case and may be assumed by Arch should Arch become a debtor in any bankruptcy
case under the Bankruptcy Code. Any assignment in contravention of the preceding
sentence shall be null and void.
* * * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date
first written above.
PAGING NETWORK, INC.
By: /s/ John P. Frazee, Jr.
----------------------------------
Name: John P. Frazee, Jr.
Title: Chairman of the Board and
Chief Executive Officer
ARCH COMMUNICATIONS GROUP, INC.
By: /s/ C.E. Baker, Jr.
----------------------------------
Name: C.E. Baker, Jr.
Title: Chairman of the Board and
Chief Executive Officer
ST. LOUIS ACQUISITION CORP.
By: /s/ C.E. Baker, Jr.
----------------------------------
Name: C.E. Baker, Jr.
Title: Chief Executive Officer
<PAGE> 1
EXHIBIT 99.2
AMENDMENT NO. 5 TO RIGHTS AGREEMENT
This Amendment No. 5 dated as of November 15, 1999 hereby amends the Rights
Agreement originally dated as of October 13, 1995, as amended on June 29, 1998,
August 18, 1998, September 3, 1998 and May 14, 1999 (the "Agreement"), between
Arch Communications Group, Inc., a Delaware corporation (the "Company"), and The
Bank of New York, a national banking association, as Rights Agent (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, no Person has become an Acquiring Person as such terms are defined in
the Agreement; and
WHEREAS, the Company has directed the Rights Agent to enter into this Amendment
No. 5 pursuant to Section 27 of the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
herein, the parties hereby agree as follows:
1. Section 1(ii) of the Agreement is hereby deleted in its entirety and
the following substituted in lieu thereof:
(ii) "Exempted Person" shall mean, prior to the PageNet
Effective Time (as defined below): (A) W. R. Huff Asset
Management Co., L.L.C., together with its Affiliates
(collectively, "Huff"), unless and until such time as Huff,
directly or indirectly, becomes the Beneficial Owner of Common
Stock in excess of the Huff Exempt Threshold (as defined
below), in which event Huff immediately shall cease to be an
Exempted Person; (B) Whippoorwill Associates, Inc., together
with its Affiliates, including, without limitation, any
accounts and investment funds managed by it or its Affiliates
(collectively, "Whippoorwill"), unless and until such time as
Whippoorwill, directly or indirectly, becomes the Beneficial
Owner of Common Stock in excess of the Whippoorwill Exempt
Threshold (as defined below), in which case Whippoorwill
immediately shall cease to be an Exempted Person; (C)
Resurgence Asset Management, L.L.C., together with its
Affiliates (collectively, "Resurgence"), unless and until such
time as Resurgence, directly or indirectly, becomes the
Beneficial Owner of Common Stock in excess of the Resurgence
Exempt Threshold (as defined below), in which event Resurgence
immediately shall cease to be an Exempted Person. "Exempted
Person" shall mean, on or after the PageNet Effective Time,
any Person that acquires shares of Common Stock ("Merger
Shares") in exchange for shares of common stock of Paging
Network, Inc. ("PageNet") upon the consummation of the merger
between PageNet and St. Louis Acquisition Corp., a wholly
owned
<PAGE> 2
subsidiary of the Company ("MergerSub"), pursuant to that
Agreement and Plan of Merger among PageNet, the Company and
MergerSub dated as of November 7, 1999 as the same may be
amended (the " PageNet Merger Agreement") unless and until
such time as such Person, directly or indirectly becomes the
Beneficial Owner of Common Stock in excess of the Merger
Exempt Threshold (as defined below). For purposes of this
Agreement: (A) the Huff Exempt Threshold shall mean 23.9% of
the Common Stock then outstanding; (B) the Whippoorwill Exempt
Threshold shall mean 21.3% of the Common Stock then
outstanding; (C) the Resurgence Exempt Threshold shall mean
19.0% of the Common Stock then outstanding; and (D) the Merger
Exempt Threshold shall mean 20.0% of the Common Stock then
outstanding (provided that a majority of the shares of Common
Stock Beneficially Owned by such Person are Merger Shares).
For purposes of this Agreement, the Huff Exempt Threshold, the
Whippoorwill Exempt Threshold, the Resurgence Exempt Threshold
and the Merger Exempt Threshold are collectively referred to
herein as the "Exempt Threshold." For purposes of this Section
1(ii): (A) none of Huff, Credit Suisse First Boston
Corporation (or its Affiliates), Whippoorwill or The
Northwestern Mutual Life Insurance Company (or its Affiliates)
shall be deemed the Beneficial Owner of any shares of Common
Stock that are Beneficially Owned by any other Person solely
as a result of any such Person's execution and performance of
any Standby Purchase Commitment (as such term is defined in
the Plan and Agreement of Merger between the Company, Farm
Team Corp., a wholly-owned Subsidiary of the Company,
MobileMedia Corporation and MobileMedia Communications, Inc.,
dated as of August 18, 1998) (as amended, the "Merger
Agreement"); (B) no Person shall be deemed the Beneficial
Owner of any shares of Common Stock that are Beneficially
Owned by any other Person solely as a result of such Person's,
or such other Person's service as a member of any committee or
working group of debtholders of PageNet or the Company; and
(C) Common Stock shall be deemed to include shares of Common
Stock issuable upon conversion of shares of the Company's
Series C Convertible Preferred Stock, $.01 par value per
share. For purposes of this Agreement the PageNet Effective
Time shall mean the Effective Time of the Merger as determined
pursuant to the PageNet Merger Agreement.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Amendment No. 5 to be duly
executed and their respective corporate seals to be hereunto affixed and
attested as of the day and year first written above.
ARCH COMMUNICATIONS GROUP, INC.
Attest:
/s/ Gerald J. Cimmino By: /s/ C.E. Baker, Jr.
- ----------------------------------- ----------------------------------
Name: Gerald J. Cimmino Name: C.E. Baker, Jr.
Title: Vice President and Treasurer Title: Chairman of the Board and
Chief Executive Officer
Seal
THE BANK OF NEW YORK
Attest:
/s/ Eon Canzius By: /s/ John Sivertsen
- ----------------------------------- ----------------------------------
Name: Eon Canzius Name: John Sivertsen
Title: Assistant Treasurer Title: Vice President
Seal
-3-
<PAGE> 1
Exhibit 99.3
NEWS RELEASE
================================================================================
FOR IMMEDIATE RELEASE CONTACTS:
- --------------------- ---------
November 8, 1999 Arch: Robert W. Lougee, Jr. 508-870-6771
PageNet: Scott Baradell (Media) 972-801-8180
Kirk Brewer (Investor) 972-801-8012
ARCH AND PAGENET SIGN MERGER AGREEMENT;
COMPANY TO BE LEADER IN WIRELESS COMMUNICATIONS
Combined Company Will Have Approximately 16 Million Units in Service
With Broadest Portfolio of Products and Service Coverage in North America
Agreement Calls for Recapitalization
To Substantially Enhance Consolidated Balance Sheet
Entity to Spin Off PageNet's Vast Solutions Subsidiary
Westborough, MA and Dallas, TX (November 8, 1999) --- Arch Communications Group,
Inc. (Nasdaq:APGR) and Paging Network, Inc. (Nasdaq:PAGE) (PageNet) today
announced they have signed a definitive agreement to merge the two companies in
a transaction that will create one of the world's largest wireless
communications companies with approximately 16 million units in service
throughout North America.
The transaction will combine PageNet's broad range of wireless products and new
advanced wireless network with Arch's extensive national accounts and sales
presence in major markets nationwide. It will create a wireless communications
leader with estimated annual operating cash flow, prior to expected cost
synergies, of approximately $535 million and annual net revenues in excess of
$1.7 billion, based on third quarter 1999 pro forma combined operating results
of the two companies.
The combined company will retain the name Arch Communications Group, Inc. It
will be headquartered in Westborough but will maintain significant operations in
Dallas.
<PAGE> 2
Among other significant benefits, the merger will give customers of the combined
entity greater access to an expanded range of wireless products and services,
along with greater ubiquity of coverage and reliability with the consolidation
of the two companies' nationwide networks. Expanded service offerings will
include Internet-based wireless information provided through the two companies'
established alliances with such Internet industry leaders as Bloomberg, CNN,
ESPN, Forbes, and Yahoo!, as well as such advanced services as guaranteed
messaging over PageNet's state-of-the-art broadcast network.
The Boards of Directors of both companies have approved the merger agreement,
which requires a recapitalization of the combined company. The recapitalization
will include the conversion of $1.2 billion of PageNet Senior Notes and
approximately $384 million (accreted value as of September 30, 1999) of Arch
Senior Discount Notes, and approximately $28 million (as of September 30, 1999)
of Arch Series C Convertible Preferred Stock into common stock of the merged
entity. Under the terms of the merger, owners of common stock of both companies
will receive common stock in the combined company, with shareholders of Arch
retaining one share of common stock in the combined company for each share they
currently own, and shareholders of PageNet receiving 0.1247 share of common
stock in the combined company for each share they currently own of PageNet
common stock. In addition, owners of PageNet's common stock and Senior Notes
will receive a pro rata distribution of 80.5 percent of PageNet's interest in
Vast Solutions (Vast), which will become a separate entity at the merger's
close. The combined company will trade on The Nasdaq National Market under the
ticker symbol "APGR," Arch's current trading symbol.
Under terms of the merger and proposed recapitalization, the combined company
would have approximately 172.8 million common shares outstanding upon completion
of the transaction, along with total debt of approximately $1.8 billion,
representing a 46 percent reduction in debt from current pro forma levels. When
the merger closes, current holders of PageNet's Senior Notes would own 44.5
percent of the combined company's common stock, and current holders of PageNet's
common stock would own 7.5 percent of the combined company's common stock.
Current holders of Arch common stock would own approximately 29.6 percent of the
combined company's common stock, current holders of Arch Senior Discount Notes
would own approximately 17.2 percent of the combined company's common stock, and
current holders of Series C Convertible Preferred shares would own approximately
1.2 percent of the combined
<PAGE> 3
company's common stock. Additional details of the proposed recapitalization are
outlined in the attached Appendix A.
"The benefits of the merger are significant for the stakeholders of both
companies," said John P. Frazee, Jr., PageNet chairman and chief executive
officer. "The wireless messaging business has been ripe for change for the past
several years, as unit growth has slowed and competition has intensified. Given
this environment, we believe the combined company will be exceptionally well
positioned to lead our evolving business into its next growth phase."
"When the transaction is completed," Frazee added, "the combined company will
have an appropriate capital structure and the financial flexibility needed to
fuel long-term growth. Arch's experience with integrating acquisitions,
especially the operations of MobileMedia, will prove to be invaluable in
maximizing the operational and strategic synergies that we expect to realize as
a result of this merger. After years of building separate companies on capital
bases suited for a rapidly expanding market for paging, the combined company's
proposed capital structure will provide the opportunity to grow a strong
business in today's market, which includes a broader set of wireless competitors
including broadband PCS and other wireless technologies."
C. Edward Baker, Jr., chairman and chief executive officer of Arch, said, "On a
pro forma basis, the proposed combination would immediately provide the combined
company with more than $1.7 billion in annual revenue and EBITDA of
approximately $535 million, based on third quarter 1999 results. This level of
financial performance, combined with total debt of $1.8 billion upon completion
of the recapitalization, would substantially reduce the combined company's
leverage to less than 3.5 times EBITDA. Even before attaining anticipated
synergies, the newly formed company would be free cash flow positive."
Baker added: "In addition to the operational and financial benefits of the
merger, the two companies' customer bases dovetail very well. We believe the
combination of two very strong distribution vehicles will build a formidable
competitor whose business will extend far beyond the industry's traditional
focus on paging. Both companies have strong brands, and we intend to quickly
determine a branding strategy to maximize our market potential."
<PAGE> 4
The companies said they currently expect the merger to generate approximately
$80 million in annual cost synergies over a two-year period from the date of
close, driven primarily by a reduction of redundant functions. The combined
company will be organized around a sales force of more than 2,300 salespeople
supported by state-of-the-art customer service and support platforms.
As part of the transaction, 80.5% of PageNet's interest in Vast will be
distributed to PageNet's bondholders and its existing common stockholders, while
the merged entity will retain the remaining 19.5% interest. The distribution
will enable Vast to be capitalized appropriately for the nature of its business,
while maintaining the advantage of having a strong corporate partner.
John P. Frazee, Jr. will be chairman of the Board of Directors of the combined
company. The combined company management team will be led by C. Edward Baker,
Jr. as chief executive officer, Lyndon R. Daniels as president and chief
operating officer, and J. Roy Pottle as executive vice president and chief
financial officer. Daniels and Pottle will retain their current Arch titles with
the combined entity. Mark A. Knickrehm will remain president and chief operating
officer of Vast Solutions.
The companies said they expect the merger, which is subject to customary
regulatory review, shareholder approval, other third-party consents and the
completion of the recapitalization transactions, to be completed during the
first half of 2000. The recapitalization is expected to be accomplished through
a registered exchange offer that is expected to be filed with the Securities and
Exchange Commission within 30 days. PageNet and Arch said that, in addition to
consents for the proposed recapitalization, the merger agreement permits PageNet
to concurrently solicit consents to effectuate the recapitalization through a
"pre-packaged" Chapter 11 reorganization, which would be contemplated if the
required level of participation in the registered exchange offer is not
obtained.
Paging Networks, Inc. is a leading provider of wireless messaging and
information services with more than 9 million subscribers in all 50 states, the
District of Columbia, the U.S. Virgin Islands, Puerto Rico and Canada. The
company offers a full range of paging and advanced messaging services, including
guaranteed-delivery messaging, two-way wireless e-mail, and global messaging.
PageNet's wholly owned subsidiary, Vast Solutions, plans to introduce a variety
of
<PAGE> 5
customized information services for pagers and other devices, partnering with
content providers such as Yahoo!, CNN, Bloomberg, ESPN and others. Additionally,
Vast Solutions develops integrated wireless solutions to increase productivity
and improve performance for major corporations. Detailed information for PageNet
services are available on the Internet at WWW.PAGENET.COM. Detailed information
about Vast Solutions is available at WWW.VAST.COM. PageNet is a registered
trademark of Paging Network, Inc. Other names are trademarks and/or registered
trademarks of their respective owners.
Arch Communications Group, Inc., Westborough, Mass., is a leading U.S. wireless
messaging company with annual revenues in excess of $800 million. It provides
local, regional and nationwide narrowband wireless messaging services to
customers in all 50 states, the District of Columbia and in the Caribbean. Arch
operates approximately 300 offices and company-owned stores across the country.
Additional information on Arch is available on the Internet at WWW.ARCH.COM.
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Statements contained in this news release which are not historical fact,
such as forward-looking statements concerning future financial performance and
growth, involve risks and uncertainties, including those described in Arch's and
PageNet's most recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. Although Arch and PageNet believe the
expectations reflected in any forward-looking statements are based on reasonable
assumptions, they can give no assurance that their expectations will be
attained. Factors that could cause actual results to differ materially from
their expectations include the recapitalization of the combined companies,
challenges of integrating the businesses of Arch and PageNet, the future capital
needs following the merger, the uncertainty of additional funding, and other
risks. Any forward-looking statements represent the best judgment of both Arch
and PageNet as of the date of this release. The companies disclaim any intent or
obligation to update any forward-looking statements.
(TABLE TO FOLLOW)
<PAGE> 6
Appendix A
Details of proposed recapitalization (1)
<TABLE>
<CAPTION>
($ millions) Pro Forma Combined(4)
------------------------------------
(9/30/99) Assumed Debt Common Shares %
--------- ------------ ------------- ----
<S> <C> <C> <C> <C>
Arch Bank Debt $ 450
Combined Bank Debt $ 450
PageNet Bank Debt $ 804
Combined Bank Debt $ 804
Combined Company Bank Debt (2) $1,254 $1,254
ACI Senior Notes $ 493
Combined Senior Notes $ 493
Arch Convertible Debentures (5) $ 5
Combined Convertible Debentures $ 5
PageNet Senior Notes $1,200 --
Combined Common Shares 76.9 44.5%
PageNet Common Shares 104 --
Combined Common Shares 13.0 7.5%
---- ----
PageNet Stakeholder Interest in
Combined Company 89.9 52.0%
Arch Series C Convertible Preferred Shares (3) $ 28 --
Combined Common Shares 2.1 1.2%
Arch Senior Discount Notes (5) $ 384 --
Combined Common Shares 29.6 17.2%
Arch Common Shares 51.2
Combined Common Shares 51.2 29.6%
---- ----
Arch Stakeholder Interest in
Combined Company 82.9 48.0%
Combined Company Total Debt $3,336 $1,752
Combined Company Total Shares 172.8 100%
</TABLE>
(1) Assumes 100% of existing security holders participate in the exchange
offers contemplated in the recapitalization.
(2) Excludes potential borrowings at closing to pay transaction and other
costs.
(3) On an "as converted" basis.
(4) All references to pro forma Combined Company common shares and ownership
percentages are based on primary shares only.
(5) Pro forma for debt-for-equity exchange completed after 9/30/99.
