<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED AUGUST 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ___
COMMISSION FILE
NUMBER 0-24992
TELETOUCH COMMUNICATIONS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2556090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
110 NORTH COLLEGE, SUITE 200
TYLER, TEXAS 75702
(Address of principal executive offices, including zip code)
(903) 595-8800
(Issuer's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value - 6,347,416 shares outstanding as of
October 15, 1996
Transitional Small Business Disclosure Format : YES __ NO X
-
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
FORM 10-QSB
QUARTER ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
PAGE NO.
---- ---
PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS - TELETOUCH COMMUNICATION, INC. (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS AT
AUGUST 31, 1996 AND MAY 31, 1995 4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
THREE MONTHS ENDED AUGUST 31, 1996 AND
AUGUST 31, 1995 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
THREE MONTHS ENDED AUGUST 31, 1996 AND
AUGUST 31, 1995 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
3
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
August 31 May 31
1996 1996
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 2,663 $ 1,021
Accounts receivable, net.............................. 2,267 1,705
Inventory, net........................................ 3,721 3,498
Deferred income tax assets............................ 124 124
Prepaid expenses and other current assets............. 579 336
------- --------
9,354 6,684
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation.......................................... 20,729 20,198
GOODWILL, INTANGIBLES AND OTHER ASSETS, net of
accumulated amortization.............................. 65,242 57,080
------- --------
$95,325 $ 83,962
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses................. $ 4,269 $ 3,562
Deferred revenue...................................... 1,196 981
-------- --------
5,465 4,543
LONG-TERM DEBT........................................... 76,681 60,115
COMMITMENTS AND CONTINGENCIES
DEFERRED INCOME TAXES.................................... 584 740
STOCKHOLDERS' EQUITY:
Series A cumulative preferred stock, $.001 par value.. -- --
Series B preferred stock, $.001 par value............. -- --
Common stock, $.001 par value......................... 6 6
Additional paid-in capital............................ 24,865 24,865
Accumulated deficit................................... (12,276) (6,307)
Stock subscription receivable......................... -- --
-------- --------
12,595 18,564
-------- --------
$ 95,325 $ 83,962
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENDSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS - EXCEPT SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months ended
August 31,
---------------------------
1996 1995
---------- -----------
<S> <C> <C>
Pager sales and service revenue......................... $ 8,906 $ 4,921
Other sales and service revenue......................... 669 658
Cost of products sold................................... (1,299) (1,078)
---------- ----------
Net revenue 8,276 4,501
Expenses:
Operating.............................................. 1,919 928
Selling................................................ 1,527 919
General and administrative............................. 1,913 1,217
Depreciation and amortization.......................... 2,965 1,479
Merger termination charges............................. 522 --
---------- ----------
Total expenses.......................................... 8,846 4,543
---------- ----------
Operating loss.......................................... (570) (42)
Interest expense, net................................... (1,987) (1,029)
---------- ----------
Loss before income taxes and extraordinary item......... (2,557) (1,071)
Income tax benefit...................................... (156) (347)
---------- ----------
Loss before extraordinary item.......................... (2,401) (724)
Extraordinary item, early debt retirement............... (3,568) -
---------- ----------
Net loss................................................ (5,969) (724)
Preferred stock dividends............................... (596) (175)
---------- ----------
Loss applicable to common stock......................... $ (6,565) $ (899)
========== ==========
Loss per share..........................................
Loss before extraordinary item......................... $ (0.47) $ (0.17)
Extraordinary item..................................... (0.56) --
---------- ----------
Net loss per share..................................... $ (1.03) $ (0.17)
========== ==========
Weighted Average Shares Outstanding..................... 6,347,416 5,272,725
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE>
TELETOUCH COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss................................................... $ (5,969) $ (724)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss on early retirement of debt......................... 3,568 --
Depreciation and amortization......................... 2,965 1,479
Non cash interest expense................................ 670 114
Deferred income taxes.................................... (156) (346)
Changes in operating assets and liabilities:
Accounts receivable, net............................... (343) (184)
Inventories............................................ (488) 166
Prepaid expenses and other current assets............ (99) 98
Accounts payable and accrued expenses................. 326 560
Deferred revenue....................................... 193 200
-------- --------
Net cash provided by operating activities.................. 667 1,363
-------- --------
INVESTING ACTIVITIES:
Capital expenditures, including pagers.................... (572) (124)
Acquisitions, net of cash acquired........................ (10,626) (50,600)
Deferred costs associated with pending acquisitions, net.. 6 --
Decrease in other assets.................................. -- (26)
-------- --------
Net cash used for investing activities..................... (11,192) (50,750)
-------- --------
FINANCING ACTIVITIES:
Debt incurred in connection with acquisitions............. 10,626 35,194
Proceeds from new debt.................................... 57,173 --
Payments on long-term debt................................ (52,700) (9)
Payments to related parties............................... -- (7)
Debt issue costs.......................................... (2,932) --
Net proceeds from preferred stock and
common stock warrants.................................... -- 15,891
Proceeds from stock subscription receivable............... -- 52
-------- --------
Net cash provided by financing activities.................. 12,167 51,121
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS.................. 1,642 1,734
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........... 1,021 715
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................. $ 2,663 $ 2,449
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
6
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated financial statements of Teletouch
Communications, Inc., and its subsidiaries (the "Company") for the periods ended
August 31, 1996 and 1995 have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis. Significant
accounting policies followed by the Company were disclosed in the notes to the
financial statements included in the Company's Annual Report on Form 10-KSB for
the year ended May 31, 1996. The balance sheet at May 31, 1996 has been derived
from the audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company's
management, the accompanying condensed consolidated financial statements contain
the material adjustments necessary to present fairly the financial position of
the Company at August 31, 1996 and May 31, 1996 and the results of its
operations and cash flows for the periods ended August 31, 1996 and 1995. All
such adjustments are of a normal recurring nature. Interim period results are
not necessarily indicative of the results to be achieved for the full year. The
financial statements for the periods ended August 31, 1996 and 1995 include the
results of operations for companies acquired by Teletouch from the effective
date of the acquisition, see Note B.
IMPAIRMENT OF LONG-LIVED ASSETS: In March 1995, the FASB issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, which requires impairment losses to be recognized for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows are not sufficient to recover the assets'
carrying amount. The Company has adopted Statement 121 in the first quarter of
fiscal year 1997 and has determined that no material impairment loss has
occurred.
NOTE B - ACQUISITIONS
During the first quarter of fiscal year 1997, the Company completed the
acquisition of all of the stock of Russell's Communication, Inc., d.b.a.
LaPageCo ("LaPageCo") and AACS Communications, Inc. ("AACS") for cash
consideration of approximately $2.3 million and $1.9 million, respectively. In
addition, the Company acquired substantially all of the assets of Warren
Communications, Inc. ("Warren"), for cash consideration of approximately $5.1
million and Dave Fant Company, d.b.a. Oklahoma Radio Systems ("ORS") for cash
consideration of approximately $2.1 million. The consideration paid for these
acquisitions was obtained from the amounts available under the Company's
existing credit facility.
Each of these acquisitions have been accounted for using the purchase method of
accounting. Of the total purchase price for these acquisitions, for financial
reporting purposes, the preliminary allocation will be approximately $0.9
million to property, plant and equipment, $0.2 million to accounts receivable,
$0.2 million to inventory and other assets, $4.0 to FCC licenses, $3.6 million
to subscriber bases, $0.4 million to non-compete, with the remaining amount
allocated to goodwill.
The following unaudited pro forma summary financial information presents the
results of operations of the Company as if the acquisitions, and related
financing, had occurred at the beginning of each period presented. This summary
may not be indicative of what would have occurred had the acquisitions been made
as of these dates or of results which may occur in the future. The historical
financial statements used to prepare the summary reflect the acquisitions from
the effective date of the respective acquisition forward, using the purchase
method of accounting, based on the estimated fair values of assets purchased and
liabilities assumed.
7
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
NOTE B - ACQUISITIONS (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
------------------------
(UNAUDITED)
<S> <C> <C>
1996 1995
------- --------
Net revenue................................ $ 9,172 $ 8,058
======= =======
Operating income (loss).................... $ (366) $ 301
======= =======
Net loss before extraordinary item......... $(2,184) $(1,136)
======= =======
Extraordinary item......................... $(3,568) $ --
======= =======
Net Loss................................... $(5,752) $(1,136)
======= =======
Loss per share:
Loss before extraordinary item........ $ (0.44) $ (0.32)
======= =======
Extraordinary item per share.......... $ (0.56) $ --
======= =======
Net Loss per share.................... $ (1.00) $ (0.32)
======= =======
</TABLE>
NOTE C - GOODWILL, INTANGIBLES AND OTHER ASSETS
Goodwill, intangibles and other assets consist of the following:
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
1996 1996
---------- --------
(Unaudited)
<S> <C> <C>
Goodwill.............................. $22,417 $20,380
Subscriber bases...................... 27,606 24,014
FCC licenses.......................... 19,670 15,600
Deferred acquisition costs............ 597 998
Non-compete agreements................ 650 300
Debt issue costs...................... 3,467 3,795
Other................................. 203 203
------- -------
74,610 65,290
Accumulated amortization.............. (9,368) (8,210)
------- -------
$65,242 $57,080
======== =======
</TABLE>
NOTE D - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
1996 1996
---------- -------
(Unaudited)
<S> <C> <C>
Notes Payable.............................. $66,800 $50,700
Junior Subordinated Notes.................. 9,881 9,415
------- -------
$76,681 $60,115
======= =======
</TABLE>
8
<PAGE>
TELETOUCH COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
NOTE D - LONG-TERM DEBT (CONTINUED)
In July 1996, the Company entered into an agreement with a group of lenders, led
by Chase Manhattan Bank, to provide new loans in an amount not to exceed $95
million (the "Credit Facility"). As of August 31, 1996, $66.8 million of the
Credit Facility had been funded and $28.2 million is available for future
funding. The funding from the Credit Facility was used to repay notes payable
to FINOVA Capital Corporation (the "FINOVA Loan"), and to provide the financing
necessary to complete the acquisitions discussed in Note B. As a result of the
repayment of the FINOVA Loan, the Company was required to pay a $1 million
prepayment penalty to FINOVA Capital Corporation ("FINOVA"). The prepayment
penalty, and the unamortized deferred loan costs associated with the FINOVA Loan
of approximately $2.6 million, have been recorded as an extraordinary expense.
Direct costs incurred in connection with obtaining the Credit Facility of
approximately $2.9 million have been deferred and are being amortized, using the
effective interest rate method, over the term of the loan.
The Credit Facility bears interest, at the Company's designation, at a floating
rate of either the prime rate plus 1% to 2% or LIBOR plus 2% to 3% depending on
the leverage ratio of the Company and is secured by substantially all of the
assets of the Company and its subsidiaries. Borrowings under the Credit Facility
require that the principal be repaid in escalating quarterly installments
beginning in February 1998 and ending in fiscal year 2004. The terms require
that the Company obtain an interest rate protection agreement, within one
hundred and twenty days of closing, to protect at least 50% of the commitments
against fluctuations in the three-month LIBOR rate for a period of at least
three years. In addition, the terms require the maintenance of certain
specified financial and operating covenants, provide for restrictions on capital
expenditures and future acquisitions, prohibit any payments on the Junior
Subordinated Notes or the payment of dividends.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
CERTAIN STATEMENTS CONTAINED HEREIN ARE NOT BASED ON HISTORICAL FACTS, BUT ARE
FORWARD-LOOKING STATEMENTS THAT ARE BASED UPON NUMEROUS ASSUMPTIONS ABOUT FUTURE
CONDITIONS THAT COULD PROVE NOT TO BE ACCURATE. ACTUAL EVENTS, TRANSACTIONS AND
RESULTS MAY MATERIALLY DIFFER FROM THE ANTICIPATED EVENTS, TRANSACTIONS OR
RESULTS DESCRIBED IN SUCH STATEMENTS. THE COMPANY'S ABILITY TO CONSUMMATE SUCH
TRANSACTIONS AND ACHIEVE SUCH EVENTS OR RESULTS IS SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO,
THE EXISTENCE OF DEMAND FOR AND ACCEPTANCE OF THE COMPANY'S PRODUCTS AND
SERVICES, REGULATORY APPROVALS AND DEVELOPMENTS, ECONOMIC CONDITIONS, THE IMPACT
OF COMPETITION AND PRICING, RESULTS OF FINANCING EFFORTS AND OTHER FACTORS
AFFECTING THE COMPANY'S BUSINESS THAT ARE BEYOND THE COMPANY'S CONTROL. THE
COMPANY UNDERTAKES NO OBLIGATION AND DOES NOT INTEND TO UPDATE, REVISE OR
OTHERWISE PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING
STATEMENTS THAT MAY BE MADE TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES.
The Company is a leading provider of wireless messaging services, primarily
paging services, in non-major metropolitan areas and communities in the
southeast United States. As of August 31, 1996 the Company had approximately
275,000 pagers in service. The Company derives the majority of its revenues from
fixed periodic fees, not dependent on usage, charged to subscribers for paging
services. As long as a subscriber remains on service, operating results benefit
from the recurring payments of the fixed periodic fees without incurring
additional selling expenses or other fixed costs. Due to the growth from the
completion of the acquisitions discussed below, the Company's results of
operations for prior periods may not be indicative of future performance.
The following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the condensed
consolidated financial statements and notes thereto included elsewhere in this
report.
ACQUISITIONS
In August 1995, the Company purchased substantially all of the non-cash assets
and assumed selected liabilities of Dial-A-Page, Inc. ("Dial") for a purchase
price of approximately $49.4 million (the "Dial Acquisition"). Of the total
purchase price, for financial reporting purposes, approximately $14.2 million
was allocated to property, plant and equipment, $0.5 million to accounts
receivable, $15.5 million to FCC licenses, $13.8 million to subscriber bases,
$0.1 million to non-compete, $1.2 million to current liabilities, and $0.1
million to other current assets, with the remaining amount allocated to
goodwill. To complete the Dial Acquisition, and to provide additional working
capital, the Company completed the private placement of $25 million of debt and
equity securities with Continental Illinois Venture Corporation ("CIVC") and
certain other parties both related and unrelated to CIVC (together with CIVC,
the "CIVC Investors"), and $35 million in additional senior financing from its'
existing senior lender, FINOVA Capital Corporation (the "FINOVA Loan"). In July
1996, the FINOVA Loan was repaid with proceeds from the Credit Facility.
During the first quarter of fiscal year 1997, the Company completed the
acquisition of all of the stock of Russell's Communication, Inc., d.b.a.
LaPageCo ("LaPageCo") and AACS Communications, Inc. ("AACS") for cash
consideration of approximately $2.3 million and $1.9 million, respectively. In
addition, the Company acquired substantially all of the assets of Warren
Communications, Inc. ("Warren"), for cash consideration of approximately $5.1
million and Dave Fant Company, d.b.a. Oklahoma Radio Systems ("ORS") for cash
consideration of approximately $2.1 million. The consideration paid for these
acquisitions was obtained from available capacity under the Company's existing
credit facility.
10
<PAGE>
Each of these acquisitions have been accounted for using the purchase method of
accounting. Of the total purchase price for these acquisitions, for financial
reporting purposes, the preliminary allocation will be approximately $0.9
million to property, plant and equipment, $0.2 million to accounts receivable,
$0.2 million to inventory and other assets, $4.0 to FCC licenses, $3.6 million
to subscriber bases, $0.4 million to non-compete, with the remaining amount
allocated to goodwill.
RESULTS OF OPERATIONS
The following table presents certain items from the Company's condensed
consolidated statements of operations, certain unaudited pro forma information,
and certain other information for the periods indicated. The pro forma
information presents results of the operations of the Company as if the Dial
Acquisition and the acquisitions of LaPageCo, AACS, Warren, and ORS
(collectively, "the Fiscal Year 1997 Acquisitions") and the related financing,
had occurred at the beginning of each period presented.
<TABLE>
<CAPTION>
Pro forma
Three Months ended Three Months ended
August 31, August 31,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
(in thousands, except pagers, ARPU and per share amounts)
<S> <C> <C> <C> <C>
Net revenue $ 8,276 $ 4,501 $ 9,172 $ 8,058
Operating loss $ (570) (42) (366) 301
Loss before extraordinary item $(2,401) $ (724) $(2,184) $(1,136)
Loss per share before extraordinary item $ (0.47) $ (0.17) $ (0.44) $ (0.32)
EBITDA (1)(2) $ 2,917 $ 1,437 $ 3,400 $ 3,124
Pagers in service at end of period 275,000 173,000 275,000 232,500
Average revenue per unit ("ARPU") $ 11.77 $ 13.93 $ 11.51 $ 12.22
</TABLE>
___________________________
(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is a standard measure of financial performance in the
paging industry. However, EBITDA is not a measure defined in generally
accepted accounting principles ("GAAP") and should not be construed as an
alternative to operating income or cash flows from operating activities as
determined in accordance with GAAP. EBITDA is, however, one of the primary
financial measures by which the Company's covenants are calculated under
the agreements governing the Company's indebtedness.
(2) As discussed below, in July 1996 the Company and ProNet, Inc. mutually
agreed to terminate a previously announced agreement to merge the Company
with a subsidiary of ProNet. In addition, the Company elected not to
complete certain other acquisitions that it had been pursuing. The actual
and proforma EBITDA for the three months ended August 31, 1996 shown above
excludes $522,000 of non-recurring costs associated with these
terminations.
Results of Operations for the three months ended August 31, 1996 and 1995
- -------------------------------------------------------------------------
Net Revenue: The historical net revenue of the Company has increased to $8.3
- -----------
million in the first three months of fiscal year 1997 from $4.5 million in the
first three months of fiscal year 1996. This increase is due primarily to the
increase in the pagers in service resulting from the Fiscal Year 1997
Acquisitions as well as greater market penetration in the Company's existing
markets. Pagers in service increased to approximately 275,000 at August 31,
1996 as compared to 173,000 at August 31, 1995. The Fiscal Year 1997
Acquisitions represented approximately 72,000 of this increase. The Company
believes that internal growth due to further penetration of its' existing
markets will continue.
11
<PAGE>
The impact on net revenue of the increase in pagers in service is partially
offset by the decline in average revenue per unit ("ARPU"). ARPU for the three
months ended August 31, 1996 was $11.77 as compared to $13.93 for the three
months ended August 31, 1995. This decline in ARPU is due to increased
competition in the Company's markets as well as an increase in the number of
paging units sold to paging resellers. Paging resellers are businesses that buy
airtime at wholesale prices from the Company and sell the service to
subscribers. While the wholesale price to the reseller is lower than the price
the Company charges directly to its customers, the reseller bears the cost of
acquiring, billing, collecting and servicing the subscribers. Prior to the
Fiscal Year 1997 Acquisitions, approximately 16% of the Company's paging units
were sold through resellers, as of August 31, 1996 approximately 34% of the
Company's paging units are sold through resellers. The Company expects to see
the ARPU continue to decline as the competition continues to pursue customers in
its marketplace, generally resulting in new customers being added at a lower
ARPU than the Company's existing ARPU in that market. In addition, the higher
percentage of units sold through resellers in the Fiscal Year 1997 Acquisitions
as compared to the percentage sold through resellers by the Company prior to
these acquisitions, will also result in an overall reduction of the ARPU.
However, while there can be no assurance, the Company expects that the growth in
units in service will increase sufficiently to offset this decline in ARPU.
Expenses, excluding depreciation and amortization: Operating expenses, excluding
- -------------------------------------------------
depreciation and amortization, were $5.9 million, 71% of net revenue, in the
first three months of fiscal year 1997 as compared to $3.1 million, 68% of net
revenue in the first three months of fiscal year 1996. The increased costs are
primarily due to the inclusion of operating results of the Dial Acquisition for
three full months in fiscal year 1997 as compared to only one month in fiscal
year 1996 and one month of expenses in fiscal year 1997 for the Fiscal Year 1997
Acquisitions. In addition, $0.5 million of non-recurring costs are included in
general and administrative expenses for the three months ended August 31, 1996
related to costs incurred in connection with a now terminated proposed merger
with ProNet, Inc. ("ProNet") and certain other proposed acquisitions that the
Company will not be pursuing. Excluding the impact of these non-recurring
costs, operating expenses for the first three months of fiscal year 1997 were
$5.4 million, 65% of net revenues. The decrease as a percentage of net revenue
is due to fixed costs being spread over an increased customer base. On a
proforma basis, assuming the Fiscal Year 1997 Acquisitions and the Dial
acquisition had occurred at the beginning of the respective periods, these
expenses increased to $6.3 million, 69% of proforma net revenue, ($5.8 million
and 63% excluding the costs associated with the terminated ProNet merger and
other acquisitions) for the first three months of fiscal year 1997 as compared
to $4.9 million, 61% of proforma net revenue, in the first three months of
fiscal year 1996. The increase as a percentage of proforma net revenue is
primarily due to the increased costs associated with a much larger, publicly
traded, company. Many of these costs, including increased general and
administrative salaries and other costs, are incurred early in the growth
process. Accordingly, although the actual costs are expected to continue to
increase, the Company expects them to decrease as a percentage of net revenue as
the company continues to grow.
Depreciation and amortization: Depreciation and amortization expense increased
- -----------------------------
to $3.0 million in the first three months of fiscal year 1997 from $1.5 million
in the first three months of fiscal years 1996. The increase is due primarily
to the increased amortization of intangible assets resulting from the Dial
Acquisition and the Fiscal Year 1997 Acquisitions. The Company expects that
this expense will continue to increase in the near term as the amortization
related to the Dial Acquisition and the Fiscal Year 1997 Acquisitions are
included in the results of operations for a full year.
Interest Expense: Interest expense increased to $2.0 million in the first three
- ----------------
months of fiscal year 1997 from $1.0 million in the first three months of fiscal
years. This increase is due to the increased debt incurred by the Company in
connection with the Fiscal Year 1997 Acquisitions and the Dial Acquisition as
well as the financing of the costs associated with obtaining the Credit
Facility. The Credit Facility terms provide for lower interest rates than the
FINOVA Loan; however, due to the increased amount borrowed, the interest expense
for fiscal year 1997 will be greater than the amounts incurred in fiscal year
1996.
12
<PAGE>
Income tax benefit: For fiscal year 1997 the Company estimates the effective
- ------------------
tax benefit rate will be 6.1% as compared to 31.3% for fiscal year 1996. The
decrease is due to the recording of a valuation allowance against deferred tax
assets which are not likely to be realized. Specifically, the Company's
carryforwards expire at specific future dates and utilization of certain
carryforwards is limited to specific amounts each year. However, due to the
uncertain nature of their ultimate realization the Company has established a
significant valuation allowance against these carryforward benefits and will
recognize benefits only as reassessment demonstrates they are realizable.
Realization is entirely dependent upon future earnings in specific tax
jurisdictions. While the need for this valuation allowance is subject to
periodic review, if the allowance is reduced, the tax benefits of the
carryforwards will be recorded in future operations as a reduction of the
Company's income tax expense.
Extraordinary Item: In July 1996, the Company repaid its outstanding notes
- ------------------
payable to FINOVA Capital Corporation ("FINOVA") with the proceeds of the Credit
Facility. As a result of this prepayment of the FINOVA Loan, the Company
incurred a prepayment penalty of $1.0 million. The prepayment penalty, and
unamortized deferred loan costs associated with the FINOVA Loan of approximately
$2.6 million, were recorded as an extraordinary item. As discussed above, the
Company has recorded a significant valuation allowance against tax assets which
are not likely to be realized. Accordingly, the Company has not recognized any
tax benefit associated with this extraordinary item.
EBITDA: EBITDA increased to $2.4 million, 29% of net revenue, ($2.9 million,
- ------
35% of net revenue, excluding the $0.5 million of costs associated with the
terminated ProNet merger and other terminated acquisitions) in the first three
months of fiscal year 1997 from $1.4 million, 32% of net revenue, in the first
three months of fiscal year 1996. On a proforma basis, assuming the Fiscal Year
1997 Acquisitions and the Dial Acquisition had occurred at the beginning of the
respective periods, EBITDA increased to $2.9 million, 31% of proforma net
revenue, ($3.4 million and 37% excluding the costs associated with the
terminated ProNet merger and other acquisitions) for the first three months of
fiscal year 1997 as compared to $3.1 million, 39% of proforma net revenue, in
the first three months of fiscal year 1996. The decrease in proforma EBITDA as a
percentage of net revenue is due to the impact of the increased costs associated
with running a larger, publicly traded, company as discussed above. In
addition, these margins are impacted by the declining ARPU discussed above. The
Company expects that this margin will stabilize in the near term as the impact
of declining ARPU is offset by increased revenue from increasing pagers in
service and lower operating expenses as a percentage of net revenue.
FINANCIAL CONDITION
In July 1996, the Company entered into an agreement with a group of lenders, led
by Chase Manhattan Bank, to provide new loans in an amount not to exceed $95
million (the "Credit Facility"). As of August 31, 1996, $66.8 million of the
Credit Facility had been funded and $28.2 million is available for future
funding. The funding from the Credit Facility was used to repay notes payable
to FINOVA Capital Corporation (the "FINOVA Loan"), and to provide the financing
necessary to complete the acquisitions discussed in Note B. As a result of the
repayment of the FINOVA Loan, the Company was required to pay a $1 million
prepayment penalty to FINOVA. The prepayment penalty and the unamortized
deferred loan costs associated with the FINOVA Loan of approximately $2.6
million have been recorded as an extraordinary expense. Direct costs incurred in
connection with obtaining the Credit Facility of approximately $2.9 million have
been deferred and are being amortized, using the effective interest rate method,
over the term of the loan.
The Credit Facility bears interest, at the Company's designation, at a floating
rate of either the prime rate plus 1% to 2% or LIBOR plus 2% to 3% depending on
the leverage ratio of the Company and is secured by substantially all of the
assets of the Company and its subsidiaries. Borrowings under the Credit Facility
require that the principal be repaid in escalating quarterly installments
beginning in February 1998 and ending in fiscal year 2004. The terms require
that the Company obtain an interest rate protection agreement, within one
hundred and twenty days of closing, to protect at least 50% of the
13
<PAGE>
commitments against fluctuations in the three-month LIBOR rate for a period of
at least three years. In addition, the terms require the maintenance of certain
specified financial and operating covenants, provide for restrictions on capital
expenditures and future acquisitions, prohibit any payments on the Junior
Subordinated Notes or the payment of dividends. The Company believes that the
availability under the Credit Facility, and cash flow from operations, will be
sufficient to fund working capital needs for the next twelve months.
The Company's paging operations require capital investment to procure pagers and
to acquire paging infrastructure equipment to support the Company's growth. The
Company's net capital expenditures amounted to $0.6 million and $0.1 million for
the first three months of fiscal year 1997 and 1996, respectively. Management
anticipates capital expenditures for the Company to continue to increase as the
the Company continues to improve its infrastructure. These expenditures will be
paid for with cash generated from operations and borrowings under the unused
portion of the Credit Facility.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various legal proceedings arising in the ordinary
course of business. The Company believes that there is no proceeding,
either threatening or pending, against the Company that could result in a
material adverse effect on the results of operations or financial condition
of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits,
--------
Exhibit Page
Number Title of Exhibit Number
- ------ ---------------- ------
2.13 Stock Purchase Agreement by and among Teletouch
Communications, Inc. as Buyer and the Shareholders of
Russell's Communication, Inc. (d/b/a Louisiana Paging &
Communications Co.) as Sellers dated May 13, 1996
2.14 Asset Purchase Agreement by and among Teletouch
Communications, Inc. as Buyer and Warren
Communications, Inc. as Sellers dated April 2, 1996
2.15 Asset Purchase Agreement by and among Teletouch
Communications, Inc. as Buyer and Dave Fant Company
(d/b/a Oklahoma Radio Systems) and David W. Fant
as Sellers dated April 11, 1996
2.16 Stock Purchase Agreement by and among Teletouch
Communications, Inc. as Buyer and the Shareholders of
AACS Communications, Inc. as Sellers dated April 4, 1996
10.2 Noncompetition Agreement by and between Teletouch
Communications, Inc. and the former Shareholders of
Russell's Communication, Inc. (d/b/a Louisiana Paging
& Communications Co.)
10.3 Noncompetition Agreement by and between Teletouch
Communications, Inc. and the former Shareholders of
Warren Communication, Inc.
10.4 Noncompetition Agreement by and between Teletouch
Communications, Inc., Dave Fant Company and David W.
Fant, the sole shareholder of Dave Fant Company.
10.5 Noncompetition Agreement by and between Teletouch
Communications, Inc. and the former shareholders of
AACS Communications, Inc.
11 Computation of Loss Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K, None.
-------------------
15
<PAGE>
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.
TELETOUCH COMMUNICATIONS, INC.
------------------------------------
(Registrant)
Date: October 15, 1996 /s/ G. David Higginbotham
-------------------------------
G. David Higginbotham
President
Chief Operating Officer
/s/ Michael Rosen
-------------------------------
Michael Rosen
Executive Vice President
Chief Financial Officer
(Principal Accounting Officer)
16
<PAGE>
EXHIBIT 2.13
STOCK PURCHASE AGREEMENT
by and among
TELETOUCH COMMUNICATIONS, INC.
as Buyer
and
the Shareholders of
RUSSELL'S COMMUNICATION, INC.
(D/B/A LOUISIANA PAGING & COMMUNICATIONS CO.)
as Sellers
May 13, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I DEFINITIONS
<S> <C>
1.1 Definitions................................................. 1
1.2 Other Terms................................................. 6
1.3 Other Definitional Provisions............................... 6
ARTICLE II THE TRANSACTION
ARTICLE III PAYMENT OF PURCHASE PRICE
3.1 Amount; Delivery............................................ 7
3.2 Purchase Price Adjustments.................................. 7
3.3 Holdback.................................................... 8
3.4 Excluded Asset.............................................. 8
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF SELLERS
4.1 Existence and Good Standing................................. 9
4.2 Capitalization of The Company............................... 9
4.3 Authorization and Validity of Agreement..................... 9
4.4 Consents and Approvals; No Violations.......................10
4.5 Receivables and Payables....................................10
4.6 Financial Statements; No Material Adverse Change............10
4.7 Warranty Claims.............................................11
4.8 Title to Properties; Encumbrances; Condition................11
4.9 Leases......................................................11
4.10 Contracts and Commitments..................................11
4.11 Permits....................................................13
4.12 Litigation.................................................13
4.13 Taxes......................................................14
4.14 Insurance..................................................15
4.15 Intellectual Property......................................15
4.16 Compliance with Laws.......................................15
4.17 Employment Relations.......................................15
4.18 Employee Benefit Plans.....................................15
4.19 Environmental Laws and Regulations.........................15
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
4.20 Interests in Customers and Suppliers........................16
4.21 Compensation of Employees...................................16
4.22 Suppliers and Customers.....................................16
4.23 Absence of Changes..........................................17
4.24 Solvency and Indebtedness...................................18
4.25 Disclosure..................................................18
4.26 Government Contracts........................................18
4.27 Copies of Documents.........................................18
4.28 No Subsidiaries.............................................18
4.29 Books and Records...........................................18
4.30 Broker's or Finder's Fees...................................18
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF BUYER
5.1 Existence and Good Standing of Buyer; Power and Authority....19
5.2 No Violations................................................19
5.3 Broker's or Finder's Fees....................................20
ARTICLE VI CONDITIONS TO
SELLER'S OBLIGATIONS
6.1 Truth of Representations and Warranties......................20
6.2 Performance of Agreements....................................20
6.3 No Litigation Threatened.....................................20
6.4 Governmental Approvals.......................................20
6.5 Proceedings..................................................21
ARTICLE VII CONDITIONS TO BUYER'S
OBLIGATIONS
7.1 Truth of Representations and Warranties......................21
7.2 Performance of Agreements....................................21
7.3 No Litigation Threatened.....................................21
7.4 Due Diligence................................................21
7.5 Governmental Approvals.......................................21
7.6 Consents.....................................................22
7.7 Legal Opinions...............................................22
7.8 Schedules....................................................22
7.9 Proceedings..................................................22
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VIII COVENANTS OF SELLER
<S> <C>
8.1 Cooperation by Sellers......................................22
8.2 Notice of Breaches..........................................22
8.3 Conduct of Business.........................................23
8.4 Negative Covenants of Seller................................23
8.5 Exclusive Dealing...........................................24
8.6 Review of the Assets........................................24
8.7 Governmental Filings........................................24
8.8 Further Assurances..........................................25
ARTICLE IX COVENANTS OF BUYER
9.1 Cooperation by Buyer........................................25
9.2 Books and Records; Personnel................................25
9.3 Further Assurances..........................................25
9.4 Governmental Filings........................................25
ARTICLE X THE CLOSING
10.1 Time and Place.............................................26
10.2 Sellers' Obligations.......................................26
10.3 Buyer's Obligations........................................27
ARTICLE XI TERMINATION
11.1 Termination................................................27
11.2 Remedies Upon Default or Failure to Close..................28
11.3 Effect on Obligations......................................28
ARTICLE XII SURVIVAL AND INDEMNIFICATION
12.1 Indemnification of Seller..................................29
12.2 Indemnification of Buyer...................................29
12.3 Demands....................................................29
12.4 Right to Contest and Defend................................30
12.5 Cooperation................................................30
12.6 Right to Participate.......................................31
12.7 Payment of Damages.........................................31
12.8 Survival of Representations and Warranties.................31
ARTICLE XIII MISCELLANEOUS
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
13.1 Notices.....................................................31
13.2 Governing Law...............................................33
13.3 Entire Agreement; Amendments and Waivers....................33
13.4 Binding Effect and Assignment...............................34
13.5 Severability................................................34
13.6 Headings....................................................34
13.7 Execution...................................................34
13.8 Sales and Transfer Taxes....................................34
13.9 Expenses....................................................34
13.10 Publicity..................................................34
</TABLE>
-iv-
<PAGE>
SCHEDULES
- ---------
Schedule 3.2(e) Certain Equipment
Schedule 4.2 Shareholder Impediments
Schedule 4.4 Seller Consents
Schedule 4.5 Receivables and Payables
Schedule 4.6 Material Adverse Change
Schedule 4.7 Warranty Claims
Schedule 4.8 Title to Properties; Encumbrances; Condition
Schedule 4.9 Leases
Schedule 4.10 Contracts and Commitments
Schedule 4.11 Permits
Schedule 4.12 Litigation
Schedule 4.13 Taxes
Schedule 4.14 Insurance Policies
Schedule 4.15 Intellectual Property
Schedule 4.19 Environmental Laws and Regulations
Schedule 4.20 Certain Relationships of Seller
Schedule 4.21 List of Employees of Seller
Schedule 4.22 Suppliers and Customers
Schedule 4.23 Absence of Changes
Schedule 4.24 Indebtedness
Schedule 4.28 Government Contracts
EXHIBITS
- --------
Exhibit A Noncompetition Agreements
Exhibit B-1 Opinion of Seller's Counsel
Exhibit B-2 Opinion of Seller's FCC Counsel
-v-
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") dated as of May 13, 1996,
is by and among Teletouch Communications, Inc., a Delaware corporation
("Buyer"), and Ron W. Dunham and Jacqueline R. Dunham (individually, a "Seller"
and collectively, the "Sellers"), together constituting all of the shareholders
of Russell's Communication, Inc., d/b/a Louisiana Paging & Communications Co., a
Louisiana corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Sellers wish to sell and Buyer wishes to purchase all of the
issued and outstanding capital stock of the Company (the "Stock") and the
Equipment, as defined below, all upon the terms and subject to the conditions
set forth below.
NOW, THEREFORE, for the mutual covenants and other consideration described
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
-----------
I.1 Definitions. As used herein, the following terms have the meanings
-----------
set forth below:
"Accounts Receivable": all notes and accounts receivable of Seller
-------------------
attributable to the Business through the date immediately preceding the Closing
Date.
"Affiliate": with respect to any Person, any other Person directly or
---------
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
"Agreement": this Stock Purchase Agreement, as amended from time to time
---------
as provided herein, and all exhibits, schedules and ancillary documents hereto,
except where the context clearly indicates otherwise.
"Audit Date": as defined in Section 3.2(a).
----------
"Balance Sheet": as defined in Section 4.6.
-------------
-1-
<PAGE>
"Books and Records": all books, records, books of account, files and data
-----------------
(including customer and supplier lists), catalogs, brochures, sales literature,
promotional material, certificates and other documents used in or associated
with the conduct of the Business or the ownership of the assets, including
personnel records and files (to the extent Seller's personnel are hired by
Buyer), minute books, transfer ledgers and stock certificates.
"Business": the paging operations, including (a) the lease and sale of
--------
paging equipment, (b) sale and servicing of mobile equipment, (c) voice mail
services and (d) any other services provided by the Company relating to the
paging industry as currently conducted by the Company which has its principal
office at 717 Foster Drive, Suite 230, Baton Rouge, Louisiana.
"Business Day": any day excluding Saturday, Sunday and any day on which
------------
banks in Houston, Texas are authorized or required by law or other governmental
action to close.
"Buyer": as defined in the preamble of this Agreement.
-----
"Buyer Indemnitees": as defined in Section 13.2.
-----------------
"Buyer's Agreements": the Escrow Agreement and the Noncompetition
------------------
Agreements.
"Cash Payment": as defined in Section 3.1(a).
------------
"Claim": as defined in Section 13.3.
-----
"Closing": as defined in Section 10.1.
-------
"Closing Date": as defined in Section 10.1.
------------
"Code": the Internal Revenue Code of 1986, as amended from time to time,
----
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commission": the Federal Communications Commission.
----------
"Company": as defined in the preamble hereto.
-------
"Confidentiality Agreement": as defined in Section 12.3.
-------------------------
"Contract": any written or oral contract, agreement or instrument relating
--------
to the Business
-2-
<PAGE>
to which the Company is a party or is otherwise bound, including, without
limitation, supply contracts, customer agreements, any mortgages, deeds of
trust, notes or guarantees, pledges, liens, or conditional sales agreements to
which the Company is a party or by which any of its assets may be bound, but
excluding Leases and Employee Benefit Plans.
"Damages": as defined in Section 13.1.
-------
"December Balance Sheet": as defined in Section 3.2(a).
----------------------
"Deposit": as defined in Section 2.2.
-------
"Employee Benefit Plans": any employee benefit plans, policies, programs
----------------------
and arrangements and all related contracts, agreements and other descriptions
thereof with respect to the employee benefits provided to the employees of the
Company conducting the Business as of the date hereof and through the Closing
Date.
"Encumbrances": liens, security interests, options, rights of first
------------
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, encroachments, licenses, Leases, Permits, security
agreements, or any other encumbrances and other restrictions or limitations on
the use or ownership of real or personal property or irregularities in title
thereto.
"Environmental Claim": any and all administrative, regulatory, judicial or
-------------------
other actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, penalties, cleanup, removal, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) any and all Environmental Claims by any third party seeking damages,
enforcement, penalties, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
-----------------
regulation, ordinance, code, policy or rule of common law now in effect and in
each case as amended and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to Hazardous Materials, the environment or health relating to or
arising from environmental conditions, including without limitation the
Occupational Safety and Health Act, as amended, 29 U.S.C. (S) 651 et seq; the
-- ---
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials Transportation
-- ---
Act, as amended, 49 U.S.C. (S) 5101 et seq.; the Resource Conservation
-- ---
-3-
<PAGE>
and Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal Water
-- ---
Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
-- ---
Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C.
-- ---
(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq.; the
-- --- -- ---
Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; and relevant state and
-- ---
local laws.
"Equipment": as defined in Section 3.2(d).
---------
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Escrow Agreement": the agreement in form and substance materially
----------------
satisfactory to Buyer and Sellers and to be entered into among Buyer, Sellers
and a bank materially acceptable to the parties, as escrow agent, pursuant to
which Buyer shall make the deposit of the Holdback in escrow subject to the
disbursement terms of this Agreement.
"Excluded Asset": as defined in Section 3.5.
--------------
"FCC Approvals": as defined in Section 6.4.
-------------
"Financial Statements": as defined in Section 4.6.
--------------------
"Finova": Finova Capital Corporation, the senior lender to Buyer.
------
"GAAP": generally accepted accounting principles consistently applied (as
----
such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of the Financial Statements.
"Hazardous Materials": (i) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants," "regulated substances" or
words of similar import under any applicable Environmental Law.
"Holdback": as defined in Section 3.3.
--------
-4-
<PAGE>
"Intellectual Property": domestic and foreign patents, patent
---------------------
applications, registered and unregistered trademarks, service marks, trade names
and logos, registered and unregistered copyrights, computer programs and
software, data bases, trade secrets, methods, designs, processes, procedures,
proprietary information and any other intangible property used in or associated
with the conduct of the Business and the ownership of the assets, including all
of the Company's rights to any such property which is owned by and licensed from
others and any goodwill associated with any of the above.
"Inventory": all pagers, other merchandise, supplies, stock in trade and
---------
other such assets of the Company held for sale or lease in the ordinary course
of the Business or to be furnished under contracts of service or held as work in
process or to be used or consumed in the Business.
"Leases": any and all written and oral contracts, agreements, and
------
commitments regarding the lease of real or personal property to which the
Company is a party or is otherwise bound that relate to or are used in the
operation of the Business, including, but not limited to, leases of towers and
transmitter sites.
"Loan Agreement": as defined in Section 5.2.
--------------
"Noncompete Payment": as defined in Section 3.1(b).
------------------
"Noncompetition Agreement": the agreement between Buyer and each of the
------------------------
Sellers relating to each Sellers' noncompetition with Buyer and the Company in
the form of Exhibit "A" attached hereto, to be executed at Closing.
"Permits": any license, permit, franchise, consent, approval or authority
-------
granted to the Company by any Person, including, but not limited to, all
licenses and permits issued by the Commission.
"Permitted Encumbrances": (i) Encumbrances consisting of easements,
----------------------
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by Seller in the operation of
the Business, (ii) Encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent and (iii) Encumbrances
created by Buyer.
"Person": any individual, partnership, joint venture, corporation, trust,
------
unincorporated organization, government or other department or agency thereof or
other entity.
"Pre-Closing Period": as defined in Section 4.13(a).
------------------
-5-
<PAGE>
"Purchase Price": as defined in Section 3.1.
--------------
"Releases": as defined in Section 4.19.
--------
"Returns": as defined in Section 4.13(a).
-------
"Rules and Regulations": as defined in Section 4.11.
---------------------
"Schedules": The schedules of Seller, Buyer or both as appropriate in the
---------
context and as referenced throughout this Agreement.
"Seller(s)": as defined in the preamble of this Agreement.
---------
"Sellers Indemnitees": as defined in Section 13.1.
-------------------
"Sellers' Agreements": the Escrow Agreement and the Noncompetition
-------------------
Agreement.
"Stock": as defined in the introduction to this Agreement.
-----
"Subordinated Debt Agreement": as defined in Section 5.2.
---------------------------
"Tax": any net income, alternative or add-on minimum tax, advance,
---
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
-- -------
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
I.2 Other Terms. Other terms may be defined elsewhere in the text of
-----------
this Agreement and shall have the meaning indicated throughout this Agreement.
I.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein" and "hereunder," and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms defined in the neuter or masculine gender shall
include the
-6-
<PAGE>
feminine, neuter and masculine genders, unless the context clearly
indicates otherwise.
(d) Reference to the "best knowledge" of a Person or words of
similar import shall mean the actual or constructive best knowledge of such
Person after reasonable due diligence as to the facts and circumstances
addressed.
ARTICLE II
THE TRANSACTION
---------------
Subject to the terms and conditions of this Agreement, Buyer agrees to
purchase from Sellers, and Sellers agree to sell, convey, transfer, assign and
deliver, and cause to be sold, conveyed, transferred, assigned and delivered,
the Stock to Buyer on the Closing Date against the receipt by Sellers of the
Purchase Price.
ARTICLE III
PAYMENT OF PURCHASE PRICE
-------------------------
III.1 Amount; Delivery. The purchase price ("Purchase Price") for the
----------------
Stock, the Equipment, the Noncompetition Agreement and all other rights and
obligations contemplated hereunder shall be Two Million Three Hundred Thousand
Dollars ($2,300,000), as adjusted pursuant to Section 3.2 hereof. At the
Closing, the Purchase Price, as adjusted, shall be remitted by Buyer to Seller
in the following manner:
(a) $2,200,000 in cash (the "Cash Payment") as adjusted pursuant
to Section 3.2 below, less the amount of the Holdback as defined and as
provided for in Section 3.3 below, shall be paid to the Sellers in
proportion to their respective ownership of the Stock by wire transfer of
immediately available funds to the respective accounts of the Sellers as
designated in writing by Sellers to Buyer not more than three (3) Business
Days prior to the Closing Date; and
(b) $100,000 in cash ("Noncompete Payment") on the Closing Date,
which shall be paid to the Sellers in proportion to their respective
ownership of Stock by wire transfer of immediately available funds to
respective accounts of the Sellers as designated pursuant to Section 3.1(a)
above.
III.2 Purchase Price Adjustments. At the Closing, the Purchase Price
--------------------------
shall be reduced or increased, as applicable, for the aggregate dollar amount of
the following determined as of the Closing Date:
(a) The Purchase Price shall be reduced by the amount of
outstanding
-7-
<PAGE>
indebtedness of the Company for borrowed funds which are not to exceed $130,000.
At the Closing, Buyer will pay the withheld amount to the appropriate creditors,
lenders, mortgagees or such other persons as may be due monies to pay such
indebtedness.
(b) (i) The Purchase Price shall be reduced by the amount of
any dividends or distributions to the Sellers made after December 31, 1995
("Audit Date"), (ii) the amount of any bonuses or increases in salaries paid
after the Audit Date to any officer, director or employee of the Company or any
person related to any such officer, director or employees; and (iii) any
dividends, distributions, salaries or bonuses made or paid during the period
December 31, 1995 through the Closing Date out of the ordinary course of
business or inconsistent with past practices of the Company.
(c) The Purchase Price shall be increased by $3,800.00, the fair
market value of the equipment identified on Schedule 3.2(a) which was previously
leased to the Company by Ron W. Dunham (the "Equipment") and will be
transferred to the Company on or before the Closing Date.
(d) The Purchase Price shall be increased by the amount of cash
paid by the Company for the purchase of pagers or equipment after June 1, 1996,
in the ordinary course of business.
III.3 Holdback. The Purchase Price to be paid at Closing shall be
--------
reduced by ten percent (10%) of the total Purchase Price after making the
adjustments specified in Sections 3.2(b), (c) and (d) above, and the amount of
such reduction (the "Holdback") shall be deposited into escrow by Buyer pursuant
to the terms of the Escrow Agreement for a period of one year from the Closing
Date to be applied to post-Closing Purchase Price adjustments (as set forth in
Section 3.4 below) and as an offset against any indemnification amounts due
Buyer by Sellers after the Closing pursuant to Article XII hereof. On the first
anniversary date of the Closing Date, the escrow agent under the Escrow
Agreement, pursuant to written instructions in accordance with the terms of the
Escrow Agreement, shall wire transfer the amount of the Holdback and any and all
accrued interest, less any amounts previously transferred to Buyer or then
subject to a claim by Buyer made prior to such date under Article XII, in
immediately available funds to the respective accounts designated by Sellers in
the same proportions as set forth in Section 3.1.
III.4 Excluded Asset. At Closing, the Company shall transfer title to
--------------
and possession of and control of that certain automobile identified as 1996
Lincoln Continental (the "Excluded Asset") to Ron W. Dunham.
ARTICLE IV
-8-
<PAGE>
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby represent and warrant, jointly and severally, to Buyer as
follows:
IV.1 Existence and Good Standing. The Company is a corporation duly
---------------------------
organized and validly existing under the laws of the State of Louisiana. The
Company has the power and authority to own, lease and operate its property and
to carry on its business as now being conducted and to own or lease the assets
owned or leased by it. The Company is duly qualified or licensed to do business
in each jurisdiction in which the character or location of the properties owned
or leased by the Company or the nature of the business conducted by the Company
makes such qualification necessary.
IV.2 Capitalization of The Company.
-----------------------------
(a) The entire authorized capital stock of the Company consists
of 1,000 shares of common stock, no par value per share, of which 1,000
shares are issued and outstanding, fully paid and nonassessable. The Stock
is owned beneficially and of record by the Sellers as set forth on Schedule
4.2.
(b) The Stock represents all of the issued and outstanding
capital stock of the Company. There are no outstanding subscriptions,
options, convertible securities or debt instruments, warrants, calls or
rights of any kind including preemptive rights (issued, contracted for or
granted by, or binding upon, the Company) to purchase or otherwise acquire
any security of or equity interest in the Company. Except as set forth in
Schedule 4.2, the Sellers have full legal right to sell, assign and
transfer the Stock to Buyer and will, upon delivery of the Stock to Buyer
pursuant to the terms hereof, transfer to Buyer good and valid title to the
Stock free and clear of all Encumbrances, rights, options to purchase,
voting trusts or other voting agreements and calls and commitments of every
kind affecting the Stock.
(c) There are no outstanding registration rights relating to the
Stock. The Stock was issued in compliance with exemptions from the
registration requirements of federal and state securities laws, as
applicable.
IV.3 Authorization and Validity of Agreement. Each of the Sellers has
---------------------------------------
full legal capacity to execute and deliver this Agreement and the Sellers
Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement,
and the Sellers' Agreements have been, as applicable as of the date hereof or
as of the Closing Date, duly executed and delivered by Sellers, as applicable,
and are valid and binding obligations of Sellers enforceable against Sellers in
accordance with their respective terms, except to the extent that enforceability
may be subject to applicable bankruptcy,
-9-
<PAGE>
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
IV.4 Consents and Approvals; No Violations. The execution, delivery and
-------------------------------------
performance of this Agreement and the Sellers' Agreements by Sellers and the
consummation by Sellers of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time or both: (a)
violate, conflict with, or result in a breach or default under any provision of
the charter or bylaws of the Company; (b) violate any statute, ordinance, rule,
regulation, order, judgment or decree of any court or of any governmental or
regulatory body, agency or authority applicable to the Company or Sellers or by
which any of their respective properties or assets may be bound; (c) require any
filing by the Company or Sellers with, or require the Company or Sellers to
obtain any Permit of, or require the Company or Sellers to give any notice to,
any governmental or regulatory body, agency or authority other than as set forth
on Schedule 4.4 attached hereto; or (d) other than as set forth on Schedule 4.4
attached hereto, result in a violation or breach by the Company or Sellers of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default by the Company or Sellers (or give rise to any right of termination,
cancellation, payment or acceleration) under or result in the creation of any
Encumbrance upon any of the assets or properties of the Company under any of the
terms, conditions, or provisions of any note, bond, mortgage, indenture, Permit,
Contract, Lease or other instrument or obligation to which the Company or any
Seller is a party, or by which the Company, any Seller or any of the assets or
properties of the Company may be bound, except in the case of clauses (b), (c)
and (d) of this Section 4.4, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a material
adverse effect on the business, condition (financial or otherwise) or assets of
the Company.
IV.5 Receivables and Payables. Schedule 4.5 lists all Accounts
------------------------
Receivable of the Company. Schedule 4.5 specifically indicates all such
Accounts Receivable from any Affiliate of the Company. Except as reflected on
Schedule 4.5, all such Accounts Receivable are, and all Accounts Receivable at
the Closing Date will be, (a) bona fide claims against debtors for sales, work
performed or other charges, (b) to the best knowledge of Sellers, subject to no
defenses, set-offs or counterclaims and (c) collectible subject to the Company's
normal reserve for bad debts as reflected in the Financial Statements. Except
as set forth on Schedule 4.5 or for trade accounts payable or to become due and
payable within 30 days, all accounts payable of the Company have been paid.
IV.6 Financial Statements; No Material Adverse Change. Sellers have
------------------------------------------------
heretofore furnished Buyer with the audited financial statements of the Company
as of December 31, 1995, in the form of a balance sheet (the "Balance Sheet"),
and an income statement for the twelve-month period then ended relating to the
Balance Sheet (together with the Balance Sheet, the "Financial Statements").
The Financial Statements have been prepared in accordance with
-10-
<PAGE>
GAAP and fairly present in all material respects the financial position of the
Company at the dates thereof and the results of operations and cash flow of the
Company for the period indicated. Except as set forth on Schedule 4.6 attached
hereto, since the Audit Date there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations of the Company.
IV.7 Warranty Claims. Except as set forth on Schedule 4.7 attached
---------------
hereto, as of the date hereof, there are no warranty claims relating to products
at any time sold or services at any time performed by the Company pending or, to
the best knowledge of the Company, threatened.
IV.8 Title to Properties; Encumbrances; Condition. Except as set forth
--------------------------------------------
on Schedule 4.8 or any of the other Schedules hereto and except for properties
and assets reflected in the Financial Statements or acquired since the Audit
Date which have been sold or otherwise disposed of in the ordinary course of
business, the Company owns outright, and has, and shall at the Closing have,
full legal and beneficial title to all of its assets and properties, in each
case subject to no Encumbrances except for Permitted Encumbrances. Except as set
forth on Schedule 4.8, each asset is in good operating condition and repair,
subject to ordinary wear and tear, and has been maintained in accordance with
the manufacturers' specifications, and each asset is in compliance with all
applicable federal and state laws and regulations. The Inventory consists of
items of a quality and quantity usable or saleable in the regular course of
business of the Company. As of the date of this Agreement, the Company has no
less than 424 pagers in Inventory, no less than 1,812 leased pagers outstanding
and at least 5,637 pagers in service.
IV.9 Leases. Schedule 4.9 contains an accurate and complete list of all
------
Leases to which the Company is a party (as lessee or lessor). Each Lease set
forth on Schedule 4.9 is, to the best knowledge of the Company, in full force
and effect; there is no existing default under any of such Leases on the part of
the Company or, to the best of the Company's knowledge, any other party thereto.
IV.10 Contracts and Commitments. Schedule 4.10 contains an accurate and
-------------------------
complete list of all Contracts to which the Company is a party. Each Contract
set forth on Schedule 4.10 is, to the best knowledge of the Company, in full
force and effect; there is no existing default under any of such Contracts on
the part of the Company or, to the best of Sellers' knowledge, any other party
thereto. Except as set forth on Schedule 4.10:
(a) The Company is not a party to or bound by any loan, credit
or similar agreement or any indenture, trust agreement or other instrument
relating to any issue of bonds, debentures, notes or other evidences of
indebtedness or creating any Encumbrance on any of the Company's assets or
properties;
(b) There are no bonus, pension, profit sharing, retirement,
stock
-11-
<PAGE>
option, stock purchase, deferred compensation, hospitalization or insurance
plans, or vacation or severance pay plans, or any other plans or
arrangements providing benefits to officers, agents or employees of the
Company;
(c) The Company does not have nor is the Company currently
negotiating any collective bargaining agreement with any labor union or
association or any employment contract or other binding agreement relating
to the employment of any of its employees;
(d) The Company is not a party to any joint venture agreement or
other agreement involving the sharing of profits relating to the Business
and/or the Company' assets or properties;
(e) The Company is not a party to any (i) contracts or
commitments for capital expenditures outside the ordinary course of
business or involving obligations on the part of the Company in amounts
inconsistent with those incurred by the Company in the ordinary course of
business in accordance with the Company's prior operation of the Business,
(ii) Lease under which personal property is leased to or from the Company
and which is not cancelable by the Company without penalty upon notice of
thirty days or less or pursuant to which rentals payable by or to the
Company, either individually or in the aggregate, substantially exceed
amounts previously incurred by the Company in the ordinary course of
business, (iii) continuing contract for the future purchase of Inventory or
other materials, supplies, machinery or equipment in excess of the
requirements of the Business conducted in the ordinary course, (iv) other
contract or agreement which involves an obligation on the part of the
Company, either individually or in the aggregate, in excess of amounts
previously incurred by the Company in the ordinary course of business, (v)
contract not made in the ordinary course of business, or (vi) any contract
that is terminable upon or requires a consent to a change of control of the
Company;
(f) There are no agreements, notes, mortgages, leases,
franchises, permits, orders, judgments or decrees to which the Company is a
party or by which the Company is bound, which contain any provision which
would be violated or contravened by, or which would cause acceleration of
any obligation of the Company as a result of or which would cause or permit
the forfeiture of any right or benefit of the Company by reason of the
execution or performance of this Agreement;
(g) The Company is not party to any Contract limiting the
freedom of a the Company to engage in any line of business or to compete
with any Person;
(h) The Company is not a party to any Contract which involves
$5,000 or more and is not cancelable without penalty within thirty days;
and
-12-
<PAGE>
(i) There are no persons holding powers of attorney from, or
otherwise authorized to act on behalf of the Company with respect to the
Business or the assets except for its respective officers and other
management personnel regularly performing their business functions.
Except as specifically identified on Schedule 4.10, Sellers have no knowledge
that any Contract, Lease, or other obligation to which the Company is a party,
individually or in the aggregate: (i) will result in a material loss to the
Company after the Closing Date; (ii) cannot readily be performed or fulfilled on
time without undue or unusual expenditure of money or effort by the Company
after the Closing Date, or (iii) is not in full force and effect and there
exists a default or event of default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default thereunder.
A true copy of each written Contract and Lease as well as all other documents
evidencing any commitment of the Company required to be set forth on any
Schedule hereto has been or will be delivered to Buyer by Sellers no later than
fifteen (15) days after execution of this Agreement. Also set forth on Schedule
4.10 is a list of all proposals, except proposals made by the Company's sales
people in the ordinary course of business, submitted by the Company to any third
party that, if accepted by such third party, would require disclosure on
Schedule 4.10.
IV.11 Permits. All Permits required in connection with the use,
-------
operation or ownership of the assets or properties of the Company and the
conduct of the Business as currently conducted are listed on Schedule 4.11. To
the best knowledge of Sellers, the Permits issued to the Company by the
Commission can be transferred to Buyer or a subsidiary corporation of Buyer as
part of the consummation of the transactions contemplated by this Agreement.
All such Permits are in full force and effect and the facilities associated with
such Permits have been constructed within the time frame provided by the rules
and regulations promulgated by the Commission pursuant to the Communications Act
of 1934 (the "Rules and Regulations").
IV.12 Litigation. Except as set forth on Schedule 4.12, there is no
----------
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of the
Company, threatened, against or affecting the assets, properties or rights of
the Company, and Sellers do not know of any valid basis for any such action,
proceeding or investigation. There are no such suits, actions, claims,
proceedings or investigations pending or to the best knowledge of Sellers,
threatened, seeking to prevent or challenge the transactions contemplated by
this Agreement. Schedule 4.12 lists all claims, if any, filed with the
Commission with respect to the Company and/or the operation of the Business
since January 1, 1993. A decision adverse to the Company with respect to any of
the matters listed on Schedule 4.12, or with respect to all or any combination
thereof, would not result in a material adverse effect to the business,
conditions (financial or otherwise) or assets of the Company.
-13-
<PAGE>
IV.13 Taxes.
-----
(a) The Company has either accrued, discharged or caused to be
discharged, as the same have become due, or the Balance Sheet contains
adequate accruals and reserves for, all Taxes attributable or relating to
the properties of the Company, its Business or operations or the revenues
or income derived therefrom for all periods through the Audit Date. As of
the Closing Date, the Company will have, in all material respects,
satisfied or accrued, for all periods through the Closing Date, all
applicable federal, state, local and foreign withholding tax requirements
including without limitation, income, social security and employment tax
withholding for all types of compensation. All quarterly deposits of
estimated Taxes required to be paid by the Company since the Audit Date
through the date hereof have been paid, and all quarterly deposits of
estimated Taxes required to be paid by the Company after the date hereof
through the Closing Date (the "Pre-Closing Period") will have been paid on
or before the Closing Date. All other Taxes of the Company for any period
after the Audit Date through the date hereof have been paid or properly
accrued on the books of the Company. The Company has filed, or by the
Closing Date will have filed, in a timely manner (taking into account all
extensions of due dates) with the appropriate federal, state, local and
foreign governmental authorities all Tax returns, if any, that are required
to be filed by or on behalf of the Company on or before the Closing Date,
such Tax returns are complete and correct in all material respects, and the
Company has paid in full, or on the Closing Date will have paid in full,
all Taxes shown to be due and payable on said returns;
(b) Except as provided on Schedule 4.13, there is no action,
suit, proceeding, investigation, audit, or claim now pending or, to the
best knowledge of Sellers, threatened by any authority regarding any Taxes
relating to the Company for any Pre-Closing Period;
(c) There are no liens or security interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Taxes;
(d) There are no agreements for the extension or waiver of the
time for assessment of any Taxes relating to the Company for any Pre-
Closing Period and the Company has not been requested to enter into any
such agreement or waiver;
(e) All Taxes relating to the Company which the Company is
required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable; and
-14-
<PAGE>
(f) The Company is not now nor has it ever been a party to any
Tax allocation or sharing agreement that could result in any liability to
the Company or Buyer.
IV.14 Insurance. Set forth on Schedule 4.14 is a complete list of
---------
insurance policies that the Company maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and effect
and are free from any right of termination on the part of the insurance
carriers. In the judgment of Sellers, such policies, with respect to their
amounts and types of coverage, are adequate to insure against risks to which the
Company and its property and assets are normally exposed in the operation of the
Business, subject to customary deductibles and policy limits.
IV.15 Intellectual Property. Schedule 4.15 sets forth all Intellectual
---------------------
Property owned by the Company. The operation of the Business requires no rights
under the Intellectual Property other than rights under the Intellectual
Property listed on Schedule 4.15 and rights granted to the Company pursuant to
agreements listed on Schedule 4.15. Except as otherwise set forth on Schedule
4.15, the Company owns all right, title and interest in the Intellectual
Property. No litigation is pending or, to the best knowledge of the Company,
threatened wherein the Company is accused of infringing or otherwise violating
the intellectual property rights of another, or of breaching a contract
conveying intellectual property rights.
IV.16 Compliance with Laws. The Company is in compliance with all
--------------------
applicable laws, regulations, orders, judgments and decrees applicable to the
Business, except where any noncompliance would not have a material adverse
effect on the business, condition (financial or otherwise) or assets of the
Company.
IV.17 Employment Relations. The Company is not engaged in any unfair
--------------------
labor practice.
IV.18 Employee Benefit Plans. Sellers have provided Buyer with copies of
----------------------
all Employee Benefit Plans of the Company. None of the Employee Benefit Plans
are subject to Title IV of ERISA or the minimum funding obligations of Section
412 of the Code, and the Company and any entity required to be aggregated
therewith pursuant to Section 414(b) or (c) of the Code have no liability under
Title IV of ERISA or under Section 412(f) or 412(n) of the Code.
IV.19 Environmental Laws and Regulations. Except as set forth on
----------------------------------
Schedule 4.19:
(a) The Company, Sellers or their authorized agents or
independent contractors (including suppliers) have not generated on, used
on, treated or stored on, transported to or from or arranged for
transportation to or from, the real property owned or leased by the Company
or any property adjoining such real property any Hazardous Materials,
-15-
<PAGE>
(b) Hazardous Materials have not been disposed, discharged,
injected, spilled, leaked, leached, dumped, emitted, escaped, emptied,
allowed to seep, placed and the like, into or upon any land or water or
air, or otherwise allowed to enter into the environment (collectively,
"Releases") by the Company, Sellers, their authorized agents or independent
contractors (including suppliers) on such real property or by the Company,
Sellers or their agents on any other property,
(c) The Company is and has been in compliance with all
applicable Environmental Laws, possesses all Permits required thereunder
and is in compliance with all Permits issued thereunder with respect to
such real property and to the Company's operations conducted thereon,
(d) there are no pending or, to the best knowledge of Sellers,
threatened Environmental Claims against the Company or such real property,
(e) there are no facts or present or past circumstances,
conditions or occur rences on such real property known to Sellers that
reasonably could be anticipated (i) to form the basis of an Environmental
Claim against the Company or any owner or operator of such real property,
or (ii) to cause such real property to be subject to any restrictions on
the ownership, occupancy, use or transferability of such real property
under any Environmental Law,
(f) there are not now and, to the best knowledge of Sellers,
there never have been any underground storage tanks located on such real
property, and
(g) The Company has not in the ordinary course of business
transported, treated, disposed of or stored Hazardous Materials.
IV.20 Interests in Customers and Suppliers. Except for relationships
------------------------------------
with Affiliates and as set forth on Schedule 4.20 attached hereto, the Company
does not possess, directly or indirectly, any financial interest in, nor is any
Person associated with the Company as a director, officer or employee of, any
corporation, firm, association or business organization which is a supplier,
customer, lessor, lessee, or competitor of the Company.
IV.21 Compensation of Employees. Set forth on Schedule 4.21 is a
-------------------------
complete list of all employees of the Company showing (a) such individuals'
total compensation from the Company for the fiscal year ended on the Audit Date
and (b) compensation and salary rates for the current fiscal year. Except as set
forth on Schedule 4.21, no employee of the Company has been promised a bonus or
an increase in salary to take effect subsequent to the date hereof.
-16-
<PAGE>
IV.22 Suppliers and Customers. Schedule 4.22 sets forth the five largest
-----------------------
suppliers and the ten largest customers of the Company by dollar volume in
fiscal 1995 and as of the date hereof. The relationship of the Company with
each of such suppliers and customers as of the date of this Agreement is, to the
best knowledge of the Company, a good commercial working relationship, and
except as set forth on Schedule 4.22, no significant supplier or client has
canceled or otherwise terminated or, to the best knowledge of Sellers,
threatened to cancel or otherwise terminate its relationship with the Company
since December 31, 1994.
IV.23 Absence of Changes. Except as set forth on Schedule 4.23, with
------------------
respect to the Company or the Business since the Audit Date there has not been
any:
(a) sale, assignment, pledge, hypothecation or other transfer of
any of the Company's assets or properties except in the ordinary course of
business;
(b) material adverse effect to the business, condition
(financial or otherwise) or assets of the Company or any condition or
contingency that might reasonably be expected to result in such material
adverse effect;
(c) termination of or material amendment to any Contract or
Lease except as reflected by any applicable Schedule;
(d) increase in compensation payable or paid to, or any
employment, bonus or compensation agreement entered into with, any officer,
director, employee, agent or independent contractor of the Company other
than in the ordinary course of business or other than as set forth on
Schedule 4.24;
(e) declaration or making, or agreement to declare or make, any
payment of dividends or distributions of any assets of any kind or
purchase, redemption or other acquisition, or agreement to purchase,
redeem or otherwise acquire, directly or indirectly, any of the Company's
outstanding capital stock; or merger, consolidation or agreement to merge
or consolidate with any other entity;
(f) agreement or arrangement creating any preferential rights to
purchase any of the Company's capital stock or assets or requiring the
consent of any party to the transfer or assignment of any of the Company's
capital stock or assets;
(g) other than in the ordinary course of business, a change in
the amount of all Accounts Receivable of the Company or other fees or debts
due to the Company or the allowances with respect thereto, or the payables
of the Company to trade accounts and other creditors by the Company, from
that reflected in the Balance Sheet;
-17-
<PAGE>
(h) Contract or transaction entered into or agreed to by the
Company other than in the ordinary course of business; or
(i) agreement by the Company to do any of the things described
in the preceding clauses (a) through (h) except as contemplated in this
Agreement.
IV.24 Solvency and Indebtedness. Sellers are not entering into this
-------------------------
Agreement with actual intent to hinder, delay or defraud creditors. The
indebtedness of the Company to be paid at closing is in the amounts and payable
to the parties listed on Schedule 4.24.
IV.25 Disclosure. No representation or warranty by Sellers contained in
----------
this Agreement, nor any statement or certificate furnished or to be furnished by
Sellers to Buyer or its representatives in connection herewith or pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading or necessary in order to provide a
prospective purchaser of the Stock with adequate information as to the Company
and its condition (financial and otherwise), properties, assets, liabilities,
business and prospects, and Sellers have disclosed to Buyer in writing all
material adverse facts known to Sellers relating to the same. The
representations and warranties contained in this Article IV or elsewhere in this
Agreement or any document delivered pursuant hereto shall not be affected or
deemed waived by reason of the fact that Buyer and/or its representatives knew
or should have known that any such representation or warranty is or might be
inaccurate in any respect.
IV.26 Government Contracts. Except as set forth on Schedule 4.26, the
--------------------
Company does not have any Contracts with or provide any services to any agency
or department of the Government of the United States.
IV.27 Copies of Documents. The Company has made available for inspection
-------------------
and copying by Buyer and its advisers, true, complete and correct copies of all
documents referred to in this Article IV or in any Schedule attached hereto.
IV.28 No Subsidiaries. The Company has no subsidiaries and owns no
---------------
capital stock or equity interest in any entity.
IV.29 Books and Records. The Books and Records of the Company, as
-----------------
previously made available to Buyer and its representatives, contain accurate
records in all material respects of all meetings of, and corporate action taken
by (including action taken by written consent) the shareholders and Board of
Directors of the Company.
IV.30 Broker's or Finder's Fees. No Person acting on behalf of Sellers
-------------------------
is, or will be, entitled to any fee, commission or broker's or finder's fees in
connection with this Agreement or any of the transactions contemplated hereby.
-18-
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows:
V.1 Existence and Good Standing of Buyer; Power and Authority. Buyer is
---------------------------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has full corporate power and authority to
make, execute, deliver and perform this Agreement and the Buyer's Agreements, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and the Buyer's
Agreements have been duly authorized and approved by all required corporate
governance action of Buyer. This Agreement and the Buyer's Agreements have been,
as applicable as of the date hereof or as of the Closing Date, duly executed and
delivered by Buyer and are the valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms, except to
the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
V.2 No Violations. Except with respect to the Amended and Restated
-------------
Loan Agreement dated August 3, 1995 ("Loan Agreement"), among Buyer, each of
Buyer's subsidiaries, and Finova, and with respect to the Amended and Restated
Subordinated Note, Preferred Stock and Warrant Purchase Agreement dated August
3, 1995, among Buyer, Continental Illinois Venture Corporation, CIVC Partners I,
GM Holdings, LLC, and certain other purchasers listed on the signature pages
thereto ("Subordinated Debt Agreement"), the execution, delivery and performance
of this Agreement and the Buyer's Agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby and thereby will not, with or
without the giving of notice or the lapse of time or both, (a) violate, conflict
with, or result in a breach or default under any provision of the charter or
bylaws of Buyer; (b) violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to Buyer or by which any of its properties or
assets may be bound; (c) require any filing by Buyer with, or require Buyer to
obtain any permit, consent or approval of, or require Buyer to give any notice
to, any governmental or regulatory body, agency or authority or any third party
other than the Commission, Finova and certain parties to the Subordinated Debt
Agreement; or (d) result in a violation or breach by Buyer of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Buyer (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of Buyer pursuant to, any of the terms, conditions or
provision of any note, bond, mortgage, indenture, permit, contract, lease or
other instrument or obligation to which Buyer is a party, or by which it or any
of its
-19-
<PAGE>
properties or assets may be bound, except in the case of clauses (b), (c) and
(d) of this Section 5.2, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a material
adverse effect on the business, condition (financial or otherwise) or assets of
the Company.
V.3 Broker's or Finder's Fees. No Person acting on behalf of Buyer is,
-------------------------
or will be, entitled to any fee, commission or broker's or finder's fee in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Sellers under this Agreement to sell, or cause to be
sold, the Stock and to consummate the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Sellers) on or prior to the
Closing Date of all of the following conditions:
VI.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, and Buyer shall have
delivered to Sellers on the Closing Date a certificate of an authorized officer
of Buyer, dated the Closing Date, to such effect.
VI.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Buyer to be performed on or before the Closing Date pursuant to the
terms hereof, including all deliveries and obligations at Closing, shall have
been duly performed, and Buyer shall have delivered to Sellers a certificate of
an authorized officer of Buyer, dated the Closing Date, to such effect and
evidencing the incumbency of all officers executing any documents in connection
with the Closing.
VI.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Buyer
shall have delivered to Sellers a certificate of an authorized officer of Buyer,
dated the Closing Date, to such effect to the best knowledge of such officer.
VI.4 Governmental Approvals. With respect to the Company's common
----------------------
carrier licenses from the Commission, all governmental consents and approvals
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received, including, but not limited to, all necessary
approvals of the Commission ("FCC Approvals"), and the FCC Approvals shall be
final and nonappealable. With respect to Sellers' private radio
-20-
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licenses from the Commission, the parties shall have authority to close the
transactions contemplated by this Agreement pursuant to conditional temporary
authority under the Rules and Regulations.
VI.5 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Sellers and their
counsel, and Sellers shall have received copies of all such documents and other
evidence as its or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer under this Agreement to purchase the Stock and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by Buyer) on or prior to the Closing Date of all of the
following conditions:
VII.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Sellers contained herein shall be true and correct on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, and Sellers shall have
delivered to Buyer on the Closing Date a certificate of Sellers, dated the
Closing Date, to such effect.
VII.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Sellers to be performed on or before the Closing Date pursuant to
the terms hereof, including all deliveries and obligations at Closing, shall
have been duly performed, and Sellers shall have delivered to Buyer a
certificate of Sellers, dated the Closing Date, to such effect and evidencing
the incumbency of all officers executing any documents in connection with the
Closing.
VII.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Sellers
shall have delivered to Buyer a certificate of Sellers, dated the Closing Date,
to such effect to the best knowledge of each Seller.
VII.4 Due Diligence. Buyer shall have concluded a due diligence review
-------------
of the Company satisfactory to Buyer in its sole discretion.
VII.5 Governmental Approvals. With respect to common carrier licenses,
----------------------
all governmental consents and approvals necessary to permit the consummation of
the transactions
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contemplated by this Agreement shall have been received, including, but not
limited to, the FCC Approvals and the FCC Approvals shall be final and
nonappealable. With respect to Sellers' private radio licenses from the
Commission, the parties shall have authority to close the transactions
contemplated by this Agreement pursuant to conditional temporary authority under
the Rules and Regulations.
VII.6 Consents. Each of the consents referred to on Schedule 4.4
--------
attached hereto shall have been obtained. Buyer shall have received the consents
required under the Loan Agreement and the Subordinated Debt Agreement.
VII.7 Legal Opinions. Sellers shall have delivered to Buyer the opinion
--------------
of Frank H. Dickinson, III, Attorney at Law, counsel to Sellers, substantially
in the form of Exhibit "B-1" attached hereto, which opinion shall be acceptable
to Buyer and its counsel. Sellers also shall have delivered to Buyer the
opinion of Sellers' counsel with regard to matters relating to the Company's
Permits with the Commission, in form and substance acceptable to Buyer and its
counsel substantially in the form of Exhibit "B-2" attached hereto.
VII.8 Schedules. Buyer shall have received the Schedules to be attached
---------
hereto and shall have concluded a due diligence review of the Company, both
satisfactory to Buyer in its sole discretion.
VII.9 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its counsel,
and Buyer shall have received copies of all such documents and other evidence as
it or its counsel may reasonably request in order to establish the consummation
of such transactions and the taking of all proceedings in connection therewith.
ARTICLE VIII
COVENANTS OF SELLER
-------------------
Sellers hereby covenant and agree with Buyer as follows:
VIII.1 Cooperation by Sellers. Sellers shall use their reasonable best
----------------------
efforts to cooperate with Buyer to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Sellers to effect the transactions contemplated hereby, and
Sellers shall otherwise use their reasonable best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied. Sellers further agree to deliver to Buyer prompt
written notice of any event or condition known to or
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discovered by Sellers, which if it existed on the date of this Agreement or on
the Closing Date, would result in any of the representations and warranties of
Sellers contained herein being untrue in any material respect.
VIII.2 Notice of Breaches. Sellers shall deliver to Buyer prompt written
------------------
notice of any event or condition actually known to or discovered by Sellers,
which, if it existed on the date of this Agreement or on the Closing Date, would
result in any of the representations and warranties of Sellers contained herein
being untrue in any material respect. Upon the discovery and subsequent notice
of such an event or condition, Buyer and Sellers shall be entitled to the rights
and remedies set forth in Section 11.2.
VIII.3 Conduct of Business. Except as Buyer may otherwise consent to in
-------------------
writing, between the date hereof and the Closing Date, Sellers shall cause the
Company to, (a) conduct the Business only in the ordinary course, (b) use their
reasonable efforts to keep available the services of the Company's employees and
maintain the Company's current relationships with licensors, suppliers, lessors,
distributors, customers, clients and others, (c) maintain, consistent with past
practice and good business judgment, all of the assets and properties of the
Company in customary repair, order and condition, ordinary wear and tear
excepted, and insurance upon all of the assets used in the conduct of the
Business in such amounts and of such kinds comparable to that in effect on the
date hereof, to the extent available at current premiums, and (d) maintain the
Books and Records in the usual, regular and ordinary manner, on a basis
consistent with past practice.
VIII.4 Negative Covenants of Seller. From and after the date hereof and
----------------------------
through the Closing Date and except with the specific prior written consent of
Buyer, Sellers covenant and agree that Sellers shall not allow the Company to:
(a) sell, transfer or dispose of any of its assets or properties
other than in the ordinary course of business; provided, however, that any
sale, transfer or disposition of any assets in the ordinary course of
business shall not exceed assets valued at more than $5,000 in the
aggregate;
(b) grant, nor shall Sellers grant, an Encumbrance (except a
Permitted Encumbrance) on any of the assets or properties of the Company or
allow any such Encumbrance (except a Permitted Encumbrance) to occur or to
be created;
(c) except in the ordinary course of business, acquire any
tangible properties or assets relating to the Business;
(d) enter into any employment and/or any independent contractor
agreements relating to services to be rendered in connection with the
Business or any of the assets
-23-
<PAGE>
except in the ordinary course of business;
(e) except in the ordinary course of business, amend, modify or
terminate, without the prior written consent of Buyer, any of the
Contracts, Leases or other agree ments of the Company;
(f) incur any indebtedness;
(g) enter into any undertaking to furnish services for any
consideration other than money with respect to the operation of the
Company's assets or properties other than trades of paging services for
advertising in the normal course of business and consistent with historic
levels; and
(h) grant any subscriptions, options, convertible securities,
warrants, calls or rights of any kind (issued, contracted for or granted
by, or binding upon, Sellers) to purchase or otherwise acquire any security
of or equity interest in Sellers. Sellers shall not allow the Company to
issue any shares of authorized but unissued shares of capital stock.
VIII.5 Exclusive Dealing. During the period from the date of this
-----------------
Agreement to the earlier of the Closing Date or the termination of this
Agreement, Sellers shall not take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person other than Buyer, concerning any sale of Stock or
any assets of properties of the Company or a similar transaction involving
Sellers or the Company.
VIII.6 Review of the Assets. Sellers agree that Buyer may, prior to the
--------------------
Closing Date, through its representatives, review (a) the assets and properties
of the Company, (b) the complete working papers of Sellers' certified public
accountants used in their preparation of financial statements of the Company,
and (c) the Books and Records of the Company and otherwise review the financial
and legal condition of the Company as Buyer deems necessary or advisable to
familiarize itself with the Business and related matters; such review shall not,
however, affect the representations and warranties made by Sellers hereunder or
the remedies of Buyer for breaches of those representations and warranties.
Buyer may also, prior to the Closing Date, through its representatives, inspect
any or all of the Company's towers and other transmitting facilities. Such
review and inspection shall occur only during normal business hours upon
reasonable notice by Buyer. Sellers shall permit Buyer and its representatives
to have, after the execution of this Agreement, full access to employees of the
Company who can furnish Buyer with financial and operating data and other
information with respect to the Business as Buyer shall from time to time
reasonably request. Until the Closing Date, Seller agrees to provide Buyer with
monthly financial reports within ten days of the end of each month.
-24-
<PAGE>
VIII.7 Governmental Filings. It is expressly acknowledged and agreed
--------------------
that, as soon as practicable after the execution of this Agreement, but in no
event more than fifteen (15) days from the date hereof, Buyer and Sellers shall
file any forms required by the Commission to transfer the Stock. Sellers agree
that they will cooperate with Buyer in all respects in connection with such
filings and in connection with any requests for information or further filings
which may be necessary in order to obtain the necessary consents (or to allow
the applicable time periods to expire) with respect thereto. Sellers shall
deliver to Buyer and its counsel drafts of such filings by Sellers and all other
materials to be submitted sufficiently in advance of any such submission so that
Buyer and its counsel may review and comment upon such filings and other
materials.
VIII.8 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Sellers shall, at the reasonable request of Buyer, execute and
deliver any further instruments or documents and take all such further action as
Buyer may reasonably request in order to consummate and make effective the sale
of the Stock pursuant to this Agreement.
ARTICLE IX
COVENANTS OF BUYER
------------------
Buyer hereby covenants and agrees with Sellers as follows:
IX.1 Cooperation by Buyer. Buyer will use its reasonable best efforts,
--------------------
and will cooperate with Sellers, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Buyer to effect the transactions contemplated on its part
hereby, and Buyer will otherwise use its reasonable best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied.
IX.2 Books and Records; Personnel. At all times after the Closing Date,
----------------------------
Buyer shall allow Sellers and any agents of Sellers, upon reasonable advance
notice to Buyer, access to all Books and Records of the Company which are
transferred to Buyer in connection herewith, to the extent necessary or
desirable in anticipation of, or preparation for, existing or future litigation,
employment matters, tax returns or audits, or reports to or filings with
governmental agencies, during normal working hours at the location where such
Books and Records are maintained and Sellers shall have the right, at Sellers'
sole cost, to make copies of any such Books and Records. Buyer agrees to
maintain all Books and Records of the Company for a period of six years from the
Closing Date.
IX.3 Further Assurances. At any time or from time to time after the
------------------
Closing Date,
-25-
<PAGE>
Buyer shall, at the request of Sellers and at Sellers' expense, execute and
deliver any further instruments or documents and take all such further action as
Sellers may reasonably request in order to consummate and make effective the
sale of the Stock pursuant to this Agreement.
IX.4 Governmental Filings. It is expressly acknowledged and agreed
--------------------
that, as soon as practicable after the execution of this Agreement, but in no
event more than fifteen (15) days from the date hereof, Buyer and Sellers shall
file any forms required by the Commission to authorize the transfer of the
Stock. Buyer agrees that it will cooperate with Sellers in all respects in
connection with such filings and in connection with any requests for information
or further filings which may be necessary in order to obtain the necessary
consents (or to allow the applicable time periods to expire) with respect
thereto. Buyer shall deliver to Sellers and their counsel drafts of such filings
by Buyer and all other materials to be submitted sufficiently in advance of any
such submission so that Sellers and their counsel may review and comment upon
such filings and other materials.
ARTICLE X
THE CLOSING
-----------
X.1 Time and Place. The closing of the transactions contemplated by
--------------
this Agreement (the "Closing") will take place at 9:00 a.m. at the offices of
Frank H. Dickinson, III, Attorney at Law, located at 2900 West Fork Drive, Suite
200, Baton Rouge, Louisiana on or before August 1, 1996 or at such other time,
at such other place or on such other date as the parties hereto may mutually
agree. The date on which the Closing occurs is herein referred to as the
"Closing Date," and the transactions contemplated by this Agreement shall be
deemed to be effective as of 12:01 a.m. on the Closing Date.
X.2 Sellers' Obligations. At the Closing, Sellers shall deliver to
--------------------
Buyer, against delivery of the items specified in Section 10.3:
(a) the certificates representing the Stock together with stock
powers executed in blank;
(b) the Sellers' Agreements executed by Sellers;
(c) certified copies of the Articles of Incorporation, Bylaws
and Good Standing and Existence Certificates of the Company;
(d) all Books and Records of the Company, including all
Contracts and Leases of the Company;
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<PAGE>
(e) the certifications required by Section 7.1, 7.2 and 7.3
which may be contained in one certificate;
(f) the consents to assignment of the Contracts and Leases as
required by Section 7.6;
(g) the legal opinions as required by Section 7.7;
(h) evidence of final and nonappealable FCC Approvals;
(i) a bill of sale executed by Ron W. Dunham and any other
documents or instruments reasonably requested by Buyer to transfer title to
the Equipment to Buyer or to the Company, with such terms and provisions as
are reasonably satisfactory to Buyer and Sellers;
(j) the certificate of title executed by a duly authorized
officer of the Company or any other document or instrument reasonably
necessary to transfer title to the Excluded Asset to Ron W. Dunham, with
such terms and provisions as are reasonably satisfactory to Ron W. Dunham
and Buyer; and
(k) such other instruments, documents and certificates in form
and substance reasonably satisfactory to Buyer, as Buyer shall have
reasonably required.
X.3 Buyer's Obligations. At the Closing, Buyer shall deliver to
-------------------
Sellers or others, as indicated below, against delivery of the items specified
in Section 10.2:
(a) a wire transfer for the total of the Purchase Price, as
adjusted pursuant to Section 3.2;
(b) a wire transfer to the escrow agent under the Escrow
Agreement in the amount of the Holdback;
(c) wire transfers to the debtholders of the Company for the
amount of the indebtedness indicated on Schedule 4.24;
(d) the Buyer's Agreements executed by a duly authorized officer
of Buyer;
(e) evidence of final and nonappealable FCC Approvals; and
(f) the certifications required by Sections 6.1, 6.2 and 6.3
which may be contained in one certificate.
-27-
<PAGE>
ARTICLE XI
TERMINATION
-----------
XI.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of Buyer and Sellers;
(b) by either Buyer or all Sellers on or after August 1, 1996,
if the Closing has not occurred by such date, provided that as of such date
neither Buyer nor any of the Sellers is in default or that both Buyer and
any of the Sellers are in default under this Agreement; or
(c) by Buyer or all Sellers in writing, without prejudice to
other rights and remedies which the terminating party may have (provided
the terminating party is not otherwise in material default or breach of
this Agreement, or has failed or refused to close without justification
hereunder), if the other party shall (i) materially fail to perform its
covenants or agreements contained herein required to be performed prior to
the Closing Date, or (ii) materially breach or have breached any of its
representations or warranties contained herein.
XI.2 Remedies Upon Default or Failure to Close.
-----------------------------------------
(a) If Buyer shall default in the performance of its obligations
under this Agreement, and shall for this reason be unable to consummate
this Agreement on the Closing Date in accordance with the terms hereof, and
provided that Sellers are not then in material default of any of their
obligations hereunder, Sellers shall be entitled to terminate this
Agreement; provided, however, that Buyer shall have a period of ten (10)
days following written notice from Sellers to cure any breach of this
Agreement, if such breach is curable.
(b) If any Seller shall default in the performance of its
obligations under this Agreement, including, but not limited to, the
failure of any condition to Closing in Article VII or the failure to make
any required delivery under Section 10.2, and shall for that reason be
unable to consummate this Agreement on the Closing Date in accordance with
the terms hereof, and if Buyer is not then in material default of any of
its obligations hereunder, Buyer shall be entitled either (i) to waive any
such defaults by such Seller and to require such Seller through specific
performance (which such Seller acknowledges to be an appropriate remedy) to
consummate the sale in accordance with the terms of this
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<PAGE>
Agreement or (ii) to terminate this Agreement; provided, however that
Sellers shall have a period of ten (10) days following written notice from
Buyer to cure any breach of this Agreement if such breach is curable. The
availability of specific performance shall be in addition to any other
remedies or claims for damages Buyer may have at law or in equity for
breaches or defaults by Sellers of Sellers' obligations hereunder or for
Buyer's remedies pursuant to Article XII hereof.
XI.3 Effect on Obligations. Termination of this Agreement pursuant to
---------------------
this Article shall terminate all obligations of the parties hereunder, except
for (i) the obligations under Sections 11.2, 13.1, 13.2, 13.9 and 13.10 hereof
and the remedies under Article XII, (ii) the obligations set forth in the next
succeeding sentence of this Section 11.3, and (iii) the obligations under the
Confidentiality Agreement between the parties dated effective as of September
18, 1995 (the "Confidentiality Agreement"). Upon any termination of this
Agreement each party hereto will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
and all copies of such materials, whether so obtained before or after the
execution hereof, to the party furnishing the same.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
----------------------------
XII.1 Indemnification of Seller. Buyer shall indemnify and hold Sellers
-------------------------
and its Affiliates (the "Sellers Indemnitees") harmless from and against any and
all damages, including exemplary damages and penalties, losses, deficiencies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
the Sellers Indemnitees as a result of, caused by, arising out of, or in any way
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to Sellers by Buyer pursuant to the
terms of this Agreement, or (b) any liability or obligation (other than those
for which Buyer is being indemnified by Sellers hereunder) which pertains to the
ownership, operation or conduct of the Business or assets arising from any acts,
omissions, events, conditions or circumstances occurring on or after the Closing
Date.
XII.2 Indemnification of Buyer. Sellers shall, jointly and severally,
------------------------
indemnify and hold Buyer and its Affiliates (the "Buyer Indemnitees") harmless
from and against any and all Damages suffered by Buyer Indemnitees as a result
of, caused by, arising out of, or in any way relating to (a) any
misrepresentation, breach of warranty, nonfulfillment of any agreement or
covenant on the part of Sellers under this Agreement, or any misrepresentation
in or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Buyer by
-29-
<PAGE>
Sellers pursuant to the terms of this Agreement, or (b) any liability or
obligation (other than those for which Seller is being indemnified by Buyer
hereunder) which pertains to the ownership, operation or conduct of the Business
or assets arising from any acts, omissions, events, conditions or circumstances
occurring prior to the Closing Date.
XII.3 Demands. Each indemnified party hereunder agrees that promptly
-------
upon its discovery of facts giving rise to a claim for indemnity under the
provisions of this Agreement, including receipt by it of notice of any demand,
assertion, claim, action or proceeding, judicial or otherwise, by any third
party (such third party actions being collectively referred to herein as the
"Claim"), with respect to any matter as to which it claims to be entitled to
indemnity under the provisions of this Agreement, it will give prompt notice
thereof in writing to the indemnifying party, together with a statement of such
information respecting any of the foregoing as it shall have. Such notice shall
include a formal demand for indemnification under this Agreement. The
indemnifying party shall not be obligated to indemnify the indemnified party
with respect to any Claim if the indemnified party knowingly failed to notify
the indemnifying party thereof in accordance with the provisions of this
Agreement in sufficient time to permit the indemnifying party or its counsel to
defend against such matter and to make a timely response thereto including,
without limitation, any responsive motion or answer to a complaint, petition,
notice or other legal, equitable or administrative process relating to the
Claim, only insofar as such knowing failure to notify the indemnifying party has
actually resulted in prejudice or damage to the indemnifying party.
XII.4 Right to Contest and Defend. The indemnifying party shall be
---------------------------
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention to contest shall be delivered by the indemnifying party to the
indemnified party within twenty (20) days from the date of receipt by the
indemnifying party of notice by the indemnified party of the assertion of the
Claim. Any such contest may be conducted in the name and on behalf of the
indemnifying party or the indemnified party as may be appropriate. Such contest
shall be conducted by reputable counsel employed by the indemnifying party, but
the indemnified party shall have the right but not the obligation to participate
in such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party, having used its reasonable best efforts in resolution. At
any time after the commencement of the defense of any Claim, the indemnifying
party may request the indemnified party to agree in writing to the abandonment
of such contest or to the payment or compromise by the indemnified party of the
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<PAGE>
asserted Claim, whereupon such action shall be taken unless the indemnified
party determines that the contest should be continued, and so notifies the
indemnifying party in writing within fifteen (15) days of such request from the
indemnifying party. If the indemnified party determines that the contest should
be continued, the indemnifying party shall be liable hereunder only to the
extent of the amount that the other party to the contested Claim had agreed
unconditionally to accept in payment or compromise as of the time the
indemnifying party made its request therefor to the indemnified party.
XII.5 Cooperation. If requested by the indemnifying party, the
-----------
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
Claim, or any cross-complaint against any person, and the indemnifying party
will reimburse the indemnified party for any expenses incurred by it in so
cooperating. If the indemnifying party has not chosen to contest a Claim, the
indemnifying party shall cooperate with the indemnified party and its counsel in
contesting any Claim at no cost or expense to the indemnified party.
XII.6 Right to Participate. The indemnified party agrees to afford the
--------------------
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons at the indemnifying party's
sole cost and expense.
XII.7 Payment of Damages. The indemnifying party shall pay to the
------------------
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement subject to offset for any insurance proceeds actually received by the
indemnified party, such payment to be made within five days after any such
amounts are finally determined either by mutual agreement of the parties hereto
or pursuant to the final unappealable judgment of a court of competent
jurisdiction. The availability of insurance proceeds shall not delay or
postpone any indemnification payment required hereunder. If the indemnified
party both collects any such insurance proceeds and receives a payment from the
indemnifying party hereunder, and the sum of such proceeds and payment is in
excess of the amount payable with respect to the matter that is the subject of
the indemnity, then the indemnified party shall promptly refund to the
indemnifying party the amount of such excess, if permitted by the applicable
insurance policy(ies). Except as otherwise provided in the preceding sentence,
the indemnified party's receipt of any such insurance proceeds shall not
eliminate or reduce the obligations of the indemnifying party or the rights of
the indemnified party hereunder, but shall reduce the amount of the obligation
in the amount of such insurance proceeds paid.
XII.8 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties contained in Articles IV and V of this Agreement shall survive
until the fifth anniversary date of
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<PAGE>
the Closing Date except for the representations and warranties in Sections 4.2,
4.3, 4.8, 4.12 and 5.1 which shall survive forever.
ARTICLE XIII
MISCELLANEOUS
-------------
XIII.1 Notices. Any notice, request, instruction, correspondence or other
-------
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to Sellers prior to Closing, addressed to:
Mr. Ronald W. Dunham
Russell's Communication, Inc.
(d/b/a Louisiana Paging & Communications Co.)
717 S. Foster Drive, Suite 230
Baton Rouge, Louisiana 70806
Telecopy: (504) 923-2469
with a copy prior to Closing to:
Frank H. Dickinson, III, Attorney at Law
2900 West Fork Drive
Suite 200
Baton Rouge, Louisiana 70827
Telecopy: (504) 291-9035
and to:
Mr. Marc DeRouen, CPA
DeRouen and Wells
7918 Wrenwood Boulevard
Baton Rouge, Louisiana 70809
Telecopy: (504) 926-2503
If to Sellers after Closing, addressed to:
Mr. Ronald W. Dunham
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310 Mathew Street
Denham Springs, Louisiana 70726
If to Buyer, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
with a copy prior to Closing to:
Mr. Thomas D. Manford III
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Telecopy: (713) 221-1303
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next Business Day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
XIII.2 Governing Law. The provisions of this Agreement shall be governed
-------------
by and construed and enforced in accordance with the laws of the State of
Louisiana (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
XIII.3 Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
(including the exhibits and schedules hereto) and the Confidentiality Agreement
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No
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waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
XIII.4 Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned by either party without the
prior written consent of the other party; provided, however, that Buyer may
assign this Agreement to a wholly-owned subsidiary of Buyer. The parties
acknowledge that Buyer has entered into that certain Agreement and Plan of
Merger by and among ProNet Inc. ("ProNet"), ProNet Subsidiary Inc. and Buyer
dated April 15, 1996 and that as a result of the merger, ProNet or a subsidiary
of ProNet will succeed to the rights and obligations of Buyer hereunder.
XIII.5 Severability. If any provision of the Agreement is rendered or
------------
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Buyer and Seller
shall promptly meet and negotiate substitute provisions for those rendered or
declared illegal or unenforceable so as to preserve as nearly as possible the
contemplated economic effects of the transactions, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
XIII.6 Headings. The headings of the sections herein are inserted for
--------
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
XIII.7 Execution. This Agreement may be executed in multiple counterparts
---------
each of which shall be deemed an original and all of which shall constitute one
instrument.
XIII.8 Sales and Transfer Taxes. Buyer shall be responsible for and pay
------------------------
any applicable sales, stamp, transfer, documentary, use, registration, filing
and other taxes and fees (including any penalties and interest) that may become
due or payable in connection with this Agreement and the transactions
contemplated hereby.
XIII.9 Expenses. Except as otherwise provided in this Agreement, Seller
--------
and Buyer shall each pay all costs and expenses incurred by them or on their
behalf in connection with this Agreement and the transactions contemplated
hereby, provided, however, that Buyer and Seller shall share equally all filing
fees payable to the Commission.
XIII.10 Publicity. Except as otherwise required by applicable laws or
---------
regulations, Seller or Buyer shall not issue any press release or make any other
public statement, in each case relating to or connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other party hereto to the contents and the manner of
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presentation and publication thereof.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
BUYER:
TELETOUCH COMMUNICATIONS, INC.
By:_____________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SELLERS:
________________________________________
Ron W. Dunham
________________________________________
Jacqueline R. Dunham
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EXHIBIT 2.14
ASSET PURCHASE AGREEMENT
by and between
TELETOUCH COMMUNICATIONS, INC.
as Buyer
and
WARREN COMMUNICATIONS, INC.
as Seller
April 2, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE IDEFINITIONS
1.1 Definitions.............................................. 1
1.2 Other Terms.............................................. 6
1.3 Other Definitional Provisions............................ 6
ARTICLE IITHE TRANSACTION
2.1 Purchase and Sale of Assets.............................. 7
2.2 Excluded Assets.......................................... 8
2.3 Assumption of Obligations................................ 9
2.4 Excluded Obligations and Liabilities..................... 9
2.5 Nonassignable Contracts and Leases....................... 10
ARTICLE IIIPAYMENT OF PURCHASE PRICE
3.1 Amount; Delivery......................................... 11
3.2 Price Allocation......................................... 11
3.3 Purchase Price Adjustments............................... 12
3.4 Holdback................................................. 13
3.5 Apportionments; Post-Closing Adjustments................. 13
3.6 Additional Deposit....................................... 13
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Existence and Good Standing.............................. 13
4.2 Authorization and Validity of Agreement.................. 14
4.3 Consents and Approvals; No Violations.................... 14
4.4 Receivables.............................................. 14
4.5 Financial Statements; No Material Adverse Change......... 15
4.6 Warranty Claims.......................................... 15
4.7 Title to Properties; Encumbrances; Condition............. 15
4.8 Property................................................. 15
4.9 Contracts and Commitments................................ 16
4.10 Permits.................................................. 17
4.11 Litigation............................................... 17
</TABLE>
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<TABLE>
<S> <C>
4.12 Taxes....................................................... 18
4.13 Insurance................................................... 18
4.14 Intellectual Property....................................... 18
4.15 Compliance with Laws........................................ 18
4.16 Employment Relations........................................ 19
4.17 Employee Benefit Plans...................................... 19
4.18 Environmental Laws and Regulations.......................... 19
4.19 Interests in Customers and Suppliers........................ 19
4.20 Compensation of Employees................................... 20
4.21 Suppliers and Customers..................................... 20
4.22 Absence of Changes.......................................... 20
4.23 Solvency.................................................... 21
4.24 Disclosure.................................................. 21
4.25 Government Contracts........................................ 22
4.26 Copies of Documents......................................... 22
4.27 No Subsidiaries............................................. 22
4.28 Broker's or Finder's Fees................................... 22
ARTICLE VREPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Existence and Good Standing of Buyer; Power and Authority... 22
5.2 No Violations............................................... 23
5.3 Broker's or Finder's Fees................................... 23
ARTICLE VICONDITIONS TO SELLER'S OBLIGATIONS
6.1 Truth of Representations and Warranties..................... 24
6.2 Performance of Agreements................................... 24
6.3 No Litigation Threatened.................................... 24
6.4 Governmental Approvals...................................... 24
6.5 Consents.................................................... 24
6.6 Proceedings................................................. 24
ARTICLE VIICONDITIONS TO BUYER'S OBLIGATIONS
7.1 Truth of Representations and Warranties..................... 25
7.2 Performance of Agreements................................... 25
7.3 No Litigation Threatened.................................... 25
7.4 Due Diligence............................................... 25
</TABLE>
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<TABLE>
<S> <C> <C>
7.5 Governmental Approvals...................................... 25
7.6 Consents.................................................... 25
7.7 Legal Opinion............................................... 26
7.8 Proceedings................................................. 26
ARTICLE VIIICOVENANTS OF SELLER
8.1 Cooperation by Seller....................................... 26
8.2 Notice of Breaches.......................................... 26
8.3 Conduct of Business......................................... 26
8.4 Negative Covenants of Seller................................ 27
8.5 Exclusive Dealing........................................... 27
8.6 Review of the Assets........................................ 27
8.7 Governmental Filings........................................ 28
8.8 Use of Name................................................. 28
8.9 Further Assurances.......................................... 28
ARTICLE IXCOVENANTS OF BUYER
9.1 Cooperation by Buyer........................................ 29
9.2 Books and Records; Personnel................................ 29
9.3 Further Assurances.......................................... 29
9.4 Governmental Filings........................................ 29
ARTICLE XTHE CLOSING
10.1 Time and Place.............................................. 30
10.2 Seller's Obligations........................................ 30
10.3 Buyer's Obligations......................................... 31
10.4 Possession.................................................. 31
ARTICLE XITERMINATION
11.1 Termination................................................. 31
11.2 Remedies Upon Default or Failure to Close................... 32
11.3 Effect on Obligations....................................... 32
ARTICLE XIISURVIVAL AND INDEMNIFICATION
</TABLE>
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<TABLE>
<S> <C> <C>
12.1 Indemnification of Seller................................... 33
12.2 Indemnification of Buyer.................................... 33
12.3 Demands..................................................... 33
12.4 Right to Contest and Defend................................. 34
12.5 Cooperation................................................. 34
12.6 Right to Participate........................................ 35
12.7 Payment of Damages.......................................... 35
12.8 Attorneys Fees.............................................. 35
12.9 Survival of Representations and Warranties.................. 35
ARTICLE XIIIMISCELLANEOUS
13.1 Notices..................................................... 35
13.2 Governing Law............................................... 37
13.3 Entire Agreement; Amendments and Waivers.................... 37
13.4 Binding Effect and Assignment............................... 37
13.5 Severability................................................ 38
13.6 Headings.................................................... 38
13.7 Execution................................................... 38
13.8 Sales and Transfer Taxes.................................... 38
13.9 Expenses.................................................... 38
13.10 Publicity................................................... 39
</TABLE>
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<PAGE>
SCHEDULES
- ---------
Schedule 2.1(a) Certain Assets
Schedule 2.1(c) Contracts
Schedule 2.1(d) Leases
Schedule 2.1(f) Intellectual Property
Schedule 2.1(g) Permits
Schedule 2.2(b) Excluded Contracts
Schedule 2.2(d) Personal Items and Other Excluded Assets
Schedule 2.3(c) Accrued Vacation and Sick Leave
Schedule 2.4(h) Breaches or Violations
Schedule 3.2 Allocation of Purchase Price
Schedule 4.3 Seller Consents
Schedule 4.4 Receivables
Schedule 4.5 Material Adverse Change
Schedule 4.6 Warranty Claims
Schedule 4.7 Title to Properties; Encumbrances; Condition
Schedule 4.8 Leases
Schedule 4.9 Contracts and Commitments
Schedule 4.10 Permits
Schedule 4.11 Litigation
Schedule 4.12 Taxes
Schedule 4.13 Insurance Policies
Schedule 4.14 Intellectual Property
Schedule 4.18 Environmental Laws and Regulations
Schedule 4.19 Certain Relationships of Seller
Schedule 4.20 List of Employees of Seller
Schedule 4.21 Suppliers and Customers
Schedule 4.22 Absence of Changes
Schedule 4.25 Government Contracts
EXHIBITS
- --------
Exhibit A Lease Agreement
Exhibit B Noncompetition Agreement
Exhibit C Opinion of Seller's Corporate Counsel
-v-
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated as of April 2, 1996,
is by and between Teletouch Communications, Inc., a Delaware corporation
("Buyer") and Warren Communications, Inc., a Louisiana corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller wishes to sell and Buyer wishes to purchase substantially
all of the assets and business of Seller, all upon the terms and subject to the
conditions set forth below.
NOW, THEREFORE, for the mutual covenants and other consideration described
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
-----------
I.1 Definitions. As used herein, the following terms have the meanings
-----------
set forth below:
"Accounts Receivable": all notes and accounts receivable of Seller
-------------------
attributable to the Business through the date immediately preceding the Closing
Date.
"Accounts Payable": the payables of Seller to trade accounts and other
----------------
creditors.
"Affiliate": with respect to any Person, any other Person directly or
---------
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
"Agreement": this Asset Purchase Agreement, as amended from time to time
---------
as provided herein, and all exhibits, schedules and ancillary documents hereto,
except where the context clearly indicates otherwise.
"Assets": as defined in Section 2.1.
------
"Assigned Contracts": as defined in Section 2.3.
------------------
"Assumed Obligations": as defined in Section 2.3.
-------------------
"Balance Sheet": as defined in Section 4.5.
-------------
<PAGE>
"Balance Sheet Date": as defined in Section 4.5
------------------
"Books and Records": all books, records, books of account, files and data
-----------------
(including customer and supplier lists), catalogs, brochures, sales literature,
promotional material, certificates and other documents used in or associated
with the conduct of the Business or the ownership of the Assets, including
personnel records and files (to the extent Seller's personnel are hired by
Buyer), except that the Books and Records shall not include any books, records,
files and other data of Seller which relate exclusively to (i) organizational or
governance proceedings of Seller, (ii) the Excluded Assets, or (iii) excluded
obligations or liabilities in Section 2.4 below.
"Business": the paging operations, including (a) the lease and sale of
--------
paging equipment, (b) sale and servicing of mobile equipment and (c) voice mail
services, currently conducted by Seller headquartered in Lafayette, Louisiana,
with principal offices in Lafayette, Louisiana.
"Business Day": any day excluding Saturday, Sunday and any day on which
------------
banks in Houston, Texas are authorized or required by law or other governmental
action to close.
"Buyer": as defined in the preamble of this Agreement.
-----
"Buyer Indemnitees": as defined in Section 12.2.
-----------------
"Buyer's Agreements": the Lease Agreement and the Noncompetition Agreement.
------------------
"Cash Payment": as defined in Section 3.1(a).
------------
"Claim": as defined in Section 12.3.
-----
"Closing": as defined in Section 10.1.
-------
"Closing Date": June 3, 1996, as may be extended pursuant to Section 3.6 or
------------
Section 10.1 hereunder.
"Code": the Internal Revenue Code of 1986, as amended from time to time,
----
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commission": the Federal Communications Commission.
----------
"Confidentiality Agreement": as defined in Section 11.3.
-------------------------
"Contract": any written or oral contract, agreement or instrument relating
--------
to the Business to which Seller is a party or is otherwise bound, including,
without limitation, supply contracts,
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customer agreements, any mortgages, deeds of trust, notes or guarantees,
pledges, liens, or conditional sales agreements to which Seller is a party or by
which any of its assets may be bound, but excluding Leases and Employee Benefit
Plans.
"Damages": as defined in Section 12.1.
-------
"Employee Benefit Plans": any employee benefit plans, policies, programs
----------------------
and arrangements and all related contracts, agreements and other descriptions
thereof with respect to the employee benefits provided to the employees of the
Business prior to the Closing Date.
"Encumbrances": liens, security interests, options, rights of first
------------
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, encroachments, licenses, Leases, Permits, security
agreements, or any other encumbrances and other restrictions or limitations on
the use or ownership of real or personal property or irregularities in title
thereto.
"Environmental Claim": any and all administrative, regulatory, judicial or
-------------------
other actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, penalties, cleanup, removal, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) any and all Environmental Claims by any third party seeking damages,
enforcement, penalties, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
-----------------
regulation, ordinance, code, policy or rule of common law now in effect and in
each case as amended and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to Hazardous Materials, the environment or health relating to or
arising from environmental conditions, including without limitation the
Occupational Safety and Health Act, as amended, 29 U.S.C. (S) 651 et seq; the
-- ---
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials Transportation
-- ---
Act, as amended, 49 U.S.C. (S) 5101 et seq.; the Resource Conservation and
-- ---
Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal Water
-- ---
Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
-- ---
Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C.
-- ---
(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq.; the
-- --- -- ---
Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; and relevant state and
-- ---
local laws.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time
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to time, and the regulations promulgated and rulings issued thereunder. Section
references to ERISA are to ERISA as in effect at the date of this Agreement and
any subsequent provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"Excluded Assets": as defined in Section 2.2.
---------------
"Excluded Contracts": as defined in Section 2.2(c).
------------------
"Excluded Liabilities": as defined in Section 2.4.
--------------------
"FCC Approvals": as defined in Section 6.4.
-------------
"Financial Statements": as defined in Section 4.5.
--------------------
"Finova": Finova Capital Corporation.
------
"GAAP": generally accepted accounting principles consistently applied (as
----
such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of the Financial Statements.
"Hazardous Materials": (i) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants," "regulated substances" or
words of similar import under any applicable Environmental Law.
"Intellectual Property": domestic and foreign patents, patent
---------------------
applications, registered and unregistered trademarks, service marks, trade names
and logos, registered and unregistered copyrights, computer programs and
software, data bases, trade secrets, methods, designs, processes, procedures,
proprietary information and any other intangible property used in or associated
with the conduct of the Business and the ownership of the Assets, including all
of Seller's rights to any such property which is owned by and licensed from
others and any goodwill associated with any of the above.
"Inventory": all pagers, other merchandise, supplies, stock in trade and
---------
other such assets of Seller held for sale or lease in the ordinary course of the
Business or to be furnished under contracts of service or held as work in
process or to be used or consumed in the Business.
"Lease Agreement": the agreement relating to Buyer's lease from John C.
---------------
Warren, a
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principal stockholder of Seller, of the property located at 152 Banks Street at
which Seller's offices are currently located in the form of Exhibit "A" attached
hereto, to be executed at Closing.
"Leases": any and all written and oral contracts, agreements, and
------
commitments regarding the lease of real or personal property to which Seller is
a party or is otherwise bound that relate to or are used in the operation of the
Business, including, but not limited to, leases of towers and transmitter sites.
"Letter of Intent": that certain letter of intent dated December 22, 1995
----------------
from Buyer to Seller.
"Loan Agreement": as defined in Section 5.2.
--------------
"Material Adverse Effect": a material adverse effect on the assets,
-----------------------
liabilities, business, condition (financial or otherwise), results of operations
or prospects of the applicable party.
"Noncompete Payment": as defined in Section 3.1(b).
------------------
"Noncompetition Agreement": the agreement relating to Seller's and certain
------------------------
of its stockholders' noncompetition with Buyer in the form of Exhibit "B"
attached hereto, to be executed at Closing.
"Pending Applications": any applications filed with, but not granted by,
--------------------
the Commission on behalf of Seller prior to the Closing Date.
"Permits": any license, permit, franchise, consent, approval or authority
-------
granted to Seller by any Person and applicable to the Business, including, but
not limited to, all licenses and permits issued by the Commission.
"Permitted Encumbrances": (i) Encumbrances consisting of easements,
----------------------
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by Seller in the operation of
the Business, (ii) Encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent, (iii) Encumbrances
created by Buyer, and (iv) Encumbrances, if any, relating to the Assumed
Obligations.
"Person": any individual, partnership, joint venture, corporation, limited
------
liability company, trust, unincorporated organization, government or other
department or agency thereof or other entity.
"Pre-Closing Period": as defined in Section 4.12(a).
------------------
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"Price Allocation": as defined in Section 3.2.
----------------
"Purchase Price": as defined in Section 3.1.
--------------
"Releases": as defined in Section 4.18.
--------
"Returns": as defined in Section 4.12(a).
-------
"Rules and Regulations": as defined in Section 4.10.
---------------------
"Schedules": The schedules of Seller, Buyer or both as appropriate in the
---------
context and as referenced throughout this Agreement.
"Seller": as defined in the preamble of this Agreement.
------
"Seller Indemnitees": as defined in Section 12.1.
------------------
"Seller's Agreements": the Lease Agreement and the Noncompetition
-------------------
Agreement.
"Subordinated Debt Agreement": as defined in Section 5.2.
---------------------------
"Subsequent Permits": any Permits acquired by or granted to Seller after
------------------
the date of this Agreement but prior to the Closing Date.
"Subsequently Constructed Facilities": any facilities licensed by the
-----------------------------------
Commission under Parts 22 or 90 of the Commission's Rules which are constructed
and placed into operation after the date of this Agreement, but prior to the
Closing Date.
"Tax": any net income, alternative or add-on minimum tax, advance,
---
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
-- -------
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
I.2 Other Terms. Other terms may be defined elsewhere in the text of this
-----------
Agreement and shall have the meaning indicated throughout this Agreement.
I.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein" and "hereunder," and words of similar
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import, when used in this Agreement, shall refer to this Agreement as a
whole and not any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms defined in the neuter or masculine gender shall include
the feminine, neuter and masculine genders, unless the context clearly
indicates otherwise.
(d) Reference to the "best knowledge" of a Person or words of similar
import shall mean the actual or constructive best knowledge of such Person
after reasonable due diligence as to the facts and circumstances addressed.
ARTICLE II
THE TRANSACTION
---------------
II.1 Purchase and Sale of Assets. Subject to the terms and conditions of
---------------------------
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell,
convey, transfer, assign and deliver, and cause to be sold, conveyed,
transferred, assigned and delivered, the Assets, free and clear of all
Encumbrances except Permitted Encumbrances, to Buyer on the Closing Date against
the receipt by Seller of the Purchase Price. The term "Assets" shall mean all
of the rights, title and interests of Seller in and to the assets used in or
relating to the conduct of the Business, tangible and intangible, real, personal
and mixed, other than the Excluded Assets, wherever situated and whether or not
specifically referred to herein or in any instrument of conveyance delivered
pursuant hereto. The Assets shall include, but not be limited to, the following
categories of assets and specifically referenced assets:
(a) all machinery, equipment, tools, supplies, furniture, furnishings,
vehicles and other tangible personal property or other fixed assets owned
or leased by Seller and used or held for use in the conduct of the
Business, including, without limitation, the assets listed on Schedule
2.1(a), but excluding any items specifically identified in Section 2.2
below;
(b) all Inventory;
(c) all rights of Seller existing under the Contracts which are listed
on Schedule 2.1(c);
(d) all rights of Seller existing under the Leases which are listed
(by categories) on Schedule 2.1(d) and all easements rights of way and
other appurtenances thereof;
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(e) Seller's current telephone numbers as listed in the "White Pages"
or the "Yellow Pages" or similar publications;
(f) the names "Warren Communications, Inc." and "Amerapage" and all
Intellectual Property including, but not limited to, that listed on
Schedule 2.1(f);
(g) all Permits which are held by Seller and are associated with or
necessary to operate the Assets or conduct the Business as listed on
Schedule 2.1(g) to the extent such Permits are transferable to Buyer
including all Subsequent Permits and Pending Applications;
(h) all Books and Records;
(i) any rights of Seller pertaining to any counterclaims, set-offs or
defenses Seller may have with respect to any Assumed Obligations;
(j) all prepaid claims, prepaid taxes, prepaid insurance premiums and
other prepaid expense items of Seller;
(k) the Accounts Receivable;
(l) Seller's current post office boxes for any mail delivered relating
to the Business; and
(m) any additional assets from time to time acquired for the Business
by Seller in the ordinary course of business prior to Closing Date except
for such property as may be used, sold, consumed or disposed of by Seller
in the ordinary course of business prior to the Closing Date and in
compliance with the terms and conditions of this Agreement.
To the extent that any Assets of Seller are intended to be transferred to Buyer
pursuant to the general language of this Agreement but are not listed, the
general language of this Section 2.1 shall be controlling and such Assets
nonetheless shall be transferred to Buyer for all purposes.
II.2 Excluded Assets. The Assets shall not include any of the following
---------------
(the "Excluded Assets"):
(a) all cash on hand, on deposit or in transit and arising out of the
operation of the Business prior to the Closing Date;
(b) each contract or agreement set forth on Schedule 2.2(b) attached
hereto or which requires the consent to assignment by a Person other than
Seller and which
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<PAGE>
consents are not obtained on or before the Closing Date (the "Excluded
Contracts");
(c) all Employee Benefit Plans;
(d) the personal items and equipment and furnishings unrelated to the
Business as listed on Schedule 2.2(d);
(e) causes of action and third-party indemnities, policies of
insurance, fidelity, surety or similar bonds and the coverage afforded
thereby;
(f) tax refunds related to the Business or the Assets received or
receivable by Seller relating to taxes paid by Seller for all periods prior
to Closing Date; and
(g) minute books and governance documents of Seller.
II.3 Assumption of Obligations. Upon the sale of the Assets by Seller,
-------------------------
Buyer shall assume and agree to pay, perform and discharge, in a timely manner
and in accordance with the terms thereof, from and after the Closing Date only
such of the obligations of Seller in respect of the following (collectively, the
"Assumed Obligations"):
(a) the Permits, Contracts and Leases properly transferred and
assigned to Buyer hereunder in conformity with the provisions of such
Permits, Contracts and Leases (collectively, the "Assigned Contracts");
(b) customer deposits to the extent such deposits were made pursuant
to and remain outstanding under the Assigned Contracts; and
(c) the accrued vacation and sick leave obligations with respect to
any employee of Seller hired by Buyer within thirty (30) days of the
Closing Date to the extent that such accrued vacation and sick leave are
based on the existing policies of Seller and are reflected on Schedule
2.3(c) attached hereto; provided that Buyer shall have no obligation to
hire any employees of Seller or the Business.
The assumption by Buyer of the Assumed Obligations shall not enlarge any rights
or remedies of any third parties under any contracts or arrangements with
Seller. Nothing herein shall prevent Buyer from contesting in good faith any of
the Assumed Obligations. Seller agrees to satisfy and discharge all the
liabilities of Seller relating to the Business and which are not assumed by
Buyer pursuant to the terms of this Agreement, whether known at the Closing or
thereafter determined, and, pursuant to Section 12.2 below, Seller agrees to
indemnify and hold Buyer harmless with respect thereto.
II.4 Excluded Obligations and Liabilities. It is expressly understood and
------------------------------------
agreed that,
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except as specifically provided in Section 2.3, Buyer shall not be obligated to
pay, perform or discharge any debt, obligation, cost, expense or liability of
Seller, whether absolute or contingent, known or unknown ("Excluded
Liabilities"), including, but not limited to debts, obligations, costs, expenses
and liabilities:
(a) related to any of the Excluded Assets or to any employees of
Seller except as specifically stated in Section 2.3(c) above;
(b) for the Accounts Payable (except any Accounts Payable arising from
the Assigned Contracts on or after the Closing Date);
(c) for any Taxes owed by Seller, including without limitation, any
foreign, federal, state or local Tax (i) based on income or revenues of
Seller, or any state franchise tax or sales or use taxes of Seller, (ii)
based on wages earned by employees of Seller (as that term is defined under
Section 3121 of the Code), or (iii) based on the transfer of motor vehicles
by reason of the existence or operations of Seller prior to the Closing
Date;
(d) for any losses, costs or damages based upon or arising (i) from
any agreement, commitment, undertaking, law, rule, regulation, order, or
other obligations, or (ii) out of any claims or actions against Seller or
Buyer, in either case arising out of events, facts or circumstances
occurring prior to the Closing Date whether or not filed or known to Seller
prior to the Closing Date, unless such claims arise from Buyer's failure to
perform an Assumed Obligation;
(e) for any of the liabilities or expenses of Seller incurred in the
negotiation of and carrying out of its obligations under this Agreement;
(f) for liabilities and obligations of Seller to Buyer created by
this Agreement;
(g) for any product liability resulting from any product sold by
Seller prior to the Closing Date or any tort liability of Seller arising
out of Assets not expressly assumed by Buyer hereunder;
(h) for any pre-Closing Date breach or violation of any of the
Assigned Contracts unless such breach or violation is specifically
disclosed on Schedule 2.4(h) and assumed by Buyer; or
(i) for any regulatory user fees attributable to the Assets or the
Business for the period prior to the Closing Date and payable to the
Commission.
II.5 Nonassignable Contracts and Leases. If any Permits, Contracts or
----------------------------------
Leases are not by their respective terms assignable, Seller agrees to use its
reasonable best efforts to obtain, or
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cause to be obtained, prior to the Closing Date, any written consents necessary
to convey to Buyer the benefit thereof, it being understood that such reasonable
best efforts shall not include any requirement to offer or grant financial
accommodations to any third party or to remain secondarily liable with respect
to any such Permits, Contracts or Leases. Buyer shall cooperate with Seller, in
such manner as may be reasonably requested, in connection therewith, including
without limitation, active participation in visits to and meetings, discussions
and negotiations with all Persons with the authority to grant or withhold
consent. To the extent that any such consents cannot be obtained, Seller and
Buyer will use their reasonable best efforts to take such actions as may be
possible without violation or breach of any such nonassignable Permits,
Contracts or Leases to effectively (i) grant Buyer the economic benefits of, and
(ii) impose upon Buyer the economic burdens of, such Permits, Contracts and
Leases.
ARTICLE III
PAYMENT OF PURCHASE PRICE
-------------------------
III.1 Amount; Delivery. At the Closing, in addition to Buyer's assumption
----------------
of the Assumed Obligations, Buyer shall pay to Seller the consideration as
follows (the "Purchase Price"), subject to adjustment as provided in Section 3.3
hereof, which Purchase Price shall be remitted by Buyer to Seller in the
following manner:
(a) Four Million Nine Hundred Thousand Dollars ($4,900,000) in cash
(the "Cash Payment") on the Closing Date which shall be paid by wire
transfer of immediately available funds to an account of Seller as
designated in writing by Seller to Buyer not more than three (3) Business
Days prior to the Closing Date; and
(b) One Hundred Thousand Dollars ($100,000) in cash ("Noncompete
Payment") on the Closing Date which shall be paid by wire transfer of
immediately available funds to an account of Seller (as designated pursuant
to Section 3.1(a) above) for the benefit of the parties to the
Noncompetition Agreement, or as directed by Seller for the parties to the
Noncompetition Agreement, in consideration of the execution and delivery of
the Noncompetition Agreement.
III.2 Price Allocation. Seller and Buyer agree to allocate the Purchase
----------------
Price for the Assets in accordance with the residual method described in the
Treasury Regulations promulgated under Section 338(b)(5) of the Code, as amended
(the "Price Allocation"). Seller and Buyer further agree to comply with all
filing, notice and reporting requirements described in Section 1060 of the Code
and the proposed Treasury Regulations promulgated thereunder. Seller and Buyer
mutually agree to use their reasonable best efforts to agree to the Price
Allocation to be detailed (i) on Schedule 3.2 to be completed at Closing, and
(ii) on the Form 8594 jointly completed and separately filed with their
respective income tax returns for the tax year in which the Closing occurs. The
failure to agree on the Price Allocation, however, shall not constitute a
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<PAGE>
default or breach of this Agreement by either party hereto. The parties further
agree that they will report the federal, state, municipal, foreign and local and
other tax consequences of the purchase and sale hereunder in a manner consistent
with the Price Allocation, and that they will not take any position inconsistent
therewith.
III.3 Purchase Price Adjustments. At the Closing, the Purchase Price
--------------------------
shall be reduced for the aggregate dollar amount of the following determined as
of the Closing Date:
(a) all distributions, dividends or bonuses of any assets of Seller
other than cash since December 31, 1995;
(b) all distributions, dividends or bonuses of any assets of Seller
other than cash during the period November 1, 1995 through December 31,
1995, inconsistent with past practices or not in the ordinary course of
business;
(c) billed paging services for which Seller has received payment but
for which Buyer shall be required to provide service, including prepaid
customer accounts;
(d) customer deposits;
(e) any net reduction in Inventory since December 31, 1995 determined
by comparing the Inventory valuation on the Balance Sheet with the results
of an Inventory valuation taken by Buyer no more than three (3) days prior
to Closing in a manner consistent with Seller's historical accounting
practices and at which Seller shall be entitled to be present and have
input; provided, however, that any reduction in Inventory shall be offset
by the amount of the Accounts Receivable (adjusted for reserves for bad
debt) in excess of the total Accounts Receivable as of December 31, 1995;
(f) the cost of the audit conducted by Buyer in accordance with the
terms of the Letter of Intent, but not to exceed $30,000;
(g) the value of capital equipment disposed of or deemed obsolete
since December 31, 1995, determined by comparing the capital equipment
valuation on the Balance Sheet with the results of a capital equipment
valuation (without taking into account any capital equipment purchased
since December 31, 1995) taken by Buyer no more than three (3) days prior
to Closing in a manner consistent with Seller's historical accounting
practices and at which Seller shall be entitled to be present and have
input;
(h) the $5,000 deposit made pursuant to the Letter of Intent; and
(i) the $245,000 deposit made pursuant to Section 3.6 plus any
additional deposit paid to Seller pursuant to Section 3.6.
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<PAGE>
At the Closing, the Purchase Price shall be increased for the aggregate dollar
amount of capital expenditures previously approved in writing by Buyer for
pagers, paging equipment and changes and upgrades to Seller's Lafayette,
Louisiana, Corpus Christi, Texas and New Orleans, Louisiana offices; provided,
however, that such increase shall not exceed $100,000.
III.4 Holdback. The Purchase Price to be paid at Closing shall be reduced
--------
by $100,000 after making the adjustments specified in Section 3.3 above, and the
amount of such reduction (the "Holdback") shall be held by Buyer for a period of
one year from the Closing Date to be applied to post-Closing Purchase Price
adjustments (as set forth in Section 3.5 below) and as an offset against any
indemnification amounts due Buyer by the Seller after the Closing pursuant to
Article XII hereof; provided, however, that in no case shall Buyer be entitled
to post-Closing Purchase Price adjustments (as set forth in Section 3.5 below)
that exceed $100,000. On the first anniversary date of the Closing Date, Buyer
shall wire transfer the amount of the Holdback, less any amounts retained by
Buyer as an offset to the above-described post-Closing Purchase Price
adjustments and as payment for claims of Buyer made prior to such date under
Article XII, in immediately available funds to the respective accounts
designated by Seller.
III.5 Apportionments; Post-Closing Adjustments. At the Closing, the
----------------------------------------
following items shall be apportioned as of 11:59 p.m. on the day preceding the
Closing Date: (a) property taxes, utility charges and other state, county and
municipal taxes and assessments and charges affecting the Assets; (b) rents and
other payments under any of the Assigned Contracts; and (c) such other items as
are customarily apportioned in connection with the sale of similar property, all
such items prior to such time being for the account of Seller and all such items
after such time being the account of Buyer. At the Closing, Seller or Buyer, as
the case may be, shall deliver to the other a check or wire transfer for the net
amount owing under this Section 3.5 If any such items cannot accurately be
apportioned at the Closing or prior thereto, or if it is later determined that
such apportionment at Closing was not accurate, such items shall be apportioned
or reapportioned, as the case may be, as soon as practicable after the Closing
Date or the date on which the apportionment error is discovered, as applicable,
but in no event more than 120 days after the Closing Date.
III.6 Additional Deposit. Upon the execution hereof, Buyer shall deposit
------------------
with Seller $245,000. If this Agreement has not been terminated and the Closing
has not occur prior to June 3, 1996, Buyer may deposit an additional $50,000 to
extend the Closing Date to July 1, 1996. If this Agreement has not been
terminated and the Closing has not occur prior to July 1, 1996, Buyer may
deposit an additional $50,000 to extend the Closing Date to August 1, 1996. All
such deposits shall be non-refundable, except as provided in Section 11.2(b)
hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
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<PAGE>
Seller hereby represents and warrants to Buyer as follows:
IV.1 Existence and Good Standing. Seller is a corporation duly organized
---------------------------
and validly existing under the laws of the State of Louisiana. Seller has the
power and authority to own, lease and operate its property and to carry on its
business as now being conducted and to own or lease the assets owned or leased
by it. Seller is duly qualified or licensed to do business in each jurisdiction
in which the character or location of the properties owned or leased by Seller
or the nature of the business conducted by Seller makes such qualification
necessary and the absence of which would have a Material Adverse Effect.
IV.2 Authorization and Validity of Agreement. Seller has full corporate
---------------------------------------
power and authority to execute and deliver this Agreement and Seller's
Agreements, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Seller's Agreements by Seller
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized and approved by the Board of Directors of Seller and no
other corporate governance action on the part of Seller is necessary to
authorize the execution, delivery and performance of this Agreement and the
Seller's Agreements by Seller and the consummation of the transactions
contemplated hereby and thereby. This Agreement and the Seller's Agreements
have been, as applicable as of the date hereof or as of the Closing Date, duly
executed and delivered by Seller and are the valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms,
except to the extent that their respective enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
IV.3 Consents and Approvals; No Violations. The execution, delivery and
-------------------------------------
performance of this Agreement and the Seller's Agreements by Seller and the
consummation by Seller of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time or both: (a)
violate, conflict with, or result in a breach or default under any provision of
the charter or bylaws of Seller; (b) violate any statute, ordinance, rule,
regulation, order, judgment or decree of any court or of any governmental or
regulatory body, agency or authority applicable to Seller or by which any of its
properties or assets may be bound; (c) require any filing by Seller with, or
require Seller to obtain any Permit of, or require Seller to give any notice to,
any governmental or regulatory body, agency or authority other than as set forth
on Schedule 4.3 attached hereto; or (d) other than as set forth on Schedule 4.3
attached hereto, result in a violation or breach by Seller of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Seller (or give rise to any right of termination, cancellation, payment or
acceleration) under or result in the creation of any Encumbrance upon any of the
Assets under any of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, Permit, Contract, Lease or other instrument or obligation
to which Seller is a party, or by which it or any of the Assets may be bound,
except in the case of clauses (b), (c) and (d) of
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<PAGE>
this Section 4.3, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a Material
Adverse Effect.
IV.4 Receivables. Schedule 4.4 lists all Accounts Receivable of Seller.
-----------
Schedule 4.4 specifically indicates all such Accounts Receivable from any
Affiliate of Seller. Except as reflected on Schedule 4.4, all such Accounts
Receivable are, and all Accounts Receivable at the Closing Date will be, (i)
bona fide claims against debtors for sales, work performed or other charges,
(ii) to the best knowledge of Seller, subject to no defenses, set-offs or
counterclaims and (iii) collectible subject to Seller's normal reserve for bad
debts as reflected in the Financial Statements.
IV.5 Financial Statements; No Material Adverse Change. The Financial
------------------------------------------------
Statements have been prepared in accordance with GAAP and fairly present in all
material respects the financial position of Seller at the dates thereof and the
results of operations and cash flow of Seller for the period indicated. Except
as set forth on Schedule 4.5 attached hereto or for changes that would not have
a Material Adverse Effect, since December 31, 1995 (the "Balance Sheet Date")
there has been no change in the Assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of operations of Seller.
IV.6 Warranty Claims. Except as set forth on Schedule 4.6 attached hereto,
---------------
as of the date hereof, there are no warranty claims relating to products at any
time sold or services at any time performed by Seller pending or, to the best
knowledge of Seller, threatened, which would have a Material Adverse Effect.
IV.7 Title to Properties; Encumbrances; Condition. Except as set forth on
--------------------------------------------
Schedule 4.7 or any of the other Schedules hereto and except for properties and
assets reflected in the Financial Statements or acquired since the Balance Sheet
Date which have been sold or otherwise disposed of in the ordinary course of
business, Seller owns outright, and has, and shall at the Closing have, full
legal and beneficial title to all of its Assets, in each case subject to no
Encumbrances except for Permitted Encumbrances. Except as set forth on Schedule
4.7, each Asset is in good operating condition and repair, subject to ordinary
wear and tear, and has been maintained in accordance with the manufacturers'
specifications, and each Asset is in compliance with all appli cable federal and
state laws and regulations. The Inventory consists of items of a quality and
quantity usable or saleable in the regular course of business of Seller.
IV.8 Property.
--------
(a) Real Property. All of the buildings, structures and appurtenances
-------------
situated on the real property subject to the Lease Agreement are in good
operating condition, and in a state of good maintenance and repair, subject to
ordinary wear and tear, except where such condition or maintenance would not
have a Material Adverse Effect. The real property subject to the Lease
Agreement has adequate rights of ingress and egress for operation of the
Business in
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<PAGE>
the ordinary course. No condemnation or similar proceeding is pending or, to the
best knowledge of Seller, threatened, which would preclude or impair the use of
the real property.
(b) Leases. Schedule 2.1(d) contains an accurate and complete list of
------
all Leases to which Seller is a party (as lessee or lessor) and which are to be
included in the Assets. Except as set forth on Schedule 4.8, each Lease is, to
the best knowledge of Seller, in full force and effect; there is no existing
default under any of such Leases on the part of Seller or, to the best of
Seller's knowledge, any other party thereto.
(c) Pagers. As of the date of this Agreement, Seller has no less
------
than 25 pagers in Inventory, no less than 3,800 leased pagers outstanding and at
least 15,400 pagers in service.
IV.9 Contracts and Commitments. Schedule 2.1(c) contains an accurate and
-------------------------
complete list of all Contracts to which Seller is a party and which are to be
included in the Assets. Each Contract set forth on Schedule 2.1(c) is, to the
best knowledge of Seller, in full force and effect; there is no existing default
under any of such Contracts on the part of Seller, or, to the best of Seller's
knowledge, any other party thereto. Except as set forth on Schedule 4.9:
(a) Seller is not a party to or bound by any loan, credit or similar
agreement or any indenture, trust agreement or other instrument relating to
any issue of bonds, debentures, notes or other evidences of indebtedness or
creating any Encumbrance on any of the Assets;
(b) There are no bonus, pension, profit sharing, retirement, stock
option, stock purchase, deferred compensation, hospitalization or insurance
plans, or vacation or severance pay plans, or any other plans or
arrangements providing benefits to officers, agents or employees of Seller;
(c) Seller does not have nor is Seller currently negotiating any
collective bar gaining agreement with any labor union or association or any
employment contract or other binding agreement relating to the employment
of any of its employees;
(d) Seller is not a party to any joint venture agreement or other
agreement involving the sharing of profits relating to the Business and/or
the Assets;
(e) Seller is not a party to any (i) contracts or commitments for
capital expenditures outside the ordinary course of business or involving
obligations on the part of Seller in amounts inconsistent with those
incurred by Seller in the ordinary course of business in accordance with
Seller's prior operation of the Business, (ii) Lease under which personal
property is leased to or from Seller and which is not cancelable by Seller
without penalty upon notice of thirty days or less or pursuant to which
rentals payable by or to Seller, either individually or in the aggregate,
substantially exceed amounts
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<PAGE>
previously incurred by Seller in the ordinary course of business, (iii)
continuing contract for the future purchase of Inventory or other
materials, supplies, machinery or equipment in excess of the requirements
of the Business conducted in the ordinary course, (iv) other contract or
agreement which involves an obligation on the part of Seller, either
individually or in the aggregate, in excess of amounts previously incurred
by Seller in the ordinary course of business, or (v) contract not made in
the ordinary course of business;
(f) Seller is not party to any Contract limiting the freedom of a
Seller to engage in any line of business or to compete with any Person;
(g) Seller is not a party to any Contract which involves $5,000 or
more and is not cancelable without penalty within thirty days; and
(h) There are no persons holding powers of attorney from, or otherwise
authorized to act on behalf of Seller with respect to the Business or the
Assets except for its respective officers and other management personnel
regularly performing their business functions.
Except as specifically identified on Schedule 4.9, Seller has no knowledge that
any Contract, Lease, or other obligation to which Seller is a party,
individually or in the aggregate: (i) will result in a material loss to the
Buyer after the Closing Date; (ii) cannot readily be performed or fulfilled on
time without undue or unusual expenditure of money or effort by the Buyer after
the Closing Date, or (iii) is not in full force and effect and there exists a
default or event of default or event, occurrence, condition or act which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder, except where
such event would not cause a Material Adverse Effect. A true copy of each
written Contract and Lease as well as all other documents evidencing any
commitment of Seller required to be set forth on any Schedule hereto has been or
will be delivered to Buyer by Seller no later than five days after execution of
this Agreement. Also set forth on Schedule 4.9 is a list of all proposals,
except proposals made by Seller's sales people in the ordinary course of
business, submitted by Seller to any third party that, if accepted by such third
party, would require dis closure on Schedule 4.9.
IV.10 Permits. All Permits required in connection with the use, operation
-------
or ownership of the Assets and the conduct of the Business as currently
conducted are listed on Schedule 2.1(g). To the best knowledge of Seller, the
Permits issued to Seller by the Commission can be transferred to Buyer or a
subsidiary corporation of Buyer as part of the consummation of the transactions
contemplated by this Agreement. Except as noted in Schedule 4.10, all such
Permits are in full force and effect and the facilities associated with such
Permits have been constructed within the time frame required by the grant
thereof and as provided by the rules and regulations promulgated by the
Commission pursuant to the Communications Act of 1934 ("Rules and Regulations").
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<PAGE>
IV.11 Litigation. Except as set forth on Schedule 4.11, there is no
----------
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of Seller,
threatened, against or affecting the properties or rights of Seller, and Seller
does not know of any valid basis for any such action, proceeding or
investigation. There are no such suits, actions, claims, proceedings or
investigations pending or to the best knowledge of Seller, threatened, seeking
to prevent or challenge the transactions contemplated by this Agreement.
Without exception as to materiality or otherwise, Schedule 4.11 lists all
claims, if any, filed with the Commission with respect to Seller and/or the
operation of the Business since January 1, 1993. A decision adverse to Seller
with respect to any of the matters listed on Schedule 4.11, or with respect to
all or any combination thereof, would not result in a Material Adverse Effect
with respect to Seller.
IV.12 Taxes. Except as set forth on Schedule 4.12:
-----
(a) All returns and reports for Taxes for all taxable years or periods
that end on or before the Closing Date and, with respect to any taxable
year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing
Date (the "Pre-Closing Period"), which are required to be filed by or with
respect to Seller (collectively, the "Returns") have been or will be filed
when due in a timely fashion and such Returns as filed are or will be
accurate in all material respects.
(b) There are no agreements for the extension or waiver of the time
for assessment of any Taxes relating to Seller for any Pre-Closing Period
and Seller has not been requested to enter into any such agreement or
waiver.
(c) All Taxes relating to Seller which Seller is required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and payable.
(d) Seller is not now nor has it ever been a party to any Tax
allocation or sharing agreement that could result in any liability to
Buyer.
(e) The Assets have been operated by Seller as a single business or as
a separate division, branch, or identifiable segment of Seller's entire
business.
IV.13 Insurance. Set forth on Schedule 4.13 is a complete list of
---------
insurance policies that Seller maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and effect
and are free from any right of termination on the part of the insurance
carriers. In the judgment of Seller, such policies, with respect to their
amounts and types of coverage, are adequate to insure against risks to which
Seller and its property and assets are
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normally exposed in the operation of the Business, subject to customary
deductibles and policy limits.
IV.14 Intellectual Property. Schedule 2.1(f) sets forth all Intellectual
---------------------
Property owned by Seller. The operation of the Business requires no rights
under the Intellectual Property other than rights under the Intellectual
Property listed on Schedule 2.1(f) and rights granted to Seller pursuant to
agreements listed on Schedule 2.1(f). Except as otherwise set forth on Schedule
4.14, Seller owns all right, title and interest in the Intellectual Property.
No litigation is pending or, to the best knowledge of Seller, threatened wherein
Seller is accused of infringing or otherwise violating the intellectual property
rights of another, or of breaching a contract conveying intellectual property
rights.
IV.15 Compliance with Laws. Seller is in compliance with all applicable
--------------------
laws, regula tions, orders, judgments and decrees applicable to the Business,
except where any noncompliance would not have a Material Adverse Effect.
IV.16 Employment Relations. Seller is not engaged in any unfair labor
--------------------
practice.
IV.17 Employee Benefit Plans. None of the Employee Benefit Plans are
----------------------
subject to Title IV of ERISA or the minimum funding obligations of Section 412
of the Code, and Seller and any entity required to be aggregated therewith
pursuant to Section 414(b) or (c) of the Code have no liability under Title IV
of ERISA or under Section 412(f) or 412(n) of the Code.
IV.18 Environmental Laws and Regulations. Except as set forth on Schedule
----------------------------------
4.18,
(a) Seller or its officers, directors or employees have not generated
on, used on, treated or stored on, transported to or from or arranged for
transportation to or from, the real property owned or leased by Seller or any
property adjoining such real property (the "Real Property") any Hazardous
Materials,
(b) Hazardous Materials have not been disposed, discharged, injected,
spilled, leaked, leached, dumped, emitted, escaped, emptied, allowed to seep,
placed and the like, into or upon any land or water or air, or otherwise allowed
to enter into the environment (collectively, "Releases") by Seller or its
officers, directors or employees on such Real Property or by Seller or its
officers, directors or employees on any other property,
(c) Seller is and has been in compliance with all applicable
Environmental Laws, possesses all Permits required thereunder and is in
compliance with all Permits issued thereunder with respect to such Real Property
and to Seller's operations conducted thereon,
(d) there are no pending or, to the best knowledge of Seller,
threatened Environmental Claims against Seller or such Real Property,
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(e) there are no facts or present or past circumstances, conditions or
occur rences on such Real Property known to Seller that reasonably could be
anticipated (i) to form the basis of an Environmental Claim against Seller or
any owner or operator of such Real Property, or (ii) to cause such Real Property
to be subject to any restrictions on the ownership, occupancy use or
transferability of such Real Property under any Environmental Law,
(f) there are not now and to the best knowledge of Seller, there never
have been any underground storage tanks located on such Real Property, and
(g) Seller has not in the ordinary course of business transported,
treated, disposed of or stored Hazardous Materials.
IV.19 Interests in Customers and Suppliers. Except for relationships with
------------------------------------
Affiliates and as set forth on Schedule 4.19 attached hereto, Seller does not
possess, directly or indirectly, any financial interest in, nor is any Person
associated with Seller as a director, officer or employee of, any corporation,
firm, association or business organization which is a supplier, customer,
lessor, lessee, or competitor of Seller.
IV.20 Compensation of Employees. Set forth on Schedule 4.20 is a complete
-------------------------
list of all employees of Seller showing (i) such individuals' total compensation
from Seller for the fiscal year ended on the Balance Sheet Date and (ii)
compensation and salary rates for the current fiscal year. Except as set forth
on Schedule 4.20, no employee of Seller has been promised a bonus or an increase
in salary to take effect subsequent to the date hereof.
IV.21 Suppliers and Customers. Schedule 4.21 sets forth the five largest
-----------------------
suppliers and the ten largest customers of Seller by dollar volume for each of
the fiscal years 1994 and 1995 and as of the date hereof. The relationship of
Seller with each of such suppliers and customers as of the date of this
Agreement is, to the best knowledge of Seller, a good commercial working
relationship, and except as set forth on Schedule 4.21, no significant supplier
or client has canceled or otherwise terminated or, to the best knowledge of
Seller, threatened to cancel or otherwise terminate its relationship with Seller
since December 31, 1994.
IV.22 Absence of Changes. Except as set forth on Schedule 4.22, since the
------------------
Balance Sheet Date there has not been any:
(a) sale, assignment, pledge, hypothecation or other transfer of any
of Seller's assets or properties except in the ordinary course of business;
(b) Material Adverse Effect or any condition or contingency that might
reasonably be expected to result in any Material Adverse Effect on Seller
or the Business;
(c) termination of or material amendment to any Contract or Lease
except as
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<PAGE>
reflected by any applicable Schedule;
(d) increase in compensation payable or paid to, or any employment,
bonus or compensation agreement entered into with, any officer, director,
employee, agent or independent contractor of Seller other than in the
ordinary course of business or other than as set forth on Schedule 4.20;
(e) declaration or making, or agreement to declare or make, any
payment of dividends or distributions of any assets of any kind or
purchase, redemption or other acquisition, or agreement to purchase, redeem
or otherwise acquire, directly or indirectly, any of Seller's outstanding
capital stock; or merger, consolidation or agreement to merge or
consolidate with any other entity;
(f) agreement or arrangement creating any preferential rights to
purchase any of Seller's capital stock or Assets or requiring the consent
of any party to the transfer or assignment of any of Seller's capital stock
or Assets;
(g) other than in the ordinary course of business, a change in the
amount of all Accounts Receivable of Seller or other fees or debts due to
Seller or the allowances with respect thereto, or the payables of Seller to
trade accounts and other creditors by Seller, from that reflected in the
Balance Sheet;
(h) Contract or transaction entered into or agreed to by Seller other
than in the ordinary course of business; or
(i) agreement by Seller to do any of the things described in the
preceding clauses (a) through (h) except as contemplated in this Agreement.
IV.23 Solvency. Seller is not entering into this Agreement with actual
--------
intent to hinder, delay or defraud creditors. Immediately prior to and
immediately subsequent to the Closing Date:
(a) the present fair salable value of the assets of Seller (on a going
concern basis) will exceed the liability of Seller for its debts (including
its contingent obligations);
(b) Seller has not incurred, nor does it intend to or believe that it
will incur, debts (including contingent obligations) beyond its ability to
pay such debts as such debts mature (taking into account the timing and
amounts of cash to be received from any source, and of amounts to be
payable on or in respect of debts); and the amount of cash available to
Seller after taking into account all other anticipated uses of funds is
antici pated to be sufficient to pay all such amounts on or in respect of
debts, when such amounts are required to be paid; and
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<PAGE>
(c) Seller will have sufficient capital with which to conduct its
business, and the property of Seller does not constitute unreasonably small
capital with which to conduct its business.
For purposes of this Section 4.23, "debt" means any liability or a (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable secured, or unsecured; or (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such a right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
IV.24 Disclosure. No representation or warranty by Seller contained in
----------
the Agreement, nor any statement or certificate furnished or to be furnished by
Seller to Buyer or its representatives in connection herewith or pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading or necessary in order to provide a
prospective purchaser of the Business with adequate information as to Seller and
its condition (financial and otherwise), properties, assets, liabilities,
business and prospects, and Seller has disclosed to Buyer in writing all
material adverse facts known to Seller relating to the same. The
representations and warranties contained in this Article IV or elsewhere in this
Agreement or any document delivered pursuant hereto shall not be affected or
deemed waived by reason of the fact that Buyer and/or its representatives knew
or should have known that any such representation or warranty is or might be
inaccurate in any respect.
IV.25 Government Contracts. Except as set forth on Schedule 4.25, Seller
--------------------
does not:
(a) have any Contracts with any agency of the Government of the United
States involving any information, technology or data which is classified
under Executive Order 12356 of April 2, 1982; or
(b) have any products or services (including research and development)
with respect to which Seller (i) is a supplier, direct or indirect, to any
of the military services of the United States or the Department of Defense,
other than the United States Coast Guard, except the supply to individuals
of such military in their individual capacity, or (ii) has technology which
has or could have military applications.
IV.26 Copies of Documents. Seller has made available for inspection and
-------------------
copying by Buyer and its advisers, true, complete and correct copies of all
documents referred to in this Article IV or in any Schedule attached hereto.
The Books and Records to be delivered at Closing are true, complete and correct.
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<PAGE>
IV.27 No Subsidiaries. Seller has no subsidiaries.
---------------
IV.28 Broker's or Finder's Fees. No Person acting on behalf of Seller or
-------------------------
its stockholders is, or will be, entitled to any fee, commission or broker's or
finder's fees in connection with this Agreement or any of the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
V.1 Existence and Good Standing of Buyer; Power and Authority. Buyer is a
---------------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has full corporate power and authority to make,
execute, deliver and perform this Agreement and the Buyer's Agreements, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and the Buyer's
Agreements have been duly authorized and approved by all required corporate
governance action of Buyer. This Agreement and the Buyer's Agreements have
been, as applicable as of the date hereof or as of the Closing Date, duly
executed and delivered by Buyer and are the valid and binding obligations of
Buyer enforceable against Buyer in accordance with their respective terms,
except to the extent that their respective enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
V.2 No Violations. Except with respect to the Amended and Restated Loan
-------------
Agreement dated August 3, 1995 ("Loan Agreement"), among Buyer, each of Buyer's
subsidiaries, and Finova, and with respect to the Amended and Restated
Subordinated Note, Preferred Stock and Warrant Purchase Agreement dated August
3, 1995, among Buyer, Continental Illinois Venture Corporation, CIVC Partners I,
GM Holdings, LLC, and certain other purchasers listed on the signature pages
thereto ("Subordinated Debt Agreement"), the execution, delivery and performance
of this Agreement and the Buyer's Agreements by Buyer and the consummation by
Buyer of the transactions contemplated hereby and thereby will not, with or
without the giving of notice or the lapse of time or both, (a) violate, conflict
with, or result in a breach or default under any provision of the charter or
bylaws of Buyer; (b) violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to Buyer or by which any of its properties or
assets may be bound; (c) require any filing by Buyer with, or require Buyer to
obtain any permit, consent or approval of, or require Buyer to give any notice
to, any governmental or regulatory body, agency or authority or any third party
other than the Commission, Finova and certain parties to the Subordinated Debt
Agreement; or (d) result in a violation or breach by Buyer of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Buyer
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<PAGE>
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of Buyer pursuant to, any of the terms, conditions or
provision of any note, bond, mortgage, indenture, permit, contract, lease or
other instrument or obligation to which Buyer is a party, or by which it or any
of its properties or assets may be bound, except in the case of clauses (b), (c)
and (d) of this Section 5.2, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a Material
Adverse Effect.
V.3 Broker's or Finder's Fees. No Person acting on behalf of Buyer is, or
-------------------------
will be, entitled to any fee, commission or broker's or finder's fee in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller under this Agreement to sell, or cause to be
sold, the Assets and to consummate the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Seller) on or prior to the
Closing Date of all of the following conditions:
VI.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
and Buyer shall have delivered to Seller on the Closing Date, a certificate of
an authorized officer of Buyer, dated the Closing Date, to such effect.
VI.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Buyer to be performed on or before the Closing Date pursuant to the
terms hereof, including all deliveries and obligations at Closing, shall have
been duly performed in all material respects, and Buyer shall have delivered to
Seller a certificate of an authorized officer of Buyer, dated the Closing Date,
to such effect and evidencing the incumbency of all officers executing any
documents in connection with the Closing.
VI.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Buyer
shall have delivered to Seller a certificate of an authorized officer of Buyer,
dated the Closing Date, to such effect to the best knowledge of such officer.
VI.4 Governmental Approvals. All governmental consents and approvals
----------------------
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received, including, but not limited to, all necessary
approvals of the Commission ("FCC
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<PAGE>
Approvals"); provided, however, that with respect to Seller's Permits designated
as private radio licenses from the Commission, the parties agree to close the
transactions contemplated by this Agreement pursuant to conditional temporary
authority under the Rules and Regulations.
VI.5 Consents. Buyer shall have received the consents required under the
--------
Loan Agreement and the Subordinated Debt Agreement prior to the Closing Date.
VI.6 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Seller and its
counsel, and Seller shall have received copies of all such documents and other
evidence as its or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer under this Agreement to purchase the Assets and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by Buyer) on or prior to the Closing Date of all of the
following conditions:
VII.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Seller contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, and
Seller shall have delivered to Buyer on the Closing Date a certificate of an
authorized representative of Seller, dated the Closing Date, to such effect.
VII.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Seller to be performed on or before the Closing Date pursuant to
the terms hereof, including all deliveries and obligations at Closing, shall
have been duly performed in all material respects, and Seller shall have
delivered to Buyer a certificate of an authorized representative of Seller,
dated the Closing Date, to such effect and evidencing the incumbency of all
officers executing any documents in connection with the Closing.
VII.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Seller
shall have delivered to Buyer a certificate of an authorized representative of
Seller, dated the Closing Date, to such effect to the best knowledge of such
officer.
VII.4 Due Diligence. Buyer shall have concluded a due diligence review of
-------------
Seller satisfactory to Buyer in its sole discretion, provided that such due
diligence shall be completed
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<PAGE>
within thirty (30) days of the date of this Agreement.
VII.5 Governmental Approvals. All governmental consents and approvals
----------------------
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received, including, but not limited to, the FCC
Approvals; provided, however, that with respect to Seller's Permits designated
private radio licenses from the Commission, the parties have agreed to close the
transactions contemplated by this Agreement pursuant to conditional temporary
authority under the Rules and Regulations.
VII.6 Consents. Each of the consents referred to on Schedule 4.3 attached
--------
hereto shall have been obtained. Buyer shall have received the consents
required under the Loan Agreement and the Subordinated Debt Agreement.
VII.7 Legal Opinion. Seller shall have delivered to Buyer the opinion of
-------------
Perret, Doise, Daigle, Longman, Russo & Zaunbrecher, counsel to Seller,
substantially in the form of Exhibit "C" attached hereto, which opinion shall be
acceptable to Buyer and its counsel.
VII.8 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its counsel,
and Buyer shall have received copies of all such documents and other evidence as
it or its counsel may reasonably request in order to establish the consummation
of such transactions and the taking of all proceedings in connection therewith.
ARTICLE VIII
COVENANTS OF SELLER
-------------------
Seller hereby covenants and agrees with Buyer as follows:
VIII.1 Cooperation by Seller. Seller shall use its reasonable best
---------------------
efforts to cooperate with Buyer to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Seller to effect the transactions contemplated hereby, and
Seller shall otherwise use its reasonable best efforts to cause the consummation
of such transactions in accordance with the terms and conditions hereof and to
cause all conditions contained in this Agreement over which it has control to be
satisfied. Seller further agrees to deliver to Buyer prompt written notice of
any event or condition known to or discovered by Seller, which if it existed on
the date of this Agreement or on the Closing Date, would result in any of the
representations and warranties of Seller contained herein being untrue in any
material respect.
VIII.2 Notice of Breaches. Seller shall deliver to Buyer prompt written
------------------
notice of any
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<PAGE>
event or condition actually known to or discovered by Seller, which, if it
existed on the date of this Agreement or on the Closing Date, would result in
any of the representations and warranties of Seller contained herein being
untrue in any material respect. Upon the discovery and subsequent notice of such
an event or condition, Buyer and Seller shall be entitled to the rights and
remedies set forth in Section 11.2.
VIII.3 Conduct of Business. Except as Buyer may otherwise consent to in
-------------------
writing, between the date hereof and the Closing Date, Seller shall, (a) conduct
the Business only in the ordinary course, (b) use its reasonable efforts to keep
available the services of its employees and maintain its current relationships
with licensors, suppliers, lessors, distributors, customers, clients and others,
(c) maintain, consistent with past practice and good business judgment, all of
the Assets in customary repair, order and condition, ordinary wear and tear
excepted, and insurance upon all of the Assets used in the conduct of the
Business in such amounts and of such kinds comparable to that in effect on the
date hereof, to the extent available at current premiums, and (d) maintain the
Books and Records in the usual, regular and ordinary manner, on a basis
consistent with past practice.
VIII.4 Negative Covenants of Seller. From and after the date hereof and
----------------------------
through the Closing Date and except with the specific prior written consent of
Buyer, Seller covenants and agrees as follows:
(a) Seller shall not sell, transfer or dispose of any of the Assets
other than in the ordinary course of business; provided, however, that any
sale, transfer or disposition of any Assets in the ordinary course of
business shall not exceed Assets valued at more than $10,000 in the
aggregate;
(b) Seller shall not grant an Encumbrance (except a Permitted
Encumbrance) on any of the Assets or allow any such Encumbrance (except a
Permitted Encumbrance) to occur or to be created;
(c) Except in the ordinary course of business and as allowed at the
end of Section 3.3, Seller shall not acquire any tangible properties or
assets relating to the Business;
(d) Seller shall not enter into any employment and/or any independent
contractor agreements relating to services to be rendered in connection
with the Business or any of the Assets except in the ordinary course of
business;
(e) Except in the ordinary course of business, Seller shall not amend,
modify or terminate, without the prior written consent of Buyer, any of the
Contracts, Leases or other agreements, if any, to be assumed by Buyer
hereunder;
(f) Seller shall not incur any indebtedness for which any of the
Assets are, or
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<PAGE>
may be, subject to any Encumbrance or claim, either express or implied; and
(g) Seller shall not enter into any undertaking to furnish services
for any con sideration other than money with respect to the operation of
the Assets other than trades of paging services for advertising in the
normal course of business and consistent with historic levels.
VIII.5 Exclusive Dealing. During the period from the date of this
-----------------
Agreement to the earlier of the Closing Date or the termination of this
Agreement, Seller shall not take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person other than Buyer, concerning any sale of the
Assets or any material part thereof or a similar transaction involving Seller.
VIII.6 Review of the Assets. Subject to the Confidentiality Agreement
--------------------
between Seller and Buyer entered into on the date hereof ("Confidentiality
Agreement"), Seller agrees that Buyer may, prior to the Closing Date, through
its representatives, review (a) the Assets, (b) the complete working papers of
Seller's certified public accountants used in their preparation of financial
statements for Seller and (c) the Books and Records of Seller and otherwise
review the financial and legal condition of Seller as Buyer deems necessary or
advisable to familiarize itself with the Business and related matters; such
review shall not, however, affect the representations and warranties made by
Seller hereunder or the remedies of Buyer for breaches of those representations
and warranties. Buyer may also, prior to the Closing Date, through its
representatives, inspect any or all of Seller's towers and other transmitting
facilities. Such review and inspection shall occur only during normal business
hours upon reasonable notice by Buyer. Seller shall permit Buyer and its
representatives to have, after the execution of this Agreement, full access to
employees of Seller who can furnish Buyer with financial and operating data and
other information with respect to the Business as Buyer shall from time to time
reasonably request, subject to the Confidentiality Agreement.
VIII.7 Governmental Filings. It is expressly acknowledged and agreed
--------------------
that, as soon as practicable after the execution of this Agreement, but in no
event more than fifteen (15) days from the date hereof, Buyer and Seller shall
file any forms required by the Commission to transfer the Assets. Seller agrees
that it will cooperate with Buyer in all respects in connection with such
filings and in connection with any requests for information or further filings
which may be necessary in order to obtain the necessary consents (or to allow
the applicable time periods to expire) with respect thereto. Seller shall
deliver to Buyer and its counsel drafts of such filings by Seller and all other
materials to be submitted sufficiently in advance of any such submission so that
Buyer and its counsel may review and comment upon such filings and other
materials. It is further agreed that (a) as soon as reasonably practicable, but
in no event more than fifteen (15) days after the Closing Date, Buyer and Seller
shall file any forms required by the Commission to transfer any Subsequent
Permits and any Subsequently Constructed Facilities; provided that
notwithstanding the provisions of Article X, Buyer and Seller shall
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<PAGE>
undertake the Closing prior to the grant of the FCC Approvals of the assignment
of the Subsequent Permits, and (b) as soon as reasonably practicable, but in no
event more than fifteen (15) days after the Closing Date, Buyer and Seller shall
amend any Pending Applications to replace Seller with Buyer as the proposed
licensee.
VIII.8 Use of Name. Seller hereby agrees that, after the Closing Date,
-----------
Seller shall (i) discontinue all use of the name[s] "Warren Communications,
Inc." and "Amerapage," or any other trade or assumed names used by Seller in the
Business prior to the Closing Date alone or in any combination of words for any
and all goods and services in connection with any telecommunications business
done by Seller after the Closing Date; and (ii) discontinue all use of the names
"Warren Communications, Inc." and "Amerapage" in any generally dispersed
advertising or public solicitation of Seller or any advertising or solicitation
which otherwise might reasonably be expected to reach any material number of
Buyer's customers or potential customers.
VIII.9 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Seller shall, at the reasonable request of Buyer and at Buyer's
expense, execute and deliver any further instruments or documents and take all
such further action as Buyer may reasonably request in order to consummate and
make effective the sale of the Assets and the assumption of the Assumed
Obligations pursuant to this Agreement.
ARTICLE IX
COVENANTS OF BUYER
------------------
Buyer hereby covenants and agrees with Seller as follows:
IX.1 Cooperation by Buyer. Buyer will use its reasonable best efforts, and
--------------------
will cooperate with Seller, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Buyer to effect the transactions contemplated on its part
hereby, and Buyer will otherwise use its reasonable best efforts to cause and
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied.
IX.2 Books and Records; Personnel. At all times after the Closing Date,
----------------------------
Buyer shall allow Seller and any agents of Seller, upon reasonable advance
notice to Buyer, access to all Books and Records of Seller which are transferred
to Buyer in connection herewith, to the extent necessary or desirable in
anticipation of, or preparation for, existing or future litigation, employment
matters, tax returns or audits, or reports to or filings with governmental
agencies, during normal working hours at the location where such Books and
Records are maintained, and Seller shall have the right, at Seller's sole cost,
to make copies of any such Books and Records. Buyer agrees to maintain all
Books and Records acquired from Seller for a period of six years from the
Closing Date unless such Books and Records are transferred and delivered to
Seller
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within such six year period.
IX.3 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Buyer shall, at the request of Seller and at Seller's expense,
execute and deliver any further instruments or documents and take all such
further action as Seller may reasonably request in order to consummate and make
effective the sale of the Assets and the assumption of the Assumed Obligations
pursuant to this Agreement.
IX.4 Governmental Filings. It is expressly acknowledged and agreed that,
--------------------
as soon as practicable after the execution of this Agreement, but in no event
more than fifteen (15) days from the date hereof, Buyer and Seller shall file
any forms required by the Commission to authorize the transfer of the Assets.
Buyer agrees that it will cooperate with Seller in all respects in connection
with such filings and in connection with any requests for information or further
filings which may be necessary in order to obtain the necessary consents (or to
allow the applicable time periods to expire) with respect thereto. Buyer shall
deliver to Seller and its counsel drafts of such filings by Buyer and all other
materials to be submitted sufficiently in advance of any such submission so that
Seller and its counsel may review and comment upon such filings and other
materials. If the Closing does not occur as contemplated hereunder for any
reason, Buyer shall promptly execute any documents required by the Commission
and requested by Seller to reassign or transfer the Assets to Seller and as may
be necessary to allow Seller to continue its business without interruption.
ARTICLE X
THE CLOSING
-----------
X.1 Time and Place. The closing of the transactions contemplated by this
--------------
Agreement (the "Closing") will take place at 9 a.m. at the offices of Bracewell
& Patterson, L.L.P. located at 711 Louisiana, Suite 2900, Houston, Texas 77002,
on the Closing Date, or at such other time, at such other place or on such other
date as the parties hereto may mutually agree. The transactions contemplated by
this Agreement shall be deemed to be effective as of 12:01 a.m. on the Closing
Date.
X.2 Seller's Obligations. At the Closing, Seller shall deliver to Buyer,
--------------------
against delivery of the items specified in Section 10.3:
(a) a bill of sale, assumption and other instruments of transfer,
assignment and conveyance in form and substance reasonably satisfactory to
Buyer sufficient to transfer to and effectively vest in Buyer all right,
title and interest in the Assets together with posses sion of the Assets
free and clear of all Encumbrances except Permitted Encumbrances;
(b) the allocation of the Purchase Price on Schedule 3.2 agreed to by
Buyer;
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(c) a check or wire transfer to an account of Buyer in the amount of
any apportionment due Buyer pursuant to Section 3.5;
(d) the Seller's Agreements executed by a duly authorized officer of
Seller and by its stockholders, as applicable;
(e) certified copies of the Articles of Incorporation, Bylaws and Good
Standing and Existence Certificates of Seller;
(f) all Books and Records which are to be furnished to Buyer
hereunder, including all Contracts and Leases of Seller;
(g) the certifications required by Section 7.1, 7.2 and 7.3 which may
be contained in one certificate;
(h) the consents to assignment of the Contracts and Leases as required
by Section 7.6;
(i) the legal opinions as required by Section 7.7;
(j) evidence of authority to close the transactions contemplated by
this Agreement pursuant to conditional temporary authority under the Rules
and Regulations; and
(k) such other instruments, documents and certificates in form and
substance reasonably satisfactory to Buyer, as Buyer shall have reasonably
required.
X.3 Buyer's Obligations. At the Closing, Buyer shall deliver to Seller,
-------------------
against delivery of the items specified in Section 10.2:
(a) a wire transfer for the total of the Cash Payment and Noncompete
Payment as adjusted pursuant to Section 3.3, if necessary, plus the amount
of any apportionment due Seller pursuant to Section 3.5;
(b) the Buyer's Agreements executed by a duly authorized officer of
Buyer;
(c) the allocation of Purchase Price on Schedule 3.2 agreed to by
Seller;
(d) evidence of authority to close the transactions contemplated by
this Agreement pursuant to conditional temporary authority under the Rules
and Regulations; and; and
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<PAGE>
(e) the certifications required by Sections 6.1, 6.2 and 6.3 which may
be contained in one certificate.
X.4 Possession. Simultaneously with the consummation of the transfer
----------
contemplated herein, Seller, through its officers, agents and employees shall
put Buyer in full possession and enjoyment of all Assets to be conveyed and
transferred by this Agreement.
ARTICLE XI
TERMINATION
-----------
XI.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time on or prior to the Closing
Date:
(a) by the mutual written consent of Buyer and Seller;
(b) by either party after June 3, 1996 (or such later date as the
Closing has been extended pursuant to Section 3.6 or Section 10.1), if the
Closing has not occurred by such date, provided that as of such date
neither party is in default or that both parties are in default under this
Agreement; or
(c) by Buyer or Seller in writing, without prejudice to other rights
and remedies which the terminating party may have (provided the terminating
party is not otherwise in material default or breach of this Agreement, or
has failed or refused to close without justification hereunder), if the
other party shall (i) materially fail to perform its covenants or
agreements contained herein required to be performed on or prior to the
Closing Date, or (ii) materially breach or have breached any of its
representations or warranties contained herein.
XI.2 Remedies Upon Default or Failure to Close.
-----------------------------------------
(a) If Buyer shall default in the performance of its obligations under
this Agreement, and shall for this reason be unable to consummate this
Agreement on the Closing Date in accordance with the terms hereof, and
provided that Seller is not then in material default of any of its
obligations hereunder, Seller shall be entitled as its sole remedy to
terminate this Agreement by written notice to Buyer and to retain the
Deposit, as defined in the Letter of Intent and any deposits made pursuant
to Section 3.6, as liqui dated damages; provided, however, that Buyer shall
have a period of ten (10) days following written notice from Seller to cure
any breach of this Agreement, if such breach is curable. Buyer and Seller
hereby agree in the case of this clause (a) of Section 11.2 that (i)
Seller's damages for Buyer's default are difficult or impossible to
determine, (ii) Buyer's payment of the deposits is deemed a reasonable
estimate of Seller's potential
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<PAGE>
damages, (iii) such payment is not a penalty or forfeiture, and (iv) upon
Seller's retention of the deposits, Buyer shall have no further liability
to Seller.
(b) If Seller shall default in the performance of its obligations
under this Agreement, including, but not limited to, the failure of any
condition to Closing in Article VII or the failure to make any required
delivery under Section 10.2, and shall for that reason be unable to
consummate this Agreement on the Closing Date in accordance with the terms
hereof, and if Buyer is not then in material default of any of its
obligations hereunder, Buyer may (i) waive any such defaults by Seller and
require Seller through specific performance (which Seller acknowledges to
be an appropriate remedy) to consummate the sale in accordance with the
terms of this Agreement, or (ii) terminate the Agreement and be entitled to
the return of the Deposit, as defined in the Letter of Intent, and all
additional deposits made pursuant to Section 3.6. The availability of
specific performance shall be in addition to any other remedies or claims
for damages Buyer may have at law or in equity for breaches or defaults by
Seller of Seller's obligations hereunder or for Buyer's remedies pursuant
to Article XII hereof.
XI.3 Effect on Obligations. Termination of this Agreement pursuant to this
---------------------
Article shall terminate all obligations of the parties hereunder, except for (i)
Sections 11.2, 13.1, 13.2, 13.9 and 13.10 and Buyer's remedies under Article XII
hereof, (ii) the obligations set forth in the next succeeding sentence of this
Section 11.3, and (iii) the obligations under the Confidentiality Agreement
between the parties dated effective as of the date hereof (the "Confidentiality
Agreement"). Upon any termination of this Agreement each party hereto will
redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, and all copies of such
materials, whether so obtained before or after the execution hereof, to the
party furnishing the same.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
----------------------------
XII.1 Indemnification of Seller. Buyer shall indemnify and hold Seller
-------------------------
and its Affiliates (the "Seller Indemnitees") harmless from and against any and
all damages, including exemplary damages and penalties, losses, deficiencies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
Seller Indemnitees as a result of, caused by, arising out of, or in any way
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to Seller by Buyer pursuant to the terms
of this Agreement, or (b) any liability or obligation (other than those for
which Buyer is being indemnified by Seller hereunder) which pertains to the
ownership, operation or
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<PAGE>
conduct of the Business or Assets arising from any acts, omissions, events,
conditions or circumstances occurring on or after the Closing Date including,
but not limited to, Buyer's failure to perform any of the Assumed Obligations.
XII.2 Indemnification of Buyer.
------------------------
Seller shall indemnify and hold Buyer and its Affiliates (the "Buyer
Indemnitees") harmless from and against any and all Damages suffered by Buyer
Indemnitees as a result of, caused by, arising out of, or in any way relating to
(a) any misrepresentation, breach of warranty, nonfulfillment of any agreement
or covenant on the part of Seller under this Agreement, or any misrepresentation
in or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Buyer by Seller pursuant to the terms of this
Agreement, (b) any liability or obligation (other than those for which Seller is
being indemnified by Buyer hereunder and other than the Assumed Obligations)
which pertains to the ownership, operation or conduct of the Business or Assets
arising from any acts, omissions, events, conditions or circumstances occurring
before the Closing Date and (c) the Excluded Liabilities. Buyer Indemnitees
shall not be entitled to seek indemnification from Seller until and unless the
aggregate of all claims for indemnification is equal to or greater than $10,000
at which time Seller's indemnification liability shall be for such entire
amount.
XII.3 Demands. Each indemnified party hereunder agrees that promptly upon
-------
its discovery of facts giving rise to a claim for indemnity under the provisions
of this Agreement, including receipt by it of notice of any demand, assertion,
claim, action or proceeding, judicial or otherwise, by any third party (such
third party actions being collectively referred to herein as the "Claim"), with
respect to any matter as to which it claims to be entitled to indemnity under
the provisions of this Agreement, it will give prompt notice thereof in writing
to the indemnifying party, together with a statement of such information
respecting any of the foregoing as it shall have. Such notice shall include a
formal demand for indemnification under this Agreement. The indemnifying party
shall not be obligated to indemnify the indemnified party with respect to any
Claim if the indemnified party knowingly failed to notify the indemnifying party
thereof in accordance with the provisions of this Agreement in sufficient time
to permit the indemnifying party or its counsel to defend against such matter
and to make a timely response thereto including, without limitation, any
responsive motion or answer to a complaint, petition, notice or other legal,
equitable or administrative process relating to the Claim, only insofar as such
knowing failure to notify the indemnifying party has actually resulted in
prejudice or damage to the indemnifying party.
XII.4 Right to Contest and Defend. The indemnifying party shall be
---------------------------
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention to contest shall be delivered by the indemnifying party to the
indemnified party within twenty (20) days from the date of receipt by
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the indemnifying party of notice by the indemnified party of the assertion of
the Claim. Any such contest may be conducted in the name and on behalf of the
indemnifying party or the indemnified party as may be appropriate. Such contest
shall be conducted by reputable counsel employed by the indemnifying party, but
the indemnified party shall have the right but not the obligation to participate
in such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party, having used its reasonable best efforts in resolution. At any
time after the commencement of the defense of any Claim, the indemnifying party
may request the indemnified party to agree in writing to the abandonment of such
contest or to the payment or compromise by the indemnified party of the asserted
Claim, whereupon such action shall be taken unless the indemnified party
determines that the contest should be continued, and so notifies the
indemnifying party in writing within fifteen (15) days of such request from the
indemnifying party. If the indemnified party determines that the contest should
be continued, the indemnifying party shall be liable hereunder only to the
extent of the amount that the other party to the contested Claim had agreed
unconditionally to accept in payment or compromise as of the time the
indemnifying party made its request therefor to the indemnified party.
XII.5 Cooperation. If requested by the indemnifying party, the
-----------
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
Claim, or any cross-complaint against any person, and the indemnifying party
will reimburse the indemnified party for any expenses incurred by it in so
cooperating. If the indemnifying party has not chosen to contest a Claim, the
indemnifying party shall cooperate with the indemnified party and its counsel in
contesting any Claim at no cost or expense to the indemnified party.
XII.6 Right to Participate. The indemnified party agrees to afford the
--------------------
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons.
XII.7 Payment of Damages. The indemnifying party shall pay to the
------------------
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement subject to offset for any insurance proceeds actually received by the
indemnified party, such payment to be made within five days after any such
amounts are finally determined either by mutual agreement of the parties hereto
or pursuant to the final unappealable judgment of a court of competent
jurisdiction. The availability of
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<PAGE>
insurance proceeds shall not delay or postpone any indemnification payment
required hereunder. If the indemnified party both collects any such insurance
proceeds and receives a payment from the indemnifying party hereunder, and the
sum of such proceeds and payment is in excess of the amount payable with respect
to the matter that is the subject of the indemnity, then the indemnified party
shall promptly refund to the indemnifying party the amount of such excess, if
permitted by the applicable insurance policy(ies). Except as otherwise provided
in the preceding sentence, the indemnified party's receipt of any such insurance
proceeds shall not eliminate or reduce the obligations of the indemnifying party
or the rights of the indemnified party hereunder.
XII.8 Attorneys Fees. To the extent that Damages include attorney's fees
--------------
and expenses paid by the indemnified party, the aggregate of all such amounts to
be included as Damages to be paid to either Seller or Buyer as an indemnified
party hereunder shall not exceed $75,000 each.
XII.9 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in Articles IV and V of this Agreement shall survive until
the third anniversary date of the Closing Date except for the representations
and warranties in Sections 4.2, 4.7, 4.11, 4.12, 4.14, 4.15 and 5.1 which shall
survive forever.
ARTICLE XIII
MISCELLANEOUS
-------------
XIII.1 Notices. Any notice, request, instruction, correspondence or other
-------
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to Seller prior to Closing, addressed to:
Warren Communications, Inc.
152 Banks Avenue
Lafayette, Louisiana 70506
Attention: Mr. John C. Warren
Telecopy: (318) 233-3965
with a copy to:
Mr. Lester J. Zaunbrecher
Perret, Doise, Daigle, Longman, Russo & Zaunbrecher
Suite 1200, First National Bank Towers
600 Jefferson Street
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<PAGE>
Lafayette, Louisiana 70501
If to Seller after Closing, addressed to:
200 Flying W Drive
Carencro, Louisiana 70520
Attention: Mr. John C. Warren
If to Buyer, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
with a copy prior to Closing to:
Mr. Thomas D. Manford III
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next Business Day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
XIII.2 Governing Law. The provisions of this Agreement shall be governed
-------------
by and construed and enforced in accordance with the laws of the State of
Louisiana (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
XIII.3 Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
(including the exhibits and schedules hereto) and the Confidentiality Agreement
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated
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<PAGE>
hereby. No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. The failure of a
party to exercise any right or remedy shall not be deemed or constitute a waiver
of such right or remedy in the future. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.
XIII.4 Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party; provided, however, that the parties specifically consent to the following
future assign ments: (i) after or at the Closing, as collateral for the
financing of the transaction contemplated by this Agreement, Buyer may assign
this Agreement and Buyer's rights hereunder and under other documents entered
into in connection herewith to financial institutions or their affiliates
providing any such financing or any refinancing thereof, and provided that, upon
foreclosure or sale in lieu of foreclosure or deed in lieu of foreclosure or
deed of any of the assets of Buyer to its Affiliates of Buyer's rights hereunder
or under other documents entered into in connection herewith or a substantial
portion thereof by or to any such financial institutions or their Affiliates,
the representations, warranties, obligations, covenants, agreements and
indemnities of Seller herein and in such other documents will inure to the
benefit of such financial institutions (or their Affiliates) or any such
purchaser or grantee; (ii) Seller may assign its rights and obligations to its
stockholders pursuant to a dissolution of Seller as long as such assignment
shall include the assumption by Seller's stockholders, severally and not jointly
based on each stockholder's pro rata share, of Seller's obligations hereunder
and (iii) at the election of Buyer and in connection with the FCC Approvals to
be obtained as a condition of Closing, all Permits of Seller issued by the
Commission and subject to assignment and/or transfer from Seller to Buyer
pursuant to the Agreement may be transferred and assigned to either Buyer or
Teletouch Licenses, Inc., a Delaware corporation and wholly owned subsidiary of
Buyer. Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity other than the parties hereto and their respective
permitted successors and assigns, any rights, benefits or obligations hereunder.
If any portion of the Purchase Price (or any assets acquired directly or
indirectly with all or any portion of the Purchase Price) is distributed to
Seller's stockholders during the period beginning on the Closing Date and ending
three years after the Closing Date, as a condition to any such distribution or
dividend, Seller agrees to cause its stockholders to agree to be bound by the
indemnification obligations of Seller set forth in Article XII hereof, severally
and not jointly, to the extent and based on the percentage of the Purchase Price
distributed to each stockholder. Seller covenants that should additional
persons or entities become holders of Seller's capital stock prior to any
payment of dividends including the Purchase Price or distribution of assets
pursuant to a dissolution of Seller, Seller shall obtain the written agreement
of such new holder of capital stock to the terms and provisions of this Section
13.4 and promptly forward a copy thereof to Buyer. Except for the foregoing,
nothing in this Agreement, express or
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implied, is intended to confer upon any person or entity other than the parties
hereto and their respective permitted successors and assigns, any rights,
benefits or obligations hereunder.
XIII.5 Severability. If any provision of the Agreement is rendered or
------------
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Buyer and Seller
shall promptly meet and negotiate substitute provisions for those rendered or
declared illegal or unenforceable so as to preserve as nearly as possible the
contemplated economic effects of the transactions, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
XIII.6 Headings. The headings of the sections herein are inserted for
--------
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
XIII.7 Execution. This Agreement may be executed in multiple counterparts
---------
each of which shall be deemed an original and all of which shall constitute one
instrument.
XIII.8 Sales and Transfer Taxes. Seller shall be responsible for and pay
------------------------
any applicable sales, stamp, transfer, documentary, use, registration, filing
and other taxes and fees (including any penalties and interest) that may become
due or payable in connection with this Agreement and the transactions
contemplated hereby except for transfer taxes relating to motor vehicles which
shall be paid by Buyer.
XIII.9 Expenses. Except as otherwise provided in this Agreement, Seller
--------
and Buyer shall each pay all costs and expenses incurred by them or on their
behalf in connection with this Agreement and the transactions contemplated
hereby, including fees of their respective legal counsel, provided, however,
that Buyer and Seller shall share equally all filing fees payable to the
Commission.
XIII.10 Publicity. Except as otherwise required by applicable laws or
---------
regulations, Seller or Buyer shall not issue any press release or make any other
public statement, in each case relating to or connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other party hereto to the contents and the manner of
presentation and publication thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
BUYER:
TELETOUCH COMMUNICATIONS, INC.
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<PAGE>
By:______________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SELLER:
Warren Communications, Inc.
By:______________________________________
John C. Warren
President
Seller's stockholders have executed this Agreement below for the purpose of
acknowledging and affirming their obligations under Section 13.4 of this
Agreement and their agreement to be bound thereby as indirect beneficiaries of
the consideration paid for the Assets by Buyer.
_________________________________________
Name: John C. Warren
_________________________________________
Name: Carolyn R. Warren
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<PAGE>
EXHIBIT 2.15
ASSET PURCHASE AGREEMENT
by and between
TELETOUCH COMMUNICATIONS, INC.
as Buyer
and
DAVE FANT COMPANY
(D/B/A OKLAHOMA RADIO SYSTEMS)
AND DAVID W. FANT
as Seller
April 11, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE I DEFINITIONS
1.1 Definitions................................................. 1
1.2 Other Terms................................................. 7
1.3 Other Definitional Provisions............................... 7
ARTICLE II THE TRANSACTION
2.1 Purchase and Sale of Assets................................. 7
2.2 Excluded Assets............................................. 9
2.3 Assumption of Obligations................................... 9
2.4 Excluded Obligations and Liabilities........................10
2.5 Nonassignable Contracts and Leases..........................11
ARTICLE III PAYMENT OF PURCHASE PRICE
3.1 Amount; Delivery............................................11
3.2 Price Allocation............................................12
3.3 Purchase Price Adjustments..................................12
3.4 Apportionments; Post-Closing Adjustments....................13
3.5 Audit.......................................................13
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF SELLER
4.1 Existence and Good Standing.................................14
4.2 Authorization and Validity of Agreement.....................14
4.3 Consents and Approvals; No Violations.......................15
4.4 Receivables.................................................15
4.5 Financial Statements; No Material Adverse Change............15
4.6 Warranty Claims.............................................16
4.7 Title to Properties; Encumbrances; Condition................16
4.8 Leases......................................................16
4.9 Contracts and Commitments...................................16
4.10 Permits.....................................................18
4.11 Litigation..................................................18
4.12 Taxes.......................................................18
4.13 Insurance...................................................19
</TABLE>
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<TABLE>
<S> <C> <C>
4.14 Intellectual Property.......................................19
4.15 Compliance with Laws........................................19
4.16 Employment Relations........................................19
4.17 Employee Benefit Plans......................................19
4.18 Environmental Laws and Regulations..........................19
4.19 Interests in Customers and Suppliers........................20
4.20 Compensation of Employees...................................20
4.21 Suppliers and Customers.....................................20
4.22 Absence of Changes..........................................21
4.23 Solvency....................................................21
4.24 Disclosure..................................................22
4.25 Government Contracts........................................22
4.26 Copies of Documents.........................................23
4.27 No Subsidiaries.............................................23
4.28 Broker's or Finder's Fees...................................23
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF BUYER
5.1 Existence and Good Standing of Buyer; Power and Authority...23
5.2 No Violations...............................................23
5.3 Broker's or Finder's Fees...................................24
ARTICLE VI CONDITIONS TO SELLER'S
OBLIGATIONS
6.1 Truth of Representations and Warranties.....................24
6.2 Performance of Agreements...................................24
6.3 No Litigation Threatened....................................24
6.4 Governmental Approvals......................................25
6.5 Proceedings.................................................25
ARTICLE VII CONDITIONS TO BUYER'S
OBLIGATIONS
7.1 Truth of Representations and Warranties.....................25
7.2 Performance of Agreements...................................25
7.3 No Litigation Threatened....................................25
7.4 Schedules, Due Diligence and Audit..........................26
7.5 Governmental Approvals......................................26
7.6 Consents....................................................26
7.7 Proceedings.................................................26
</TABLE>
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<TABLE>
ARTICLE VIII COVENANTS OF SELLER
<S> <C> <C>
8.1 Cooperation by Seller.......................................26
8.2 Notice of Breaches..........................................26
8.3 Conduct of Business.........................................27
8.4 Negative Covenants of Seller................................27
8.5 Exclusive Dealing...........................................28
8.6 Review of the Assets........................................28
8.7 Governmental Filings........................................28
8.8 Use of Name.................................................29
8.9 Schedules...................................................29
8.10 Further Assurances..........................................29
ARTICLE IX COVENANTS OF BUYER
9.1 Cooperation by Buyer........................................29
9.2 Books and Records; Personnel................................29
9.3 Further Assurances..........................................30
9.4 Governmental Filings........................................30
ARTICLE X THE CLOSING
10.1 Time and Place..............................................30
10.2 Seller's Obligations........................................30
10.3 Buyer's Obligations.........................................31
10.4 Possession..................................................32
ARTICLE XI TERMINATION
11.1 Termination.................................................32
11.2 Remedies Upon Default or Failure to Close...................32
11.3 Effect on Obligations.......................................33
ARTICLE XII SURVIVAL AND
INDEMNIFICATION
12.1 Indemnification of Seller...................................33
12.2 Indemnification of Buyer....................................34
12.3 Demands.....................................................34
12.4 Right to Contest and Defend.................................34
12.5 Cooperation.................................................35
12.6 Right to Participate........................................35
12.7 Payment of Damages..........................................35
</TABLE>
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<TABLE>
<S> <C> <C>
12.8 Survival of Representations and Warranties..................36
12.9 General.....................................................36
ARTICLE XIII MISCELLANEOUS
13.1 Notices.....................................................36
13.2 Governing Law...............................................37
13.3 Entire Agreement; Amendments and Waivers....................37
13.4 Binding Effect and Assignment...............................38
13.5 Severability................................................38
13.6 Headings....................................................39
13.7 Execution...................................................39
13.8 Sales and Transfer Taxes....................................39
13.9 Expenses....................................................39
13.10 Publicity...................................................39
13.11 Bulk Sales..................................................39
</TABLE>
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<PAGE>
SCHEDULES
- ---------
Schedule 2.1(a) Certain Assets
Schedule 2.1(c) Contracts
Schedule 2.1(d) Leases
Schedule 2.1(f) Intellectual Property
Schedule 2.1(g) Permits
Schedule 2.2(b) Excluded Contracts
Schedule 2.2(d) Personal Items and Other Excluded Assets
Schedule 2.3(c) Accrued Vacation and Sick Leave
Schedule 2.4(h) Breaches or Violations
Schedule 3.2 Allocation of Purchase Price
Schedule 4.3 Seller Consents
Schedule 4.4 Receivables
Schedule 4.5 Material Adverse Change
Schedule 4.6 Warranty Claims
Schedule 4.7 Title to Properties; Encumbrances; Condition
Schedule 4.8 Leases
Schedule 4.9 Contracts and Commitments
Schedule 4.10 Permits
Schedule 4.11 Litigation
Schedule 4.13 Insurance Policies
Schedule 4.14 Intellectual Property
Schedule 4.18 Environmental Laws and Regulations
Schedule 4.19 Certain Relationships of Seller
Schedule 4.20 List of Employees of Seller
Schedule 4.21 Suppliers and Customers
Schedule 4.22 Absence of Changes
Schedule 4.26 Government Contracts
EXHIBITS
- --------
Exhibit A Noncompetition Agreement
Exhibit B Note
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<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") dated as of April 11, 1996,
is by and between Teletouch Communications, Inc., a Delaware corporation
("Buyer") and Dave Fant Company, d/b/a Oklahoma Radio Systems, an Oklahoma
corporation ("DFC"), and David W. Fant, a resident of Oklahoma ("Fant"). DFC
and Fant are referred to herein together as "Seller."
W I T N E S S E T H:
WHEREAS, Fant operates a portion of the Business, as defined below, as a
sole proprietorship and Fant wishes to sell and Buyer wishes to purchase
substantially all of the assets of Fant related to the Business, excluding any
personal assets of Fant; and
WHEREAS, DFC wishes to sell and Buyer wishes to purchase substantially all
of the assets of DFC, all upon the terms and subject to the conditions set forth
below.
NOW, THEREFORE, for the mutual covenants and other consideration described
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
-----------
I.1 Definitions. As used herein, the following terms have the meanings
-----------
set forth below:
"Accounts Receivable": all notes and accounts receivable of Seller
-------------------
attributable to the Business through the date immediately preceding the Closing
Date.
"Accounts Payable": the payables of Seller to trade accounts and other
----------------
creditors.
"Affiliate": with respect to any Person, any other Person directly or
---------
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
"Agreement": this Asset Purchase Agreement, as amended from time to time
---------
as provided herein, and all exhibits, schedules and ancillary documents hereto,
except where the context clearly indicates otherwise.
"Assets": as defined in Section 2.1.
------
"Assigned Contracts": as defined in Section 2.3.
------------------
<PAGE>
"Assumed Obligations": as defined in Section 2.3.
-------------------
"Books and Records": all books, records, books of account, files and data
-----------------
(including customer and supplier lists), catalogs, brochures, sales literature,
promotional material, certificates and other documents used in or associated
with the conduct of the Business or the ownership of the Assets, including
personnel records and files (to the extent Seller's personnel are hired by
Buyer), except that the Books and Records shall not include any books, records,
files and other data of Seller which relate exclusively to (i) organizational or
governance proceedings of Seller, (ii) the Excluded Assets, or (iii) excluded
obligations or liabilities in Section 2.4 below.
"Business": the paging operations, including (a) the lease and sale of
--------
paging equipment, (b) sale and servicing of mobile equipment and (c) voice mail
services, currently conducted by Seller with its sole office in Moore, Oklahoma.
"Business Day": any day excluding Saturday, Sunday and any day on which
------------
banks in Houston, Texas are authorized or required by law or other governmental
action to close.
"Buyer": as defined in the preamble of this Agreement.
-----
"Buyer Indemnitees": as defined in Section 12.2.
-----------------
"Buyer's Agreements": the Lease Agreement, the Noncompetition Agreement and
------------------
the Note.
"Cash Payment": as defined in Section 3.1(a).
------------
"Claim": as defined in Section 12.3.
-----
"Closing": as defined in Section 10.1.
-------
"Closing Date": as defined in Section 10.1.
------------
"Code": the Internal Revenue Code of 1986, as amended from time to time,
----
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commission": the Federal Communications Commission.
----------
"Contract": any written or oral contract, agreement or instrument relating
--------
to the Business to which Seller is a party or is otherwise bound, including,
without limitation, supply contracts,
-2-
<PAGE>
customer agreements, any mortgages, deeds of trust, notes or guarantees,
pledges, liens, or conditional sales agreements to which Seller is a party or by
which any of its assets may be bound, but excluding Leases and Employee Benefit
Plans.
"Damages": as defined in Section 12.1.
-------
"DFC": as defined in the preamble to this Agreement.
---
"Earnest Money": the $5,000 paid by Buyer to Seller pursuant to the terms
-------------
of the Letter of Intent dated January 16, 1996, between Buyer and Seller.
"Employee Benefit Plans": any employee benefit plans, policies, programs
----------------------
and arrangements and all related contracts, agreements and other descriptions
thereof with respect to the employee benefits provided to the employees of the
Business prior to the Closing Date.
"Encumbrances": liens, security interests, options, rights of first
------------
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, encroachments, licenses, Leases, Permits, security
agreements, or any other encumbrances and other restrictions or limitations on
the use or ownership of real or personal property or irregularities in title
thereto.
"Environmental Claim": any and all administrative, regulatory, judicial or
-------------------
other actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, penalties, cleanup, removal, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) any and all Environmental Claims by any third party seeking damages,
enforcement, penalties, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
-----------------
regulation, ordinance, code, policy or rule of common law now in effect and in
each case as amended and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to Hazardous Materials, the environment or health relating to or
arising from environmental conditions, including without limitation the
Occupational Safety and Health Act, as amended, 29 U.S.C. (S) 651 et seq; the
-- ---
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials Transportation
-- ---
Act, as amended, 49 U.S.C. (S) 5101 et seq.; the Resource Conservation and
-- ---
Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal Water
-- ---
Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
-- ---
Substances Control Act, 15 U.S.C. (S) 2601
-3-
<PAGE>
et seq.; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking
- -- --- -- ---
Water Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act of 1990, 33
-- ---
U.S.C. (S) 2701 et seq.; and relevant state and local laws.
-- ---
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Excluded Assets": as defined in Section 2.2.
---------------
"Excluded Contracts": as defined in Section 2.2(c).
------------------
"Excluded Liabilities": as defined in Section 2.4.
--------------------
"Fant": as defined in the preamble to this Agreement.
----
"FCC Approvals": as defined in Section 6.4.
-------------
"Finova": Finova Capital Corporation, the senior lender to Buyer.
------
"GAAP": generally accepted accounting principles consistently applied (as
----
such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of the Unaudited Financial Statements.
"Hazardous Materials": (i) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants," "regulated substances" or
words of similar import under any applicable Environmental Law.
"Intellectual Property": domestic and foreign patents, patent
---------------------
applications, registered and unregistered trademarks, service marks, trade names
and logos, registered and unregistered copyrights, computer programs and
software, data bases, trade secrets, methods, designs, processes, procedures,
proprietary information and any other intangible property used in or associated
with the conduct of the Business and the ownership of the Assets, including all
of Seller's rights to any such property which is owned by and licensed from
others and any goodwill associated with any of the foregoing.
"Inventory": all pagers, other merchandise, supplies, stock in trade and
---------
other such assets
-4-
<PAGE>
of Seller held for sale or lease in the ordinary course of the Business or to be
furnished under contracts of service or held as work in process or to be used or
consumed in the Business.
"Lease Agreement": the agreement relating to Buyer's lease from Seller of
---------------
the property at which Seller's office is located to be executed at Closing in
form and substance satisfactory to Buyer and Seller.
"Leases": any and all written and oral contracts, agreements, and
------
commitments regarding the lease of real or personal property to which Seller is
a party or is otherwise bound that relate to or are used in the operation of the
Business, including, but not limited to, leases of towers and transmitter sites.
"Loan Agreement": the Amended and Restated Loan Agreement dated August 3,
--------------
1995, among Buyer, each of Buyer's subsidiaries, and Finova.
"Material Adverse Effect": a material adverse effect on the assets,
-----------------------
liabilities, business, condition (financial or otherwise), results of operations
or prospects of the applicable party.
"Noncompete Payment": as defined in Section 3.1(b).
------------------
"Noncompetition Agreement": the agreement relating to Seller's and certain
------------------------
of its shareholders' noncompetition with Buyer in the form of Exhibit "A"
attached hereto, to be executed at Closing.
"Note": an unsecured promissory note in the form attached hereto as Exhibit
----
"B" issued by Buyer payable to Seller in the principal amount of $200,000, as
adjusted pursuant to Section 3.3, if necessary, due and payable one (1) year
after the Closing Date, bearing interest at a rate of ten percent (10%) per
annum.
"Pending Applications": any applications filed with, but not granted by,
--------------------
the Commission on behalf of Seller prior to the Closing Date.
"Permits": any license, permit, franchise, consent, approval or authority
-------
granted to Seller by any Person and applicable to the Business, including, but
not limited to, all licenses and permits issued by the Commission.
"Permitted Encumbrances": (i) Encumbrances consisting of easements,
----------------------
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by Seller in the operation of
the Business, (ii) Encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent, (iii) Encumbrances
created by Buyer, and (iv) Encumbrances, if any, relating to the Assumed
Obligations.
-5-
<PAGE>
"Person": any individual, partnership, joint venture, corporation, limited
------
liability company, trust, unincorporated organization, government or other
department or agency thereof or other entity.
"Pre-Closing Period": as defined in Section 4.12(a).
------------------
"Price Allocation": as defined in Section 3.2.
----------------
"Purchase Price": as defined in Section 3.1.
--------------
"Releases": as defined in Section 4.18.
--------
"Returns": as defined in Section 4.12(a).
-------
"Rules and Regulations ": as defined in Section 4.10.
---------------------
"Schedules": The schedules of Seller, Buyer or both as appropriate in the
---------
context and as referenced throughout this Agreement.
"Seller": as defined in the preamble of this Agreement.
------
"Seller Indemnitees": as defined in Section 12.1.
------------------
"Seller's Agreements": the Lease Agreement and the Noncompetition
-------------------
Agreement.
"Subordinated Debt Agreement": the Amended and Restated Subordinated Note,
---------------------------
Preferred Stock and Warrant Purchase Agreement dated August 3, 1995, among
Buyer, Continental Illinois Venture Corporation, CIVC Partners I, GM Holdings,
LLC, and certain other purchasers listed on the signature pages thereto.
"Subsequent Permits": any Permits acquired by or granted to Seller after
------------------
the date of this Agreement but prior to the Closing Date.
"Subsequently Constructed Facilities": any facilities licensed by the
-----------------------------------
Commission under Parts 22 or 90 of the Commission's Rules which were constructed
and placed into operation after the date of this Agreement, but prior to the
Closing Date.
"Tax": any net income, alternative or add-on minimum tax, advance,
---
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
-- -------
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty
-6-
<PAGE>
imposed by any governmental authority with respect thereto, and any liability
for such amounts as a result either of being a member of an affiliated group or
of a contractual obligation to indemnify any other entity.
"Unaudited Financial Statement Date": as defined in Section 4.5.
----------------------------------
"Unaudited Financial Statements": as defined in Section 4.5.
------------------------------
I.2 Other Terms. Other terms may be defined elsewhere in the text of this
-----------
Agreement and shall have the meaning indicated throughout this Agreement.
I.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms defined in the neuter or masculine gender shall include
the feminine, neuter and masculine genders, unless the context clearly
indicates otherwise.
(d) Reference to the "best knowledge" of a Person or words of similar
import shall mean the actual or constructive best knowledge of such Person
after reasonable due diligence as to the facts and circumstances addressed.
ARTICLE II
THE TRANSACTION
---------------
II.1 Purchase and Sale of Assets. Subject to the terms and conditions of
---------------------------
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell,
convey, transfer, assign and deliver, and cause to be sold, conveyed,
transferred, assigned and delivered, the Assets, free and clear of all
Encumbrances except Permitted Encumbrances, to Buyer on the Closing Date against
the receipt by Seller of the Purchase Price. The term "Assets" shall mean all
of the rights, title and interests of Seller in and to the assets used in or
relating to the conduct of the Business, tangible and intangible, real, personal
and mixed, other than the Excluded Assets, wherever situated and whether or not
specifically referred to herein or in any instrument of conveyance delivered
pursuant hereto. The Assets shall include, but not be limited to, the following
categories of assets and specifically referenced assets:
-7-
<PAGE>
(a) all machinery, equipment, tools, supplies, furniture,
furnishings, vehicles and other tangible personal property or other fixed
assets owned or leased by Seller and used or held for use in the conduct of
the Business, including, without limitation, the assets listed on Schedule
2.1(a), but excluding any items specifically identified in Section 2.2
below;
(b) all Inventory;
(c) all rights of Seller existing under the Contracts which are
listed on Schedule 2.1(c);
(d) all rights of Seller existing under the Leases which are listed
(by categories) on Schedule 2.1(d) and all easements, rights of way and
other appurtenances thereof;
(e) Seller's current business telephone numbers as listed in the
"White Pages" or the "Yellow Pages" or similar publications;
(f) the name "Oklahoma Radio Systems" and all Intellectual Property
including, but not limited to, that listed on Schedule 2.1(f);
(g) all Permits which are held by Seller and are associated with or
necessary to operate the Assets or conduct the Business as listed on
Schedule 2.1(g) to the extent such Permits are transferable to Buyer,
including all Subsequent Permits and Pending Applications;
(h) all Books and Records;
(i) any rights of Seller pertaining to any counterclaims, set-offs or
defenses Seller may have with respect to any Assumed Obligations;
(j) all prepaid claims, prepaid taxes, prepaid insurance premiums and
other prepaid expense items of Seller;
(k) third-party indemnities, policies of insurance, fidelity, surety
or similar bonds and the coverages afforded thereby relating to the Assets;
(l) the Accounts Receivable;
(m) Seller's current post office boxes for any mail delivered
relating to the Business; and
-8-
<PAGE>
(n) any additional assets from time to time acquired for the Business
by Seller in the ordinary course of business prior to Closing Date, except
for such property as may be used, sold, consumed or disposed of by Seller
in the ordinary course of business prior to the Closing Date and in
compliance with the terms and conditions of this Agreement.
To the extent that any Assets of Seller are intended to be transferred to Buyer
pursuant to the general language of this Agreement but are not listed, the
general language of this Section 2.1 shall be controlling and such Assets
nonetheless shall be transferred to Buyer for all purposes.
II.2 Excluded Assets. The Assets shall not include any of the following
---------------
(the "Excluded Assets"):
(a) all cash on hand, on deposit or in transit and arising out of the
operation of the Business prior to the Closing Date;
(b) the Motorola Service Monitor, model number R2600;
(c) each contract or agreement set forth on Schedule 2.2(b) attached
hereto or which requires the consent to assignment by a Person other than
Seller and which consents are not obtained on or before the Closing Date
(the "Excluded Contracts");
(d) all Employee Benefit Plans;
(e) the personal items and equipment and furnishings unrelated to the
Business and of insubstantial value as listed on Schedule 2.2(d);
(f) causes of action and third-party indemnities, policies of
insurance, fidelity, surety or similar bonds and the coverage afforded
thereby other than those relating to the Assets;
(g) tax refunds related to the Business or the Assets received or
receivable by Seller relating to taxes paid by Seller for all periods prior
to Closing Date; and
(h) minute books and governance documents of Seller.
II.3 Assumption of Obligations. Upon the sale of the Assets by Seller,
-------------------------
Buyer shall assume and agree to pay, perform and discharge, in a timely manner
and in accordance with the terms thereof, from and after the Closing Date only
such of the obligations of Seller in respect of the following (collectively, the
"Assumed Obligations"):
(a) the Permits, Contracts and Leases properly transferred and
assigned to Buyer hereunder in conformity with the provisions of such
Permits, Contracts and Leases
-9-
<PAGE>
(collectively, the "Assigned Contracts");
(b) customer deposits to the extent such deposits were made pursuant
to and remain outstanding under the Assigned Contracts; and
(c) the accrued vacation and sick leave obligations with respect to
any employee of Seller hired by Buyer within thirty (30) days of the
Closing Date to the extent that such accrued vacation and sick leave are
based on the existing policies of Seller and are reflected on Schedule
2.3(c) attached hereto; provided that Buyer shall have no obligation to
hire any employees of Seller or the Business.
The assumption by Buyer of the Assumed Obligations shall not enlarge any rights
or remedies of any third parties under any contracts, agreements, instruments or
arrangements of any kind with Seller. Nothing herein shall prevent Buyer from
contesting in good faith any of the Assumed Obligations.
II.4 Excluded Obligations and Liabilities. It is expressly understood and
------------------------------------
agreed that, except as specifically provided in Section 2.3, Buyer shall not be
obligated to pay, perform or discharge any debt, obligation, cost, expense or
liability of Seller, whether absolute or contingent, known or unknown ("Excluded
Liabilities"), including, but not limited to debts, obligations, costs, expenses
and liabilities:
(a) related to any of the Excluded Assets or to any employees of
Seller, including all severance, retirement, medical and other benefits
payable to employees or former employees of the Business or of Seller or to
their dependents or beneficiaries), except as specifically stated in
Section 2.3(c) above;
(b) for the Accounts Payable (except any Accounts Payable arising
from the Assigned Contracts on or after the Closing Date);
(c) for any Taxes owed by Seller, including without limitation, any
foreign, federal, state or local Tax (i) based on income or revenues of
Seller, or any state franchise tax or sales or use taxes of Seller, (ii)
based on wages earned by employees of Seller (as that term is defined under
Section 3121 of the Code), or (iii) based on the transfer of motor vehicles
by reason of the existence or operations of Seller prior to the Closing
Date;
(d) for any losses, costs, damages, judgments, penalties, expenses,
fines, debts, liabilities and obligations of any nature whatsoever based
upon or arising (i) from any agreement, commitment, undertaking, law, rule,
regulation, order or other obligations, or (ii) out of any claims or
actions against Seller or Buyer, in either case arising out of events,
facts, circumstances or conditions existing on or occurring prior to
-10-
<PAGE>
the Closing Date, whether or not filed or known to Seller prior to the
Closing Date, unless such claims arise from Buyer's failure to perform an
Assumed Obligation;
(e) for any of the liabilities or expenses of Seller incurred in the
negotiation of and carrying out of its obligations under this Agreement;
(f) for liabilities and obligations of Seller to Buyer created by
this Agreement;
(g) for any product liability resulting from any product sold by
Seller prior to the Closing Date or any tort liability of Seller arising
out of the Assets or the Business not expressly assumed by Buyer hereunder;
(h) for any pre-Closing Date breach or violation of any of the
Assigned Contracts unless such breach or violation is specifically
disclosed on Schedule 2.4(h) and assumed by Buyer; or
(i) for any regulatory user fees attributable to the Assets or the
Business for the period prior to the Closing Date and payable to the
Commission.
Seller agrees to satisfy and discharge all the liabilities of Seller relating to
the Business and which are not assumed by Buyer pursuant to the terms of this
Agreement, whether known at the Closing or thereafter determined, and, pursuant
to Section 12.2 below, Seller agrees to indemnify and hold Buyer harmless with
respect thereto.
II.5 Nonassignable Contracts and Leases. If any Permits, Contracts or
----------------------------------
Leases are not by their respective terms assignable, Seller agrees to use its
reasonable best efforts promptly to obtain, or cause to be obtained, prior to
the Closing Date, any written consents necessary to convey to Buyer the benefit
thereof, it being understood that such reasonable best efforts shall not include
any requirement to offer or grant financial accommodations to any third party or
to remain secondarily liable with respect to any such Permits, Contracts or
Leases. Buyer shall cooperate with Seller, in such manner as may be reasonably
requested, in connection therewith, including without limitation, active
participation in visits to and meetings, discussions and negotiations with all
Persons with the authority to grant or withhold consent. To the extent that any
such consents cannot be obtained, Seller and Buyer will use their reasonable
best efforts to take such actions as may be possible without violation or breach
of any such nonassignable Permits, Contracts or Leases to effectively (i) grant
Buyer the economic benefits of, and (ii) impose upon Buyer the economic burdens
of, such Permits, Contracts and Leases.
ARTICLE III
PAYMENT OF PURCHASE PRICE
-------------------------
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<PAGE>
III.1 Amount; Delivery. At the Closing, in addition to Buyer's assumption
----------------
of the Assumed Obligations, Buyer shall pay to Seller the consideration as
follows (the "Purchase Price"), subject to adjustment as provided in Section 3.3
hereof, which Purchase Price shall be remitted by Buyer to Seller in the
following manner:
(a) $1,950,000 in cash (the "Cash Payment") on the Closing Date,
which shall be paid by wire transfer of immediately available funds to an
account of Seller as designated in writing by Seller to Buyer not more than
three (3) Business Days prior to the Closing Date;
(b) $50,000 in cash ("Noncompete Payment") on the Closing Date, which
shall be paid by wire transfer of immediately available funds to an account
of Seller (as designated pursuant to Section 3.1(a) above) for the benefit
of the parties to the Noncompetition Agreement, or as directed by Seller
for the parties to the Noncompetition Agreement, in consideration of the
execution and delivery of the Noncompetition Agreement; and
(c) the issuance of the Note.
III.2 Price Allocation. Seller and Buyer agree to allocate the Purchase
----------------
Price for the Assets in accordance with the residual method described in the
Treasury Regulations promulgated under Section 338(b)(5) of the Code, as amended
(the "Price Allocation"). Seller and Buyer further agree to comply with all
filing, notice and reporting requirements described in Section 1060 of the Code
and the proposed Treasury Regulations promulgated thereunder. Seller and Buyer
mutually agree to use their reasonable best efforts to agree to the Price
Allocation to be detailed (i) on Schedule 3.2 to be completed at Closing, and
(ii) on the Form 8594 jointly completed and separately filed with their
respective income tax returns for the tax year in which the Closing occurs. The
failure to agree on the Price Allocation, however, shall not constitute a
default or breach of this Agreement by either party hereto. The parties further
agree that they will report the federal, state, municipal, foreign and local and
other tax consequences of the purchase and sale hereunder in a manner consistent
with the Price Allocation, and that they will not take any position inconsistent
therewith.
III.3 Purchase Price Adjustments. At the Closing, the Purchase Price
--------------------------
shall be increased or reduced, as applicable, by the aggregate dollar amount of
the following determined as of the Closing Date:
(a) reduced by billed amount of paging services for which Seller has
received payment but for which Buyer shall be required to provide service,
including prepaid customer accounts, in excess of $10,000;
(b) reduced by the amount of Customer deposits;
-12-
<PAGE>
(c) increased by any net increase in pagers in Inventory or in
transit since December 31, 1995, determined by physical count taken by Buyer no
more than three (3) days prior to Closing in a manner consistent with Seller's
historical accounting practices and at which representatives of Seller shall be
entitled to be present and have input; provided, that regardless of the results
of such valuation, the Purchase Price shall not be increased by more than
$70,000;
(d) decreased or increased by the net change in the value of
Seller's capital equipment (taking into effect capital equipment (i) disposed
of, (ii) not in operating condition, or (iii) acquired with the consent of Buyer
pursuant to this Agreement, since the Unaudited Financial Statement Date,
determined by comparing the capital equipment valuation on the Unaudited
Financial Statements with the results of a capital equipment valuation taken by
Buyer no more than three (3) days prior to Closing in a manner consistent with
Seller's historical accounting practices and at which representatives of Seller
shall be entitled to be present and have input; provided, however, that
regardless of the results of such valuation, the Purchase Price shall not be
increased by more than $100,000;
(e) reduced by all distributions, dividends or bonuses of any assets
of Seller, other than cash, to its shareholders after the Unaudited Financial
Statement Date;
(f) reduced by all distributions, dividends or bonuses of any assets
of Seller to its shareholders during the period January 1, 1995, through
December 31, 1995, inconsistent with past practices or not in the ordinary
course of business;
(g) increased by $13,500, the cost of the Seller's new Glenayre
terminal; and
(h) reduced by the Earnest Money.
Adjustments, if any, to the Purchase Price under this Section 3.3 shall be made
first to the Cash Payment and then to the principal amount of the Note.
III.4 Apportionments; Post-Closing Adjustments. At the Closing, the
----------------------------------------
following items shall be apportioned as of 11:59 p.m. on the day preceding the
Closing Date: (a) property taxes, utility charges and other state, county and
municipal taxes and assessments and charges affecting the Assets; (b) rents and
other payments under any of the Assigned Contracts; and (c) such other items as
are customarily apportioned in connection with the sale of similar property, all
such items prior to such time being for the account of Seller and all such items
after such time being the account of Buyer. At the Closing, Seller or Buyer, as
the case may be, shall deliver to the other a check or wire transfer for the net
amount owing under this Section 3.4. If any such items cannot accurately be
apportioned at the Closing or prior thereto, or if it is later determined that
such apportionment at Closing was not accurate, such items shall be apportioned
or reapportioned, as the case may be, as soon as practicable after the Closing
Date or the date on
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<PAGE>
which the apportionment error is discovered, as applicable, but in no event more
than 120 days after the Closing Date.
III.5 Audit. At least 60 days prior to the Closing Date, Buyer shall
-----
receive an audited balance sheet of the Business for the twelve-month period
ending as of December 31, 1995 prepared by Seller's independent auditors and
prepared in accordance with GAAP (the "December Balance Sheet") together with an
income statement for the twelve-month period ended as of December 31, 1995 (the
"Audit Date") relating to the December Balance Sheet (together with the December
Balance Sheet, the "Audited Financial Statements"). In connection with the
December Balance Sheet, Seller shall also deliver to Buyer a determination of
the aggregate earnings before interest, taxes, depreciation and amortization of
Seller ("EBITDA") calculated for the twelve-month period ending on the Audit
Date, which EBITDA calculation shall be appropriately adjusted to reflect non-
operational inventory and to increase EBITDA to take into account and include
(i) manager's salary expense of $50,000, and (ii) certain unrecorded revenue
agreed upon by Buyer and Seller. Buyer and its representatives shall have the
right to review all work papers and procedures used to prepare the Audited
Financial Statements and the EBITDA calculation and shall have the right to
perform any other reasonable procedures necessary to verify the accuracy
thereof. Unless Buyer, within 30 days after delivery to Buyer of the December
Balance Sheet notify Seller in writing that Buyer objects to the December
Balance Sheet or the EBITDA calculation, as applicable, and specifies the basis
for such objection, such December Balance Sheet and the EBITDA calculation shall
become final and binding upon the parties for purposes of this Agreement. If the
EBITDA is less than $350,000, Buyer may terminate this Agreement without any
liability to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
IV.1 Existence and Good Standing. DFC is a corporation duly organized and
---------------------------
validly existing under the laws of the State of Oklahoma. Fant operates a sole
proprietorship. Seller has the power and authority to own, lease and operate
its property and to carry on its business as now being conducted and to own or
lease the assets owned or leased by it. Seller is duly qualified or licensed to
do business in each jurisdiction in which the character or location of the
properties owned or leased by Seller or the nature of the business conducted by
Seller makes such qualification necessary and the absence of which would have a
Material Adverse Effect.
IV.2 Authorization and Validity of Agreement. Seller has full corporate
---------------------------------------
power and authority or legal capacity, as applicable, to execute and deliver
this Agreement and the Seller's Agreements, to perform its obligations hereunder
and thereunder, and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this
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Agreement and the Seller's Agreements by Seller and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by the Board of Directors and shareholders of Seller, as applicable,
and no other corporate governance action on the part of Seller is necessary to
authorize the execution, delivery and performance of this Agreement and the
Seller's Agreements by Seller and the consummation of the transactions
contemplated hereby and thereby. This Agreement and the Seller's Agreements have
been, as applicable as of the date hereof or as of the Closing Date, duly
executed and delivered by Seller and are the valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms,
except to the extent that their respective enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
IV.3 Consents and Approvals; No Violations. The execution, delivery and
-------------------------------------
performance of this Agreement and the Seller's Agreements by Seller and the
consummation by Seller of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time or both: (a)
violate, conflict with, or result in a breach or default under any provision of
the charter or bylaws of Seller; (b) violate any statute, ordinance, rule,
regulation, order, judgment or decree of any court or of any governmental or
regulatory body, agency or authority applicable to Seller or by which any of its
properties or assets may be bound; (c) require any filing by Seller with, or
require Seller to obtain any Permit of, or require Seller to give any notice to,
any governmental or regulatory body, agency or authority other than as set forth
on Schedule 4.3 attached hereto; or (d) other than as set forth on Schedule 4.3
attached hereto, result in a violation or breach by Seller of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Seller (or give rise to any right of termination, cancellation, payment or
acceleration) under or result in the creation of any Encumbrance upon any of the
Assets under any of the terms, conditions, or provisions of any note, bond,
mortgage, indenture, Permit, Contract, Lease or other instrument or obligation
to which Seller is a party, or by which it or any of the Assets may be bound,
except in the case of clauses (b), (c) and (d) of this Section 4.3, for such
violations, consents, breaches, defaults, terminations and accelerations which
in the aggregate would not have a Material Adverse Effect.
IV.4 Receivables. Schedule 4.4 lists all Accounts Receivable of Seller.
-----------
Schedule 4.4 specifically indicates all such Accounts Receivable from any
Affiliate of Seller. Except as reflected on Schedule 4.4, all such Accounts
Receivable are, and all Accounts Receivable at the Closing Date will be, (i)
bona fide claims against debtors for sales, work performed or other charges,
(ii) to the best knowledge of Seller, subject to no defenses, set-offs or
counterclaims and (iii) collectible subject to Seller's normal reserve for bad
debts as reflected in the Unaudited Financial Statements.
IV.5 Financial Statements; No Material Adverse Change. Seller has
------------------------------------------------
heretofore furnished Buyer with the unaudited financial statements of Seller as
of December 31, 1995, in the form of an income statement for the twelve-month
period then ended (the "Unaudited
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Financial Statements"). The Unaudited Financial Statements have been prepared in
accordance with GAAP and fairly present in all material respects the financial
position of Seller at the dates thereof and the results of operations and cash
flow of Seller for the period indicated. Except as set forth on Schedule 4.5
attached hereto or for changes that would not have a Material Adverse Effect,
since December 31, 1995 (the "Unaudited Financial Statement Date") there has
been no change in the Assets or liabilities, or in the business or condition,
financial or otherwise, or in the results of operations of Seller.
IV.6 Warranty Claims. Except as set forth on Schedule 4.6 attached hereto,
---------------
as of the date hereof, there are no warranty claims relating to products at any
time sold or services at any time performed by Seller pending or, to the best
knowledge of Seller, threatened, which would have a Material Adverse Effect.
IV.7 Title to Properties; Encumbrances; Condition. Except as set forth on
--------------------------------------------
Schedule 4.7 or any of the other Schedules hereto and except for properties and
assets reflected in the Unaudited Financial Statements or acquired since the
Unaudited Financial Statement Date which have been sold or otherwise disposed of
in the ordinary course of business, Seller owns outright, and has, and shall at
the Closing have, full legal and beneficial title to all of its Assets, in each
case subject to no Encumbrances except for Permitted Encumbrances. Except as
set forth on Schedule 4.7, each Asset is in good operating condition and repair,
subject to ordinary wear and tear and has been properly maintained in accordance
with the manufacturers' specifications, and each Asset is in compliance with all
applicable federal and state laws and regulations. The Inventory consists of
items of a quality and quantity usable or saleable in the regular course of
business of Seller. As of the date of this Agreement, Seller has no less than
1,000 pagers in Inventory and at least 25,000 pagers in service.
IV.8 Leases. Schedule 4.8 contains an accurate and complete list of all
------
Leases to which Seller is a party (as lessee or lessor) and which are to be
included in the Assets. Each Lease set forth on Schedule 4.8 is, to the best
knowledge of Seller, in full force and effect; there is no existing default
under any of such Leases on the part of Seller or, to the best of Seller's
knowledge, any other party thereto.
IV.9 Contracts and Commitments. Schedule 2.1(c) contains an accurate and
-------------------------
complete list of all Contracts to which Seller is a party and which are to be
included in the Assets. Each Contract set forth on Schedule 2.1(c) is, to the
best knowledge of Seller, in full force and effect; there is no existing default
under any of such Contracts on the part of Seller, or, to the best of Seller's
knowledge, any other party thereto. Except as set forth on Schedule 4.9:
(a) Seller is not a party to or bound by any loan, credit or similar
agreement or any indenture, trust agreement or other instrument relating to
any issue of bonds, debentures, notes or other evidences of indebtedness or
creating any Encumbrance on any of the Assets;
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(b) There are no bonus, pension, profit sharing, retirement, stock
option, stock purchase, deferred compensation, hospitalization or insurance
plans, or vacation or severance pay plans, or any other plans or
arrangements providing benefits to officers, agents or employees of Seller;
(c) Seller does not have nor is Seller currently negotiating any
collective bar gaining agreement with any labor union or association or any
employment contract or other binding agreement relating to the employment
of any of its employees;
(d) Seller is not a party to any joint venture agreement or other
agreement involving the sharing of profits relating to the Business and/or
the Assets;
(e) Seller is not a party to any (i) contracts or commitments for
capital expenditures outside the ordinary course of business or involving
obligations on the part of Seller in amounts inconsistent with those
incurred by Seller in the ordinary course of business in accordance with
Seller's prior operation of the Business, (ii) Lease under which personal
property is leased to or from Seller and which is not cancelable by Seller
without penalty upon notice of thirty days or less or pursuant to which
rentals payable by or to Seller, either individually or in the aggregate,
substantially exceed amounts previously incurred by Seller in the ordinary
course of business, (iii) continuing contract for the future purchase of
Inventory or other materials, supplies, machinery or equipment in excess of
the requirements of the Business conducted in the ordinary course, (iv)
other contract or agreement which involves an obligation on the part of
Seller, either individually or in the aggregate, in excess of amounts
previously incurred by Seller in the ordinary course of business or, (v)
contract not made in the ordinary course of business;
(f) Seller is not party to any Contract limiting the freedom of Seller
or any of its employees to engage in any line of business or to compete
with any Person, and to the knowledge of Seller, no employee of Seller is
subject to any such restrictions;
(g) Seller is not a party to any Contract which involves $5,000 or
more and is not cancelable without penalty within thirty days; and
(h) There are no persons holding powers of attorney from, or otherwise
authorized to act on behalf of Seller with respect to the Business or the
Assets except for its respective officers and other management personnel
regularly performing their business functions.
Except as specifically identified on Schedule 4.9, Seller has no knowledge that
any Contract, Lease, or other obligation to which Seller is a party,
individually or in the aggregate: (i) will result in a material loss to the
Buyer after the Closing Date; (ii) cannot readily be performed or fulfilled on
time without undue or unusual expenditure of money or effort by the Buyer after
the
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Closing Date, or (iii) is not in full force and effect and there exists a
default or event of default or event, occurrence, condition or act which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder, except where
such event would not cause a Material Adverse Effect. A true copy of each
written Contract and Lease as well as all other documents evidencing any
commitment of Seller required to be set forth on any Schedule hereto has been or
will be delivered to Buyer by Seller no later than five days after execution of
this Agreement. Also set forth on Schedule 4.9 is a list of all proposals,
except proposals made by Seller's sales people in the ordinary course of
business, submitted by Seller to any third party that, if accepted by such third
party, would require dis closure on Schedule 4.9.
IV.10 Permits. All Permits required in connection with the use, operation
-------
or ownership of the Assets and the conduct of the Business as currently
conducted are listed on Schedule 4.10. To the best knowledge of Seller, the
Permits issued to Seller by the Commission can be transferred to Buyer or a
subsidiary corporation of Buyer as part of the consummation of the transactions
contemplated by this Agreement. Except as noted in Schedule 2.1(g), all such
Permits are in full force and effect and the facilities associated with such
Permits have been constructed within the time frame provided by the rules and
regulations promulgated by the Commission pursuant to the Communications Act of
1934 (the "Rules and Regulations").
IV.11 Litigation. Except as set forth on Schedule 4.11, there is no
----------
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of Seller,
threatened, against or affecting the properties or rights of Seller, and Seller
does not know of any valid basis for any such action, proceeding or
investigation. There are no such suits, actions, claims, proceedings or
investigations pending or to the best knowledge of Seller, threatened, seeking
to prevent or challenge the transactions contemplated by this Agreement.
Without exception as to materiality or otherwise, Schedule 4.11 lists all
claims, if any, filed with the Commission with respect to Seller and/or the
operation of the Business since January 1, 1993. A decision adverse to Seller
with respect to any of the matters listed on Schedule 4.11, or with respect to
all or any combination thereof, would not result in a Material Adverse Effect
with respect to Seller.
IV.12 Taxes.
-----
(a) All returns and reports for Taxes for all taxable years or
periods that end on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date
the portion of such taxable year or period ending on and including the
Closing Date (the "Pre-Closing Period"), which are required to be filed by
or with respect to Seller (collectively, the "Returns") have been or will
be filed when due in a timely fashion and such Returns as filed are or will
be accurate in all material respects.
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(b) There are no agreements for the extension or waiver of the time
for assessment of any Taxes relating to Seller for any Pre-Closing Period
and Seller has not been requested to enter into any such agreement or
waiver.
(c) All Taxes relating to Seller which Seller is required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and payable.
(d) Seller is not now nor has it ever been a party to any Tax
allocation or sharing agreement that could result in any liability to
Buyer.
(e) The Assets have been operated by Seller as a single business or
as a separate division, branch, or identifiable segment of Seller's entire
business.
IV.13 Insurance. Set forth on Schedule 4.13 is a complete list of
---------
insurance policies that Seller maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and effect
and are free from any right of termination on the part of the insurance
carriers. In the judgment of Seller, such policies, with respect to their
amounts and types of coverage, are adequate to insure against risks to which
Seller and its property and assets are normally exposed in the operation of the
Business, subject to customary deductibles and policy limits.
IV.14 Intellectual Property. Schedule 4.14 sets forth all Intellectual
---------------------
Property owned by Seller. The operation of the Business requires no rights
under the Intellectual Property other than rights under the Intellectual
Property listed on Schedule 4.14 and rights granted to Seller pursuant to
agreements listed on Schedule 4.14. Except as otherwise set forth on Schedule
4.14, Seller owns all right, title and interest in the Intellectual Property.
No litigation is pending or, to the best knowledge of Seller, threatened wherein
Seller is accused of infringing or otherwise violating the intellectual property
rights of another, or of breaching a contract conveying intellectual property
rights.
IV.15 Compliance with Laws. Seller is in compliance with all applicable
--------------------
laws, regula tions, orders, judgments and decrees applicable to the Business,
except where any noncompliance would not have a Material Adverse Effect.
IV.16 Employment Relations. Seller is not engaged in any unfair labor
--------------------
practice and to its knowledge has a good relationship with its employees.
IV.17 Employee Benefit Plans. None of the Employee Benefit Plans are
----------------------
subject to Title IV of ERISA or the minimum funding obligations of Section 412
of the Code, and Seller and any entity required to be aggregated therewith
pursuant to Section 414(b) or (c) of the Code have no liability under Title IV
of ERISA or under Section 412(f) or 412(n) of the Code.
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IV.18 Environmental Laws and Regulations. Except as set forth on Schedule
----------------------------------
4.18,
(a) Seller or its authorized agents or independent contractors
(including suppliers) have not generated on, used on, treated or stored on,
transported to or from or arranged for transportation to or from, the real
property owned or leased by Seller or any property adjoining such real property
any Hazardous Materials,
(b) Hazardous Materials have not been disposed, discharged,
injected, spilled, leaked, leached, dumped, emitted, escaped, emptied, allowed
to seep, placed and the like, into or upon any land or water or air, or
otherwise allowed to enter into the environment (collectively, "Releases") by
Seller, its authorized agents or independent contractors (including suppliers)
on such real property or by Seller or its agents on any other property,
(c) Seller is and has been in compliance with all applicable
Environmental Laws, possesses all Permits required thereunder and is in
compliance with all Permits issued thereunder with respect to such real property
and to Seller's operations conducted thereon,
(d) there are no pending or, to the best knowledge of Seller,
threatened Environmental Claims against Seller with respect to such real
property,
(e) there are no facts or present or past circumstances, conditions
or occur rences on such real property known to Seller that reasonably could be
anticipated (i) to form the basis of an Environmental Claim against Seller or
any owner, operator or lessee of such real property, or (ii) to cause such real
property to be subject to any restrictions on the ownership, occupancy use or
transferability of such real property under any Environmental Law,
(f) there are not now and to the best knowledge of Seller, there
never have been any underground storage tanks located on such real property, and
(g) Seller has not in the ordinary course of business transported,
treated, disposed of or stored Hazardous Materials.
IV.19 Interests in Customers and Suppliers. Except for relationships with
------------------------------------
Affiliates and as set forth on Schedule 4.19 attached hereto, Seller does not
possess, directly or indirectly, any financial interest in, nor is any Person
associated with Seller as a director, officer or employee of, any corporation,
firm, association or business organization which is a supplier, customer,
lessor, lessee, or competitor of Seller.
IV.20 Compensation of Employees. Set forth on Schedule 4.20 is a complete
-------------------------
list of all employees of Seller showing (i) such individuals' total compensation
from Seller for the fiscal year ended on the Unaudited Financial Statement Date
and (ii) compensation and salary rates for
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the current fiscal year. Except as set forth on Schedule 4.20, no employee of
Seller has been promised a bonus or an increase in salary to take effect
subsequent to the date hereof.
IV.21 Suppliers and Customers. Schedule 4.21 sets forth the five largest
-----------------------
suppliers and the ten largest customers of Seller by dollar volume for each of
the fiscal years 1994 and 1995 and as of the date hereof. The relationship of
Seller with each of such suppliers and customers as of the date of this
Agreement is, to the best knowledge of Seller, a good commercial working
relationship, and except as set forth on Schedule 4.21, no significant supplier
or client has canceled or otherwise terminated or, to the best knowledge of
Seller, threatened to cancel or otherwise terminate its relationship with Seller
since December 31, 1994.
IV.22 Absence of Changes. Except as set forth on Schedule 4.22, since the
------------------
Unaudited Financial Statement Date, there has not been any:
(a) sale, assignment, pledge, hypothecation or other transfer of any
of Seller's assets or properties except in the ordinary course of business;
(b) Material Adverse Effect or any condition or contingency that
might reasonably be expected to result in any Material Adverse Effect on
Seller or the Business;
(c) termination of or material amendment to any Contract or Lease
except as reflected by any applicable Schedule;
(d) increase in compensation payable or paid to, or any employment,
bonus or compensation agreement entered into with, any officer, director,
employee, agent or independent contractor of Seller other than in the
ordinary course of business or other than as set forth on Schedule 4.20;
(e) declaration or making, or agreement to declare or make, any
payment of dividends or distributions of any assets of any kind or
purchase, redemption or other acquisition, or agreement to purchase, redeem
or otherwise acquire, directly or indirectly, any of Seller's outstanding
capital stock; or merger, consolidation or agreement to merge or
consolidate with any other entity;
(f) agreement or arrangement creating any preferential rights to
purchase any of Seller's capital stock or Assets or requiring the consent
of any party to the transfer or assignment of any of Seller's capital stock
or Assets;
(g) other than in the ordinary course of business, a change in the
amount of all Accounts Receivable of Seller or other fees or debts due to
Seller or the allowances with respect thereto, or the payables of Seller to
trade accounts and other creditors by Seller, from that reflected in the
Unaudited Financial Statements;
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(h) Contract or transaction entered into or agreed to by Seller
other than in the ordinary course of business; or
(i) agreement by Seller to do any of the things described in the
preceding clauses (a) through (h) except as contemplated in this Agreement.
IV.23 Solvency. Seller is not entering into this Agreement with actual
--------
intent to hinder, delay or defraud creditors. Immediately prior to and
immediately subsequent to the Closing Date:
(a) the present fair salable value of the assets of Seller (on a
going concern basis) will exceed the liability of Seller for its debts
(including its contingent obligations);
(b) Seller has not incurred, nor does it intend to or believe that
it will incur, debts (including contingent obligations) beyond its ability
to pay such debts as such debts mature (taking into account the timing and
amounts of cash to be received from any source, and of amounts to be
payable on or in respect of debts); and the amount of cash available to
Seller after taking into account all other anticipated uses of funds is
antici pated to be sufficient to pay all such amounts on or in respect of
debts, when such amounts are required to be paid; and
(c) Seller will have sufficient capital with which to conduct its
business, and the property of Seller does not constitute unreasonably small
capital with which to conduct its business.
For purposes of this Section 4.23, "debt" means any liability or a (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable secured, or unsecured; or (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such a right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
IV.24 Disclosure. No representation or warranty by Seller contained in
----------
this Agreement, nor any statement or certificate furnished or to be furnished by
Seller to Buyer or its representatives in connection herewith or pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading or necessary in order to provide a
prospective purchaser of the Business with adequate information as to Seller and
its condition (financial and otherwise), properties, assets, liabilities,
business and prospects, and Seller has disclosed to Buyer in writing all
material adverse facts known to Seller relating to the same. The
representations and warranties contained in this Article IV or elsewhere in this
Agreement or any
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document delivered pursuant hereto shall not be affected or deemed waived by
reason of the fact that Buyer and/or its representatives knew or should have
known that any such representation or warranty is or might be inaccurate in any
respect.
IV.25 Government Contracts. Except as set forth on Schedule 4.26, Seller
--------------------
does not:
(a) have any Contracts with any agency of the Government of the
United States involving any information, technology or data which is
classified under Executive Order 12356 of April 2, 1982; or
(b) have any products or services (including research and
development) with respect to which Seller (i) is a supplier, direct or
indirect, to any of the military services of the United States or the
Department of Defense, other than the United States Coast Guard, except the
supply to individuals of such military in their individual capacity, or
(ii) has technology which has or could have military applications.
IV.26 Copies of Documents. Seller has made available for inspection and
-------------------
copying by Buyer and its advisers, true, complete and correct copies of all
documents referred to in this Article IV or in any Schedule attached hereto.
The Books and Records to be delivered at Closing are true, complete and correct.
IV.27 No Subsidiaries. DFC has no subsidiaries.
---------------
IV.28 Broker's or Finder's Fees. No Person acting on behalf of Seller is,
-------------------------
or will be, entitled to any fee, commission or broker's or finder's fees in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
V.1 Existence and Good Standing of Buyer; Power and Authority. Buyer is a
---------------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has full corporate power and authority to make,
execute, deliver and perform this Agreement and the Buyer's Agreements, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and the Buyer's
Agreements have been duly authorized and approved by all required corporate
governance action of Buyer. This Agreement and the Buyer's Agreements have
been, as applicable as of the date hereof or as of the Closing Date, duly
executed and delivered by Buyer and are the valid and binding obligations of
Buyer enforceable against Buyer in accordance with
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their respective terms, except to the extent that their respective
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
V.2 No Violations. Except with respect to the Loan Agreement and the
-------------
Subordinated Debt Agreement, the execution, delivery and performance of this
Agreement and the Buyer's Agreements by Buyer and the consummation by Buyer of
the transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time or both, (a) violate, conflict with, or
result in a breach or default under any provision of the charter or bylaws of
Buyer; (b) violate any statute, ordinance, rule, regulation, order, judgment or
decree of any court or of any governmental or regulatory body, agency or
authority applicable to Buyer or by which any of its properties or assets may be
bound; (c) require any filing by Buyer with, or require Buyer to obtain any
permit, consent or approval of, or require Buyer to give any notice to, any
governmental or regulatory body, agency or authority or any third party other
than the Commission, Finova and certain parties to the Subordinated Debt
Agreement; or (d) result in a violation or breach by Buyer of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Buyer (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of Buyer pursuant to, any of the terms, conditions or
provision of any note, bond, mortgage, indenture, permit, contract, lease or
other instrument or obligation to which Buyer is a party, or by which it or any
of its properties or assets may be bound, except in the case of clauses (b), (c)
and (d) of this Section 5.2, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a Material
Adverse Effect.
V.3 Broker's or Finder's Fees. No Person acting on behalf of Buyer is, or
-------------------------
will be, entitled to any fee, commission or broker's or finder's fee in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Seller under this Agreement to sell, or cause to be
sold, the Assets and to consummate the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Seller) on or prior to the
Closing Date of all of the following conditions:
VI.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
and Buyer shall have delivered to Seller on the Closing Date a certificate of an
authorized officer of Buyer, dated the Closing Date, to such effect.
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VI.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Buyer to be performed on or before the Closing Date pursuant to the
terms hereof, including all deliveries and obligations at Closing, shall have
been duly performed in all material respects, and Buyer shall have delivered to
Seller a certificate of an authorized officer of Buyer, dated the Closing Date,
to such effect and evidencing the incumbency of all officers executing any
documents in connection with the Closing.
VI.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Buyer
shall have delivered to Seller a certificate of an authorized officer of Buyer,
dated the Closing Date, to such effect to the best knowledge of such officer.
VI.4 Governmental Approvals. With respect to Seller's common carrier
----------------------
licenses from the Commission, all governmental consents and approvals necessary
to permit the consummation of the transactions contemplated by this Agreement
shall have been received, including, but not limited to, all necessary approvals
of the Commission ("FCC Approvals") and the FCC Approvals shall be final and
nonappealable. With respect to Seller's private radio licenses from the
Commission, the parties have authority to close the transactions contemplated by
this Agreement pursuant to conditional temporary authority under the Rules and
Regulations.
VI.5 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Seller and its
counsel, and Seller shall have received copies of all such documents and other
evidence as its or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer under this Agreement to purchase the Assets and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by Buyer) on or prior to the Closing Date of all of the
following conditions:
VII.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Seller contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, and
Seller shall have delivered to Buyer on the Closing Date a certificate of an
authorized representative of Seller, dated the Closing Date, to such effect.
VII.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of
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Seller to be performed on or before the Closing Date pursuant to the terms
hereof, including all deliveries and obligations at Closing, shall have been
duly performed in all material respects, and Seller shall have delivered to
Buyer a certificate of an authorized representative of Seller, dated the Closing
Date, to such effect and evidencing the incumbency of all officers executing any
documents in connection with the Closing.
VII.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Seller
shall have delivered to Buyer a certificate of an authorized representative of
Seller, dated the Closing Date, to such effect to the best knowledge of such
officer.
VII.4 Schedules, Due Diligence and Audit. Buyer shall have received the
----------------------------------
Schedules to be attached hereto and shall have concluded a due diligence review
of Seller, both satisfactory to Buyer in its sole discretion. The audit
pursuant to Section 3.5 shall have been completed and the final determination of
EBITDA pursuant to Section 3.5 shall have been made, which determination shall
be $350,000 or more.
VII.5 Governmental Approvals. With respect to Seller's common carrier
----------------------
licenses from the Commission, all governmental consents and approvals necessary
to permit the consummation of the transactions contemplated by this Agreement
shall have been received, including, but not limited to, the FCC Approvals and
the FCC Approvals shall be final and nonappealable. With respect to Seller's
private radio licenses from the Commission, the parties have authority to close
the transactions contemplated by this Agreement pursuant to conditional
temporary authority under the Rules and Regulations.
VII.6 Consents. Each of the consents referred to on Schedule 4.3 attached
--------
hereto shall have been obtained. Buyer shall have received the consents
required under the Loan Agreement and the Subordinated Debt Agreement.
VII.7 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its
counsel, and Buyer shall have received copies of all such documents and other
evidence as it or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VIII
COVENANTS OF SELLER
-------------------
Seller hereby covenants and agrees with Buyer as follows:
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<PAGE>
VIII.1 Cooperation by Seller. Seller shall use its reasonable best
---------------------
efforts to cooperate with Buyer to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Seller to effect the transactions contemplated hereby, and
Seller shall otherwise use its reasonable best efforts to cause the consummation
of such transactions in accordance with the terms and conditions hereof and to
cause all conditions contained in this Agreement over which it has control to be
satisfied. Seller further agrees to deliver to Buyer prompt written notice of
any event or condition known to or discovered by Seller, which if it existed on
the date of this Agreement or on the Closing Date, would result in any of the
representations and warranties of Seller contained herein being untrue in any
material respect.
VIII.2 Notice of Breaches. Seller shall deliver to Buyer prompt written
------------------
notice of any event or condition actually known to or discovered by Seller,
which, if it existed on the date of this Agreement or on the Closing Date, would
result in any of the representations and warranties of Seller contained herein
being untrue in any material respect. Upon the discovery and subsequent notice
of such an event or condition, Buyer and Seller shall be entitled to the rights
and remedies set forth in Section 11.2.
VIII.3 Conduct of Business. Except as Buyer may otherwise consent to in
-------------------
writing, between the date hereof and the Closing Date, Seller shall, (a) conduct
the Business only in the ordinary course, (b) use its reasonable efforts to keep
available the services of its employees and maintain its current relationships
with licensors, suppliers, lessors, distributors, customers, clients and others,
(c) maintain, consistent with past practice and good business judgment, all of
the Assets in customary repair, order and condition, ordinary wear and tear
excepted, and insurance upon all of the Assets used in the conduct of the
Business in such amounts and of such kinds comparable to that in effect on the
date hereof, to the extent available at current premiums, and (d) maintain the
Books and Records in the usual, regular and ordinary manner, on a basis
consistent with past practice.
VIII.4 Negative Covenants of Seller. From and after the date hereof and
----------------------------
through the Closing Date and except with the specific prior written consent of
Buyer, Seller covenants and agrees as follows:
(a) Seller shall not sell, transfer or dispose of any of the Assets
other than in the ordinary course of business; provided, however, that any
sale, transfer or disposition of any Assets in the ordinary course of
business shall not exceed Assets valued at more than $5,000 in the
aggregate;
(b) Seller shall not grant an Encumbrance (except a Permitted
Encumbrance) on any of the Assets or allow any such Encumbrance (except a
Permitted Encumbrance) to occur or to be created;
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(c) Except in the ordinary course of business, Seller shall not
acquire any tangible properties or assets relating to the Business;
(d) Seller shall not enter into any employment and/or any independent
contractor agreements relating to services to be rendered in connection
with the Business or any of the Assets except in the ordinary course of
business;
(e) Except in the ordinary course of business, Seller shall not amend,
modify or terminate, without the prior written consent of Buyer, any of the
Contracts, Leases or other agreements, if any, to be assumed by Buyer
hereunder;
(f) Seller shall not incur any indebtedness for which any of the
Assets are, or may be, subject to any Encumbrance or claim, either express
or implied; and
(g) Seller shall not enter into any undertaking to furnish services
for any con sideration other than money with respect to the operation of
the Assets other than trades of paging services for advertising in the
normal course of business and consistent with historic levels.
VIII.5 Exclusive Dealing. During the period from the date of this
-----------------
Agreement to the earlier of the Closing Date or the termination of this
Agreement, Seller shall not take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person other than Buyer, concerning any sale of the
Assets or any material part thereof or a similar transaction involving Seller.
VIII.6 Review of the Assets. Seller agrees that Buyer may, prior to the
--------------------
Closing Date, through its representatives, review (a) the Assets, (b) the
complete working papers of Seller's certified public accountants used in their
preparation of financial statements for Seller and (c) the Books and Records of
Seller and otherwise review the financial and legal condition of Seller as Buyer
deems necessary or advisable to familiarize itself with the Business and related
matters; such review shall not, however, affect the representations and
warranties made by Seller hereunder or the remedies of Buyer for breaches of
those representations and warranties. Buyer may also, prior to the Closing
Date, through its representatives, inspect any or all of Seller's towers and
other transmitting facilities. Such review and inspection shall occur only
during normal business hours upon reasonable notice by Buyer. Seller shall
permit Buyer and its representatives to have, after the execution of this
Agreement, full access to employees of Seller who can furnish Buyer with
financial and operating data and other information with respect to the Business
as Buyer shall from time to time reasonably request.
VIII.7 Governmental Filings. It is expressly acknowledged and agreed
--------------------
that, as soon as practicable after the execution of this Agreement, but in no
event more than fifteen (15) days
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from the date hereof, Buyer and Seller shall file any forms required by the
Commission to transfer the Assets. Seller agrees that it will cooperate with
Buyer in all respects in connection with such filings and in connection with any
requests for information or further filings which may be necessary in order to
obtain the necessary consents (or to allow the applicable time periods to
expire) with respect thereto. Seller shall deliver to Buyer and its counsel
drafts of such filings by Seller and all other materials to be submitted
sufficiently in advance of any such submission so that Buyer and its counsel may
review and comment upon such filings and other materials. It is further agreed
that (a) as soon as reasonably practicable, but in no event more than fifteen
(15) days after the Closing Date, Buyer and Seller shall file any forms required
by the Commission to transfer the Subsequent Permits and the Subsequently
Constructed Facilities; provided that notwithstanding the provisions of Section
10.1, Buyer and Seller shall undertake the Closing prior to the grant of the FCC
Approvals of the assignment of the Subsequent Permits, and (b) as soon as
reasonably practicable, but in no event more than fifteen (15) days after the
Closing Date, Buyer and Seller shall amend any Pending Applications to replace
Seller with Buyer as the proposed licensee.
VIII.8 Use of Name. Seller hereby agrees that, after the Closing Date,
-----------
Seller shall (i) discontinue all use of the name "Oklahoma Radio Systems" or any
other trade or assumed names used by Seller in the Business prior to the Closing
Date alone or in any combination of words for any and all goods and services in
connection with any telecommunications business done by Seller after the Closing
Date; and (ii) discontinue all use of the name "Oklahoma Radio Systems" in any
generally dispersed advertising or public solicitation of Seller or any
advertising or solicitation which otherwise might reasonably be expected to
reach any material number of Buyer's customers or potential customers.
VIII.9 Schedules. Buyer and Seller acknowledge that the Schedules hereto
---------
have not been delivered upon the execution of this Agreement. Seller therefore
covenants to deliver such Schedules as soon as reasonably practical after the
date hereof.
VIII.10 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Seller shall, at the reasonable request of Buyer and at Buyer's
expense, execute and deliver any further instruments or documents and take all
such further action as Buyer may reasonably request in order to consummate and
make effective the sale of the Assets and the assumption of the Assumed
Obligations pursuant to this Agreement.
ARTICLE IX
COVENANTS OF BUYER
------------------
Buyer hereby covenants and agrees with Seller as follows:
IX.1 Cooperation by Buyer. Buyer will use its reasonable best efforts, and
--------------------
will
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<PAGE>
cooperate with Seller, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Buyer to effect the transactions contemplated on its part
hereby, and Buyer will otherwise use its reasonable best efforts to cause and
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied.
IX.2 Books and Records; Personnel. At all times after the Closing Date,
----------------------------
Buyer shall allow Seller and any agents of Seller, upon reasonable advance
notice to Buyer, access to all Books and Records of Seller which are transferred
to Buyer in connection herewith, to the extent necessary or desirable in
anticipation of, or preparation for, existing or future litigation, employment
matters, tax returns or audits, or reports to or filings with governmental
agencies, during normal working hours at the location where such Books and
Records are maintained, and Seller shall have the right, at Seller's sole cost,
to make copies of any such Books and Records. Buyer agrees to maintain all
Books and Records acquired from Seller for a period of six years from the
Closing Date unless such Books and Records are transferred and delivered to
Seller within such six year period.
IX.3 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Buyer shall, at the request of Seller and at Seller's expense,
execute and deliver any further instruments or documents and take all such
further action as Seller may reasonably request in order to consummate and make
effective the sale of the Assets and the assumption of the Assumed Obligations
pursuant to this Agreement.
IX.4 Governmental Filings. It is expressly acknowledged and agreed that,
--------------------
as soon as practicable after the execution of this Agreement, but in no event
more than fifteen (15) days from the date hereof, Buyer and Seller shall file
any forms required by the Commission to authorize the transfer of the Assets.
Buyer agrees that it will cooperate with Seller in all respects in connection
with such filings and in connection with any requests for information or further
filings which may be necessary in order to obtain the necessary consents (or to
allow the applicable time periods to expire) with respect thereto. Buyer shall
deliver to Seller and its counsel drafts of such filings by Buyer and all other
materials to be submitted sufficiently in advance of any such submission so that
Seller and its counsel may review and comment upon such filings and other
materials.
ARTICLE X
THE CLOSING
-----------
X.1 Time and Place. The closing of the transactions contemplated by this
--------------
Agreement (the "Closing") will take place at 9:00 a.m. at the offices of
Bracewell & Patterson, L.L.P. located at 711 Louisiana, Suite 2900, Houston,
Texas 77002, on or before August 1, 1996, or at such other time, at such other
place or on such other date as the parties hereto may mutually
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<PAGE>
agree. The date on which the Closing occurs is herein referred to as the
"Closing Date," and the transactions contemplated by this Agreement shall be
deemed to be effective as of 12:01 a.m. on the Closing Date.
X.2 Seller's Obligations. At the Closing, Seller shall deliver to Buyer,
--------------------
against delivery of the items specified in Section 10.3:
(a) a bill of sale, assumption and other instruments of transfer,
assignment and conveyance in form and substance reasonably satisfactory to
Buyer sufficient to transfer to and effectively vest in Buyer all right,
title and interest in the Assets together with posses sion of the Assets
free and clear of all Encumbrances except Permitted Encumbrances;
(b) the allocation of the Purchase Price on Schedule 3.2 agreed to by
Buyer;
(c) a check or wire transfer to an account of Buyer in the amount of
any apportionment due Buyer pursuant to Section 3.4;
(d) the Seller's Agreements executed by a duly authorized officer of
DFC, by Fant and by DFC's shareholders, as applicable;
(e) certified copies of the Articles of Incorporation, Bylaws and Good
Standing and Existence Certificates of Seller;
(f) all Books and Records which are to be furnished to Buyer
hereunder, including all Contracts and Leases of Seller;
(g) the certifications required by Section 7.1, 7.2 and 7.3 which may
be contained in one certificate;
(h) the consents to assignment of the Contracts and Leases as required
by Section 7.6;
(i) evidence of final and nonappealable FCC Approvals and with respect
to Seller's private carrier licenses, evidence of authority to close the
transactions contemplated by this Agreement pursuant to conditional
temporary authority under the Rules and Regulations; and
(j) such other instruments, documents and certificates in form and
substance reasonably satisfactory to Buyer, as Buyer shall have reasonably
required.
X.3 Buyer's Obligations. At the Closing, Buyer shall deliver to Seller,
-------------------
against
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<PAGE>
delivery of the items specified in Section 10.2:
(a) a wire transfer for the total of the Cash Payment and Noncompete
Payment, as adjusted pursuant to Section 3.3, if necessary, plus the amount
of any apportionment due Seller pursuant to Section 3.4;
(b) the Buyer's Agreements executed by a duly authorized officer of
Buyer;
(c) the allocation of Purchase Price on Schedule 3.2 agreed to by
Seller;
(d) evidence of final and nonappealable FCC Approvals and with respect
to Seller's private carrier licenses, evidence of authority to close the
transactions contemplated by this Agreement pursuant to conditional
temporary authority under the Rules and Regulations; and
(e) the certifications required by Sections 6.1, 6.2 and 6.3 which may
be contained in one certificate.
X.4 Possession. Simultaneously with the consummation of the transfer
----------
contemplated herein, Seller, through its officers, agents and employees shall
put Buyer in full possession and enjoyment of all Assets to be conveyed and
transferred by this Agreement.
ARTICLE XI
TERMINATION
-----------
XI.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time on or prior to the Closing
Date:
(a) by the mutual written consent of Buyer and Seller;
(b) by either party on or after August 1, 1996, if the Closing has not
occurred by such date, provided that as of such date neither party is in
default or that both parties are in default under this Agreement;
(c) by Buyer or Seller in writing, without prejudice to other rights
and remedies which the terminating party may have (provided the terminating
party is not otherwise in material default or breach of this Agreement, or
has failed or refused to close without justification hereunder), if the
other party shall (i) materially fail or have failed to perform its
covenants or agreements contained herein required to be performed on or
prior to the Closing Date, or (ii) materially breach or have breached any
of its representations or warranties contained herein; or
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(d) by Buyer if the final determination of EBITDA pursuant to Section
3.5 is $350,000 or less.
XI.2 Remedies Upon Default or Failure to Close.
-----------------------------------------
(a) If Buyer shall default in the performance of its obligations under
this Agreement and shall for this reason be unable to consummate this
Agreement on the Closing Date in accordance with the terms hereof, and
provided that Seller is not then in material default of any of its
obligations hereunder, Seller shall be entitled as its sole remedy to
terminate this Agreement by written notice to Buyer and to retain the
Earnest Money as liquidated damages; provided, however, that Buyer shall
have a period of ten (10) days following written notice from Seller to cure
any breach of this Agreement, if such breach is curable. Buyer and Seller
hereby agree in the case of this clause (a) of Section 11.2 that (i)
Seller's damages for Buyer's default are difficult or impossible to
determine, (ii) Buyer's payment of the Earnest Money is deemed a reasonable
estimate of Seller's potential damages, (iii) such payment is not a penalty
or forfeiture, and (iv) upon Seller's retention of the Earnest Money, Buyer
shall have no further liability to Seller.
(b) If Seller shall materially default in the performance of its
obligations under this Agreement, including, but not limited to, the
failure of any condition to Closing in Article VII or the failure to make
any required delivery under Section 10.2, and shall for that reason be
unable to consummate this Agreement on the Closing Date in accordance with
the terms hereof, and if Buyer is not then in material default of any of
its obligations hereunder, Buyer may either (i) waive any such defaults by
Seller and require Seller through specific performance (which Seller
acknowledges to be an appropriate remedy) to consummate the sale in
accordance with the terms of this Agreement, or (ii) terminate this
Agreement and have the Earnest Money returned from Seller. The
availability of specific performance shall be in addition to any other
remedies or claims for damages Buyer may have at law or in equity for
breaches or defaults by Seller of Seller's obligations hereunder or for
Buyer's remedies pursuant to Article XII hereof.
XI.3 Effect on Obligations. Termination of this Agreement pursuant to this
---------------------
Article shall terminate all obligations of the parties hereunder, except for (i)
Sections 11.2, 13.1, 13.2, 13.9 and 13.10 and Buyer's remedies under Article XII
hereof, and (ii) the obligations set forth in the next succeeding sentence of
this Section 11.3. Upon any termination of this Agreement each party hereto
will redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, and all copies of such
materials, whether so obtained before or after the execution hereof, to the
party furnishing the same.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
----------------------------
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<PAGE>
XII.1 Indemnification of Seller. Buyer shall indemnify and hold Seller
-------------------------
and its Affiliates (the "Seller Indemnitees") harmless from and against any and
all damages, including exemplary damages and penalties, losses, deficiencies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
Seller Indemnitees as a result of, caused by, arising out of, or in any way
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to Seller by Buyer pursuant to the terms
of this Agreement, or (b) any liability or obligation (other than those for
which Buyer is being indemnified by Seller hereunder) which pertains to the
ownership, operation or conduct of the Business or Assets arising from any acts,
omissions, events, conditions or circumstances occurring on or after the Closing
Date, including, but not limited to, Buyer's failure to perform any of the
Assumed Obligations.
XII.2 Indemnification of Buyer.
------------------------
Seller shall indemnify and hold Buyer and its Affiliates (the "Buyer
Indemnitees") harmless from and against any and all Damages suffered by Buyer
Indemnitees as a result of, caused by, arising out of, or in any way relating to
(a) any misrepresentation, breach of warranty, nonfulfillment of any agreement
or covenant on the part of Seller under this Agreement, or any misrepresentation
in or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Buyer by Seller pursuant to the terms of this
Agreement, (b) any liability or obligation (other than those for which Seller is
being indemnified by Buyer hereunder and other than the Assumed Obligations)
which pertains to the ownership, operation or conduct of the Business or Assets
arising from any acts, omissions, events, conditions or circumstances occurring
before the Closing Date and (c) the Excluded Liabilities. Buyer Indemnitees
shall not be entitled to seek indemnification from Seller until and unless the
aggregate of all claims for indemnification is equal to or greater than $10,000
at which time Seller's indemnification liability shall be for such entire
amount.
XII.3 Demands. Each indemnified party hereunder agrees that promptly upon
-------
its discovery of facts giving rise to a claim for indemnity under the provisions
of this Agreement, including receipt by it of notice of any demand, assertion,
claim, action or proceeding, judicial or otherwise, by any third party (such
third party actions being collectively referred to herein as the "Claim"), with
respect to any matter as to which it claims to be entitled to indemnity under
the provisions of this Agreement, it will give prompt notice thereof in writing
to the indemnifying party, together with a statement of such information
respecting any of the foregoing as it shall have. Such notice shall include a
formal demand for indemnification under this Agreement. The indemnifying party
shall not be obligated to indemnify the indemnified party with respect to any
Claim if the indemnified party knowingly failed to notify the indemnifying party
thereof in
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accordance with the provisions of this Agreement in sufficient time to permit
the indemnifying party or its counsel to defend against such matter and to make
a timely response thereto including, without limitation, any responsive motion
or answer to a complaint, petition, notice or other legal, equitable or
administrative process relating to the Claim, only insofar as such knowing
failure to notify the indemnifying party has actually resulted in prejudice or
damage to the indemnifying party.
XII.4 Right to Contest and Defend. The indemnifying party shall be
---------------------------
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention to contest shall be delivered by the indemnifying party to the
indemnified party within twenty (20) days from the date of receipt by the
indemnifying party of notice by the indemnified party of the assertion of the
Claim. Any such contest may be conducted in the name and on behalf of the
indemnifying party or the indemnified party as may be appropriate. Such contest
shall be conducted by reputable counsel employed by the indemnifying party, but
the indemnified party shall have the right but not the obligation to participate
in such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party, having used its reasonable best efforts in resolution. At
any time after the commencement of the defense of any Claim, the indemnifying
party may request the indemnified party to agree in writing to the abandonment
of such contest or to the payment or compromise by the indemnified party of the
asserted Claim, whereupon such action shall be taken unless the indemnified
party determines that the contest should be continued, and so notifies the
indemnifying party in writing within fifteen (15) days of such request from the
indemnifying party. If the indemnified party determines that the contest should
be continued, the indemnifying party shall be liable hereunder only to the
extent of the amount that the other party to the contested Claim had agreed
unconditionally to accept in payment or compromise as of the time the
indemnifying party made its request therefor to the indemnified party.
XII.5 Cooperation. If requested by the indemnifying party, the
-----------
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
Claim, or any cross-complaint against any person, and the indemnifying party
will reimburse the indemnified party for any expenses incurred by it in so
cooperating. If the indemnifying party has not chosen to contest a Claim, the
indemnifying party shall cooperate with the indemnified party and its counsel in
contesting any Claim at no cost or expense to the indemnified party.
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<PAGE>
XII.6 Right to Participate. The indemnified party agrees to afford the
--------------------
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons.
XII.7 Payment of Damages. The indemnifying party shall pay to the
------------------
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement subject to offset for any insurance proceeds actually received by the
indemnified party, such payment to be made within five days after any such
amounts are finally determined either by mutual agreement of the parties hereto
or pursuant to the final unappealable judgment of a court of competent
jurisdiction. The availability of insurance proceeds shall not delay or
postpone any indemnification payment required hereunder. If the indemnified
party both collects any such insurance proceeds and receives a payment from the
indemnifying party hereunder, and the sum of such proceeds and payment is in
excess of the amount payable with respect to the matter that is the subject of
the indemnity, then the indemnified party shall promptly refund to the
indemnifying party the amount of such excess, if permitted by the applicable
insurance policy(ies). Except as otherwise provided in the preceding sentence,
the indemnified party's receipt of any such insurance proceeds shall not
eliminate or reduce the obligations of the indemnifying party or the rights of
the indemnified party hereunder.
XII.8 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in Articles IV and V of this Agreement shall survive until
the fifth anniversary date of the Closing Date except for the representations
and warranties in Sections 4.2, 4.7, 4.11, 4.12, 4.14, 4.15 and 5.1 which shall
survive forever.
XII.9 General. THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED FOR
-------
IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED
TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE
LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES
IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED
PARTY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS
--------------
CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND
- ---------------------------------------------------------------------
OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS
- ------------------------------------------------------------------------
AGREEMENT.
- ---------
ARTICLE XIII
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<PAGE>
MISCELLANEOUS
-------------
XIII.1 Notices. Any notice, request, instruction, correspondence or other
-------
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to Seller prior to Closing , addressed to:
Dave Fant Company
(d/b/a Oklahoma Radio Systems)
2616 N. Moore Avenue
Moore, Oklahoma 73160
Attention: Mr. David W. Fant
Telecopy: (405) 799-3099
If to Seller after Closing, addressed to:
Mr. David W. Fant
113 SW 141
Oklahoma City, Oklahoma 73170
If to Buyer, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
with a copy prior to Closing to:
Mr. Thomas D. Manford III
Bracewell & Patterson, L.L.P.
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Telecopy: (713) 221-1212
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of
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the recipient's next Business Day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
XIII.2 Governing Law. The provisions of this Agreement shall be governed
-------------
by and construed and enforced in accordance with the laws of the State of
Oklahoma (excluding any conflicts-of-law rule or principle that might refer same
to the laws of another jurisdiction).
XIII.3 Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
(including the exhibits and schedules hereto) constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and supersede
all prior agreements, understandings, negotiations and discussions, whether oral
or written, of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth specifically herein or contemplated hereby. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
XIII.4 Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by Seller without the prior written consent of Buyer. The parties
specifically consent to the following future assignments: (i) after or at the
Closing, as collateral for the financing of the transaction contemplated by this
Agreement, Buyer may assign this Agreement and Buyer's rights hereunder and
under other documents entered into in connection herewith to financial
institutions or their affiliates providing any such financing or any refinancing
thereof, and provided that, upon foreclosure or sale in lieu of foreclosure or
deed in lieu of foreclosure or deed of any of the assets of Buyer to its
Affiliates of Buyer's rights hereunder or under other documents entered into in
connection herewith or a substantial portion thereof by or to any such financial
institutions or their Affiliates, the representations, warranties, obligations,
covenants, agreements and indemnities of Seller herein and in such other
documents will inure to the benefit of such financial institutions (or their
Affiliates) or any such purchaser or grantee; (ii) Seller may assign its rights
and obligations to its shareholders pursuant to a dissolution of Seller as long
as such assignment shall include the assumption by Seller's shareholders,
severally and not jointly based on each shareholder's pro rata share, of
Seller's obligations hereunder; and (iii) at the election of Buyer and in
connection with the FCC Approvals to be obtained as a condition of Closing, all
Permits of Seller issued by the Commission and subject to assignment and/or
transfer from Seller to Buyer pursuant to the
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Agreement may be transferred and assigned to either Buyer or Teletouch Licenses,
Inc., a Delaware corporation and wholly owned subsidiary of Buyer. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder. If any portion of
the Purchase Price (or any assets acquired directly or indirectly with all or
any portion of the Purchase Price) is distributed to Seller's shareholders at
any time after the Closing Date, as a condition to any such distribution or
dividend, Seller agrees to cause its shareholders to agree to be bound by the
indemnification obligations of Seller set forth in Article XII hereof, severally
and not jointly, to the extent and based on the percentage of the Purchase Price
distributed to each shareholder. Seller covenants that should additional persons
or entities become holders of Seller's capital stock prior to any payment of
dividends including the Purchase Price or distribution of assets pursuant to a
dissolution of Seller, Seller shall obtain the written agreement of such new
holder of capital stock to the terms and provisions of this Section 13.4 and
promptly forward a copy thereof to Buyer. Except for the foregoing, nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
XIII.5 Severability. If any provision of the Agreement is rendered or
------------
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Buyer and Seller
shall promptly meet and negotiate substitute provisions for those rendered or
declared illegal or unenforceable so as to preserve as nearly as possible the
contemplated economic effects of the transactions, but all of the remaining
provisions of this Agreement shall remain in full force and effect.
XIII.6 Headings. The headings of the sections herein are inserted for
--------
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
XIII.7 Execution. This Agreement may be executed in multiple counterparts
---------
each of which shall be deemed an original and all of which shall constitute one
instrument.
XIII.8 Sales and Transfer Taxes. Seller shall be responsible for and pay
------------------------
any applicable sales, stamp, transfer, documentary, use, registration, filing
and other taxes and fees (including any penalties and interest) that may become
due or payable in connection with this Agreement and the transactions
contemplated hereby.
XIII.9 Expenses. Except as otherwise provided in this Agreement, Seller
--------
and Buyer shall each pay all costs and expenses incurred by them or on their
behalf in connection with this Agreement and the transactions contemplated
hereby, provided, however, that Buyer and Seller shall share equally all filing
fees payable to the Commission.
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XIII.10 Publicity. Except as otherwise required by applicable laws or
---------
regulations, Seller or Buyer shall not issue any press release or make any other
public statement, in each case relating to or connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other party hereto to the contents and the manner of
presentation and publication thereof.
XIII.11 Bulk Sales. Buyer and Seller agree to waive the provisions of
----------
any applicable bulk sales or bulk transfer laws. For a period of one year from
the Closing Date, Seller agrees to indemnify and hold Buyer harmless with
respect to any claims asserted against Buyer or damages incurred by Buyer as a
result of such waiver.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
BUYER:
TELETOUCH COMMUNICATIONS, INC.
By:_______________________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SELLER:
__________________________________________________
David W. Fant
DAVE FANT COMPANY
(d/b/a Oklahoma Radio Systems)
By:_______________________________________________
David W. Fant
President
Seller's shareholder has executed this Agreement below for the purpose of
acknowledging and affirming his obligations under Section 13.4 of this Agreement
and his agreement to be bound thereby as the indirect beneficiary of the
consideration paid for the Assets by Buyer.
__________________________________________________
David W. Fant
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EXHIBIT 2.16
STOCK PURCHASE AGREEMENT
by and among
TELETOUCH COMMUNICATIONS, INC.
as Buyer
and
the Shareholders of
AACS COMMUNICATIONS, INC.
as Sellers
April 4, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS
1.1 Definitions....................................................... 1
1.2 Other Terms....................................................... 6
1.3 Other Definitional Provisions..................................... 6
ARTICLE II THE TRANSACTION
2.1 Purchase and Sale of Stock........................................ 7
2.2 Earnest Money..................................................... 7
ARTICLE III PAYMENT OF PURCHASE
PRICE
3.1 Amount; Delivery.................................................. 7
3.2 Purchase Price Adjustments........................................ 8
3.3 Holdback.......................................................... 9
3.4 Apportionments; Post-Closing Adjustments.......................... 9
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF SELLERS
4.1 Existence and Good Standing....................................... 10
4.2 Capitalization of AACS............................................ 10
4.3 Authorization and Validity of Agreement........................... 10
4.4 Consents and Approvals; No Violations............................. 11
4.5 Receivables and Payables.......................................... 11
4.6 Financial Statements; No Material Adverse Change.................. 11
4.7 Warranty Claims................................................... 12
4.8 Title to Properties; Encumbrances; Condition...................... 12
4.9 Leases............................................................ 12
4.10 Contracts and Commitments......................................... 12
4.11 Permits........................................................... 14
4.12 Litigation........................................................ 14
4.13 Taxes............................................................. 14
4.14 Insurance......................................................... 15
4.15 Intellectual Property............................................. 15
4.16 Compliance with Laws.............................................. 15
4.17 Employment Relations.............................................. 15
</TABLE>
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<TABLE>
<S> <C>
4.18 Employee Benefit Plans............................................ 15
4.19 Environmental Laws and Regulations................................ 16
4.20 Interests in Customers and Suppliers.............................. 16
4.21 Compensation of Employees......................................... 16
4.22 Suppliers and Customers........................................... 17
4.23 Absence of Changes................................................ 17
4.24 Solvency.......................................................... 18
4.25 Disclosure........................................................ 18
4.26 Government Contracts.............................................. 18
4.27 Copies of Documents............................................... 18
4.28 No Subsidiaries................................................... 18
4.29 Books and Records................................................. 19
4.30 Broker's or Finder's Fees......................................... 19
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF BUYER
5.1 Existence and Good Standing of Buyer; Power and Authority......... 19
5.2 No Violations..................................................... 19
5.3 Securities Representations........................................ 20
5.4 Broker's or Finder's Fees......................................... 20
ARTICLE VI CONDITIONS TO SELLER'S
OBLIGATIONS
6.1 Truth of Representations and Warranties........................... 21
6.2 Performance of Agreements......................................... 21
6.3 No Litigation Threatened.......................................... 21
6.4 Governmental Approvals............................................ 21
6.5 Proceedings....................................................... 21
ARTICLE VII CONDITIONS TO BUYER'S
OBLIGATIONS
7.1 Truth of Representations and Warranties........................... 22
7.2 Performance of Agreements......................................... 22
7.3 No Litigation Threatened.......................................... 22
7.4 Due Diligence..................................................... 22
7.5 Governmental Approvals............................................ 22
7.6 Consents.......................................................... 22
7.7 Legal Opinions.................................................... 22
</TABLE>
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<TABLE>
<S> <C>
7.8 EBITDA............................................................ 23
7.9 Proceedings....................................................... 23
ARTICLE VIII COVENANTS OF SELLER
8.1 Cooperation by Seller............................................. 23
8.2 Notice of Breaches................................................ 23
8.3 Conduct of Business............................................... 23
8.4 Negative Covenants of Seller...................................... 24
8.5 Exclusive Dealing................................................. 25
8.6 Review of the Assets.............................................. 25
8.7 Further Assurances................................................ 25
8.8 Delivery of Schedules............................................. 25
ARTICLE IX COVENANTS OF BUYER
9.1 Cooperation by Buyer.............................................. 25
9.2 Books and Records; Personnel...................................... 26
9.3 Further Assurances................................................ 26
ARTICLE X COMMISSION APPROVAL
10.1 Commission Licenses............................................... 26
10.2 Commission Filings................................................ 26
10.3 Common Carrier Licenses........................................... 26
10.4 Private Radio Licenses............................................ 27
10.5 Assurance of Compliance........................................... 27
ARTICLE XI THE CLOSING
11.1 Time and Place.................................................... 27
11.2 Sellers' Obligations.............................................. 27
11.3 Buyer's Obligations............................................... 28
ARTICLE XII TERMINATION
12.1 Termination....................................................... 29
12.2 Remedies Upon Default or Failure to Close......................... 29
12.3 Effect on Obligations............................................. 30
ARTICLE XIII SURVIVAL AND
INDEMNIFICATION
</TABLE>
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<TABLE>
<S> <C>
13.1 Indemnification of Seller......................................... 31
13.2 Indemnification of Buyer.......................................... 31
13.3 Demands........................................................... 32
13.4 Right to Contest and Defend....................................... 32
13.5 Cooperation....................................................... 33
13.6 Right to Participate.............................................. 33
13.7 Payment of Damages................................................ 33
13.8 Survival of Representations and Warranties........................ 33
ARTICLE XIV MISCELLANEOUS
14.1 Notices........................................................... 34
14.2 Governing Law..................................................... 35
14.3 Entire Agreement; Amendments and Waivers.......................... 35
14.4 Binding Effect and Assignment..................................... 36
14.5 Severability...................................................... 36
14.6 Headings.......................................................... 36
14.7 Execution......................................................... 36
14.8 Sales and Transfer Taxes.......................................... 36
14.9 Expenses.......................................................... 36
14.10 Publicity......................................................... 37
</TABLE>
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SCHEDULES
- ---------
Schedule 4.2 Shareholder Impediments
Schedule 4.4 Seller Consents
Schedule 4.5 Receivables and Payables
Schedule 4.6 Material Adverse Change
Schedule 4.7 Warranty Claims
Schedule 4.8 Title to Properties; Encumbrances; Condition
Schedule 4.9 Leases
Schedule 4.10 Contracts and Commitments
Schedule 4.11 Permits
Schedule 4.12 Litigation
Schedule 4.14 Insurance Policies
Schedule 4.15 Intellectual Property
Schedule 4.19 Environmental Laws and Regulations
Schedule 4.20 Certain Relationships of Seller
Schedule 4.21 List of Employees of Seller
Schedule 4.22 Suppliers and Customers
Schedule 4.24 Absence of Changes
Schedule 4.28 Government Contracts
EXHIBITS
- --------
Exhibit A Employment Agreement
Exhibit B Escrow Agreement
Exhibit C Noncompetition Agreement
Exhibit D-1 Opinion of Seller's Counsel
Exhibit D-2 Opinion of Seller's FCC Counsel
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<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") dated as of April 4, 1996,
is by and among Teletouch Communications, Inc., a Delaware corporation
("Buyer"), and Lanty H. Wylie, Jr., Raymond C. Trott and the Estate of James
Robert Bell (individually, a "Seller" and collectively, the "Sellers"),
collectively constituting all of the shareholders of AACS Communications, Inc.,
a Texas corporation ("AACS").
W I T N E S S E T H:
WHEREAS, the Sellers wish to sell and Buyer wishes to purchase all of the
issued and outstanding capital stock of Seller (the "Stock"), all upon the terms
and subject to the conditions set forth below.
NOW, THEREFORE, for the mutual covenants and other consideration described
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE I
DEFINITIONS
-----------
I.1 Definitions. As used herein, the following terms have the meanings
-----------
set forth below:
"Accounts Receivable": all notes and accounts receivable of Seller
-------------------
attributable to the Business through the date immediately preceding the Closing
Date.
"Affiliate": with respect to any Person, any other Person directly or
---------
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.
"Agreement": this Stock Purchase Agreement, as amended from time to time
---------
as provided herein, and all exhibits, schedules and ancillary documents hereto,
except where the context clearly indicates otherwise.
"Audit Date": as defined in Section 3.2(a).
----------
"Books and Records": all books, records, books of account, files and data
-----------------
(including
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customer and supplier lists), catalogs, brochures, sales literature, promotional
material, certificates and other documents used in or associated with the
conduct of the Business or the ownership of the assets, including personnel
records and files (to the extent Seller's personnel are hired by Buyer), minute
books, transfer ledgers and stock certificates.
"Business": the paging operations, including (a) the lease and sale of
--------
paging equipment, (b) sale and servicing of mobile equipment and (c) any other
services provided by AACS relating to the paging industry as currently conducted
by AACS which has its principal offices at 702A East Abram Street, Arlington,
Texas 76010.
"Business Day": any day excluding Saturday, Sunday and any day on which
------------
banks in Houston, Texas are authorized or required by law or other governmental
action to close.
"Buyer": as defined in the preamble of this Agreement.
-----
"Buyer Indemnitees": as defined in Section 13.2.
-----------------
"Buyer's Agreements": the Employment Agreement, the Escrow Agreement and
------------------
the Noncompetition Agreementss.
"Cash Payment": as defined in Section 3.1(a).
------------
"Claim": as defined in Section 13.3.
-----
"Closing": as defined in Section 11.1.
-------
"Closing Date": as defined in Section 11.1.
------------
"Code": the Internal Revenue Code of 1986, as amended from time to time,
----
and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commission": the Federal Communications Commission.
----------
"Confidentiality Agreement": as defined in Section 12.3.
-------------------------
"Contract": any written or oral contract, agreement or instrument relating
--------
to the Business to which AACS is a party or is otherwise bound, including,
without limitation, supply contracts, customer agreements, any mortgages, deeds
of trust, notes or guarantees, pledges, liens, or conditional sales agreements
to which AACS is a party or by which any of its assets may be
-2-
<PAGE>
bound, but excluding Leases and Employee Benefit Plans.
"Damages": as defined in Section 13.1.
-------
"December Balance Sheet": as defined in Section 3.2(a).
----------------------
"Earnest Money": as defined in Section 2.2.
-------------
"Employee Benefit Plans": any employee benefit plans, policies, programs
----------------------
and arrangements and all related contracts, agreements and other descriptions
thereof with respect to the employee benefits provided to the employees of the
Business prior to the Closing Date.
"Employment Agreement": the agreement between AACS and Lanty H. Wylie, Jr.
--------------------
relating to his employment in the form of Exhibit "A" attached hereto, to be
executed at Closing.
"Encumbrances": liens, security interests, options, rights of first
------------
refusal, easements, mortgages, charges, debentures, indentures, deeds of trust,
rights-of-way, restrictions, encroachments, licenses, Leases, Permits, security
agreements, or any other encumbrances and other restrictions or limitations on
the use or ownership of real or personal property or irregularities in title
thereto.
"Environmental Claim": any and all administrative, regulatory, judicial or
-------------------
other actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violations, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Environmental Law
(cumulatively and for purposes of this definition, "Environmental Claims"),
including without limitation (i) any and all Environmental Claims by
governmental authorities for enforcement, penalties, cleanup, removal, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) any and all Environmental Claims by any third party seeking damages,
enforcement, penalties, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law": any federal, state or local statute, law, rule,
-----------------
regulation, ordinance, code, policy or rule of common law now in effect and in
each case as amended and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to Hazardous Materials, the environment or health relating to or
arising from environmental conditions, including without limitation the
Occupational Safety and Health Act, as amended, 29 U.S.C. (S) 651 et seq; the
-- ---
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials Transportation
-- ---
Act, as amended, 49 U.S.C. (S) 5101 et seq.; the Resource Conservation and
-- ---
Recovery Act, as amended, 42 U.S.C. (S) 6901 et seq.; the Federal Water
-- ---
Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic
-- ---
Substances Control Act, 15 U.S.C. (S) 2601
-3-
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et seq.; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking Water
- -- --- -- ---
Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. (S)
-- ---
2701 et seq.; and relevant state and local laws.
-- ---
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date
of this Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.
"Escrow Agreement": the agreement among Buyer, Sellers and Bishop, Payne,
----------------
Williams & Werley, L.L.P., as escrow agent, in the form of Exhibit "B" attached
hereto pursuant to which Buyer shall make the deposit of the Earnest Money in
escrow subject to the disbursement terms of this Agreement.
"FCC Approvals": as defined in Section 6.4.
-------------
"Finova": Finova Capital Corporation, the senior lender to Buyer.
------
"GAAP": generally accepted accounting principles consistently applied (as
----
such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of the Unaudited Financial Statements.
"Hazardous Materials": (i) any petroleum or petroleum products,
-------------------
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants," "regulated substances" or
words of similar import under any applicable Environmental Law.
"Intellectual Property": domestic and foreign patents, patent
---------------------
applications, registered and unregistered trademarks, service marks, trade names
and logos, registered and unregistered copyrights, computer programs and
software, data bases, trade secrets, methods, designs, processes, procedures,
proprietary information and any other intangible property used in or associated
with the conduct of the Business and the ownership of the assets, including all
of Seller's rights to any such property which is owned by and licensed from
others and any goodwill associated with any of the above.
"Inventory": all pagers, other merchandise, supplies, stock in trade and
---------
other such assets of Seller held for sale or lease in the ordinary course of the
Business or to be furnished under
-4-
<PAGE>
contracts of service or held as work in process or to be used or consumed in the
Business.
"Leases": any and all written and oral contracts, agreements, and
------
commitments regarding the lease of real or personal property to which AACS is a
party or is otherwise bound that relate to or are used in the operation of the
Business, including, but not limited to, leases of towers and transmitter sites.
"Loan Agreement": as defined in Section 5.2.
--------------
"Material Adverse Effect": a material adverse effect on the assets,
-----------------------
liabilities, business, condition (financial or otherwise), results of operations
or prospects of the applicable party.
"Noncompete Payment": as defined in Section 3.1(b).
------------------
"Noncompetition Agreements": the agreements between Buyer and each of the
-------------------------
Sellers relating to each Sellers noncompetition with Buyer and AACS in the form
of Exhibit "C" attached hereto, to be executed at Closing.
"Pager Lease Agreements": Leases of pagers with individual customers
----------------------
entered into in the ordinary course of business.
"Permits": any license, permit, franchise, consent, approval or authority
-------
granted to AACS by any Person, including, but not limited to, all licenses and
permits issued by the Commission.
"Permitted Encumbrances": (i) Encumbrances consisting of easements,
----------------------
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto that do not materially detract from the value
of, or materially impair the use of, such property by Seller in the operation of
the Business, (ii) Encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due and delinquent and (iii) Encumbrances
created by Buyer.
"Person": any individual, partnership, joint venture, corporation, trust,
------
unincorporated organization, government or other department or agency thereof or
other entity.
"Pre-Closing Period": as defined in Section 4.13(a).
------------------
"Purchase Price": as defined in Section 3.1.
--------------
"Releases": as defined in Section 4.19.
--------
"Returns": as defined in Section 4.13(a).
-------
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"Rules and Regulations": as defined in Section 4.11.
---------------------
"Schedules": The schedules of Seller, Buyer or both as appropriate in the
---------
context and as referenced throughout this Agreement.
"Seller": as defined in the preamble of this Agreement.
------
"Sellers Indemnitees": as defined in Section 13.1.
-------------------
"Sellers' Agreements": the Employment Agreement, the Escrow Agreement and
-------------------
the Noncompetition Agreement.
"Stock": as defined in the introduction to this Agreement.
-----
"Subordinated Debt Agreement": as defined in Section 5.2.
---------------------------
"Tax": any net income, alternative or add-on minimum tax, advance,
---
corporation, gross income, gross receipts, sales, use, ad valorem, franchise,
-- -------
profits, license, value added, withholding, payroll, employment, excise, stamp
or occupation tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty imposed by any
governmental authority with respect thereto, and any liability for such amounts
as a result either of being a member of an affiliated group or of a contractual
obligation to indemnify any other entity.
"Unaudited Balance Sheet": as defined in Section 4.6.
-----------------------
"Unaudited Financial Statements": as defined in Section 4.6.
------------------------------
I.2 Other Terms. Other terms may be defined elsewhere in the text of
-----------
this Agreement and shall have the meaning indicated throughout this Agreement.
I.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein" and "hereunder," and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
-6-
<PAGE>
(c) The terms defined in the neuter or masculine gender shall
include the feminine, neuter and masculine genders, unless the context
clearly indicates otherwise.
(d) Reference to the "best knowledge" of a Person or words of
similar import shall mean the actual or constructive best knowledge of such
Person after reasonable due diligence as to the facts and circumstances
addressed.
ARTICLE II
THE TRANSACTION
---------------
II.1 Purchase and Sale of Stock. Subject to the terms and conditions of
--------------------------
this Agreement, Buyer agrees to purchase from Sellers, and Sellers agree to
sell, convey, transfer, assign and deliver, and cause to be sold, conveyed,
transferred, assigned and delivered, the Stock to Buyer on the Closing Date
against the receipt by Sellers of the Purchase Price.
II.2 Earnest Money. Upon the execution of this Agreement, and to further
-------------
evidence Buyer's good faith intention to proceed with the acquisition of the
Stock as contemplated by the parties and as set forth in this Agreement, each of
the Sellers and an authorized officer of Buyer has executed and delivered the
Escrow Agreement and Buyer has delivered the sum of $150,000 to Sellers as an
earnest money deposit ("Earnest Money") in accordance with the terms of the
Escrow Agreement. Retention of the Earnest Money by Sellers or the return of
the Earnest Money to Buyer, as the case may be, are provided for below and are
subject to the terms of the Escrow Agreement.
ARTICLE III
PAYMENT OF PURCHASE PRICE
-------------------------
III.1 Amount; Delivery. The purchase price ("Purchase Price") for the
----------------
Stock, the Noncompetition Agreements and all other rights and obligations
contemplated hereunder shall be One Million Nine Hundred Thousand Dollars
($1,900,000), as adjusted pursuant to Section 3.2 hereof. At the Closing,
ninety percent (90%) of the Purchase Price, as adjusted, shall be remitted by
Buyer to Seller in the following manner:
(a) $1,800,000 in cash (the "Cash Payment") as adjusted pursuant to
Section 3.2 below, less ten percent (10%) of the Purchase Price as provided
in Section 3.3 below, shall be paid to the Sellers one-third each by wire
transfer of immediately available funds to the respective accounts of the
Sellers as designated in writing by Sellers to Buyer not more than three
(3) Business Days prior to the Closing Date; and
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<PAGE>
(b) $100,000 in cash ("Noncompete Payment") on the Closing Date,
which shall be paid to the Sellers as follows in proportion to their
respective ownership of Stock by wire transfer of immediately available
funds to respective accounts of the Sellers as designated pursuant to
Section 3.1(a) above:
<TABLE>
<S> <C>
Lanty H. Wylie, Jr. $33,333.34
Raymond C. Trott $33,333.33
James Robert Bell $33,333.33
</TABLE>
III.2 Purchase Price Adjustments. At the Closing, the Purchase Price
--------------------------
shall be reduced for the aggregate dollar amount of the following determined as
of the Closing Date:
(a) At least 31 days prior to the Closing Date, Sellers shall
deliver to Buyer an audited balance sheet of the Business for the twelve-month
period ending as of December 31, 1995 prepared by AACS' independent auditors and
prepared in accordance with GAAP (the "December Balance Sheet") together with an
income statement for the twelve-month period ended as of December 31, 1995 (the
"Audit Date") relating to the December Balance Sheet (together with the Balance
Sheet, the "Audited Financial Statements"). In connection with the December
Balance Sheet, Sellers shall also deliver to Buyer a determination of the
aggregate earnings before interest, taxes, depreciation and amortization of AACS
("EBITDA") calculated for the twelve-month period ending on the Audit Date,
which EBITDA calculation shall be appropriately adjusted to increase EBITDA to
take into effect the extraordinary legal expenses of AACS for the twelve-month
period ending as of the Audit Date. Buyer and its representatives shall have the
right to review all work papers and procedures used to prepare the Audited
Financial Statements and the EBITDA calculation and shall have the right to
perform any other reasonable procedures necessary to verify the accuracy
thereof. Unless Buyer, within 30 days after delivery to Buyer of the December
Balance Sheet notifies Sellers in writing that Buyer objects to the December
Balance Sheet or the EBITDA calculation, as applicable, and specifies the basis
for such objection, such December Balance Sheet and the EBITDA calculation shall
become final and binding upon the parties for purposes of this Agreement. If
Buyer and Sellers are unable to resolve such objections within 20 days after any
such notification has been given, the dispute shall be submitted to Coopers &
Lybrand, L.L.P. (or, if Coopers & Lybrand, L.L.P. is unavailable, to another
nationally recognized public accounting firm (other than Ernst & Young, L.L.P.)
mutually agreed upon by Buyer and Sellers; provided, however, that if Buyer and
Sellers cannot agree on an accounting firm, the dispute shall be submitted to an
accounting firm designated by Ernst & Young, L.L.P.). Such accounting firm shall
make a final and binding determination as to the matter or matters in dispute
within 20 days of its engagement. Buyer and Sellers agree to cooperate with each
other and with each other's authorized representatives in order to resolve any
and all matters in dispute as soon as practicable. The party or parties whose
determination of EBITDA is farthest
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<PAGE>
from that determined by the accounting firm retained under this Section 3.2(a)
to resolve any dispute regarding such determination, shall bear all of the costs
and expenses of such accounting firm, which costs and expenses shall be paid
within 30 days of presentation of an invoice for such services. To the extent
that the final determination of EBITDA is less than $292,000. the Purchase Price
shall be reduced by the amount of such difference multiplied by six (6).
(b) Fees and expenses paid or incurred by AACS on behalf of the
Sellers in connection with the negotiation and consummation of the Agreement;
provided, however, that AACS may pay such fees and expenses on behalf of the
Sellers without a reduction of the Purchase Price if AACS has at least $30,000
in cash immediately after the Closing.
(c) The Earnest Money delivered pursuant to the Escrow Agreement.
(d) The amount of outstanding indebtedness of AACS for borrowed
funds.
(e) (i) The amount of any dividends or distributions to the Sellers
made after the Audit Date, (ii) the amount of any bonuses or increases in
salaries paid after the Audit Date to any officer, director or employee of AACS
or any person related to any such officer, director or employees; and (iii) any
dividends, distributions, salaries or bonuses made or paid during the period
November 1, 1995 through the Audit Date, out of the ordinary course of business
or inconsistent with past practices of AACS; provided, however, that no
reduction to the Purchase Price shall be made for any cash distributions by AACS
to the Sellers if AACS has at least $30,000 in cash immediately after the
Closing.
III.3 Holdback. The Purchase Price to be paid at Closing shall be reduced
--------
by ten percent (10%) of the total Purchase Price after making the adjustments
specified in Section 3.2 above, and the amount of such reduction (the
"Holdback") shall be held by Buyer for a period of one year from the Closing
Date to be applied to post-Closing Purchase Price adjustments (as set forth in
Section 3.4 below) and as an offset against any indemnification amounts due
Buyer by the Sellers after the Closing pursuant to Article XII hereof. On the
first anniversary date of the Closing Date, Buyer shall wire transfer the amount
of the Holdback, less any amounts retained by Buyer as payment for claims of
Buyer made prior to such date under Article XII, in immediately available funds
to the respective accounts designated by Sellers in the same proportions as set
forth in Section 3.1.
III.4 Apportionments; Post-Closing Adjustments. At the Closing, the
----------------------------------------
following items shall be apportioned as of 11:59 p.m. on the day preceding the
Closing Date: (a) property taxes, utility charges and other state, county and
municipal taxes and assessments and charges affecting the Business that have
accrued but are not due and payable until after the Closing; and (b) such other
items as are customarily apportioned in connection with the sale of similar
property, all such items prior to such time being for the account of Sellers and
all such items after such time
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<PAGE>
being the account of Buyer. At the Closing, Sellers or Buyer, as the case may
be, shall deliver to the other a check or wire transfer for the net amount owing
under this Section 3.4. If any such items cannot accurately be apportioned at
the Closing or prior thereto, or if it is later determined that such
apportionment at Closing was not accurate, such items shall be apportioned or
reapportioned, as the case may be, as soon as practicable after the Closing Date
or the date on which the apportionment error is discovered, as applicable, but
in no event more than 120 days after the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby represent and warrant, jointly and severally, to Buyer as
follows:
IV.1 Existence and Good Standing. AACS is a corporation duly organized
---------------------------
and validly existing under the laws of the State of Texas. AACS has the power
and authority to own, lease and operate its property and to carry on its
business as now being conducted and to own or lease the assets owned or leased
by it. AACS is duly qualified or licensed to do business in each jurisdiction in
which the character or location of the properties owned or leased by AACS or the
nature of the business conducted by AACS makes such qualification necessary and
the absence of which would have a Material Adverse Effect.
IV.2 Capitalization of AACS.
----------------------
(a) The entire authorized capital stock of AACS consists of
1,000,000 shares of common stock, $1.00 par value per share, of which
42,000 shares are issued and outstanding, fully paid and nonassessable. The
Stock is owned beneficially and of record by the Sellers as set forth on
Schedule 4.2, free and clear of all Encumbrances and rights of others
including preemptive rights.
(b) The Stock represents all of the issued and outstanding capital
stock of AACS. There are no outstanding subscriptions, options,
convertible securities, warrants, calls or rights of any kind including
preemptive rights (issued, contracted for or granted by, or binding upon,
AACS) to purchase or otherwise acquire any security of or equity interest
in AACS. Except as set forth in Schedule 4.2, the Sellers have full legal
right to sell, assign and transfer the Stock to Buyer and will, upon
delivery of the Stock to Buyer pursuant to the terms hereof, transfer to
Buyer good and valid title to the Stock free and clear of all Encumbrances,
rights, options to purchase, voting trusts or other voting agreements and
calls and commitments of every kind affecting the Stock.
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<PAGE>
(c) There are no outstanding registration rights relating to the
Stock. The Stock was issued in compliance with exemptions from the
registration requirements of federal and state securities laws, as
applicable.
IV.3 Authorization and Validity of Agreement. Each of the Sellers has
---------------------------------------
full legal capacity to execute and deliver this Agreement and the Sellers'
Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement, and
the Sellers' Agreements have been, as applicable as of the date hereof or as of
the Closing Date, duly executed and delivered by Sellers, as applicable, and are
valid and binding obligations of Sellers enforceable against Sellers in
accordance with their respective terms, except to the extent that enforceability
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
IV.4 Consents and Approvals; No Violations. The execution, delivery and
-------------------------------------
performance of this Agreement and the Sellers' Agreements by Sellers and the
consummation by Sellers of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time or both: (a)
violate, conflict with, or result in a breach or default under any provision of
the charter or bylaws of AACS; (b) violate any statute, ordinance, rule,
regulation, order, judgment or decree of any court or of any governmental or
regulatory body, agency or authority applicable to AACS or Sellers or by which
any of their respective properties or assets may be bound; (c) require any
filing by AACS or Sellers with, or require AACS or Sellers to obtain any Permit
of, or require AACS or Sellers to give any notice to, any governmental or
regulatory body, agency or authority other than as set forth on Schedule 4.4
attached hereto; or (d) other than as set forth on Schedule 4.4 attached hereto,
result in a violation or breach by AACS or Sellers of, conflict with, constitute
(with or without due notice or lapse of time or both) a default by AACS or
Sellers (or give rise to any right of termination, cancellation, payment or
acceleration) under or result in the creation of any Encumbrance upon any of the
assets or properties of AACS under any of the terms, conditions, or provisions
of any note, bond, mortgage, indenture, Permit, Contract, Lease or other
instrument or obligation to which AACS or any Seller is a party, or by which
AACS, any Seller or any of the assets or properties of AACS may be bound, except
in the case of clauses (b), (c) and (d) of this Section 4.4, for such
violations, consents, breaches, defaults, terminations and accelerations which
in the aggregate would not have a Material Adverse Effect on AACS.
IV.5 Receivables and Payables. Schedule 4.5 lists all Accounts
------------------------
Receivable of AACS. Schedule 4.5 specifically indicates all such Accounts
Receivable from any Affiliate of AACS. Except as reflected on Schedule 4.5, all
such Accounts Receivable are, and all Accounts Receivable at the Closing Date
will be, (a) bona fide claims against debtors for sales, work performed or other
charges, (b) to the best knowledge of Sellers, subject to no defenses, set-offs
or counterclaims and (c) collectible subject to AACS' normal reserve for bad
debts as reflected in
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<PAGE>
the Financial Statements. Except as set forth on Schedule 4.5 or for trade
accounts payable to become due and payable within 30 days, all accounts payable
of AACS have been paid.
IV.6 Financial Statements; No Material Adverse Change. Sellers have
------------------------------------------------
heretofore furnished Buyer with the unaudited financial statements of AACS as of
December 31, 1995, in the form of a balance sheet (the "Unaudited Balance
Sheet"), and an income statement for the twelve-month period then ended relating
to the Unaudited Balance Sheet (together with the Unaudited Balance Sheet, the
"Unaudited Financial Statements"). The Unaudited Financial Statements have been
prepared in accordance with GAAP and fairly present in all material respects the
financial position of AACS at the dates thereof and the results of operations
and cash flow of AACS for the period indicated. Except as set forth on Schedule
4.6 attached hereto or for changes that would not have a Material Adverse
Effect, since the Audit Date there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in the
results of operations of AACS.
IV.7 Warranty Claims. Except as set forth on Schedule 4.7 attached
---------------
hereto, as of the date hereof, there are no warranty claims relating to products
at any time sold or services at any time performed by AACS pending or, to the
best knowledge of AACS, threatened, which would have a Material Adverse Effect.
IV.8 Title to Properties; Encumbrances; Condition. Except as set forth
--------------------------------------------
on Schedule 4.8 or any of the other Schedules hereto and except for properties
and assets reflected in the Unaudited Financial Statements or acquired since the
Audit Date which have been sold or otherwise disposed of in the ordinary course
of business, AACS owns outright, and has, and shall at the Closing have, full
legal and beneficial title to all of its assets and properties, in each case
subject to no Encumbrances except for Permitted Encumbrances. Except as set
forth on Schedule 4.8, each asset is in good operating condition and repair,
subject to ordinary wear and tear, and has been maintained in accordance with
the manufacturers' specifications, and each asset is in compliance with all
applicable federal and state laws and regulations. The Inventory consists of
items of a quality and quantity usable or saleable in the regular course of
business of AACS. As of the date of this Agreement, AACS is indirectly servicing
a minimum of 19,626 pagers through approximately 150 contracts for leases of
airtime on its system.
IV.9 Leases. Schedule 4.9 contains an accurate and complete list of all
------
Leases to which AACS is a party (as lessee or lessor). Each Lease set forth on
Schedule 4.9 is, to the best knowledge of AACS, in full force and effect; there
is no existing default under any of such Leases on the part of AACS or, to the
best of AACS's knowledge, any other party thereto.
IV.10 Contracts and Commitments. Schedule 4.10 contains an accurate and
-------------------------
complete list of all Contracts to which AACS is a party, excluding Pager Lease
Agreements. Each Contract set forth on Schedule 4.10 is, to the best knowledge
of AACS, in full force and effect;
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<PAGE>
there is no existing default under any of such Contracts on the part of AACS or,
to the best of Sellers' knowledge, any other party thereto. Except as set forth
on Schedule 4.10:
(a) AACS is not a party to or bound by any loan, credit or similar
agreement or any indenture, trust agreement or other instrument relating to
any issue of bonds, debentures, notes or other evidences of indebtedness or
creating any Encumbrance on any of AACS's assets or properties;
(b) There are no bonus, pension, profit sharing, retirement, stock
option, stock purchase, deferred compensation, hospitalization or insurance
plans, or vacation or severance pay plans, or any other plans or
arrangements providing benefits to officers, agents or employees of AACS;
(c) AACS does not have nor is AACS currently negotiating any
collective bar gaining agreement with any labor union or association or any
employment contract or other binding agreement relating to the employment
of any of its employees;
(d) AACS is not a party to any joint venture agreement or other
agreement involving the sharing of profits relating to the Business and/or
AACS' assets or properties;
(e) AACS is not a party to any (i) contracts or commitments for
capital expenditures outside the ordinary course of business or involving
obligations on the part of AACS in amounts inconsistent with those incurred
by AACS in the ordinary course of business in accordance with AACS's prior
operation of the Business, (ii) Lease [other than Pager Lease Agreements,]
under which personal property is leased to or from AACS and which is not
cancelable by AACS without penalty upon notice of thirty days or less or
pursuant to which rentals payable by or to AACS, either individually or in
the aggregate, substantially exceed amounts previously incurred by AACS in
the ordinary course of business, (iii) continuing contract for the future
purchase of Inventory or other materials, supplies, machinery or equipment
in excess of the requirements of the Business conducted in the ordinary
course, (iv) other contract or agreement which involves an obligation on
the part of AACS, either individually or in the aggregate, in excess of
amounts previously incurred by AACS in the ordinary course of business, (v)
contract not made in the ordinary course of business, or (vi) any contract
that is terminable upon or requires a consent to a change of control of
AACS;
(f) AACS is not party to any Contract limiting the freedom of a AACS
to engage in any line of business or to compete with any Person;
(g) AACS is not a party to any Contract which involves $5,000 or
more and is not cancelable without penalty within thirty days; and
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<PAGE>
(h) There are no persons holding powers of attorney from, or
otherwise authorized to act on behalf of AACS with respect to the Business
or the assets except for its respective officers and other management
personnel regularly performing their business functions.
Except as specifically identified on Schedule 4.10, Sellers have no knowledge
that any Contract, Lease, or other obligation to which AACS is a party,
individually or in the aggregate: (i) will result in a material loss to AACS
after the Closing Date; (ii) cannot readily be performed or ful filled on time
without undue or unusual expenditure of money or effort by AACS after the
Closing Date, or (iii) is not in full force and effect and there exists a
default or event of default or event, occurrence, condition or act which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder, except where
such event would not cause a Material Adverse Effect. A true copy of each
written Contract and Lease as well as all other documents evidencing any
commitment of AACS required to be set forth on any Schedule hereto has been or
will be delivered to Buyer by Sellers no later than fifteen (15) days after
execution of this Agreement. Also set forth on Schedule 4.10 is a list of all
proposals, except proposals made by AACS' sales people in the ordinary course of
business, submitted by AACS to any third party that, if accepted by such third
party, would require dis closure on Schedule 4.10.
IV.11 Permits. All Permits required in connection with the use, operation
-------
or ownership of the assets or properties of AACS and the conduct of the Business
as currently conducted are listed on Schedule 4.11. To the best knowledge of
Sellers, the Permits issued to AACS by the Commission can be transferred to
Buyer or a subsidiary corporation of Buyer as part of the consummation of the
transactions contemplated by this Agreement. All such Permits are in full force
and effect and the facilities associated with such Permits have been constructed
within the time frame provided by the rules and regulations promulgated by the
Commission pursuant to the Communications Act of 1934 (the "Rules and
Regulations").
IV.12 Litigation. Except as set forth on Schedule 4.12, there is no
----------
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or any investigation by) any governmental or
other instrumentality or agency, pending, or, to the best knowledge of AACS,
threatened, against or affecting the assets, properties or rights of AACS, and
Sellers do not know of any valid basis for any such action, proceeding or
investigation. There are no such suits, actions, claims, proceedings or
investigations pending or to the best knowledge of Sellers, threatened, seeking
to prevent or challenge the transactions contemplated by this Agreement.
Without exception as to materiality or otherwise, Schedule 4.12 lists all
claims, if any, filed with the Commission with respect to AACS and/or the
operation of the Business since January 1, 1993. A decision adverse to AACS
with respect to any of the matters listed on Schedule 4.12, or with respect to
all or any combination thereof,
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<PAGE>
would not result in a Material Adverse Effect with respect to the Business or
AACS.
IV.13 Taxes.
-----
(a) All returns and reports for Taxes for all taxable years or
periods that end on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date
the portion of such taxable year or period ending on and including the
Closing Date (the "Pre-Closing Period"), which are required to be filed by
or with respect to AACS (collectively, the "Returns") have been or will be
filed when due in a timely fashion and such Returns as filed are or will be
accurate in all material respects;
(b) There are no agreements for the extension or waiver of the time
for assessment of any Taxes relating to AACS for any Pre-Closing Period and
AACS has not been requested to enter into any such agreement or waiver;
(c) All Taxes relating to AACS which AACS is required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and payable;
and
(d) AACS is not now nor has it ever been a party to any Tax
allocation or sharing agreement that could result in any liability to AACS
or Buyer.
IV.14 Insurance. Set forth on Schedule 4.14 is a complete list of
---------
insurance policies that AACS maintains with respect to its respective
businesses, properties or employees. Such policies are in full force and effect
and are free from any right of termination on the part of the insurance
carriers. In the judgment of Sellers, such policies, with respect to their
amounts and types of coverage, are adequate to insure against risks to which
AACS and its property and assets are normally exposed in the operation of the
Business, subject to customary deductibles and policy limits.
IV.15 Intellectual Property. Schedule 4.15 sets forth all Intellectual
---------------------
Property owned by AACS. The operation of the Business requires no rights under
the Intellectual Property other than rights under the Intellectual Property
listed on Schedule 4.15 and rights granted to AACS pursuant to agreements listed
on Schedule 4.15. Except as otherwise set forth on Schedule 4.15, AACS owns all
right, title and interest in the Intellectual Property. No litigation is
pending or, to the best knowledge of AACS, threatened wherein AACS is accused of
infringing or otherwise violating the intellectual property rights of another,
or of breaching a contract conveying intellectual property rights.
IV.16 Compliance with Laws. AACS is in compliance with all applicable
--------------------
laws, regula-
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<PAGE>
tions, orders, judgments and decrees applicable to the Business, except where
any noncompliance would not have a Material Adverse Effect.
IV.17 Employment Relations. AACS is not engaged in any unfair labor
--------------------
practice.
IV.18 Employee Benefit Plans. None of the Employee Benefit Plans are
----------------------
subject to Title IV of ERISA or the minimum funding obligations of Section 412
of the Code, and AACS and any entity required to be aggregated therewith
pursuant to Section 414(b) or (c) of the Code have no liability under Title IV
of ERISA or under Section 412(f) or 412(n) of the Code.
IV.19 Environmental Laws and Regulations. Except as set forth on Schedule
----------------------------------
4.19:
(a) AACS, Sellers or their authorized agents or independent
contractors (including suppliers) have not generated on, used on, treated or
stored on, transported to or from or arranged for transportation to or from, the
real property owned or leased by AACS or any property adjoining such real
property any Hazardous Materials,
(b) Hazardous Materials have not been disposed, discharged,
injected, spilled, leaked, leached, dumped, emitted, escaped, emptied, allowed
to seep, placed and the like, into or upon any land or water or air, or
otherwise allowed to enter into the environment (collectively, "Releases") by
AACS, Sellers, their authorized agents or independent contractors (including
suppliers) on such real property or by AACS, Sellers or their agents on any
other property,
(c) AACS is and has been in compliance with all applicable
Environmental Laws, possesses all Permits required thereunder and is in
compliance with all Permits issued thereunder with respect to such real property
and to AACS' operations conducted thereon,
(d) there are no pending or, to the best knowledge of Sellers,
threatened Environmental Claims against AACS or such real property,
(e) there are no facts or present or past circumstances, conditions
or occur rences on such real property known to Sellers that reasonably could be
anticipated (i) to form the basis of an Environmental Claim against AACS or any
owner or operator of such real property, or (ii to cause such real property to
be subject to any restrictions on the ownership, occupancy, use or
transferability of such real property under any Environmental Law,
(f) there are not now and, to the best knowledge of Sellers, there
never have been any underground storage tanks located on such real property, and
(g) AACS has not in the ordinary course of business transported,
treated, disposed of or stored Hazardous Materials.
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<PAGE>
IV.20 Interests in Customers and Suppliers. Except for relationships with
------------------------------------
Affiliates and as set forth on Schedule 4.20 attached hereto, AACS does not
possess, directly or indirectly, any financial interest in, nor is any Person
associated with AACS as a director, officer or employee of, any corporation,
firm, association or business organization which is a supplier, customer,
lessor, lessee, or competitor of AACS.
IV.21 Compensation of Employees. Set forth on Schedule 4.21 is a complete
-------------------------
list of all employees of AACS showing (a) such individuals' total compensation
from AACS for the fiscal year ended on the Audit Date and (b) compensation and
salary rates for the current fiscal year. Except as set forth on Schedule 4.21,
no employee of AACS has been promised a bonus or an increase in salary to take
effect subsequent to the date hereof.
IV.22 Suppliers and Customers. Schedule 4.22 sets forth the five largest
-----------------------
suppliers and the ten largest customers of AACS by dollar volume in fiscal 1994
and 1995 and as of the date hereof. The relationship of AACS with each of such
suppliers and customers as of the date of this Agreement is, to the best
knowledge of AACS, a good commercial working relationship, and except as set
forth on Schedule 4.22, no significant supplier or client has canceled or
otherwise terminated or, to the best knowledge of Sellers, threatened to cancel
or otherwise terminate its relationship with AACS since December 31, 1994.
IV.23 Absence of Changes. Except as set forth on Schedule 4.23, with
------------------
respect to AACS or the Business since the Audit Date there has not been any:
(a) sale, assignment, pledge, hypothecation or other transfer of any
of AACS' assets or properties except in the ordinary course of business;
(b) Material Adverse Effect or any condition or contingency that
might reasonably be expected to result in any Material Adverse Effect;
(c) termination of or material amendment to any Contract or Lease
except as reflected by any applicable Schedule;
(d) increase in compensation payable or paid to, or any employment,
bonus or compensation agreement entered into with, any officer, director,
employee, agent or independent contractor of AACS other than in the
ordinary course of business or other than as set forth on Schedule 4.24;
(e) declaration or making, or agreement to declare or make, any
payment of dividends or distributions of any assets of any kind or
purchase, redemption or other acquisition, or agreement to purchase, redeem
or otherwise acquire, directly or indirectly, any of AACS' outstanding
capital stock; or merger, consolidation or agreement to merge
-17-
<PAGE>
or consolidate with any other entity;
(f) agreement or arrangement creating any preferential rights to
purchase any of AACS's capital stock or assets or requiring the consent of
any party to the transfer or assignment of any of AACS' capital stock or
assets;
(g) other than in the ordinary course of business, a change in the
amount of all Accounts Receivable of AACS or other fees or debts due to
AACS or the allowances with respect thereto, or the payables of AACS to
trade accounts and other creditors by AACS, from that reflected in the
Unaudited Balance Sheet;
(h) Contract or transaction entered into or agreed to by AACS other
than in the ordinary course of business; or
(i) agreement by AACS to do any of the things described in the
preceding clauses (a) through (h) except as contemplated in this Agreement.
IV.24 Solvency. Sellers are not entering into this Agreement with actual
--------
intent to hinder, delay or defraud creditors.
IV.25 Disclosure. No representation or warranty by Sellers contained in
----------
this Agreement, nor any statement or certificate furnished or to be furnished by
Sellers to Buyer or its representatives in connection herewith or pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading or necessary in order to provide a
prospective purchaser of the Stock with adequate information as to AACS and its
condition (financial and otherwise), properties, assets, liabilities, business
and prospects, and Sellers have disclosed to Buyer in writing all material
adverse facts known to Sellers relating to the same. The representations and
warranties contained in this Article IV or elsewhere in this Agreement or any
document delivered pursuant hereto shall not be affected or deemed waived by
reason of the fact that Buyer and/or its representatives knew or should have
known that any such representation or warranty is or might be inaccurate in any
respect.
IV.26 Government Contracts. Except as set forth on Schedule 4.26, AACS
--------------------
does not:
(a) have any Contracts with any agency of the Government of the
United States involving any information, technology or data which is
classified under Executive Order 12356 of April 2, 1982; or
(b) have any products or services (including research and
development) with respect to which AACS (i) is a supplier, direct or
indirect, to any of the military services
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<PAGE>
of the United States or the Department of Defense, other than the United
States Coast Guard, except the supply to individuals of such military in
their individual capacity, or (ii) has technology which has or could have
military applications.
IV.27 Copies of Documents. AACS has made available for inspection and
-------------------
copying by Buyer and its advisers, true, complete and correct copies of all
documents referred to in this Article IV or in any Schedule attached hereto.
IV.28 No Subsidiaries. AACS has no subsidiaries.
---------------
IV.29 Books and Records. The Books and Records of AACS, as previously
-----------------
made available to Buyer and its representatives, contain accurate records in all
material respects of all meetings of, and corporate action taken by (including
action taken by written consent) the shareholders of AACS and Board of Directors
of AACS.
IV.30 Broker's or Finder's Fees. No Person acting on behalf of Sellers
-------------------------
is, or will be, entitled to any fee, commission or broker's or finder's fees in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers as follows:
V.1 Existence and Good Standing of Buyer; Power and Authority. Buyer is
------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has full corporate power and authority to
make, execute, deliver and perform this Agreement and the Buyer's Agreements, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and the Buyer's
Agreements have been duly authorized and approved by all required corporate
governance action of Buyer. This Agreement and the Buyer's Agreements have been,
as applicable as of the date hereof or as of the Closing Date, duly executed and
delivered by Buyer and are the valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms, except to
the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
V.2 No Violations. Except with respect to the Amended and Restated Loan
-------------
Agreement dated August 3, 1995 ("Loan Agreement"), among Buyer, each of Buyer's
subsidiaries, and Finova, and with respect to the Amended and Restated
Subordinated Note, Preferred Stock and Warrant Purchase Agreement dated August
3, 1995, among Buyer,
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Continental Illinois Venture Corporation, CIVC Partners I, GM Holdings, LLC, and
certain other purchasers listed on the signature pages thereto ("Subordinated
Debt Agreement"), the execution, delivery and performance of this Agreement and
the Buyer's Agreements by Buyer and the consummation by Buyer of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time or both, (a) violate, conflict with, or
result in a breach or default under any provision of the charter or bylaws of
Buyer; (b) violate any statute, ordinance, rule, regulation, order, judgment or
decree of any court or of any governmental or regulatory body, agency or
authority applicable to Buyer or by which any of its properties or assets may be
bound; (c) require any filing by Buyer with, or require Buyer to obtain any
permit, consent or approval of, or require Buyer to give any notice to, any
governmental or regulatory body, agency or authority or any third party other
than the Commission, Finova and certain parties to the Subordinated Debt
Agreement; or (d) result in a violation or breach by Buyer of, conflict with,
constitute (with or without due notice or lapse of time or both) a default by
Buyer (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of Buyer pursuant to, any of the terms, conditions or
provision of any note, bond, mortgage, indenture, permit, contract, lease or
other instrument or obligation to which Buyer is a party, or by which it or any
of its properties or assets may be bound, except in the case of clauses (b), (c)
and (d) of this Section 5.2, for such violations, consents, breaches, defaults,
terminations and accelerations which in the aggregate would not have a Material
Adverse Effect.
V.3 Securities Representations.
--------------------------
(a) The acquisition of the Stock by Buyer is for Buyer's own
account, is for investment purposes only, and is not with a view to, nor
for offer or sale for Sellers in connection with, the distribution of any
of the Stock. Buyer is not participating and does not have a participation
in any such distribution or the underwriting of any such distribution.
(b) Buyer has no present intention of selling or otherwise disposing
of any of the Securities other than in accordance with applicable law.
(c) Buyer is an "accredited investor" as that term is defined in
Rule 501 promulgated under the Securities Act.
(d) Buyer is aware that no federal or state governmental authority
has made any finding or determination as to the fairness of an investment
in the Securities, nor any recommendation or endorsement with respect
thereto.
(e) Buyer recognizes that investment in the Securities involves a
high degree of risk. Buyer has such knowledge and experience in financial
and business matters as to
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be capable of evaluating the risks and merits of this investment and
protecting Buyer's interests in connection with this investment. Buyer is
able to bear the economic risk of an investment in the Stock, including the
risk of the total loss of such investment.
V.4 Broker's or Finder's Fees. No Person acting on behalf of Buyer is,
-------------------------
or will be, entitled to any fee, commission or broker's or finder's fee in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligations of Sellers under this Agreement to sell, or cause to be
sold, the Stock and to consummate the other transactions contemplated hereby
shall be subject to the satisfaction (or waiver by Sellers) on or prior to the
Closing Date of all of the following conditions:
VI.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
and Buyer shall have delivered to Sellers on the Closing Date a certificate of
an authorized officer of Buyer, dated the Closing Date, to such effect.
VI.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Buyer to be performed on or before the Closing Date pursuant to the
terms hereof, including all deliveries and obligations at Closing, shall have
been duly performed in all material respects, and Buyer shall have delivered to
Sellers a certificate of an authorized officer of Buyer, dated the Closing Date,
to such effect and evidencing the incumbency of all officers executing any
documents in connection with the Closing.
VI.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Buyer
shall have delivered to Sellers a certificate of an authorized officer of Buyer,
dated the Closing Date, to such effect to the best knowledge of such officer.
VI.4 Governmental Approvals. With respect to AACS' common carrier
----------------------
licenses from the Commission, all governmental consents and approvals necessary
to permit the consummation of the transactions contemplated by this Agreement
shall have been received, including, but not limited to, all necessary approvals
of the Commission ("FCC Approvals"), and the FCC Approvals shall be final and
nonappealable. With respect to Seller's private radio licenses from the
Commission, the parties have authority to close the transactions contemplated by
this
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Agreement pursuant to conditional temporary authority under the Rules and
Regulations.
VI.5 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Seller and its
counsel, and Seller shall have received copies of all such documents and other
evidence as its or its counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer under this Agreement to purchase the Stock and to
consummate the other transactions contemplated hereby shall be subject to the
satisfaction (or waiver by Buyer) on or prior to the Closing Date of all of the
following conditions:
VII.1 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Seller contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, and
Sellers shall have delivered to Buyer on the Closing Date a certificate of
Sellers, dated the Closing Date, to such effect.
VII.2 Performance of Agreements. Each and all of the agreements and
-------------------------
covenants of Seller to be performed on or before the Closing Date pursuant to
the terms hereof, including all deliveries and obligations at Closing, shall
have been duly performed in all material respects, and Sellers shall have
delivered to Buyer a certificate of Sellers, dated the Closing Date, to such
effect and evidencing the incumbency of all officers executing any documents in
connection with the Closing.
VII.3 No Litigation Threatened. No action or proceedings shall have been
------------------------
instituted before a court or other governmental body or by any public authority
to restrain or prohibit any of the transactions contemplated hereby, and Sellers
shall have delivered to Buyer a certificate of Sellers, dated the Closing Date,
to such effect to the best knowledge of each Seller.
VII.4 Due Diligence. Buyer shall have concluded a due diligence review of
-------------
AACS satisfactory to Buyer in its sole discretion.
VII.5 Governmental Approvals. With respect to common carrier licenses,
----------------------
all governmental consents and approvals necessary to permit the consummation of
the transactions contemplated by this Agreement shall have been received,
including, but not limited to, the FCC
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<PAGE>
Approvals and the FCC Approvals shall be final and nonappealable. With respect
to Seller's private radio licenses from the Commission, the parties have
authority to close the transactions contemplated by this Agreement pursuant to
conditional temporary authority under the Rules and Regulations.
VII.6 Consents. Each of the consents referred to on Schedule 4.4 attached
--------
hereto shall have been obtained. Buyer shall have received the consents
required under the Loan Agreement and the Subordinated Debt Agreement.
VII.7 Legal Opinions. Sellers shall have delivered to Buyer the opinion
--------------
of Bishop, Payne, Williams & Werley, LLP, counsel to Sellers, substantially in
the form of Exhibit "D-1" attached hereto, which opinion shall be acceptable to
Buyer and its counsel. Sellers also shall have delivered to Buyer the opinion
of Seller's counsel with regard to matters relating to AACS' Permits with the
Commission, in form and substance acceptable to Buyer and its counsel
substantially in the form of Exhibit "D-2" attached hereto.
VII.8 EBITDA. The final determination of EBITDA pursuant to Section
------
3.2(a) shall be not less than $262,800.
VII.9 Proceedings. All proceedings to be taken in connection with the
-----------
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its counsel,
and Buyer shall have received copies of all such documents and other evidence as
it or its counsel may reasonably request in order to establish the consummation
of such transactions and the taking of all proceedings in connection therewith.
ARTICLE VIII
COVENANTS OF SELLER
-------------------
Sellers hereby covenant and agree with Buyer as follows:
VIII.1 Cooperation by Seller. Sellers shall use their reasonable best
---------------------
efforts to cooperate with Buyer to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Sellers to effect the transactions contemplated hereby, and
Sellers shall otherwise use their reasonable best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied. Sellers further agree to deliver to Buyer prompt
written notice of any event or condition known to or discovered by Seller, which
if it existed on the date of this Agreement or on the Closing Date, would result
in any of the representations and warranties of Seller contained herein being
untrue
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in any material respect.
VIII.2 Notice of Breaches. Sellers shall deliver to Buyer prompt written
------------------
notice of any event or condition actually known to or discovered by Sellers,
which, if it existed on the date of this Agreement or on the Closing Date, would
result in any of the representations and warranties of Sellers contained herein
being untrue in any material respect. Upon the discovery and subsequent notice
of such an event or condition, Buyer and Sellers shall be entitled to the rights
and remedies set forth in Section 11.2.
VIII.3 Conduct of Business. Except as Buyer may otherwise consent to in
-------------------
writing, between the date hereof and the Closing Date, Sellers shall cause AACS
to, (a) conduct the Business only in the ordinary course, (b) use their
reasonable efforts to keep available the services of AACS' employees and
maintain AACS' current relationships with licensors, suppliers, lessors,
distributors, customers, clients and others, (c) maintain, consistent with past
practice and good business judgment, all of the assets and properties of AACS in
customary repair, order and condition, ordinary wear and tear excepted, and
insurance upon all of the assets used in the conduct of the Business in such
amounts and of such kinds comparable to that in effect on the date hereof, to
the extent available at current premiums, and (d) maintain the Books and Records
in the usual, regular and ordinary manner, on a basis consistent with past
practice.
VIII.4 Negative Covenants of Seller. From and after the date hereof and
----------------------------
through the Closing Date and except with the specific prior written consent of
Buyer, Sellers covenant and agree as follows:
(a) Sellers shall not allow AACS to sell, transfer or dispose of
any of its assets or properties other than in the ordinary course of
business; provided, however, that any sale, transfer or disposition of any
assets in the ordinary course of business shall not exceed assets valued at
more than $10,000 in the aggregate;
(b) Sellers shall not grant nor allow AACS to grant an Encumbrance
(except a Permitted Encumbrance) on any of the assets or properties of AACS
or allow any such Encumbrance (except a Permitted Encumbrance) to occur or
to be created;
(c) Except in the ordinary course of business, Sellers shall not
allow AACS to acquire any tangible properties or assets relating to the
Business;
(d) Sellers shall not allow AACS to enter into any employment
and/or any independent contractor agreements relating to services to be
rendered in connection with the Business or any of the assets except in the
ordinary course of business;
(e) Except in the ordinary course of business, Sellers shall not
nor allow
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<PAGE>
AACS to amend, modify or terminate, without the prior written consent of
Buyer, any of the Contracts, Leases or other agreements of AACS;
(f) Sellers shall not allow AACS to incur any indebtedness;
(g) Sellers shall not allow AACS to enter into any undertaking to
furnish services for any consideration other than money with respect to the
operation of AACS' assets or properties other than trades of paging
services for advertising in the normal course of business and consistent
with historic levels; and
(h) Sellers shall not allow AACS to grant any subscriptions,
options, convertible securities, warrants, calls or rights of any kind
(issued, contracted for or granted by, or binding upon, Sellers) to
purchase or otherwise acquire any security of or equity interest in
Sellers. Sellers shall not allow AACS to issue any shares of authorized but
unissued shares of capital stock.
VIII.5 Exclusive Dealing. During the period from the date of this
-----------------
Agreement to the earlier of the Closing Date or the termination of this
Agreement, Sellers shall not take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person other than Buyer, concerning any sale of Stock or
any assets of properties of AACS or a similar transaction involving Sellers or
AACS.
VIII.6 Review of the Assets. Sellers agree that Buyer may, prior to the
--------------------
Closing Date, through its representatives, review (a) the assets and properties
of AACS, (b) the complete working papers of Sellers' certified public
accountants used in their preparation of financial statements of AACS, and (c)
the Books and Records of AACS and otherwise review the financial and legal
condition of AACS as Buyer deems necessary or advisable to familiarize itself
with the Business and related matters; such review shall not, however, affect
the representations and warranties made by Sellers hereunder or the remedies of
Buyer for breaches of those representations and warranties. Buyer may also,
prior to the Closing Date, through its representatives, inspect any or all of
AACS' towers and other transmitting facilities. Such review and inspection
shall occur only during normal business hours upon reasonable notice by Buyer.
Sellers shall permit Buyer and its representatives to have, after the execution
of this Agreement, full access to employees of AACS who can furnish Buyer with
financial and operating data and other information with respect to the Business
as Buyer shall from time to time reasonably request. Until the Closing Date,
Seller agrees to provide Buyer with monthly financial reports within ten days of
the end of each month.
VIII.7 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Sellers shall, at the reasonable request of Buyer, execute and
deliver any further instruments or documents and take all such further action as
Buyer may reasonably request in order to
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<PAGE>
consummate and make effective the sale of the Stock pursuant to this Agreement.
VIII.8 Delivery of Schedules. Buyer and Seller acknowledge that the
---------------------
Schedules hereto have not been delivered upon the execution of this Agreement.
Seller therefore covenants to deliver such Schedules within ten days after the
date hereof.
ARTICLE IX
COVENANTS OF BUYER
------------------
Buyer hereby covenants and agrees with Sellers as follows:
IX.1 Cooperation by Buyer. Buyer will use its reasonable best efforts,
--------------------
and will cooperate with Sellers, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Buyer to effect the transactions contemplated on its part
hereby, and Buyer will otherwise use its reasonable best efforts to cause and
consummation of such transactions in accordance with the terms and conditions
hereof and to cause all conditions contained in this Agreement over which it has
control to be satisfied.
IX.2 Books and Records; Personnel. At all times after the Closing Date,
----------------------------
Buyer shall allow Sellers and any agents of Sellers, upon reasonable advance
notice to Buyer, access to all Books and Records of AACS which are transferred
to Buyer in connection herewith, to the extent necessary or desirable in
anticipation of, or preparation for, existing or future litigation, employment
matters, tax returns or audits, or reports to or filings with governmental
agencies, during normal working hours at the location where such Books and
Records are maintained and Sellers shall have the right, at Sellers' sole cost,
to make copies of any such Books and Records. Buyer agrees to maintain all
Books and Records of AACS for a period of six years from the Closing Date.
IX.3 Further Assurances. At any time or from time to time after the
------------------
Closing Date, Buyer shall, at the request of Sellers and at Sellers' expense,
execute and deliver any further instruments or documents and take all such
further action as Sellers may reasonably request in order to consummate and make
effective the sale of the Stock pursuant to this Agreement.
ARTICLE X
COMMISSION APPROVAL
-------------------
X.1 Commission Licenses. Buyer and Sellers understand and agree that
-------------------
an integral part of the assets of AACS are the licenses issued by the Commission
and commonly referred to
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<PAGE>
as (a) common carrier licenses and (b) private radio licenses. It is further
understood by all parties hereto that although AACS will continue to own and
maintain all licenses granted by the Commission, any time there is a transfer of
control of a corporate licensee, the Commission must grant prior approval of
such change in control. Since this Agreement contemplates the sale and transfer
of all issued and outstanding common stock of AACS, the approval by the
Commission of the resulting transfer of control of AACS is a condition precedent
to the obligations of Buyer hereunder, as set forth in Section 7.5 above. In
order to obtain the required Commission approvals for the transfer of control of
AACS to Buyer, the parties hereto agree to the procedure in Section 10.2 below.
X.2 Commission Filings. Buyer and Sellers together shall act
------------------
diligently to prepare and file the required applications to the Commission for
consent to the transfer of control of AACS from Sellers to Buyer and to execute
such documents as may be necessary in order to obtain Commission consent to the
transaction proposed herein.
X.3 Common Carrier Licenses. Upon consummation of the transaction
-----------------------
proposed herein following prior final and nonappealable Commission approval of
the transfer of control of AACS' common carrier licenses, Buyer shall notify the
Commission of the consummation, as required by the Rules and Regulations.
X.4 Private Radio Licenses. Buyer and Sellers agree that, to the
----------------------
extent permitted by the Rules and Regulations, the proposed transaction herein
may be closed prior to formal Commission consent to the transfer of control of
AACS' private radio licenses pursuant to conditional temporary authority or a
grant of special temporary authority by the Commission under the Rules and
Regulations.
X.5 Assurance of Compliance. Buyer and Sellers agree, in the event
-----------------------
that the transaction proposed herein is approved by the Commission, but is not
to be consummated, to cooperate in the preparation of and making of any
necessary filings with the Commission in order to restore the licenses to the
status quo ante. In this regard, it is understood that applications to undo the
- ------ --- ----
transfer of control, with respect to the private carrier licenses, would be
required, if the consent had been granted more than 30 days prior to the
parties' notification to the Commission that the transaction proposed herein is
not to be consummated.
ARTICLE XI
THE CLOSING
-----------
XI.1 Time and Place. The closing of the transactions contemplated by
--------------
this Agreement (the "Closing") will take place at 9:00 a.m. at the offices of
Bishop, Payne, Williams & Werley, LLP, 500 West Seventh Street, Suite 1800, Ft.
Worth, Texas 76102-4782 on the later of either
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the fifth business day after the final determination of EBITDA in accordance
with Section 3.3(a) or the fifth business day after the FCC Approvals become
final and non-appealable, or at such other time, at such other place or on such
other date as the parties hereto may mutually agree. The date on which the
Closing occurs is herein referred to as the "Closing Date," and the transactions
contemplated by this Agreement shall be deemed to be effective as of 12:01 a.m.
on the Closing Date.
XI.2 Sellers' Obligations. At the Closing, Sellers shall deliver to
--------------------
Buyer, against delivery of the items specified in Section 10.3:
(a) the certificates representing the Stock together with stock
powers executed in blank;
(b) a check or wire transfer to an account of Buyer in the amount
of any apportionment due Buyer pursuant to Section 3.3;
(c) the applicable Sellers' Agreements executed by Sellers;
(d) certified copies of the Articles of Incorporation, Bylaws and
Good Standing and Existence Certificates of AACS;
(e) all Books and Records of AACS, including all Contracts and
Leases of AACS;
(f) the certifications required by Section 7.1, 7.2 and 7.3 which
may be contained in one certificate;
(g) the consents to assignment of the Contracts and Leases as
required by Section 7.5;
(h) the legal opinions as required by Section 7.6;
(i) evidence of final and nonappealable FCC Approvals; and
(j) such other instruments, documents and certificates in form and
substance reasonably satisfactory to Buyer, as Buyer shall have reasonably
required.
XI.3 Buyer's Obligations. At the Closing, Buyer shall deliver to
-------------------
Sellers, against delivery of the items specified in Section 10.2:
(a) a wire transfer for the total of the Purchase Price, as
adjusted pursuant to
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Section 3.2, if necessary, plus the amount of any apportionment due Seller
pursuant to Section 3.3;
(b) the applicable Buyers' Agreements executed by a duly authorized
officer of Buyer;
(c) evidence of final and nonappealable FCC Approvals; and
(d) the certifications required by Sections 6.1, 6.2 and 6.3 which
may be contained in one certificate.
ARTICLE XII
TERMINATION
-----------
XII.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by the mutual written consent of Buyer and Sellers;
(b) by either Buyer or all Sellers on or after August 31, 1996, if
the Closing has not occurred by such date, provided that as of such date
neither Buyer nor any of the Sellers is in default or that both Buyer and
any of the Sellers are in default under this Agreement;
(c) by Buyer or all Sellers in writing, without prejudice to other
rights and remedies which the terminating party may have (provided the
terminating party is not otherwise in material default or breach of this
Agreement, or has failed or refused to close without justification
hereunder), if the other party shall (i) materially fail to perform its
covenants or agreements contained herein required to be performed prior to
the Closing Date, or (ii) materially breach or have breached any of its
representations or warranties contained herein; or
(d) by Buyer in writing (i) if Seller fails to deliver the
Schedules within ten days after the date hereof or (ii) within 5 days of
Buyer's actual receipt of the Schedules from Seller if the disclosures
contained in the Schedules are unsatisfactory to Buyer in its sole
discretion.
XII.2 Remedies Upon Default or Failure to Close.
-----------------------------------------
(a) If Buyer shall default in the performance of its obligations
under this Agreement, including, but not limited to, the failure of any
condition to Closing in
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Article VI or the failure to make any required delivery under Section 11.3,
and shall for this reason be unable to consummate this Agreement on the
Closing Date in accordance with the terms hereof, and provided that Sellers
are not then in material default of any of their obligations hereunder,
Sellers shall be entitled as their sole remedy to terminate this Agreement
by written notice to Buyer and to request the disbursement of the Earnest
Money in accordance with the terms of the Escrow Agreement as liquidated
damages; provided, however, that Buyer shall have a period of ten (10) days
following written notice from Sellers to cure any breach of this Agreement,
if such breach is curable. Buyer and Sellers hereby agree in the case of
this clause (a) of Section 11.2 that (i) Sellers' damages for Buyer's
default are difficult or impossible to determine, (ii) Buyer's payment of
the Earnest Money is deemed a reasonable estimate of Sellers' potential
damages, (iii) such payment is not a penalty or forfeiture, and (iv) upon
payment of the Earnest Money, Buyer shall have no further liability to
Sellers. Notwithstanding the foregoing, if Buyer shall intentionally breach
the terms of this Agreement or intentionally default in the performance of
its obligations hereunder, Sellers shall be entitled to indemnification
pursuant to Section 13.1 hereof for the amount of damages incurred as a
result of such breach or default, less the amount of the Earnest Money.
(b) If any Seller shall default in the performance of its
obligations under this Agreement, including, but not limited to, the
failure of any condition to Closing in Article VII or the failure to make
any required delivery under Section 11.2, and shall for that reason be
unable to consummate this Agreement on the Closing Date in accordance with
the terms hereof, and if Buyer is not then in material default of any of
its obligations hereunder, Buyer shall be entitled either (i) to waive any
such defaults by such Seller and to require such Seller through specific
performance (which such Seller acknowledges to be an appropriate remedy) to
consummate the sale in accordance with the terms of this Agreement or (ii)
to request the return of the Earnest Money in accordance with the terms of
the Escrow Agreement; provided, however, that if any Seller shall
intentionally breach the terms of this Agreement or intentionally default
in the performance of its obligations hereunder (including a sale or
contract to sell the Business, assets or a majority of the shares of
capital stock of AACS to a third party prior to September 1, 1997) Buyer
shall be entitled to indemnification pursuant to Section 13.2 hereof for
the amount of damages incurred as a result of such breach or default, and
to the return of the Earnest Money. The availability of specific
performance shall be in addition to any other remedies or claims for
damages Buyer may have at law or in equity for intentional breaches or
intentional defaults by Sellers of Sellers' obligations hereunder or for
Buyer's remedies pursuant to Article XII hereof
(c) In addition to the events or circumstances described in
paragraph (b) above respecting the Earnest Money, the Earnest Money shall
be refunded to Buyer if:
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<PAGE>
(i) Sellers and Buyer are both in material default of one
or more of their respective obligations under this Agreement and
the transactions contemplated hereby are not consummated prior to
the Termination Date; or
(ii) the Agreement is terminated pursuant to Section
12.1(a), (b) or (d) above.
In the event of (i) or (ii) above, the Earnest Money shall be returned to
Buyer in accordance with the terms of the Escrow Agreement within three
business days after the Termination Date.
XII.3 Effect on Obligations. Termination of this Agreement pursuant to
---------------------
this Article shall terminate all obligations of the parties hereunder, except
for (i) the obligations under Sections 11.2, 13.1, 13.2, 13.9 and 13.10 hereof
and Buyer's remedies under Article XII, (ii) the obligations set forth in the
next succeeding sentence of this Section 11.3, and (iii) the obligations under
the Confidentiality Agreement between the parties dated effective as of
September 5, 1995 (the "Confidentiality Agreement"). Upon any termination of
this Agreement each party hereto will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, and all copies of such materials, whether so obtained before or after
the execution hereof, to the party furnishing the same.
ARTICLE XIII
SURVIVAL AND INDEMNIFICATION
----------------------------
XIII.1 Indemnification of Seller. Buyer shall indemnify and hold Sellers
-------------------------
and its Affiliates (the "Sellers Indemnitees") harmless from and against any and
all damages, including exemplary damages and penalties, losses, deficiencies,
costs, expenses, obligations, fines, expenditures, claims and liabilities,
including reasonable counsel fees and reasonable expenses of investigation,
defending and prosecuting litigation (collectively, the "Damages"), suffered by
Sellers Indemnitees as a result of, caused by, arising out of, or in any way
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer under this Agreement or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to Sellers by Buyer pursuant to the
terms of this Agreement, or (b) any liability or obligation (other than those
for which Buyer is being indemnified by Sellers hereunder) which pertains to the
ownership, operation or conduct of the Business or assets arising from any acts,
omissions, events, conditions or circumstances occurring on or after the Closing
Date. With respect to claims brought by Seller after the Closing, Buyer's
obligation to indemnify Seller for Damages (in the aggregate for all claims)
shall not exceed the amount of the Purchase Price.
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<PAGE>
XIII.2 Indemnification of Buyer. Sellers shall, jointly and severally,
------------------------
indemnify and hold Buyer and its Affiliates (the "Buyer Indemnitees") harmless
from and against any and all Damages suffered by Buyer Indemnitees as a result
of, caused by, arising out of, or in any way relating to (a) any
misrepresentation, breach of warranty, nonfulfillment of any agreement or
covenant on the part of Sellers under this Agreement, or any misrepresentation
in or omission from any list, schedule, certificate or other instrument
furnished or to be furnished to Buyer by Sellers pursuant to the terms of this
Agreement, or (b) any liability or obligation (other than those for which Seller
is being indemnified by Buyer hereunder) which pertains to the ownership,
operation or conduct of the Business or assets arising from any acts, omissions,
events, conditions or circumstances occurring before the Closing Date. Buyer
Indemnitees shall not be entitled to seek indemnification from Sellers until and
unless the aggregate of all claims for indemnification is equal to or greater
than $10,000 at which time Sellers' indemnification liability shall be for such
entire amount. With respect to claims brought by Buyer after the Closing,
Seller's obligation to indemnify Buyer for Damages (in the aggregate for all
claims) shall not exceed the amount of the Purchase Price.
XIII.3 Demands. Each indemnified party hereunder agrees that promptly
-------
upon its discovery of facts giving rise to a claim for indemnity under the
provisions of this Agreement, including receipt by it of notice of any demand,
assertion, claim, action or proceeding, judicial or otherwise, by any third
party (such third party actions being collectively referred to herein as the
"Claim"), with respect to any matter as to which it claims to be entitled to
indemnity under the provisions of this Agreement, it will give prompt notice
thereof in writing to the indemnifying party, together with a statement of such
information respecting any of the foregoing as it shall have. Such notice shall
include a formal demand for indemnification under this Agreement. The
indemnifying party shall not be obligated to indemnify the indemnified party
with respect to any Claim if the indemnified party knowingly failed to notify
the indemnifying party thereof in accordance with the provisions of this
Agreement in sufficient time to permit the indemnifying party or its counsel to
defend against such matter and to make a timely response thereto including,
without limitation, any responsive motion or answer to a complaint, petition,
notice or other legal, equitable or administrative process relating to the
Claim, only insofar as such knowing failure to notify the indemnifying party has
actually resulted in prejudice or damage to the indemnifying party.
XIII.4 Right to Contest and Defend. The indemnifying party shall be
---------------------------
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention to contest shall be delivered by the indemnifying party to the
indemnified party within twenty (20) days from the date of receipt by the
indemnifying party of notice by the indemnified party of the assertion of the
Claim. Any such contest may be conducted in the name and on behalf of the
indemnifying party or the indemnified party as may be appropriate. Such contest
shall be conducted by reputable counsel
-32-
<PAGE>
employed by the indemnifying party, but the indemnified party shall have the
right but not the obligation to participate in such proceedings and to be
represented by counsel of its own choosing at its sole cost and expense. The
indemnifying party shall have full authority to determine all action to be taken
with respect thereto; provided, however, that the indemnifying party will not
have the authority to subject the indemnified party to any obligation
whatsoever, other than the performance of purely ministerial tasks or
obligations not involving material expense. If the indemnifying party does not
elect to contest any such Claim, the indemnifying party shall be bound by the
result obtained with respect thereto by the indemnified party, having used its
reasonable best efforts in resolution. At any time after the commencement of the
defense of any Claim, the indemnifying party may request the indemnified party
to agree in writing to the abandonment of such contest or to the payment or
compromise by the indemnified party of the asserted Claim, whereupon such action
shall be taken unless the indemnified party determines that the contest should
be continued, and so notifies the indemnifying party in writing within fifteen
(15) days of such request from the indemnifying party. If the indemnified party
determines that the contest should be continued, the indemnifying party shall be
liable hereunder only to the extent of the amount that the other party to the
contested Claim had agreed unconditionally to accept in payment or compromise as
of the time the indemnifying party made its request therefor to the indemnified
party.
XIII.5 Cooperation. If requested by the indemnifying party, the
-----------
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim that the indemnifying party elects to contest
or, if appropriate, in making any counterclaim against the person asserting the
Claim, or any cross-complaint against any person, and the indemnifying party
will reimburse the indemnified party for any expenses incurred by it in so
cooperating. If the indemnifying party has not chosen to contest a Claim, the
indemnifying party shall cooperate with the indemnified party and its counsel in
contesting any Claim at no cost or expense to the indemnified party.
XIII.6 Right to Participate. The indemnified party agrees to afford the
--------------------
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the indemnified party or conferences
with representatives of or counsel for such persons.
XIII.7 Payment of Damages. The indemnifying party shall pay to the
------------------
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement subject to offset for any insurance proceeds actually received by the
indemnified party, such payment to be made within five days after any such
amounts are finally determined either by mutual agreement of the parties hereto
or pursuant to the final unappealable judgment of a court of competent
jurisdiction. The availability of insurance proceeds shall not delay or
postpone any indemnification payment required hereunder. If the indemnified
party both collects any such insurance proceeds and receives a payment from the
indemnifying party hereunder, and the sum of such proceeds and payment is in
excess of the
-33-
<PAGE>
amount payable with respect to the matter that is the subject of the indemnity,
then the indemnified party shall promptly refund to the indemnifying party the
amount of such excess, if permitted by the applicable insurance policy(ies).
Except as otherwise provided in the preceding sentence, the indemnified party's
receipt of any such insurance proceeds shall not eliminate or reduce the
obligations of the indemnifying party or the rights of the indemnified party
hereunder.
XIII.8 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties contained in Articles IV and V of this Agreement shall survive
until the second anniversary date of the Closing Date except for the
representations and warranties in Sections 4.2, 4.3, 4.8, 4.12, 4.13, 4.15, 4.16
and 5.1 which shall survive forever.
XIII.9 General. THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED
-------
FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE
INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR
NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR
DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE,
PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY
INDEMNIFIED PARTY. BUYER AND SELLERS ACKNOWLEDGE THAT THIS STATEMENT COMPLIES
WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTHING IN
----------
THIS CONSPICUOUS NOTICE IS INTENDED TO PROVIDE OR ALTER THE RIGHTS AND
- ----------------------------------------------------------------------
OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS
- ------------------------------------------------------------------------
AGREEMENT.
- ---------
ARTICLE XIV
MISCELLANEOUS
-------------
XIV.1 Notices. Any notice, request, instruction, correspondence or other
-------
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to Sellers prior to Closing, addressed to:
Mr. Lanty H. Wylie, Jr.
AACS Communications, Inc.
702A East Abram
Arlington, Texas 76010
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<PAGE>
Telecopy: (817) 548-1582
with a copy prior to Closing to:
Mr. Hershel R. Payne
Bishop, Payne, Williams & Werley, LLP
500 West Seventh St., Suite 1800
Ft. Worth, Texas 76102-4782
Telecopy: (817) 870-2631
[If to Sellers after Closing, addressed to:
Mr. Hershel R. Payne
Bishop, Payne, Williams & Werley, LLP
500 West Seventh Street, Suite 1800
Ft. Worth, Texas 76102-4782]
Telecopy: (817) 870-2631
If to Buyer, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
with a copy prior to Closing to:
Mr. Thomas D. Manford III
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Telecopy: (713) 221-1303
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next Business Day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which
-35-
<PAGE>
Notice is to be given to it by giving Notice as provided above of such change of
address.
XIV.2 Governing Law. The provisions of this Agreement shall be governed
-------------
by and construed and enforced in accordance with the laws of the State of Texas
(excluding any conflicts-of-law rule or principle that might refer same to the
laws of another jurisdiction).
XIV.3 Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
(including the exhibits and schedules hereto) and the Confidentiality Agreement
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
XIV.4 Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party; provided, however, that
the parties specifically consent to the following future assignment: after or at
the Closing, as collateral for the financing of the transaction contemplated by
this Agreement, Buyer may assign this Agreement and Buyer's rights hereunder and
under other documents entered into in connection herewith to financial
institutions or their affiliates providing any such financing or any refinancing
thereof, and provided that, upon foreclosure or sale in lieu of foreclosure or
deed in lieu of foreclosure or deed of any of the assets of Buyer to its
Affiliates of Buyer's rights hereunder or under other documents entered into in
connection herewith or a substantial portion thereof by or to any such financial
institutions or their Affiliates, the representations, warranties, obligations,
covenants, agreements and indemnities of Sellers herein and in such other
documents will inure to the benefit of such financial institutions (or their
Affiliates) or any such purchaser or grantees. Except for the foregoing, nothing
in this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
XIV.5 Severability. If any provision of the Agreement is rendered or
------------
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Buyer and Seller
shall promptly meet and negotiate substitute provisions for those rendered or
declared illegal or unenforceable so as to preserve as nearly as possible the
contemplated economic effects of the transactions, but all of the remaining
provisions of this
-36-
<PAGE>
Agreement shall remain in full force and effect.
XIV.6 Headings. The headings of the sections herein are inserted for
--------
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
XIV.7 Execution. This Agreement may be executed in multiple counterparts
---------
each of which shall be deemed an original and all of which shall constitute one
instrument.
XIV.8 Sales and Transfer Taxes. Seller shall be responsible for and pay
------------------------
any applicable sales, stamp, transfer, documentary, use, registration, filing
and other taxes and fees (including any penalties and interest) that may become
due or payable in connection with this Agreement and the transactions
contemplated hereby.
XIV.9 Expenses. Except as otherwise provided in this Agreement, Seller
--------
and Buyer shall each pay all costs and expenses incurred by them or on their
behalf in connection with this Agreement and the transactions contemplated
hereby, provided, however, that Buyer and Seller shall share equally all filing
fees payable to the Commission.
XIV.10 Publicity. Except as otherwise required by applicable laws or
---------
regulations, Seller or Buyer shall not issue any press release or make any other
public statement, in each case relating to or connected with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other party hereto to the contents and the manner of
presentation and publication thereof.
[The remainder of this page intentionally left blank.]
-37-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
BUYER:
TELETOUCH COMMUNICATIONS, INC.
By: ___________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SELLERS:
By: ___________________________
Lanty H. Wylie, Jr.
By: ___________________________
Raymond C. Trott
Estate of James Robert Bell
By: ___________________________
Name: _________________________
Title: Independent Executor
-38-
<PAGE>
EXHIBIT 10.2
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
July 29, 1996, by and between Teletouch Communications, Inc., a Delaware
corporation ("Teletouch") and the former shareholders of Russell's
Communications, Inc. (d/b/a Louisiana Paging & Communications Co.), a Louisiana
corporation ("laPAGEco") listed on the signature pages hereof (individually, a
"Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, Teletouch and the Shareholders are parties to that certain
Stock Purchase Agreement dated as of May 13, 1996, (the "Stock Purchase
Agreement") pursuant to which Teletouch will purchase all of the issued and
outstanding capital stock of laPAGEco; and
WHEREAS, prior to the date hereof, the Shareholders owned all of the
issued and outstanding capital stock of laPAGEco; and
WHEREAS, pursuant to the Stock Purchase Agreement, the execution and
delivery of this Agreement are to occur contemporaneously with the consummation
of the trans actions contemplated by the Stock Purchase Agreement;
NOW, THEREFORE, in connection with the consummation of the
transactions contemplated by the Stock Purchase Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, the parties hereby agree as follows:
1. Agreement Not to Compete.
------------------------
1.1. Business of Company; Shareholders' Knowledge. In
--------------------------------------------
connection with the business of laPAGEco, laPAGEco has developed and perfected
business plans and procedures, marketing plans and techniques and other
procedures, methods, and processes used in connection with its business, and has
also developed a list of clients and customers with significant repeat business,
all of which are critical to the financial success of
<PAGE>
laPAGEco in part because of the specialized nature of the business and the
locales and markets serviced by laPAGEco. During each Shareholder's association
with laPAGEco as an officer, director, shareholder and/or employee, each
Shareholder has become familiar with the nature of laPAGEco's business, its
customers, and with the special techniques, procedures and methods previously
referenced.
1.2. Term and Restricted Activities.
------------------------------
(a) In consideration of the foregoing and the purchase of
the stock of laPAGEco by Teletouch, each Shareholder hereby agrees
that for the two (2) year period beginning on the date hereof (the
"Term"), each Shareholder shall not, directly or indirectly, for his
or her own account or for the account of others, as an officer,
director, stockholder, owner, partner, employee, promoter, consultant,
manager, advisor or otherwise, participate in the promotion,
financing, ownership, or management of, any business which offers any
of the same products or services presently offered by, or pursues any
activities constituting or resembling the business of laPAGEco within
all Parishes of the State of Louisiana and all counties in the State
of Texas (collectively, the "Restricted Area"); provided, however,
that the Shareholders may own collectively up to five percent (5%) of
the outstanding publicly-held securities of a publicly-held
corporation as a passive investment so long as no Shareholder
participates in the management or control of such corporation.
(b) Each Shareholder agrees during the Term not to solicit
in any manner any business from any person or entity that was a
customer of either of laPAGEco or is now or becomes a customer of
Teletouch if such business involves providing any of the same or
similar products or services in the Restricted Area as constituted the
business of laPAGEco. Each Shareholder specifically acknowledges that
laPAGEco's business is regional in scope and is currently contained in
the Restricted Area. For a period of two (2) years, the Shareholders
agree not to solicit the full-time employment of the current employees
of Teletouch or those employees of laPAGEco who became employed by
Teletouch after the purchase of the stock of laPAGEco by Teletouch in
accordance with the Stock Purchase Agreement.
2. Payments to the Shareholders. At the Closing (as such term is
----------------------------
defined in the
-2-
<PAGE>
Stock Purchase Agreement) of the transactions contemplated in the Stock Purchase
Agreement, and on the date hereof, Teletouch has paid and the Shareholders have
accepted as full compensation for all covenants contained herein, the sum of
$100,000 paid by wire transfer to an account designated by laPAGEco which funds
are hereby allocated as set forth on the signature pages hereto.
3. Remedies. In the event of a breach of a Shareholder's covenant
--------
not to compete, it is understood and agreed that Teletouch shall be entitled to
injunctive relief as well as any and all other applicable remedies at law and in
equity available to such party. The Shareholders are the recipients of
consideration under the Stock Purchase Agreement substantially in excess of the
consideration hereunder; the Shareholders therefore acknowledge that any damages
that Teletouch suffers due to a breach of this Agreement shall not be limited to
the consideration received hereunder. If a court of competent jurisdiction
should declare this covenant not to compete unenforceable, in whole or in part,
due to any unreasonable restriction of duration and/or geographical area, then
the parties hereto ack nowledge and agree that such a court of law or equity
shall have the express authority of the parties to this Agreement to reform this
covenant not to compete to a reasonable restriction and/or to grant Teletouch
any and all other relief, at law or in equity, reasonably necessary to protect
their respective interests. Each Shareholder expressly covenants and
acknowledges that he or she considers this restrictive covenant reasonable.
4. Notices. Any notice, request, instruction, correspondence or
-------
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to the Shareholders, addressed to:
Mr. Ronald W. Dunham
310 Matthew Street
Denham Springs, Louisiana 70726
If to Teletouch, addressed to:
-3-
<PAGE>
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
5. Governing Law. The provisions of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Louisiana (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
6. Entire Agreement; Amendments and Waivers. This Agreement and the
----------------------------------------
Stock Purchase Agreement constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise any
right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (regardless
of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
7. Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Neither this Agreement nor any of the rights,
benefits or obligations hereunder shall
-4-
<PAGE>
be assigned, by operation of law or otherwise, by any of the Shareholders.
Teletouch may freely assign this Agreement without the consent of the
Shareholders. The Shareholders acknowledge that Teletouch has agreed to merge
into ProNet Inc., a Delaware corporation ("ProNet"), or a subsidiary of ProNet
and that ProNet may be the ultimate beneficiary of this Agreement. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
-5-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
TELETOUCH COMMUNICATIONS, INC.
By:________________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SHAREHOLDERS:
___________________________________________
Ron W. Dunham
$50,000
___________________________________________
Ron W. Dunham, as Attorney in Fact for
Jacqueline R. Dunham
$50,000
-6-
<PAGE>
EXHIBIT 10.3
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
July 26, 1996, by and among Teletouch Communications, Inc., a Delaware
corporation ("Teletouch"), Warren Communications, Inc., a Louisiana corporation
("Warren"), and the shareholders of Warren listed on the signature pages hereof
(individually, a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, Teletouch and Warren are parties to that certain Asset
Purchase Agreement dated as of April 2, 1996, (the "APA") pursuant to which
Teletouch will purchase substantially all of the assets and business of Warren;
and
WHEREAS, prior to the date hereof, the Shareholders owned all of the
issued and outstanding capital stock of Warren; and
WHEREAS, pursuant to the APA, the execution and delivery of this
Agreement are to occur contemporaneously with the consummation of the
transactions contemplated by the APA;
NOW, THEREFORE, in connection with the consummation of the
transactions contemplated by the APA, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereby agree as follows:
1. Agreement Not to Compete.
------------------------
1.1. Business of Company; Shareholders' Knowledge. In
--------------------------------------------
connection with the business of Warren, Warren has developed and perfected
business plans and procedures, marketing plans and techniques and other
procedures, methods, and processes used in connection with its business, and has
also developed a list of clients and customers with significant repeat business,
all of which are critical to the financial success of Warren in part because of
the specialized nature of the business and the locales and markets serviced by
Warren. During each Shareholder's association with Warren as an officer,
director, shareholder and/or employee, each Shareholder has become familiar with
the nature of Warren's business, its customers, and with the special techniques,
procedures and methods previously referenced.
<PAGE>
1.2. Term and Restricted Activities.
------------------------------
(a) In consideration of the foregoing and the purchase of
the assets of Warren by Teletouch, Warren and each Shareholder hereby
agrees that for the two (2) year period beginning on the date hereof
(the "Term"), each Shareholder shall not, directly or indirectly, for
his or her own account or for the account of others, as an officer,
director, stockholder, owner, partner, employee, promoter, consultant,
manager, advisor or otherwise, participate in the promotion,
financing, ownership, or management of, any business which offers any
of the same products or services presently offered by, or pursues any
activities constituting or resembling the business of Warren within
all Parishes of the State of Lousiana and Nueces County in the State
of Texas (collectively, the "Restricted Area"); provided, however,
that the Shareholders may own collectively up to five percent (5%) of
the outstanding publicly-held securities of a publicly-held
corporation as a passive investment so long as no Shareholder
participates in the management or control of such corporation.
(b) Warren and each Shareholder agrees during the Term not
to solicit in any manner any business from any person or entity that
was a customer of Warren or is now or becomes a customer of Teletouch
or assignee or successor of Teletouch if such business involves
providing any of the same or similar products or services in the
Restricted Area as constituted the business of Warren. Each Share
holder specifically acknowledges that Warren's business is regional in
scope and is currently contained in the Restricted Area. For a period
of four (4) years, the Shareholders agree not to solicit the full-time
employment of the current employees of Teletouch or those employees of
Warren who become employed by Teletouch after the purchase of the
assets of Warren by Teletouch in accordance with the APA.
(c) During the Term, Warren and each Shareholder agree not
to file an application to operate on the 157.74 Mhz frequency in any
parish or county in the United States in which Teletouch or its
subsidiaries after the date hereof have operations utilizing such
frequency.
2. Payments to the Shareholders. At the Closing (as such term is
----------------------------
defined in the APA) of the transactions contemplated in the APA, and on the date
hereof, Teletouch has paid and the Shareholders have accepted as full
compensation for all covenants contained herein, the sum of $100,000 paid by
wire transfer to an account designated by Warren which funds are hereby
allocated as set forth on the signature pages hereto.
<PAGE>
3. Remedies. In the event of a breach of Warren or a Shareholder's
--------
covenant not to compete, it is understood and agreed that Teletouch shall be
entitled to injunctive relief as well as any and all other applicable remedies
at law and in equity available to such party. Warren is, and indirectly the
Shareholders are, the recipients of consideration under the APA substantially in
excess of the consideration hereunder; Warren and the Shareholders therefore
acknowledge that any damages that Teletouch suffers due to a breach of this
Agreement shall not be limited to the consideration received hereunder. If a
court of competent jurisdiction should declare this covenant not to compete
unenforceable, in whole or in part, due to any unreasonable restriction of
duration and/or geographical area, then the parties hereto ack nowledge and
agree that such a court of law or equity shall have the express authority of the
parties to this Agreement to reform this covenant not to compete to a reasonable
restriction and/or to grant Teletouch any and all other relief, at law or in
equity, reasonably necessary to protect their respective interests. Warren and
each Shareholder expressly covenants and acknowledges that he or she considers
this restrictive covenant reasonable.
4. Notices. Any notice, request, instruction, correspondence or
-------
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to the Shareholders or Warren, addressed to:
200 Flying W Drive
Carencro, Louisiana 70520
Attention: Mr. John C. Warren
If to Teletouch, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
-3-
<PAGE>
Telecopy: (713) 650-3351
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
5. Governing Law. The provisions of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Louisiana (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
6. Entire Agreement; Amendments and Waivers. This Agreement and the
----------------------------------------
APA constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
7. Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party; provided, however, that it is agreed that (i) after or at the Closing, as
collateral for the financing of the transaction contemplated by this Agreement,
Teletouch may assign this Agreement and Teletouch's rights hereunder and under
other
-4-
<PAGE>
documents entered into in connection herewith to financial institutions or
their affiliates providing any such financing or any refinancing thereof, and
provided that, upon foreclosure or sale in lieu of foreclosure or deed in lieu
of foreclosure or deed of any of the assets of Teletouch to its affiliates of
Teletouch's rights hereunder or under other documents entered into in connection
herewith or a substantial portion thereof by or to any such financial
institutions or their affiliates, the representations, warranties, obligations,
covenants, agreements and indemnities of Warren herein and in such other
documents will inure to the benefit of such financial institutions (or their
affiliates) or any such purchaser or grantee; (ii) Warren and each Shareholder
may assign the economic benefits, but not its, his or her obligations, under
this Agreement; and (iii) Teletouch may assign its rights hereunder in whole to
any party which acquires all of the former assets and business of Teletouch or
in pertinent part to any party which acquires a portion of the former assets and
business of Teletouch in any discrete area. Nothing in this Agreement, express
or implied, is intended to confer upon any person or entity other than the
parties hereto and their respective permitted successors and assigns, any
rights, benefits or obligations hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
TELETOUCH COMMUNICATIONS, INC.
By:________________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SHAREHOLDERS:
___________________________________________
John C. Warren
$_____________
___________________________________________
Carolyn R. Warren
-5-
<PAGE>
$_____________
WARREN COMMUNICATIONS, INC.
By:________________________________________
John C. Warren
President
-6-
<PAGE>
Exhibit 10.4
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of July
31, 1996, by and among Teletouch Communications, Inc., a Delaware corporation
("Teletouch"), Dave Fant Company, an Oklahoma corporation ("Fant"), and the sole
shareholder of Fant listed on the signature page hereof (the "Shareholder").
W I T N E S S E T H:
WHEREAS, Teletouch and Fant are parties to that certain Asset Purchase
Agreement dated as of April 11, 1996, (the "Asset Purchase Agreement") pursuant
to which Teletouch will purchase substantially all of the assets and business of
Fant; and
WHEREAS, the Shareholder owns all of the issued and outstanding capital
stock of Fant and as such shall be the primary beneficiary of the sale of the
assets and business of Fant; and
WHEREAS, pursuant to the Asset Purchase Agreement, the execution and
delivery of this Agreement are to occur contemporaneously with the consummation
of the trans actions contemplated by the Asset Purchase Agreement;
NOW, THEREFORE, in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereby agree as follows:
1. Agreement Not to Compete.
------------------------
1.1. Business of Company; Shareholder's Knowledge. In connection with
--------------------------------------------
the business of Fant, Fant has developed and perfected business plans and
procedures, marketing plans and techniques and other procedures, methods, and
processes used in connection with its business, and has also developed a list of
clients and customers with significant repeat business, all of which are
critical to the financial success of Fant in part because of the specialized
nature of the business and the locales and markets serviced by Fant. During the
Shareholder's association with Fant as an officer, director, shareholder
<PAGE>
and/or employee, the Shareholder has become familiar with the nature of Fant's
business, its customers, and with the special techniques, procedures and methods
previously referenced.
1.2. Term and Restricted Activities.
------------------------------
(a) In consideration of the foregoing and the purchase of the
assets and business of Fant by Teletouch, Fant and the Shareholder hereby
agrees that for the five (5) year period beginning on the date hereof (the
"Term"), Fant and the Shareholder shall not, directly or indirectly, for
its or his own account or for the account of others, as an officer,
director, stockholder, owner, partner, employee, promoter, consultant,
manager, advisor or otherwise, participate in the promotion, financing,
ownership, or management of, any business which offers any of the same
products or services presently offered by, or pursues any activities
constituting or resembling the business of Fant within the State of
Oklahoma and the State of Arkansas (the "Restricted Area"); provided,
however, that either Fant or the Shareholder may own collectively up to
five percent (5%) of the outstanding publicly-held securities of a publicly
-held corporation which offers such products or services as a passive
investment so long as neither Fant or the Shareholder participates in the
management or control of such corporation.
(b) Fant and the Shareholder agree during the Term not to
solicit in any manner any business from any person or entity that was a
customer of Fant or is now or becomes a customer of Teletouch if such
business involves providing any of the same or similar products or services
in the Restricted Area as constituted the business of Fant. Fant and the
Shareholder specifically acknowledge that Fant's business is regional in
scope and is currently contained in the Restricted Area. For a period of
two (2) years, Fant and the Shareholder agree not to solicit the full-time
employment of the current employees of Teletouch or those employees of Fant
who became employed by Teletouch after the purchase of the assets of Fant
by Teletouch in accordance with the Asset Purchase Agreement.
2. Payments to the Shareholder. At the Closing (as such term is defined
---------------------------
in the Asset Purchase Agreement) of the transactions contemplated in the Asset
Purchase Agreement, and on the date hereof, Teletouch has paid and Fant, on
behalf of itself and the Shareholder, has accepted as full compensation for all
covenants contained herein, the sum
-2-
<PAGE>
of $50,000 paid by wire transfer to an account designated by Fant.
3. Remedies. In the event of a breach of Fant's or the
--------
Shareholder's covenant not to compete, it is understood and agreed that
Teletouch shall be entitled to injunctive relief as well as any and all other
applicable remedies at law and in equity available to such party. Fant is the
recipient of consideration under the Asset Purchase Agreement, and the
Shareholder is the beneficiary thereof, substantially in excess of the
consideration hereunder; Fant and the Shareholder therefore acknowledge that any
damages that Teletouch suffers due to a breach of this Agreement shall not be
limited to the consideration received hereunder. If a court of competent
jurisdiction should declare this covenant not to compete unenforceable, in whole
or in part, due to any unreasonable restriction of duration and/or geographical
area, then the parties hereto acknowledge and agree that such a court of law or
equity shall have the express authority of the parties to this Agreement to
reform this covenant not to compete to a reasonable restriction and/or to grant
Teletouch any and all other relief, at law or in equity, reasonably necessary to
protect their respective interests. Fant and the Shareholder expressly
covenant and acknowledge that it or he considers this restrictive covenant
reasonable.
4. Notices. Any notice, request, instruction, correspondence or
-------
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed by
certified mail, postage prepaid and return receipt requested, or by telecopier,
as follows:
If to the Shareholder or Fant, addressed to:
Mr. David W. Fant
113 SW141
Oklahoma City, Oklahoma 73170
If to Teletouch, addressed to:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
-3-
<PAGE>
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
5. Governing Law. The provisions of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Oklahoma (excluding any conflicts-of-law rule or principle that might refer
same to the laws of another jurisdiction).
6. Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
and the Asset Purchase Agreement constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise
any right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
7. Binding Effect and Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party; provided, however, that it
is agreed that (i) after or at the Closing, as collateral for the financing of
the transaction contemplated by this Agreement, Teletouch may assign this
Agreement and Teletouch's rights hereunder and under other documents entered
into in
-4-
<PAGE>
connection herewith to financial institutions or their affiliates providing any
such financing or any refinancing thereof, and provided that, upon foreclosure
or sale in lieu of foreclosure or deed in lieu of foreclosure or deed of any of
the assets of Teletouch to its affiliates of Teletouch's rights hereunder or
under other documents entered into in connection herewith or a substantial
portion thereof by or to any such financial institutions or their affiliates,
the representations, warranties, obligations, covenants, agreements and
indemnities of Fant herein and in such other documents will inure to the benefit
of such financial institutions (or their affiliates) or any such purchaser or
grantee; (ii) Fant and the Shareholder may assign the economic benefits, but not
its, his or her obligations, under this Agreement; and (iii) Teletouch may
assign its rights hereunder in whole to any party which acquires all of the
former assets and business of Teletouch or in pertinent part to any party which
acquires a portion of the former assets and business of Teletouch in any
discrete area. Nothing in this Agreement, express or implied, is intended to
confer upon any person or entity other than the parties hereto and their
respective permitted successors and assigns, any rights, benefits or obligations
hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
TELETOUCH COMMUNICATIONS, INC.
By:______________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
DAVE FANT COMPANY
By:______________________________________
-5-
<PAGE>
David W. Fant
President
SHAREHOLDER
_________________________________________
Name: David W.Fant
-6-
<PAGE>
EXHIBIT 10.5
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as of
August __, 1996, by and between Teletouch Communications, Inc., a Delaware
corporation ("Teletouch") and the former shareholders of AACS Communications,
Inc., a Texas corporation ("AACS"), listed on the signature pages hereof
(individually, a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, Teletouch and the Shareholders are parties to that certain
Stock Purchase Agreement dated as of April 4, 1996, (the "Stock Purchase
Agreement") pursuant to which Teletouch will purchase all of the issued and
outstanding capital stock of AACS; and
WHEREAS, prior to the date hereof, the Shareholders owned all of the
issued and outstanding capital stock of AACS; and
WHEREAS, pursuant to the Stock Purchase Agreement, the execution and
delivery of this Agreement are to occur contemporaneously with the consummation
of the trans actions contemplated by the Stock Purchase Agreement;
NOW, THEREFORE, in connection with the consummation of the transactions
contemplated by the Stock Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the parties hereby agree as follows:
1. Agreement Not to Compete.
------------------------
1.1. Business of Company; Shareholders' Knowledge. In connection
--------------------------------------------
business plans and procedures, marketing plans and techniques and other
procedures, methods, and processes used in connection with its business, and has
also developed a list of clients and customers with significant repeat business,
all of which are critical to the financial success of AACS in part because of
the specialized nature of the business and the locales and markets serviced by
AACS. During each Shareholder's association with AACS as an officer, director,
shareholder and/or employee, each Shareholder has become familiar with the
nature of
<PAGE>
AACS' business, its customers, and with the special techniques, procedures and
methods previously referenced.
1.2. Term and Restricted Activities.
------------------------------
(a) In consideration of the foregoing and the purchase of the
stock of AACS by Teletouch, each Shareholder hereby agrees that for the
three (3) year period beginning on the date hereof (the "Term"), each
Shareholder shall not, directly or indirectly, for his or her own account
or for the account of others, as an officer, director, stockholder, owner,
partner, employee, promoter, consultant, manager, advisor or otherwise,
participate in the promotion, financing, ownership, or management of, any
business which offers any of the same products or services presently
offered by, or pursues any activities constituting or resembling the
business of AACS within the area indicated within the bold border on the
map attached hereto as Annex "A" (the "Restricted Area"); provided,
however, that the Shareholders may own collectively up to five percent (5%)
of the outstanding publicly-held securities of a publicly-held corporation
which offers such products or services as a passive investment so long as
no Shareholder participates in the management or control of such
corporation; and provided, further, that Raymond C. Trott may be retained
as an outside consultant or advisor for engineering services by a third
party which third party may be considered a competitor of AACS and/or
Teletouch.
(b) Each Shareholder agrees during the Term not to solicit
in any manner any business from any person or entity that was a
customer of AACS or is now or becomes a customer of Teletouch if such
business involves providing any of the same or similar products or
services in the Restricted Area as constituted the business of AACS.
Each Shareholder specifically acknowledges that AACS business is
regional in scope and is contained in the Restricted Area. For a
period of two (2) years, the Shareholders agree not to solicit the
full-time employment of the current employees of Teletouch or those
employees of AACS who became employed by Teletouch after the purchase
of the stock of AACS by Teletouch in accordance with the Stock
Purchase Agreement.
2. Payments to the Shareholders. At the Closing (as such term is
----------------------------
defined in the Stock Purchase Agreement) of the transactions contemplated in the
Stock Purchase Agreement, and on the date hereof, Teletouch has paid and the
Shareholders have accepted as full compensation for all covenants contained
herein, the sum of $100,000 paid by wire transfer to an account designated by
AACS which funds are hereby allocated as set forth on the signature pages
hereto.
<PAGE>
3. Remedies. In the event of a breach of a Shareholder's
--------
covenant not to compete, it is understood and agreed that Teletouch shall be
entitled to injunctive relief as well as any and all other applicable remedies
at law and in equity available to such party. The Shareholders are the
recipients of consideration under the Stock Purchase Agreement substantially in
excess of the consideration hereunder; the Shareholders therefore acknowledge
that any damages that Teletouch suffers due to a breach of this Agreement shall
not be limited to the consideration received hereunder. If a court of competent
jurisdiction should declare this covenant not to compete unenforceable, in whole
or in part, due to any unreasonable restriction of duration and/or geographical
area, then the parties hereto ack nowledge and agree that such a court of law or
equity shall have the express authority of the parties to this Agreement to
reform this covenant not to compete to a reasonable restriction and/or to grant
Teletouch any and all other relief, at law or in equity, reasonably necessary to
protect their respective interests. Each Shareholder expressly covenants and
acknowledges that he or she considers this restrictive covenant reasonable.
4. Notices. Any notice, request, instruction,
-------
correspondence or other document to be given hereunder by either party to the
other (herein collectively called "Notice") shall be in writing and delivered in
person or by courier service requiring acknowledgment of receipt of delivery or
mailed by certified mail, postage prepaid and return receipt requested, or by
telecopier, as follows:
If to the Shareholders: to the addresses set forth on the signature
pages hereto.
If to Teletouch:
Teletouch Communications, Inc.
1000 Louisiana, Suite 600
Houston, Texas 77002
Attention: Mr. Robert M. McMurrey
Telecopy: (713) 650-3351
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at
-3-
<PAGE>
the beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telecopier shall be
confirmed promptly after transmission in writing by certified mail or personal
delivery. Any party may change any address to which Notice is to be given to it
by giving Notice as provided above of such change of address.
5. Governing Law. The provisions of this Agreement shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of Texas.
6. Entire Agreement; Amendments and Waivers. This Agreement
----------------------------------------
and the Stock Purchase Agreement constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The failure of a party to exercise
any right or remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
7. Binding Effect and Assignment. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party; provided, however, that it
is agreed that (i) each Shareholder may assign the economic benefits, but not
his or her obligations, under this Agreement, and (ii) Teletouch may assign its
rights hereunder in whole to any party which acquires all of the former assets
and business of AACS or in pertinent part to any party which acquires a portion
of the former assets and business of AACS in any discrete area. Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than the parties hereto and their respective permitted successors and
assigns, any rights, benefits or obligations hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
-4-
<PAGE>
as of the date first above written.
TELETOUCH COMMUNICATIONS, INC.
By: ____________________________________
Robert M. McMurrey
Chairman and Chief Executive Officer
SHAREHOLDERS:
________________________________________
Lanty H. Wylie, Jr.
$33,333.34
Address: _______________________________
_______________________________
Telecopy:_______________________________
________________________________________
Raymond C. Trott
$33,333.33
Address:________________________________
________________________________
Telecopy:_______________________________
-5-
<PAGE>
Estate of James Robert Bell
By:_____________________________________
Name:___________________________________
Title: Independent Executor
$33,333.33
Address:________________________________
________________________________
Telecopy:_______________________________
-6-
<PAGE>
Exhibit 11
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS (LOSS)
<TABLE>
<CAPTION>
Three Months ended
------------------
August 31,
---------------------------
1996 1995
-------------- -----------
<S> <C> <C>
Weighted average shares outstanding..................... 6,347,416 5,272,725
Loss before extraordinary item.......................... $(2,401,000) $(724,000)
Extraordinary item...................................... (3,568,000) --
----------- ---------
Net Loss................................................ (5,969,000) (724,000)
Preferred stock dividends............................... (596,000) (175,000)
----------- ---------
Loss applicable to common stock......................... $(6,565,000) $(899,000)
=========== =========
Loss per share:
Loss before extraordinary item......................... $ (0.47) $ ( 0.17)
Extraordinary item..................................... (0.56) --
----------- ---------
Net loss per share...................................... $ (1.03) $ ( 0.17)
=========== =========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 2,663
<SECURITIES> 0
<RECEIVABLES> 2,559
<ALLOWANCES> 292
<INVENTORY> 3,721
<CURRENT-ASSETS> 9,354
<PP&E> 26,948
<DEPRECIATION> 6,219
<TOTAL-ASSETS> 95,325
<CURRENT-LIABILITIES> 5,465
<BONDS> 76,681
0
0
<COMMON> 6
<OTHER-SE> 12,589
<TOTAL-LIABILITY-AND-EQUITY> 95,325
<SALES> 9,575
<TOTAL-REVENUES> 9,575
<CGS> 1,299
<TOTAL-COSTS> 8,846
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,987
<INCOME-PRETAX> (2,557)
<INCOME-TAX> (156)
<INCOME-CONTINUING> (2,401)
<DISCONTINUED> 0
<EXTRAORDINARY> (3,568)
<CHANGES> 0
<NET-INCOME> (5,969)
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
