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
TABLE OF CONTENTS
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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 Xxxxxxx 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
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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
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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
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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
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SCHEDULES
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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
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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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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 Xxxxx X. Xxxxx, Xx., Xxxxxxx X. Xxxxx and the Estate of Xxxxx
Xxxxxx Xxxx (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
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I.1 Definitions. As used herein, the following terms have the meanings
-----------
set forth below:
"Accounts Receivable": all notes and accounts receivable of Seller
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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).
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"Books and Records": all books, records, books of account, files and data
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(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
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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 000X Xxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxx 00000.
"Business Day": any day excluding Saturday, Sunday and any day on which
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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).
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"Claim": as defined in Section 13.3.
-----
"Closing": as defined in Section 11.1.
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"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.
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"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
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bound, but excluding Leases and Employee Benefit Plans.
"Damages": as defined in Section 13.1.
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"December Balance Sheet": as defined in Section 3.2(a).
----------------------
"Xxxxxxx Money": as defined in Section 2.2.
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"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 Xxxxx X. Xxxxx, Xx.
--------------------
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
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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
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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,
----------------
Xxxxxxxx & Xxxxxx, L.L.P., as escrow agent, in the form of Exhibit "B" attached
hereto pursuant to which Buyer shall make the deposit of the Xxxxxxx Money in
escrow subject to the disbursement terms of this Agreement.
"FCC Approvals": as defined in Section 6.4.
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"Finova": Finova Capital Corporation, the senior lender to Buyer.
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"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
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other such assets of Seller held for sale or lease in the ordinary course of the
Business or to be furnished under
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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
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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.
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"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).
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"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
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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,
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unincorporated organization, government or other department or agency thereof or
other entity.
"Pre-Closing Period": as defined in Section 4.13(a).
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"Purchase Price": as defined in Section 3.1.
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"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.
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"Subordinated Debt Agreement": as defined in Section 5.2.
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"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.
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(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 Xxxxxxx 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
xxxxxxx money deposit ("Xxxxxxx Money") in accordance with the terms of the
Escrow Agreement. Retention of the Xxxxxxx Money by Sellers or the return of
the Xxxxxxx 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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(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:
Xxxxx X. Xxxxx, Xx. $33,333.34
Xxxxxxx X. Xxxxx $33,333.33
Xxxxx Xxxxxx Xxxx $33,333.33
III.2 Purchase Price Adjustments. At the Closing, the Purchase Price
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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 &
Xxxxxxx, L.L.P. (or, if Coopers & Xxxxxxx, 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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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 Xxxxxxx 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
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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
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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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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
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Sellers hereby represent and warrant, jointly and severally, to Buyer as
follows:
IV.1 Existence and Good Standing. AACS is a corporation duly organized
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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.
-10-
(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
-11-
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;
-12-
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
-13-
(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,
-14-
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-
-15-
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.
-16-
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-
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
-18-
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,
-19-
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
-20-
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
-21-
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
-22-
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, Xxxxxxxx & Xxxxxx, 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
-23-
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
-24-
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
-25-
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
-26-
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, Xxxxxxxx & Xxxxxx, LLP, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xx.
Xxxxx, Xxxxx 00000-0000 on the later of either
-27-
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
-28-
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
-29-
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 Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx Money, the Xxxxxxx Money shall
be refunded to Buyer if:
-30-
(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 Xxxxxxx 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.
-31-
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-
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-
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
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AGREEMENT.
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ARTICLE XIV
MISCELLANEOUS
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XIV.1 Notices. Any notice, request, instruction, correspondence or other
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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:
Xx. Xxxxx X. Xxxxx, Xx.
AACS Communications, Inc.
000X Xxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
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Telecopy: (000) 000-0000
with a copy prior to Closing to:
Xx. Xxxxxxx X. Xxxxx
Bishop, Payne, Xxxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxxx Xx., Xxxxx 0000
Xx. Xxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
[If to Sellers after Closing, addressed to:
Xx. Xxxxxxx X. Xxxxx
Bishop, Payne, Xxxxxxxx & Xxxxxx, LLP
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxx 00000-0000]
Telecopy: (000) 000-0000
If to Buyer, addressed to:
Teletouch Communications, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. XxXxxxxx
Telecopy: (000) 000-0000
with a copy prior to Closing to:
Xx. Xxxxxx X. Xxxxxxx III
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
South Tower Pennzoil Place
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
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
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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
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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
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(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
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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
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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
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Agreement shall remain in full force and effect.
XIV.6 Headings. The headings of the sections herein are inserted for
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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
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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
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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
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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
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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.
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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: ___________________________
Xxxxxx X. XxXxxxxx
Chairman and Chief Executive Officer
SELLERS:
By: ___________________________
Xxxxx X. Xxxxx, Xx.
By: ___________________________
Xxxxxxx X. Xxxxx
Estate of Xxxxx Xxxxxx Xxxx
By: ___________________________
Name: _________________________
Title: Independent Executor
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