EXHIBIT 10.11
MERGER AGREEMENT
BY AND AMONG
CAPE FEAR PAGING COMPANY OF NORTH CAROLINA
CAPE FEAR PAGING COMPANY
CF PAGING CORPORATION
THE SHAREHOLDERS OF CAPE FEAR PAGING COMPANY
OF NORTH CAROLINA, CAPE FEAR PAGING COMPANY AND
CF PAGING CORPORATION
AND
SATELLINK COMMUNICATIONS, INC. AND
SATELLINK PAGING, LLC
DATED AS OF NOVEMBER 6, 1998
TABLE OF CONTENTS
Page
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ARTICLE 1 CERTAIN DEFINITIONS........................................... 1
ARTICLE 2 MERGERS....................................................... 8
2.01 Cape Fear Merger................................................ 8
2.02 Cape Fear Tennessee Merger...................................... 9
2.03 CF Paging Merger................................................ 9
2.04 Time and Place of Closing....................................... 9
2.05 Effective Time.................................................. 9
2.06 Articles of Organization........................................ 10
2.07 Operating Agreement............................................. 10
2.08 Manager......................................................... 10
2.09 Name of Surviving Entity........................................ 10
ARTICLE 3 MANNER OF CONVERTING SHARES................................... 10
3.01 Conversion of Shares in Mergers................................. 10
3.02 Exchange Procedures and Payments at Closing..................... 11
3.03 Fractional Shares............................................... 11
3.04 Rights of Shareholders.......................................... 11
3.05 Shares Held by Cape Fear or Satellink........................... 11
3.06 Legending of Securities; Pooling Restrictions................... 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CAPE FEAR,
CAPE FEAR TENNESSEE AND CF PAGING............................. 12
4.01 Organization and Good Standing, Power and Authority............. 12
4.02 Capitalization and Ownership.................................... 12
4.03 Qualification................................................... 13
4.04 No Violation of Applicable Laws or Agreements................... 13
4.05 Financial Statements............................................ 14
4.06 Absence of Undisclosed Liabilities.............................. 14
4.07 Absence of Certain Changes...................................... 15
4.08 Tax Matters..................................................... 15
4.09 Pending Litigation or Proceedings............................... 16
4.10 Compliance With Applicable Laws................................. 17
4.11 Assets.......................................................... 17
4.12 Contracts....................................................... 18
4.13 Intellectual Property........................................... 18
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4.14 Consents and Approvals.......................................... 19
4.15 Employee Benefit Plans.......................................... 20
4.16 Compensation Arrangements; Bank Accounts;
Officers and Directors.......................................... 22
4.17 Transactions With Related Parties............................... 22
4.18 Labor Relations................................................. 22
4.19 Brokerage....................................................... 23
4.20 Year 2000....................................................... 23
4.21 Environmental Matters........................................... 23
4.22 Statements True and Correct..................................... 24
4.23 Accounting, Tax and Regulatory Matters.......................... 24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS................ 24
5.01 Ownership of Shares............................................. 24
5.02 Authority and Approval; No Breach By Agreement.................. 25
5.03 Accounting, Tax and Regulatory Matters.......................... 25
5.04 Purchase for Investment; Accredited Investor Status............. 25
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SATELLINK AND PARENT........ 26
6.01 Organization and Good Standing; Power and Authority............. 26
6.02 Capitalization.................................................. 26
6.03 Qualification................................................... 27
6.04 No Violation of Applicable Laws or Agreements................... 27
6.05 Parent Financial Statements..................................... 27
6.06 Absence of Undisclosed Liabilities.............................. 28
6.07 Absence of Certain Changes...................................... 28
6.08 Tax Matters..................................................... 28
6.09 Pending Litigation or Proceedings............................... 30
6.10 Compliance With Applicable Laws................................. 30
6.11 Assets.......................................................... 30
6.12 Contracts....................................................... 30
6.13 Intellectual Property........................................... 32
6.14 Consents and Approvals.......................................... 33
6.15 Employee Benefit Plans.......................................... 33
6.16 Compensation Arrangements; Bank Accounts;
Officers and Directors.......................................... 35
6.17 Transactions With Related Parties............................... 35
6.18 Labor Relations................................................. 35
6.19 Brokerage....................................................... 36
6.20 Year 2000....................................................... 36
6.21 Environmental Matters........................................... 36
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6.22 Statements True and Correct..................................... 37
6.23 Accounting, Tax and Regulatory Matters.......................... 37
ARTICLE 7 CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS................... 37
7.01 Operation of Business Pending Closing........................... 37
7.02 Access to Information........................................... 38
7.03 Schedules....................................................... 39
7.04 Best Efforts.................................................... 39
7.05 Exclusive Dealings.............................................. 39
7.06 Expenses........................................................ 40
7.07 Assignment of FCC License....................................... 40
7.08 Irrevocable Appointment of Shareholder Representative........... 40
7.09 Applications.................................................... 42
7.10 Filings with State Offices...................................... 42
7.11 Accounting and Tax Treatment.................................... 42
7.12 Agreements of Affiliates........................................ 42
ARTICLE 8 CONDITIONS TO CLOSING......................................... 43
8.01 Conditions To Obligations Of Satellink.......................... 43
8.02 Conditions to Obligations of Cape Fear Entities................. 46
ARTICLE 9 TERMINATION................................................... 48
9.01 When Agreement May be Terminated................................ 48
9.02 Effect of Termination........................................... 48
9.03 Payment of Expenses on Termination.............................. 49
ARTICLE 10 INDEMNIFICATION.............................................. 49
10.01 Definitions..................................................... 49
10.02 Agreement of Cape Fear Indemnitors to Indemnify................. 50
10.03 Agreement of Satellink Indemnitor to Indemnify.................. 50
10.04 Procedures for Indemnification.................................. 51
10.05 Third Party Claims.............................................. 52
10.06 Other Rights and Remedies Not Affected.......................... 54
10.07 Time Limitations................................................ 54
10.08 Limitations as to Amount........................................ 54
10.09 Subrogation..................................................... 55
10.10 Tax Effect and Insurance........................................ 55
ARTICLE 11 MISCELLANEOUS................................................ 55
11.01 Nature And Survival Of Representations.......................... 55
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11.02 Amendment....................................................... 55
11.03 Waiver.......................................................... 56
11.04 Governing Law................................................... 56
11.05 Notices......................................................... 56
11.06 Invalid Provision............................................... 57
11.07 Assignment...................................................... 57
11.08 Binding Effect.................................................. 57
11.09 Further Assurances.............................................. 57
11.10 Headings........................................................ 57
11.11 Person and Gender............................................... 57
11.12 Entire Agreement................................................ 57
11.13 Arbitration..................................................... 58
11.14 Execution in Counterparts....................................... 58
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EXHIBITS:
A Form of Escrow Agreement
B Form of Affiliate Letter
C Form of Cape Fear Legal Opinion
D Form of Non-Compete Agreement
E Form of Satellink Legal Opinion
SCHEDULES:
3.02 Bank Debt
4.01 Articles and Bylaws
4.02(a) Cape Fear Shareholders
4.02(b) Cape Fear Tennessee Shareholders
4.02(c) CF Paging Shareholders
4.04(b) No Violation of Agreements
4.04(e) Licenses
4.05 Financial Statements
4.08 Tax Matters
4.10 Compliance With Applicable Laws
4.11 Title to Assets
4.12 Material Contracts
4.13 Intellectual Property
4.14 Consents and Approvals
4.15 Employee Benefit Plans
4.16 Compensation Arrangements; Bank Accounts; Officers and Directors
4.17 Related Party Transactions
6.01 Articles and Bylaws
6.02(a) Parent Capitalization
6.02(b) Parent Subsidiary
6.04 No Violations
6.05 Parent Financial Statements
6.08 Satellink Tax Matters
6.10 Compliance With Applicable Laws
6.11 Title to Assets
6.12 Satellink Material Contracts
6.13 Satellink Intellectual Property
6.15 Satellink Employee Benefit Plans
6.16 Satellink Compensation Arrangements
6.17 Satellink Related Party Transactions
7.12 Affiliates of Cape Fear
8.01 Parties to Non-Compete Agreements
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is made as of November 6,
1998 by and among SATELLINK PAGING, LLC, a Georgia limited liability company
("SATELLINK"), SATELLINK COMMUNICATIONS, INC., a Georgia corporation ("PARENT"),
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CAPE FEAR PAGING COMPANY OF NORTH CAROLINA, a North Carolina corporation ("CAPE
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FEAR"), CAPE FEAR PAGING COMPANY, a Tennessee corporation ("CAPE FEAR
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TENNESSEE"), CF PAGING CORPORATION, a North Carolina corporation ("CF PAGING"),
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and the shareholders of each of Cape Fear, Cape Fear Tennessee and CF Paging
listed on the signature pages hereto (each a person listed on either the
signature pages hereto shall be referred to as a "SHAREHOLDER" and collectively,
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such persons shall be referred to as the "SHAREHOLDERS").
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BACKGROUND
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The Manager of Satellink and the Boards of Directors of Parent and
each Cape Fear Entity, respectively, are of the opinion that the transactions
described herein are in the best interests of the parties hereto and their
respective members and shareholders. This Agreement provides for the acquisition
of each Cape Fear Entity by Parent pursuant to the merger of each Cape Fear
Entity with and into Satellink. At the effective time of such merger, each
outstanding share of capital stock of each Cape Fear Entity shall, subject to
the terms and conditions of this Agreement, be converted into the right to
receive shares of Satellink Common Stock and each Cape Fear Entity shall be
merged with and into Satellink. Shareholders are the record and beneficial
owners of all of the issued and outstanding shares of Cape Fear, Cape Fear
Tennessee and CF Paging capital stock (the "CAPE FEAR SHARES," "CAPE FEAR
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TENNESSEE SHARES" and "CF PAGING SHARES," respectively and, together, the
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"SHARES"). Shareholders desire to sell and Parent desires to purchase all of
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the Shares, upon the terms and conditions set forth in this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which hereby are acknowledged, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used herein and in the Schedules and Exhibits hereto, the following
terms have the following respective meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION PROPOSAL" is defined in Section 7.05.
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"ADDITIONAL SHARES" is defined in Section 10.04(e).
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"AFFILIATE" is defined in Section 4.15(g).
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"AGREEMENT" means this Merger Agreement and all Schedules and Exhibits
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hereto, as the same may be supplemented, modified or amended from time to time.
"APPLICABLE LAW" means all applicable and currently in force
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provisions of constitutions, statutes, laws, rules, regulations and orders of
all Governmental Authorities.
"ASSETS" of a Person shall mean all of the assets, properties,
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businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, movable or immovable, corporeal or
incorporeal, tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or indirectly, in
whole or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of any such Person and wherever
located, including goodwill.
"BANK DEBT" is defined in Section 3.02.
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"BENEFIT PLANS" is defined in Section 4.15(a).
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"CAPE FEAR" is defined in the first paragraph of this Agreement.
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"CAPE FEAR ARTICLES OF MERGER" means the Articles of Merger reflecting
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the Cape Fear Merger as filed with the Secretary of State of Georgia.
"CAPE FEAR ENTITY" means each of Cape Fear, Cape Fear Tennessee and CF
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Paging, which shall collectively be referred to as the "CAPE FEAR ENTITIES."
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"CAPE FEAR INDEMNITEE" is defined in Section 10.01.
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"CAPE FEAR INDEMNITOR" is defined in Section 10.01.
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"CAPE FEAR MERGER" means the merger of Cape Fear with and into
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Satellink in accordance with this Agreement and the Georgia Limited Liability
Company Act.
"CAPE FEAR PAYMENT" is defined in Section 3.01(a).
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"CAPE FEAR SHARES" means the shares of common stock, $1.00 par value
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per share, of Cape Fear.
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"CAPE FEAR TENNESSEE" is defined in the first paragraph of this
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Agreement.
"CAPE FEAR TENNESSEE ARTICLES OF MERGER" means the Articles of Merger
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reflecting the Cape Fear Tennessee Merger as filed with the Secretary of State
of Georgia.
"CAPE FEAR TENNESSEE MERGER" means the merger of Cape Fear Tennessee
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with and into Satellink in accordance with this Agreement and the Georgia
Limited Liability Company Act.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, 42 U.S.C. (S) 9601 et. seq. and the regulations
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promulgated thereunder.
"CAPE FEAR TENNESSEE PAYMENT" is defined in Section 3.01(b).
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"CAPE FEAR TENNESSEE SHARES" means the shares of common stock, $1.00
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par value per share, of Cape Fear Tennessee.
"CF PAGING" is defined in the first paragraph of this Agreement.
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"CF PAGING ARTICLES OF MERGER" means the Articles of Merger reflecting
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the CF Paging Merger as filed with the Secretary of State of Georgia.
"CF PAGING MERGER" means the merger of CF Paging with and into
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Satellink in accordance with this Agreement and the Georgia Limited Liability
Company Act.
"CF PAGING PAYMENT" is defined in Section 3.01(c).
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"CF PAGING SHARES" means the shares of common stock, $1.00 par value
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per share, of CF Paging.
"CLOSING" means the consummation of the transactions described in this
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Agreement, and "CLOSING DATE" means the date upon which such consummation
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occurs.
"CLOSING BALANCE SHEET" is defined in Section 3.03(a).
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"CLOSING FINANCIAL DATA" is defined in Section 3.03(a).
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"CODE" means the Internal Revenue Code of 1986, as amended, and the
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rules and regulations promulgated thereunder.
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"CONFIDENTIAL INFORMATION" means any confidential or proprietary
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information about any Cape Fear Entity, provided that it does not include
information which Satellink can demonstrate (i) is or becomes generally
available to or known by the public other than as a result of improper
disclosure by Satellink or (ii) is obtained by Satellink from a source other
than a Cape Fear Entity, provided that such source was not bound by a duty of
confidentiality to a Cape Fear Entity with respect to such information or (iii)
Satellink independently develops, without recourse to the Confidential
Information.
"CONTRACT" shall mean any written or oral agreement, arrangement,
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authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding, or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"EFFECTIVE TIME" means the date and time on which the Merger becomes
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effective with the Secretary of State of Georgia.
"ENVIRONMENTAL LAWS" means CERCLA and RCRA, each as amended, together
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with all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or tic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
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as in effect from time to time.
"ESCROW AGENT" means First Union National Bank or such other mutually
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acceptable escrow agent as Satellink and the Shareholders shall select.
"ESCROW AGREEMENT" means the Escrow Agreement by and among the
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Shareholders, Parent and the Escrow Agent, substantially in the form set forth
as EXHIBIT A hereto.
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"ESCROW SHARES" means an aggregate of 253,390 shares of Satellink
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Common Stock to be issued in respect of the Payments
"FCC" means the Federal Communications Commission.
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"FCC LICENSE" means all of the right, title and interest of any Cape
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Fear Entity and/or any Shareholder in and to licenses, permits, certificates and
governmental authorizations of any Cape Fear Entity and/or any Shareholder
related to the operation of a radio station, including, without limitation, FCC
licenses for call signs WNCM631, WNMZ614, WPFX732, XXXX000, XXXX000, XXXX000,
XXXX000, KNLW288, KNKP551, KIY778, KUC909, WNLW248, WNWK983, WNVW973 and
WPHT911.
"FINANCIAL STATEMENTS" is defined in Section 4.05.
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"FORMER AFFILIATE" is defined in Section 4.15(g).
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"GAAP" consists of the official publications of the American Institute
----
of Certified Public Accountants. These official publications consist of
Accounting Principles, Board Opinions, Financial Accounting Standards Board
Statements, and Accounting Research Bulletins. In the event there is no
official pronouncement, the consensus of the accounting profession, as
manifested in textbooks, for example, determines GAAP.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, local,
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foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
"HAZARDOUS MATERIAL" means (i) any hazardous substance, hazardous
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material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"INDEMNIFICATION CLAIM" is defined in Section 10.01.
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"INDEMNITEES" is defined in Section 10.01.
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"INDEMNITORS" is defined in Section 10.01.
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"INTELLECTUAL PROPERTY" means all patents, designs, art work, designs-
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in progress, formulations, know-how, prototypes, inventions, trademarks, trade
names, trade styles, service marks, and copyrights owned or held by any Cape
Fear Entity and related to such Cape Fear Entity's business; all registrations
thereof and applications therefor, both registered and unregistered, foreign and
domestic; all trade secrets or processes owned by or belonging to any Cape Fear
Entity and related to such Cape Fear Entity's business; all computer software
(including documentation and related object and, if applicable, source codes)
owned by or belonging to any Cape Fear Entity and related to such Cape Fear
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Entity's business; and all confidential or proprietary information that are
either (i) owned by any Cape Fear Entity and related to such Cape Fear Entity's
business, whether or not reflected on the books and records of such Cape Fear
Entity, or (ii) as to which any Cape Fear Entity has rights as licensee,
constituting all of the intellectual property of the Cape Fear Entities used
exclusively in the Cape Fear Entities' business.
"LIEN" shall mean any conditional sale agreement, default of title,
----
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) Liens which do not materially impair the use of or title
to the Assets subject to such Lien.
"KNOWLEDGE" with respect to the Cape Fear Entity, means those facts
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known by any executive officer of any Cape Fear Entity, including, but not
limited to, X. Xxxxxx Xxxxxx, Jr., Xxxx Xxxxxx and Xxxxxxxx X. Xxxxxxx and, with
respect to Satellink or Parent, means those facts known by any executive officer
of Satellink or Parent, including, but not limited to, Xxxxx X. Xxxxxxxx or
Xxxxxx X. Xxxxxxxx.
"LETTER OF INTENT" means that certain Letter of Intent dated by
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Satellink on September 2, 1998 and approved and accepted by the Cape Fear
Entities on September 2, 1998.
"LOSSES" is defined in Section 10.01.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect to the
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property, business, operations, or financial condition of any Cape Fear Entity,
Satellink or Parent, as the case may be.
"MATERIAL CONTRACTS" is defined in Section 4.12.
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"MERGERS" means the Cape Fear Merger, Cape Fear Tennessee Merger and
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CF Paging Merger.
"NOTIFICATION PERIOD" is defined in Section 3.03(b).
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"OPERATING PROPERTY" means any property owned, leased, or operated by
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any Cape Fear Entity or in which such Cape Fear Entity holds a security interest
or other interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such property, but
only with respect to such property.
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"PARENT" is defined in the first paragraph of this Agreement.
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"PARENT FINANCIAL STATEMENTS" is defined in Section 6.05.
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"PARTICIPATION FACILITY" shall mean any facility or property in which
----------------------
any Cape Fear Entity participates in the management and, where required by the
context, said term means the owner or operator of such facility or property, but
only with respect to such facility or property.
"PAYMENTS" means, collectively, the Cape Fear Payment, the Cape Fear
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Tennessee Payment and the CF Paging Payment.
"PERMITTED ENCUMBRANCES" means (i) liens for taxes not yet due and
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payable, (ii) personal property leases, and (iii) with respect to Real Property,
privileges, easements, rights of way, licenses, covenants, zoning and other
restrictions of record, which individually or in the aggregate do not affect the
current uses of the Real Property.
"PERSON" means an individual, corporation, partnership, association,
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trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. (S)
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6901 et. seq. and the regulations promulgated thereunder.
"REDUCED SHARE PRICE" is defined in Section 10.04(e).
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"REDUCED VALUE" is defined in Section 10.04(e).
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"RELATED PARTY" means any of the officers or directors of any Cape
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Fear Entity or any Satellink Entity, as appropriate; any affiliate or relative
of any such person; or any business or entity in which any Cape Fear Entity or
any Satellink Entity, as appropriate, or any affiliate or relative of any such
person has any direct or material indirect interest.
"REPRESENTATIVE" is defined in Section 7.08.
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"RETURNED SHARES" is defined in Section 10.04(f).
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"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
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options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
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"SATELLINK" is defined in the first paragraph of this Agreement.
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"SATELLINK BENEFIT PLANS" is defined in Section 6.11.
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"SATELLINK COMMON STOCK" means the Class A common stock, $0.01 par
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value per share, of Parent.
"SATELLINK ENTITY" means each of Parent and Satellink, which shall
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collectively be referred to as the "SATELLINK ENTITIES."
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"SATELLINK INDEMNITEE" is defined in Section 10.01.
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"SATELLINK INDEMNITOR" is defined in Section 10.01.
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"SATELLINK MATERIAL CONTRACT" is defined in Section 6.11.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SHAREHOLDER" is defined in the first paragraph of this Agreement.
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"SHARES" is defined in the second paragraph of this Agreement.
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"SURVIVING ENTITY" means the entity surviving the Merger.
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"TAX RETURNS" means all returns or reports, including accompanying
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schedules, with respect to Taxes.
"TAXES" means all federal, state, local and foreign income, premium,
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payroll, withholding, excise, sales, use, real and personal property, use and
occupation, mercantile, capital stock, franchise and other taxes, including
interest and penalties thereon and all estimated taxes.
"THIRD PARTY CLAIM" is defined in Section 10.01.
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"THRESHOLD AMOUNT" is defined in Section 10.08.
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ARTICLE 2
MERGERS
2.01 Cape Fear Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time, Cape Fear shall be merged with and into
Satellink in accordance
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with the applicable provisions of the Georgia Limited Liability Company Act and
the North Carolina Business Corporation Law. Satellink shall be the Surviving
Entity resulting from the Cape Fear Merger and shall continue to be governed by
the laws of the State of Georgia. The Cape Fear Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved by the Manager
and Board of Directors of Satellink and Cape Fear, respectively.
2.02 Cape Fear Tennessee Merger. Subject to the terms and
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conditions of this Agreement, at the Effective Time, Cape Fear Tennessee shall
be merged with and into Satellink in accordance with the applicable provisions
of the Georgia Limited Liability Company Act and the Tennessee Business
Corporation Law. Satellink shall be the Surviving Entity resulting from the
Cape Fear Merger and shall continue to be governed by the laws of the State of
Georgia. The Cape Fear Tennessee Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved by the Manager and Board of
Directors of Satellink and Cape Fear Tennessee, respectively.
2.03 CF Paging Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time, CF Paging shall be merged with and into
Satellink in accordance with the applicable provisions of the Georgia Limited
Liability Company Act and the North Carolina Business Corporation Law.
Satellink shall be the Surviving Entity resulting from the CF Paging Merger and
shall continue to be governed by the laws of the State of Georgia. The CF
Paging Merger shall be consummated pursuant to the terms of this Agreement,
which has been approved by the Manager and Board of Directors of Satellink and
CF Paging, respectively.
2.04 Time and Place of Closing. The Closing will take place at
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9:00 AM (Atlanta, Georgia time) on the later to occur of December 11, 1998 or
the last business day of the month in which the FCC approves the transfer of the
FCC Licenses to Satellink pursuant to SECTION 7.08. The place of the Closing
will be at the offices of Xxxxxx & Bird llp, One Atlantic Center, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or such other place as may be
mutually agreed upon by the parties.
2.05 Effective Time. The Mergers and other transactions
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contemplated by this Agreement shall become effective on the later of the date
and at the later of the time the Cape Fear Articles of Merger reflecting the
Cape Fear Merger, the Cape Fear Tennessee Articles of Merger reflecting the Cape
Fear Tennessee Merger and the CF Paging Articles of Merger reflecting the CF
Paging Merger, become effective with the Secretary of State of Georgia. Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon by the
parties in writing, the parties shall use their reasonable efforts to cause the
Effective Time to occur at the close of business on the Closing Date.
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2.06 Articles of Organization. The articles of organization of
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Satellink in effect immediately prior to the Effective Time shall be the
articles of organization of the Surviving Entity at the Effective Time.
2.07 Operating Agreement. The operating agreement of Satellink in
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effect immediately prior to the Effective Time shall be the operating agreement
of the Surviving Entity at the Effective Time.
2.08 Manager. From and after the Effective Time, the Manager of
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Satellink in office immediately prior to the Effective Time shall remain the
Manager of the Surviving Entity and shall continue to hold such office from the
Effective Time until its successor is appointed in the manner provided by the
operating agreement of the Surviving Entity.
2.09 Name of Surviving Entity. The name of the Surviving Entity
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will be Satellink Paging, LLC.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.01 Conversion of Shares in Mergers. Subject to the provisions of
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this Article 3, at the Effective Time, by virtue of the Mergers and without any
action on the part of the Shareholders, the Shares, issued and outstanding at
the Effective Time shall be converted as follows:
(a) Each Cape Fear Share issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive 4.29424 shares of Satellink Common
Stock (the "CAPE FEAR PAYMENT").
-----------------
(b) Each Cape Fear Tennessee Share issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall
be converted into and exchanged for the right to receive 8,183.6 shares of
Satellink Common Stock (the "CAPE FEAR TENNESSEE PAYMENT"); and
---------------------------
(c) Each CF Paging Share issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive 66.821857 shares of Satellink Common
Stock (the "CF PAGING PAYMENT").
-----------------
3.02 Exchange Procedures and Payments at Closing. At the Closing,
-------------------------------------------
each Shareholder shall surrender the certificate or certificates representing
the Shares issued
-10-
and outstanding at the Effective Time to Satellink, all such certificates to be
duly endorsed in blank or accompanied by a duly executed assignment separate
from such certificate. Shareholders shall, upon surrender of such certificate or
certificates, receive in exchange therefor on the Closing Date the Payments,
less such Shareholder's pro rata portion of the Escrow Shares. The Escrow Shares
shall be issued and held by the Escrow Agent pursuant to the terms and
conditions of the Escrow Agreement. Prior to delivering the Payments to
Shareholders, Satellink shall deliver to each of the Cape Fear Entities' lenders
a wire transfer in an amount equal to the amount necessary to repay all debts
for money borrowed of the Cape Fear Entities ("BANK DEBT") set forth on SCHEDULE
--------- --------
3.02, including all interest and prepayment penalties due and payable.
----
3.03 Fractional Shares. Notwithstanding any other provision of
-----------------
this Agreement, each holder of Shares exchanged pursuant to the Mergers who
would otherwise have been entitled to receive a fraction of a share of Satellink
Common Stock (after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of Satellink Common Stock multiplied by
the market value of one share of Satellink Common Stock at the Effective Time.
No such holder will be entitled to dividends, voting rights, or any other rights
as a shareholder in respect of any fractional shares. For purposes of this
Agreement, the market value of one share of Satellink Common Stock at the
Effective Time shall be $9.00.
3.04 Rights of Former Shareholders. At the Effective Time, the
-----------------------------
stock transfer books of each Cape Fear Entity shall be closed and no transfer of
Shares shall thereafter be made or recognized. Until surrendered for exchange
in accordance with the provisions of SECTION 3.02 of this Agreement, each
certificate theretofore representing Shares shall from and after the Effective
Time represent for all purposes only the right to receive the Payments.
3.05 Shares Held by Cape Fear or Satellink. Each of the Shares
-------------------------------------
held by any Cape Fear Entity or by any Satellink Entity shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.06 Legending of Securities; Pooling Restrictions. Each
---------------------------------------------
certificate for Satellink Common Stock to be issued to the Shareholders shall
bear the following legend:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold,
transferred or otherwise disposed of unless registered with the Securities
and Exchange Commission of the United States and the securities regulatory
authorities of applicable states or unless an exemption from such
registration is available."
-11-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF CAPE FEAR, CAPE FEAR TENNESSEE AND CF PAGING
Cape Fear, Cape Fear Tennessee and CF Paging, jointly and severally,
hereby represent and warrant to Satellink as of the date hereof as follows:
4.01 Organization and Good Standing; Power and Authority. Each
---------------------------------------------------
Cape Fear Entity is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. Each Cape Fear
Entity has the requisite corporate power and authority to own or lease its
properties and assets. Each Cape Fear Entity has the requisite power, corporate
or otherwise, and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance by each Cape Fear Entity of its
obligations under this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action, corporate or otherwise, on the part of each Cape Fear Entity. This
Agreement has been duly and validly executed and delivered by each Cape Fear
Entity and constitutes each Cape Fear Entity's valid and binding obligation, and
is enforceable against each Cape Fear Entity in accordance with its terms. The
copies of the articles of incorporation and bylaws of each Cape Fear Entity, as
amended to date, which are attached as SCHEDULE 4.01, and copies of the
-------------
corporate minutes of each of Cape Fear Entity, which have been made available to
Satellink for review, are correct and complete and are in full force and effect.
The stock record books of each Cape Fear Entity, which have been made available
to Satellink for review, contain complete and accurate records of the stock
ownership of each Cape Fear Entity.
4.02 Capitalization and Ownership.
----------------------------
(a) Cape Fear's authorized capital stock consists of one hundred
thousand (100,000) shares of common stock, $1.00 par value, of which one hundred
thousand (100,000) shares are currently issued and outstanding and none of which
are held in its treasury. All of such outstanding shares of Cape Fear capital
stock have been duly authorized, validly issued and are fully paid and
nonassessable. None of the outstanding shares of capital stock of Cape Fear
have been issued in violation of any preemptive rights of the current or past
shareholders of Cape Fear. There are no outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of Cape Fear and no securities convertible into or exchangeable
for any of such capital stock. The Shareholders listed on SCHEDULE 4.02(A) own
----------------
all of the issued and outstanding shares of Cape Fear capital stock, free and
clear of
-12-
all liens, privileges, pledges, mortgages, claims, charges, security interests
and other encumbrances or adverse claims of any kind or nature. Cape Fear does
not, directly or indirectly, own any stock of, or any other interest in, any
Person.
(b) Cape Fear Tennessee's authorized capital stock consists of
one million (1,000,000) shares of common stock, $1.00 par value, of which two
hundred (200) shares are currently issued and outstanding and none of which are
held in its treasury. All of such outstanding shares of Cape Fear Tennessee
capital stock have been duly authorized, validly issued and are fully paid and
nonassessable. None of the outstanding shares of capital stock of Cape Fear
Tennessee have been issued in violation of any preemptive rights of the current
or past shareholders of Cape Fear Tennessee. There are no outstanding options,
warrants, rights, agreements, calls, commitments or demands of any character
relating to the capital stock of Cape Fear Tennessee and no securities
convertible into or exchangeable for any of such capital stock. The Shareholders
listed on SCHEDULE 4.02(B) own all of the issued and outstanding shares of Cape
----------------
Fear Tennessee capital stock, free and clear of all liens, privileges, pledges,
mortgages, claims, charges, security interests and other encumbrances or adverse
claims of any kind or nature. Cape Fear Tennessee does not, directly or
indirectly, own any stock of, or any other interest in, any Person.
(c) CF Paging's authorized capital stock consists of one hundred
thousand (100,000) shares of common stock, $1.00 par value, of which seven
thousand (7,000) shares are currently issued and outstanding and none of which
are held in its treasury. All of such outstanding shares of CF Paging capital
stock have been duly authorized, validly issued and are fully paid and
nonassessable. None of the outstanding shares of capital stock of CF Paging have
been issued in violation of any preemptive rights of the current or past
shareholders of CF Paging. There are no outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of CF Paging and no securities convertible into or exchangeable
for any of such capital stock. The Shareholders listed on SCHEDULE 4.02(C) own
----------------
all of the issued and outstanding shares of CF Paging capital stock, free and
clear of all liens, privileges, pledges, mortgages, claims, charges, security
interests and other encumbrances or adverse claims of any kind or nature. CF
Paging does not, directly or indirectly, own any stock of, or any other interest
in, any Person.
4.03 Qualification. Each Cape Fear Entity is duly qualified or
-------------
licensed to do business and is in good standing as a foreign corporation in each
jurisdiction in which such qualification or licensing is necessary under all
Applicable Laws.
4.04 No Violation of Applicable Laws or Agreements. The execution
---------------------------------------------
and delivery of this Agreement by each Cape Fear Entity does not, and the
consummation of the Mergers and the other transactions contemplated by this
Agreement and the
-13-
compliance with the terms, conditions and provisions of this Agreement by each
Cape Fear Entity, will not (a) violate or conflict with any provision of any
Cape Fear Entity's articles of incorporation or bylaws; (b) except as set forth
on SCHEDULE 4.04(B), violate, conflict with or result in the breach or
----------------
termination of, or otherwise give any contracting party (which has not consented
to such execution, delivery and consummation) the right to change the terms of,
or to terminate or accelerate the maturity of, or constitute a default under the
terms of, any indenture, mortgage, loan or credit agreement or any other
material agreement (including, but not limited to airtime purchase agreements,
tower leases and rental agreements) or instrument to which any Cape Fear Entity
is a party or by which any Cape Fear Entity or any of their respective assets
may be bound or affected; (c) violate any Applicable Law; (d) result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any Cape Fear Entity's assets or give to others any interests or
rights therein; other than any such conflicts, breaches, terminations,
accelerations, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect; or (e) except for those licenses
described on SCHEDULE 4.04(E) as to which governmental approval is required in
----------------
connection with the Merger, result in the revocation or suspension of any
license or permit held by any Cape Fear Entity.
4.05 Financial Statements. Attached hereto as SCHEDULE 4.05 are
-------------------- -------------
(a) the unaudited consolidating balance sheet of the Cape Fear Entities as of
September 30, 1998 and the audited consolidated balance sheets of the Cape Fear
Entities as of December 31, 1997, 1996 and 1995 and the related consolidating
statement of income, stockholders' equity and statement of cash flows of the
Cape Fear Entities for the nine months ended September 30, 1998 and consolidated
statements of income, stockholders' equity and statements of cash flows of the
Cape Fear Entities for the years ended December 31, 1997, 1996 and 1995 (the
"FINANCIAL STATEMENTS"). The Financial Statements (a) have been prepared in
---------------------
accordance with GAAP consistently applied (except as may be indicated therein or
in the notes thereto), (b) present fairly the financial position of each of the
Cape Fear Entities as of the dates indicated and present fairly the results of
the Cape Fear Entities' operations for the periods then ended, and (c) are in
accordance with the books and records of the Cape Fear Entities, which have been
properly maintained and are complete and correct in all material respects.
4.06 Absence of Undisclosed Liabilities. No Cape Fear Entity has
----------------------------------
any liabilities, whether absolute, contingent or conditional, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on any Cape Fear Entity, except liabilities which are accrued or reserved
against in the consolidated balance sheets of the Cape Fear Entities as of
September 30, 1998, included in the Financial Statements or reflected in the
notes thereto. No Cape Fear Entity has incurred or paid any liability, whether
absolute, contingent or conditional, since September 30, 1998, except for such
liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse
-14-
Effect on any Cape Fear Entity, or (ii) in connection with the transactions
contemplated by this Agreement. No Cape Fear Entity is directly or indirectly
liable, by guarantee, indemnity or otherwise, upon or with respect to, or
obligated, by discount or repurchase agreement or in any other way, to provide
funds in respect to, or obligated to guarantee or assume any liability, whether
absolute or contingent, known or unknown, of any other Person.
4.07 Absence of Certain Changes. Since September 30, 1998 (a)
--------------------------
there have been no events, changes or occurrence having, or which would
reasonably be expected to result in, a Material Adverse Effect upon any Cape
Fear Entity, and (b) no Cape Fear Entity has taken any action, or failed to take
any action, prior to the date of this Agreement, which action or failure, if
taken or omitted after the date of this Agreement, would represent or result in
a breach or violation of any of the covenants and agreements of the Cape Fear
Entities provided in Article 6. Since September 30, 1998, the business of each
Cape Fear Entity has been conducted only in the ordinary and usual course
consistent with past practice, except with respect to the transactions
contemplated in this Agreement.
4.08 Tax Matters.
-----------
(a) All Tax Returns required to be filed by or on behalf of each
Cape Fear Entity have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1997, and on or before the date of the most recent applicable year
end immediately preceding the Effective Time, and all Tax Returns filed are
complete and accurate. All Taxes and other related liabilities due and owing
with respect to periods preceding the Effective Time have been paid, accrued on
the Financial Statements or, in the case of financial statements of the Cape
Fear Entities prepared in the ordinary course of business covering the period
from January 1, 1998 through the Effective Time, will be accrued on such
financial statements, whether or not such Taxes or other liabilities are shown
on filed Tax Returns. As of the date of this Agreement, there is no audit
examination, deficiency, or refund litigation pending or, threatened with
respect to any Taxes, except as reserved against in the Financial Statements.
All Taxes and other liabilities due with respect to completed and settled
examinations or concluded litigation regarding Tax Returns have been paid. No
Cape Fear Entity has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a tax assessment or deficiency.
There are no liens, privileges, pledges, mortgages or security interests on any
of the assets of any Cape Fear Entity resulting from any failure (or alleged
failure) to pay any Tax. Attached to SCHEDULE 4.08 are correct and complete
-------------
copies of each of the Cape Fear Entities' federal and state income tax returns
for the years ended December 31, 1994, 1995, 1996 and 1997.
(b) No Cape Fear Entity has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such
-15-
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for
each Cape Fear Entity for the period or periods through and including the
Effective Date have been provided for on the Financial Statements in accordance
with GAAP.
(d) Deferred Taxes of each Cape Fear Entity have been provided
for on the Financial Statements in accordance with GAAP.
(e) Each Cape Fear Entity is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local tax laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code
(f) No Cape Fear Entity has (i) filed any consent or agreement
under Section 341(f) of the Code, (ii) applied for any tax ruling, (iii) entered
into a closing agreement with any taxing authority, (iv) filed an election under
Section 338(g) or 338(h)(10) of the Code (nor has a deemed election under
Section 338(e) of the Code occurred), (v) made any payments, or been a party to
an agreement (including this agreement) that under any circumstance would
obligate any Cape Fear Entity or the Surviving Entity , to make payments that
will not be deductible because of Section 280G or 162(m) of the Code, or (vi)
been a party to any tax allocation or tax sharing agreement. No Cape Fear Entity
is a "United States Real Property Holding Company" within the meaning of Section
897 of the Code. Each Cape Fear Entity has disclosed in accordance with
applicable law on its federal income tax returns all positions therein that
could give rise to an understatement of federal income tax.
(g) No Cape Fear Entity has (i) been a member of an affiliated
group filing a consolidated federal income tax return or (ii) been liable for
taxes of any person or entity under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor, by
contract, or otherwise.
4.09 Pending Litigation or Proceedings. There are no claims,
---------------------------------
suits, actions, proceedings, arbitrations or investigations pending or, to the
Knowledge of any Cape Fear Entity, threatened, against or otherwise relating to
or involving any Cape Fear Entity or any of their respective properties or
assets, the outcome of which would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect or to affect the ability of any
Cape Fear Entity to consummate the transactions contemplated by this Agreement.
-16-
4.10 Compliance With Applicable Laws. No Cape Fear Entity is in
-------------------------------
violation of any Applicable Law. Each Cape Fear Entity holds all licenses,
permits, registrations and other authorizations required to conduct its
business, and all such licenses, permits, registrations and other authorizations
are listed on SCHEDULE 4.10 and are valid and in full force and effect and there
-------------
has occurred no default under any such license, permit, registration or other
authorization is in material compliance with all such licenses, permits,
registrations and authorizations. No Cape Fear Entity is subject to any
judgment, order, writ, injunction or decree issued by any court or any
governmental agency.
4.11 Assets.
------
(a) Except as set forth on SCHEDULE 4.11, each Cape Fear Entity has
-------------
good, valid and marketable title, free and clear of all liens, pledges,
mortgages, claims, charges, security interests and other encumbrances of any
kind or nature to all of its Assets. All tangible and/or corporeal properties
used in the business of the Cape Fear Entities are in working condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with the Cape Fear Entities' past practices.
(b) All items of inventory of the Cape Fear Entities reflected on the
most recent balance sheet included in the Financial Statements delivered prior
to the date of this Agreement and prior to the Effective Time consisted and will
consist, as applicable, of items of a quality and quantity usable and saleable
in the ordinary course of business and conform to generally accepted standards
in the industry in which the Cape Fear Entities are a part.
(c) The accounts receivable of the Cape Fear Entities as set forth on
the most recent balance sheet included in the Financial Statements delivered
prior to the date of this agreement or arising since the date thereof are valid
and genuine; have arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the ordinary course
of business consistent with past practice; are not, to the Knowledge of any Cape
Fear Entity, subject to valid defenses, set-offs or counterclaims; and, to the
Knowledge of any Cape Fear Entity, are collectible within 90 days after billing
at the full recorded amount thereof less, in the case of accounts receivable
appearing on the most recent balance sheet included in the Financial Statements
delivered prior to the date of this Agreement, the recorded allowance for
collection losses on such balance sheet. The allowance for collection losses on
such balance sheet has been determined in accordance with GAAP.
(d) All Assets which are material to the Cape Fear Entities' business
on a consolidated basis and are held under leases or subleases by any Cape Fear
Entity are
-17-
held under valid Contracts that are enforceable in accordance with their
respective terms, and each such Contract is in full force and effect.
(e) No Cape Fear Entity has received notice from any insurance carrier
that (i) any policy of insurance will be canceled or that coverage thereunder
will be reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. There are presently no
claims pending under such policies of insurance and no notices of claims in
excess of such amounts have been given by any Cape Fear Entity under such
policies.
(f) The Assets of each of the Cape Fear Entities include all Assets
required to operate the business of the Cape Fear Entities as presently
conducted.
4.12 Contracts. The Assets of the Cape Fear Entities include all
---------
of the contracts, airtime purchase agreements, leases, warranties, commitments,
agreements, arrangements and purchase and sales orders, whether oral or written,
pursuant to which any Cape Fear Entity enjoys any right or benefit in connection
with the Cape Fear Entities' business, whether or not reflected upon the books
and records of the Cape Fear Entities, together with the right of the Cape Fear
Entities to receive income in respect of such contracts, leases, warranties,
commitments, agreements, arrangements, and purchase and sales orders on and
after the Closing Date. SCHEDULE 4.12 contains a correct and complete list of
-------------
all contracts, leases, warranties, legal commitments, agreements, arrangements,
whether oral or written, pursuant to which any Cape Fear Entity enjoys any
rights or benefits or undertakes any obligations or liabilities that (i) have a
duration of twelve (12) months or more and which are not terminable by such Cape
Fear Entity without penalty upon thirty (30) days or less prior written notice,
(ii) require or could reasonably be expected to require any party thereto to pay
$25,000 or more, or (iii) are between any Cape Fear Entity and any shareholder
or employee thereof or Related Party (collectively, the "MATERIAL CONTRACTS").
------------------
All Material Contracts are in full force and effect, and no Cape Fear Entity
nor, to the knowledge of any Cape Fear Entity, any other party thereto is in
default under nor has any event occurred which with the passage of time or
giving notice or both would result in any party to a Material Contract being in
default under any of the terms thereof.
4.13 Intellectual Property. SCHEDULE 4.13 contains a true and
--------------------- -------------
correct list of all Intellectual Property owned or used by any Cape Fear Entity
or any affiliate of any Cape Fear Entity relating to or used or useful in
connection with the Cape Fear Entities' business, containing a brief description
of each item of Intellectual Property and the nature of such Cape Fear Entity's
interest therein. The Assets of the Cape Fear Entities include and, upon the
consummation of the transactions contemplated by this Agreement, Satellink will
own or have the right to use all patents, designs, art work, designs-in-
progress, formulations, know-how, inventions, trademarks, trade names, trade
styles,
-18-
service marks, copyrights, manufacturing processes, and confidential or
proprietary information necessary for the conduct of the cape Fear Entities'
business as presently conducted. No claim is pending or, to the Knowledge of
any Cape Fear Entity threatened, and no Cape Fear Entity has received notice
that the conduct of the Cape Fear Entities' business (including without
limitation, the Cape Fear Entities' use of any Intellectual Property) infringes
upon or conflicts with any rights claimed therein by any third party, nor is any
Cape Fear Entity aware of any unasserted claim the assertion of which is
probable. To the Knowledge of each Cape Fear Entity, no use by any Cape Fear
Entity of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. No claim is pending, or to the
Knowledge of any Cape Fear Entity threatened, which alleges that any
Intellectual Property owned or licensed by any Cape Fear Entity for use in the
Cape Fear Entities' business or which any Cape Fear Entity otherwise has the
right to use is invalid or unenforceable by the Cape Fear Entities', nor is any
Cape Fear Entity aware of any such claim that is unasserted, but the assertion
of which is probable. With respect to the Cape Fear Entities' business, no Cape
Fear Entity manufactures products which are the subject of patents, patent
applications, copyrights, copyright applications, trademarks, trademark
applications, trade styles, service marks, or trade secrets owned by or licensed
from third parties. No royalties or fees are payable by any Cape Fear Entity to
anyone for use of the Intellectual Property. True, correct, and complete copies
of all agreements pursuant to which any Cape Fear Entity has any license or
right to use any Intellectual Property are attached to SCHEDULE 4.13. All such
-------------
agreements are in full force and effect and there are no existing defaults or
events of default, real or claimed, or events which with or without notice or
lapse of time or both would constitute defaults under such agreements that would
give the non-defaulting party a right to terminate such agreement or a right to
receive any payment pursuant to such agreement. With respect to the Cape Fear
Entities' business, no Cape Fear Entity has received any notice that any
operation or machinery employed by the Cape Fear Entities, violates or infringes
upon any claims of any United States or foreign patent or patent application
owned or held by any third party, nor is any Cape Fear Entity aware of any
unasserted claim the assertion of which is probable. All Intellectual Property
and registrations, applications, and agreements related thereto are fully
assignable to Satellink without the consent of any third party.
4.14 Consents and Approvals. Except as set forth on SCHEDULE 4.14,
---------------------- -------------
the execution, delivery and performance of this Agreement by each of Cape Fear
Entity and the consummation of the transactions contemplated hereby do not
require any consent, approval or authorization of, or registration or filing
with, any Person or Governmental Authority.
-19-
4.15 Employee Benefit Plans.
----------------------
(a) The only employee pension benefit plans (as defined in Section
3(2) of ERISA), welfare benefit plans (as defined in Section 3(1) of ERISA),
bonus, stock purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plan or arrangement, and other material employee
fringe benefit plans presently maintained by, or contributed to by any Cape Fear
Entity for the benefit of any current or former employee of any Cape Fear
Entity, other than a multiemployer plan as defined in Section 3(37) of the
ERISA, are those listed on SCHEDULE 4.15 (the "BENEFIT PLANS").
------------- -------------
(b) Each Cape Fear Entity and each of the Benefit Plans are in
compliance with the applicable provisions of ERISA, and those provisions of the
Code applicable to the Benefit Plans.
(c) All contributions to, and payments from, the Benefit Plans which
may have been required to be made in accordance with the Benefit Plans and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made.
(d) To the Knowledge of each Cape Fear Entity, there are (i) no
pending investigations by any Governmental Authority involving the Benefit
Plans, (ii) no termination proceedings involving the Benefit Plans, (iii) no
threatened or pending claims (except for claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings against any Benefit
Plan or asserting any rights or claims to benefits under any Benefit Plan which
could give rise to any material liability, and (iv) no facts which could give
rise to any material liability in the event of such investigation, claim, suit
or proceeding.
(e) To the Knowledge of each Cape Fear Entity, neither the Benefit
Plans, any Cape Fear Entity, any employee of any Cape Fear Entity nor any trusts
created thereunder or any trustee, administrator or other fiduciary thereof, has
engaged in a "prohibited transaction" (as such term is defined in Section 4975
of the Code or Section 406 of ERISA) which could subject any Cape Fear Entity to
the tax or penalty on prohibited transactions imposed by such Section 4975 or
the sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any
such trust has been terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereunder) with respect to
either thereof.
(f) No Benefit Plan subject to Title IV of ERISA has incurred any
material liability to the Pension Benefit Guaranty Corporation other than for
the payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed by
Section 412 of the Code.
-20-
Each Cape Fear Entity has furnished to Satellink the most recent actuarial
report with respect to each Benefit Plan that is a defined benefit pension plan
as defined by Section 3(35) of ERISA. The information supplied to the actuary by
each of Cape Fear Entity for use in preparing those reports was complete and
accurate and no Cape Fear Entity has reason to believe that the conclusions
expressed in those reports are incorrect.
(g) At no time for which any relevant statute of limitations remains
open have (a) any Cape Fear Entity, (b) any employer that is, together with any
Cape Fear Entity, treated as a "single employer" under Section 414(b), 414(c) or
414(m) of the Code (an "AFFILIATE"), or (c) any employer that was at any time
---------
after September 2, 1984, an Affiliate of any Cape Fear Entity (a "FORMER
------
AFFILIATE"), incurred any liability which could subject Satellink, or any Cape
---------
Fear Entity to liability under Section 4062, 4063 or 4064 of ERISA.
(h) At no time for which any relevant statute of limitations remains
open has any Cape Fear Entity or any Affiliate or Former Affiliate been required
to contribute to, or incurred any withdrawal liability within the meaning of
Section 4201 of ERISA, to any multiemployer pension plan, within the meaning of
Section 3(37) of ERISA, which liability has not been fully paid as of the date
hereof.
(i) Each Cape Fear Entity has complied with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Benefit Plan that is, or was during
any taxable year of any Cape Fear Entity for which the statute of limitations on
the assessment of federal income taxes remains open, by consent or otherwise, a
group health plan within the meaning of Section 5000(b)(1) of the Code.
(j) No Cape Fear Entity has incurred or is reasonably likely to incur
any liability that is or could reasonably be expected to become a liability of
any Cape Fear Entity with respect to any plan or arrangement that would be
included within the definition of "Benefit Plan" hereunder but for the fact that
such plan or arrangement was terminated before the date of this Agreement.
(k) No payment which is or may be made by any Cape Fear Entity, or
from any Benefit Plan, to any employee, former employee, director or agent of
any Cape Fear Entity under the terms of any Benefit Plan, either alone or in
conjunction with any other payment, will or could be characterized as an excess
parachute payment under Section 280G of the Code.
(l) No Cape Fear Entity has incurred any liability to provide death or
medical benefits with respect to any current or former employee of any Cape Fear
Entity beyond retirement or other termination of employment other than as
required by Section
-21-
4890B of the Code, benefit provisions under any employee pension benefit plan,
deferred compensation accrued on the Cape Fear Entities' books, disability
benefits which have been fully provided for by insurance or otherwise, or a
severance pay plan.
4.16 Compensation Arrangements; Bank Accounts; Officers and
------------------------------------------------------
Directors. SCHEDULE 4.16 sets forth the following information including, where
--------- -------------
applicable, a copy of any relevant document reflecting such information:
(a) the name and current annual salary, including any bonus, if
applicable, of each of the present officers and employees of each of Cape Fear
Entity whose current annual salary, including any promised or customary bonus,
equals or exceeds $50,000, together with a statement of the full amount of all
cash remuneration paid by any Cape Fear Entity to each such person and to any
director of any Cape Fear Entity, during the twelve-month period preceding the
date hereof;
(b) the name of each bank, brokerage house or other financial
institution in which any Cape Fear Entity has an account or safe deposit box,
the identifying numbers thereof, and the names of all persons authorized to draw
thereon or to have access thereto; and
(c) the name and title of each director and officer of each Cape Fear
Entity and of each trustee, fiduciary or plan administrator of each Benefit
Plan.
4.17 Transactions With Related Parties. Except as set forth on
---------------------------------
SCHEDULE 4.17, no Related Party:
-------------
(a) has borrowed money or loaned money to any Cape Fear Entity
which will not be repaid on or before Closing;
(b) has any contractual or other claim against any Cape Fear
Entity; or
(c) had, since January 1, 1993, any interest in any property
or assets used by any Cape Fear Entity in its business.
4.18 Labor Relations. (a) No employee of any Cape Fear Entity is
---------------
represented by any union or other labor organization; (b) there is no material
unfair labor practice complaint against any Cape Fear Entity pending or overtly
threatened before the National Labor Relations Board; and (c) there is no labor
strike, dispute, slow down or stoppage actually pending or threatened against or
involving any Cape Fear Entity.
-22-
4.19 Brokerage. No Cape Fear Entity nor any Shareholder has made
---------
any agreement or taken any other action which might cause anyone to become
entitled to a broker's fee or commission as a result of the transactions
contemplated hereby.
4.20 Year 2000. Each Cape Fear Entity's hardware and software
---------
systems include design, performance and functionality so that no Cape Fear
Entity reasonably expects to experience invalid or incorrect results or abnormal
hardware or software operation related to calendar year 2000. Each Cape Fear
Entity's hardware and software systems include calendar year 2000 date
conversion and compatibility capabilities, including, but not limited to, date
data century recognition, same century and multiple century formula and date
value calculations, and user interface date data values that reflect the
century.
4.21 Environmental Matters.
---------------------
(a) To the Knowledge of each Cape Fear Entity, each Cape Fear Entity,
its Participation Facilities, and its Operating Properties are, and have been,
in compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Cape Fear Entities.
(b) To the Knowledge of each Cape Fear Entity, there is no litigation
pending or threatened before any court, Governmental Authority, or authority or
other forum in which any Cape Fear Entity or any of its Operating Properties or
Participation Facilities (or any Cape Fear Entity in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Cape Fear Entity
or any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Cape Fear
Entities, nor is there any reasonable basis for any litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Cape Fear Material Adverse Effect on the
Cape Fear Entities.
(c) During the period of (i) any Cape Fear Entity's ownership or
operation of any of their respective current properties, (ii) any Cape Fear
Entity's participation in the management of any Participation Facility, or (iii)
any Cape Fear Entity's holding of a security interest in a Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or
-23-
affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Cape Fear Entities. Prior to the period of (i) any Cape Fear
Entity's ownership or operation of any of their respective current properties,
(ii) any Cape Fear Entity's participation in the management of any Participation
Facility, or (iii) any Cape Fear Entity's holding of a security interest in a
Operating Property, to the Knowledge of any Cape Fear Entity, there were no
releases, discharges, spillages, or disposals of Hazardous Material in, on,
under, or affecting any such property, Participation Facility or Operating
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on the Cape Fear Entities.
4.22 Statements True and Correct. No statement, certificate,
---------------------------
instrument, or other writing furnished or to be furnished by any Cape Fear
Entity or any Affiliate thereof to Satellink pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. All documents that any Cape Fear
Entity or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable Law.
4.23 Accounting, Tax and Regulatory Matters. No Cape Fear Entity
--------------------------------------
or any Shareholder or any Affiliate thereof has taken or agreed to take any
action or has any Knowledge of any fact or circumstance that is reasonably
likely to (i) prevent the Mergers from qualifying for pooling-of-interests
accounting treatment or as a reorganization within the meaning of Section 368(c)
of the Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder hereby represents and warrants to Satellink and
Parent as follows:
5.01 Ownership of Shares. Such Shareholder is the owner of
-------------------
all right, title and interest (legal and beneficial) in and to that number of
shares Cape Fear Common Stock, Cape Fear Tennessee Common Stock and CF Paging
Common Stock listed opposite the name of such Shareholder on SCHEDULES 4.02(A),
4.02(B) AND 4.02(C), free and clear of any and all Liens of any nature
whatsoever. Except as specifically contemplated by this Agreement, no person or
entity has any Contract or Right (whether
-24-
preemptive or contractual) capable of becoming a Contract or Right for the
purchase of any of shares of Cape Fear Common Stock, Cape Fear Tennessee Common
Stock or CF Paging Common Stock from such Shareholder.
5.02 Authority and Approval; No Breach By Agreement. Such
----------------------------------------------
Shareholder has the full power, authority and capacity necessary to enter into
and perform its obligations under this Agreement, to assign, transfer, convey
and deliver the shares of Cape Fear Common Stock, Cape Fear Tennessee Common
Stock or CF Paging Common Stock so owned by such Shareholder pursuant to this
Agreement, and to consummate the transactions contemplated hereby. As of the
date hereof, this Agreement has been duly executed and delivered by such
Shareholder, and constitutes a legal, valid, and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought). No
notice to, filing with, or consent of, any public body or authority or other
Person is necessary for the consummation by such Shareholder of the transactions
contemplated in this Agreement. Such Shareholder agrees that it will not seek
to assert dissenters' rights to which such Shareholder would otherwise be
entitled.
5.03 Accounting, Tax and Regulatory Matters. Neither such Shareholder nor
--------------------------------------
any Affiliate thereof has taken or agreed to take any action or has any
knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the Merger from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(c) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any consents of any
regulatory authorities or result in the imposition of a condition or restriction
of the type referred to in the last sentence of such Section.
5.04 Purchase for Investment; Accredited Investor Status. Such
---------------------------------------------------
Shareholder is acquiring the shares of Satellink Common Stock to be issued
pursuant to this Agreement for investment only, for such Shareholder's own
account and not as a nominee or agent, and not with the view to, or for resale
in connection with, any distribution thereof or participation therein. Such
Shareholder is an "accredited investor" as such term is defined in Rule 501(a)
under the Securities Act. Such Shareholder understands that the shares of
Satellink Common Stock to be issued pursuant to this Agreement have not been,
and will not be, registered under the 1933 Act in reliance upon the
representations set forth herein.
-25-
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SATELLINK AND PARENT
Satellink and Parent, jointly and severally, hereby represent and
warrant to the Cape Fear Entities and Shareholders as of the date hereof as
follows:
6.01 Organization and Good Standing; Power and Authority. Satellink is a
---------------------------------------------------
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Georgia. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Each Satellink Entity has the requisite power and authority to own or lease its
assets as now owned or leased, and to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by each Satellink
Entity of its obligations under this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary action on the part of each Satellink Entity. This Agreement has been
duly and validly executed and delivered by each Satellink Entity and constitutes
each Satellink Entity's valid and binding obligation, enforceable against such
Satellink Entity in accordance with its terms. The copies of the articles of
incorporation, articles of organization, operating agreement and bylaws of each
Satellink Entity, as amended to date, which are attached as SCHEDULE 6.01, and
-------------
copies of the corporate minutes of each Satellink Entity, which have been made
available to the Cape Fear Entities for review, are correct and complete and are
in full force and effect. The record books of each Satellink Entity, which have
been made available to the Cape Fear Entities for review, contain complete and
accurate records of the equity ownership of each Satellink Entity.
6.02 Capitalization. Parent's authorized capital stock consists of:
--------------
(i) fifty million (50,000,000) shares of Class A common stock, $.01 par value,
of which three million fifty four thousand three hundred seventy seven
(3,054,377) shares are currently issued and outstanding and none of which are
held in its treasury; (ii) twenty thousand (20,000) shares of Class B common
stock, $.01 par value, none of which are currently issued and outstanding and
none of which are held in treasury; (iii) seven thousand five hundred (7,500)
shares of Series A convertible preferred stock, $.01 par value, of which seven
thousand three hundred sixty (7,360) shares are currently issued and outstanding
and none of which are held in treasury; (iv) thirty thousand (30,000) shares of
Series B convertible preferred stock, $.01 par value, none of which are
currently issued and outstanding and none of which are held in treasury; (v)
three thousand five hundred (3,500) shares of Series C redeemable convertible
preferred stock, $.01 par value per share, of which three thousand five hundred
(3,500) shares are currently issued and outstanding and none of which are held
in treasury; and (vi) four thousand five hundred (4,500) shares of Series D
redeemable preferred stock, $.01 par value per share, of which four thousand
five hundred (4,500) shares are currently issued and outstanding and none of
which are held in treasury.
-26-
All of such outstanding shares of Parent capital stock have been duly
authorized, validly issued and are fully paid and nonassessable. None of the
outstanding shares of capital stock of Parent has been issued in violation of
any preemptive rights of the current or past shareholders of Parent. Except as
set forth on SCHEDULE 6.02(A), there are no outstanding options, warrants,
----------------
rights, agreements, calls, commitments or demands of any character relating to
the capital stock of Parent and no securities convertible into or exchangeable
for any of such capital stock. Except as set forth on SCHEDULE 6.02(B), Parent
----------------
does not, directly or indirectly, own any stock of, or any other interest in,
any Person.
6.03 Qualification. Satellink is duly qualified or licensed to do
-------------
business and is in good standing as a foreign corporation in each jurisdiction
in which such qualification or licensing is necessary under all Applicable Laws.
6.04 No Violation of Applicable Laws or Agreements. Except as set
---------------------------------------------
forth on SCHEDULE 6.04, the execution and delivery of this Agreement do not, and
-------------
the consummation of the Mergers and the other transactions contemplated by this
Agreement and the compliance with the terms, conditions and provisions of this
Agreement by each Satellink Entity will not, (a) violate or conflict with any
provision of any Satellink Entity's articles of incorporation or organization or
bylaws or operating agreement, as the case may be; (b) violate, conflict with or
result in the breach or termination of, require the consent of, or otherwise
give any contracting party (which has not consented to such execution, delivery
and consummation) the right to change the terms of, or to terminate or
accelerate the maturity of, or constitute a default under the terms of, any
indenture, mortgage, loan or credit agreement or any other material agreement or
instrument to which any Satellink Entity is a party or by which any of its
assets may be bound or affected; (c) violate any Applicable Law or (d) result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any Satellink Entity's assets or give to others any interests or
rights therein; other than any such conflicts, breaches, terminations,
accelerations, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
6.05 Parent Financial Statements. Attached hereto as SCHEDULE 6.05
--------------------------- -------------
are (a) the audited consolidated balance sheets of Parent as of July 31, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity and statements of cash flows of Parent for the fiscal years ended July
31, 1997 and 1996 and (b) the unaudited consolidated balance sheets of Parent
as of July 31, 1998 and the related consolidated statements of income,
stockholders' equity and statements of cash flows of Parent for the fiscal year
ended July 31, 1998 (the "PARENT FINANCIAL STATEMENTS"). The Parent Financial
---------------------------
Statements (a) have been prepared in accordance with GAAP consistently applied
(except as may be indicated therein or in the notes thereto), (b) present fairly
the financial position of Satellink as of the dates indicated and present fairly
the results of Satellink's operations for the periods then ended, (c) are in
accordance with the books and
-27-
records of Satellink, which have been properly maintained and are complete and
correct in all material respects, and (d) the aggregate reserve reflected
therein was determined in accordance with generally accepted actuarial standards
consistently applied (except as otherwise noted therein), is fairly stated in
accordance with sound actuarial principles and is in conformance with GAAP.
6.06 Absence of Undisclosed Liabilities. No Satellink Entity has
----------------------------------
any liabilities, whether absolute, contingent or conditional, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on any Satellink Entity, except liabilities which are accrued or reserved
against in the consolidated balance sheets of Parent, included in the Parent
Financial Statements or reflected in the notes thereto. No Satellink Entity has
incurred or paid any liability, whether absolute, contingent or conditional,
since July 31, 1998, except for such liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on any Satellink Entity, or (ii) in connection with the
transactions contemplated by this Agreement. Except with respect to Parent's
credit facility with Creditanstalt American Corporation, no Satellink Entity is
directly or indirectly liable, by guarantee, indemnity or otherwise, upon or
with respect to, or obligated, by discount or repurchase agreement or in any
other way, to provide funds in respect to, or obligated to guarantee or assume
any liability, whether absolute or contingent, known or unknown, of any other
Person.
6.07 Absence of Certain Changes. Since July 31, 1998 (a) there
--------------------------
have been no events, changes or occurrence having, or which would reasonably be
expected to result in, a Material Adverse Effect upon any Satellink Entity, and
(b) no Satellink Entity has taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken or
omitted after the date of this Agreement, would represent or result in a breach
or violation of any of the covenants and agreements of Satellink provided in
Article 7. Since July 31, 1998, the business of the Satellink Entities has been
conducted only in the ordinary and usual course consistent with past practice,
except with respect to the transactions contemplated in this Agreement.
6.08 Tax Matters.
-----------
(a) All Tax Returns required to be filed by or on behalf of any
Satellink Entity have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1997, and on or before the date of the most recent applicable year
end immediately preceding the Effective Time, and all Tax Returns filed are
complete and accurate. All Taxes and other related liabilities due and owing
with respect to periods preceding the Effective Time have been paid, accrued on
the Parent Financial Statements or, in the case of financial statements of
Parent prepared in the ordinary course of business covering the period from
January 1, 1998
-28-
through the Effective Time, will be accrued on such financial statements,
whether or not such Taxes or other liabilities are shown on filed Tax Returns.
As of the date of this Agreement, there is no audit examination, deficiency, or
refund litigation pending or, threatened with respect to any Taxes, except as
reserved against in the Parent Financial Statements. All Taxes and other
liabilities due with respect to completed and settled examinations or concluded
litigation regarding Tax Returns have been paid. No Satellink Entity has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a tax assessment or deficiency. There are no liens,
privileges, pledges, mortgages or security interests on any of the assets of any
Satellink Entity resulting from any failure (or alleged failure) to pay any Tax.
Attached to SCHEDULE 6.08 are correct and complete copies of Parent's federal
-------------
and state income tax returns for the years ended December 31, 1994, 1995, 1996
and 1997.
(b) No Satellink Entity has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for each
Satellink Entity for the period or periods through and including the Effective
Date have been provided for on the Financial Statements in accordance with GAAP.
(d) Deferred Taxes of each Satellink Entity have been provided for on
the Parent Financial Statements in accordance with GAAP.
(e) Each Satellink Entity is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms W-
9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local tax laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code
(f) No Satellink Entity has (i) filed any consent or agreement under
Section 341(f) of the Code, (ii) applied for any tax ruling, (iii) entered into
a closing agreement with any taxing authority, (iv) filed an election under
Section 338(g) or 338(h)(10) of the Code (nor has a deemed election under
Section 338(e) of the Code occurred), (v) made any payments, or been a party to
an agreement (including this agreement) that under any circumstance would
obligate any Satellink Entity or the Surviving Entity , to make payments that
will not be deductible because of Section 280G or 162(m) of the Code, or (vi)
been a party to any tax allocation or tax sharing agreement. No Satellink
Entity is a "United States Real Property Holding Company" within the meaning of
Section 897 of the Code. Each Satellink Entity has disclosed in accordance
-29-
with applicable law on its federal income tax returns all positions therein that
could give rise to an understatement of federal income tax.
(g) No Satellink Entity has (i) been a member of an affiliated group
filing a consolidated federal income tax return or (ii) been liable for taxes of
any person or entity under Treas. Reg. (S) 1.1502-6 (or any similar provision of
state, local or foreign law) as a transferee or successor, by contract, or
otherwise.
6.09 Pending Litigation or Proceedings. There are no claims, suits, actions,
---------------------------------
proceedings, arbitrations or investigations pending or, to the knowledge of any
Satellink Entity, threatened, against or otherwise relating to or involving any
Satellink Entity or any of its properties, the outcome of which would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
or to affect the ability of Parent or Satellink to consummate the transactions
contemplated by this Agreement.
6.10 Compliance With Applicable Laws. No Satellink Entity is in
-------------------------------
violation of any Applicable Law. Each Satellink Entity holds all licenses,
permits, registrations and other authorizations required to conduct its
business, and all such licenses, permits, registrations and other authorizations
are listed on SCHEDULE 6.10 and are valid and in full force and effect and there
-------------
has occurred no default under any such license, permit, registration or other
authorization is in material compliance with all such licenses, permits,
registrations and authorizations. No Satellink Entity is subject to any
judgment, order, writ, injunction or decree issued by any court or any
governmental agency.
6.11 Assets.
------
(a) Except as set forth on SCHEDULE 6.11, each Satellink Entity has
-------------
good, valid and marketable title, free and clear of all liens, pledges,
mortgages, claims, charges, security interests and other encumbrances of any
kind or nature to all of its Assets. All tangible and/or corporeal properties
used in the business of the Satellink Entities are in working condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with the Satellink Entities' past practices.
(b) All items of inventory of the Satellink Entities reflected on the
most recent balance sheet included in the Parent Financial Statements delivered
prior to the date of this Agreement and prior to the Effective Time consisted
and will consist, as applicable, of items of a quality and quantity usable and
saleable in the ordinary course of business and conform to generally accepted
standards in the industry in which the Satellink Entities are a part.
(c) The accounts receivable of the Satellink Entities as set forth on
the most recent balance sheet included in the Parent Financial Statements
delivered prior to
-30-
the date of this agreement or arising since the date thereof are valid and
genuine; have arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the ordinary course
of business consistent with past practice; are not, to the Knowledge of any
Satellink Entity, subject to valid defenses, set-offs or counterclaims; and, to
the Knowledge of any Satellink Entity, are collectible within 90 days after
billing at the full recorded amount thereof less, in the case of accounts
receivable appearing on the most recent balance sheet included in the Parent
Financial Statements delivered prior to the date of this Agreement, the recorded
allowance for collection losses on such balance sheet. The allowance for
collection losses on such balance sheet has been determined in accordance with
GAAP.
(d) All Assets which are material to the Satellink Entities' business
on a consolidated basis and are held under leases or subleases by any Satellink
Entity are held under valid Contracts that are enforceable in accordance with
their respective terms, and each such Contract is in full force and effect.
(e) No Satellink Entity has received notice from any insurance carrier
that (i) any policy of insurance will be canceled or that coverage thereunder
will be reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. There are presently no
claims pending under such policies of insurance and no notices of claims in
excess of such amounts have been given by any Satellink Entity under such
policies.
(f) The Assets of each of the Satellink Entities include all Assets
required to operate the business of the Satellink Entities as presently
conducted.
6.12 Contracts. The Assets of the Satellink Entities include all of the
---------
contracts, airtime purchase agreements, leases, warranties, commitments,
agreements, arrangements and purchase and sales orders, whether oral or written,
pursuant to which any Satellink Entity enjoys any right or benefit in connection
with the Satellink Entities' business, whether or not reflected upon the books
and records of the Satellink Entities, together with the right of the Satellink
Entities to receive income in respect of such contracts, leases, warranties,
commitments, agreements, arrangements, and purchase and sales orders on and
after the Closing Date. SCHEDULE 6.12 contains a correct and complete list of
-------------
all contracts, leases, warranties, legal commitments, agreements, arrangements,
whether oral or written, pursuant to which any Satellink Entity enjoys any
rights or benefits or undertakes any obligations or liabilities that (i) have a
duration of twelve (12) months or more and which are not terminable by such
Satellink Entity without penalty upon thirty (30) days or less prior written
notice, (ii) require or could reasonably be expected to require any party
thereto to pay $50,000 or more, or (iii) are between any Satellink Entity and
any shareholder or employee thereof or Related Party (collectively, the
"SATELLINK MATERIAL CONTRACTS"). All Satellink Material Contracts are in full
------------------
force and effect, and
-31-
no Satellink Entity nor, to the Knowledge of any Satellink Entity, any other
party thereto is in default under nor has any event occurred which with the
passage of time or giving notice or both would result in any party to a
Satellink Material Contract being in default under any of the terms thereof.
6.13 Intellectual Property. SCHEDULE 6.13 contains a true and correct list
--------------------- -------------
of all Intellectual Property owned or used by any Satellink Entity or any
affiliate of any Satellink Entity relating to or used or useful in connection
with the Satellink Entities' business, containing a brief description of each
item of Intellectual Property and the nature of such Satellink Entity's interest
therein. The Assets of the Satellink Entities include and, upon the consummation
of the transactions contemplated by this Agreement, Satellink will own or have
the right to use all patents, designs, art work, designs-in-progress,
formulations, know-how, inventions, trademarks, trade names, trade styles,
service marks, copyrights, manufacturing processes, and confidential or
proprietary information necessary for the conduct of the Satellink Entities'
business as presently conducted. No claim is pending or, to the Knowledge of any
Satellink Entity threatened, and no Satellink Entity has received notice that
the conduct of the Satellink Entities' business (including without limitation,
the Satellink Entities' use of any Intellectual Property) infringes upon or
conflicts with any rights claimed therein by any third party, nor is any
Satellink Entity aware of any unasserted claim the assertion of which is
probable. To the Knowledge of each Satellink Entity, no use by any Satellink
Entity of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. No claim is pending, or to the
Knowledge of any Satellink Entity threatened, which alleges that any
Intellectual Property owned or licensed by any Satellink Entity for use in the
Satellink Entities' business or which any Satellink Entity otherwise has the
right to use is invalid or unenforceable by the Satellink Entities', nor is any
Satellink Entity aware of any such claim that is unasserted, but the assertion
of which is probable. Each agreement pursuant to which any Satellink Entity has
any license or right to use any Intellectual Property is in full force and
effect and there are no existing defaults or events of default, real or claimed,
or events which with or without notice or lapse of time or both would constitute
defaults under such agreements that would give the non-defaulting party a right
to terminate such agreement or a right to receive any payment with pursuant to
such agreement. With respect to the Satellink Entities' business, no Satellink
Entity manufactures products which are the subject of patents, patent
applications, copyrights, copyright applications, trademarks, trademark
applications, trade styles, service marks, or trade secrets owned by or licensed
from third parties. No royalties or fees are payable by any Satellink Entity to
anyone for use of the Intellectual Property. With respect to the Satellink
Entities' business, no Satellink Entity has received any notice that any
operation or machinery employed by the Satellink Entities, violates or infringes
upon any claims of any United States or foreign patent or patent application
owned or held by any third party, nor is any Satellink Entity aware of any
unasserted claim the assertion of which is probable. All Intellectual Property
and
-32-
registrations, applications, and agreements related thereto are fully assignable
to Satellink without the consent of any third party.
6.14 Consents and Approvals. Except as set forth on SCHEDULES 4.04(B),
---------------------- -----------------
4.04(E), 4.14 AND 6.04, the execution, delivery and performance of this
------- -------------
Agreement by Satellink and the consummation of the transactions contemplated
hereby do not require any consent, approval or authorization of, or registration
or filing with, any Person or Governmental Authority.
6.15 Employee Benefit Plans.
----------------------
(a) The only employee pension benefit plans (as defined in Section
3(2) of ERISA), welfare benefit plans (as defined in Section 3(1) of ERISA),
bonus, stock purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plan or arrangement, and other material employee
fringe benefit plans presently maintained by, or contributed to by any Satellink
Entity for the benefit of any current or former employee of any Satellink
Entity, other than a multiemployer plan as defined in Section 3(37) of the
ERISA, are those listed on SCHEDULE 6.15 (the "SATELLINK BENEFIT PLANS").
------------- -----------------------
(b) Each Satellink Entity and each of the Benefit Plans are in
compliance with the applicable provisions of ERISA, and those provisions of the
Code applicable to the Benefit Plans.
(c) All contributions to, and payments from, the Benefit Plans which
may have been required to be made in accordance with the Benefit Plans and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made.
(d) To the Knowledge of each Satellink Entity, there are (i) no
pending investigations by any Governmental Authority involving the Benefit
Plans, (ii) no termination proceedings involving the Benefit Plans, (iii) no
threatened or pending claims (except for claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings against any Benefit
Plan or asserting any rights or claims to benefits under any Benefit Plan which
could give rise to any material liability, and (iv) no facts which could give
rise to any material liability in the event of such investigation, claim, suit
or proceeding.
(e) Neither the Benefit Plans, any Satellink Entity, any employee of
any Satellink Entity nor any trusts created thereunder or any trustee,
administrator or other fiduciary thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) which could subject any Satellink Entity to the tax or penalty on
prohibited transactions imposed by such Section 4975 or
-33-
the sanctions imposed under Title I of ERISA. Neither the Benefit Plans nor any
such trust has been terminated nor have there been any "reportable events" (as
defined in Section 4043 of ERISA and the regulations thereunder) with respect to
either thereof.
(f) No Benefit Plan subject to Title IV of ERISA has incurred any
material liability to the Pension Benefit Guaranty Corporation other than for
the payment of premiums, all of which have been paid when due. No Benefit Plan
has applied for or received a waiver of the minimum funding standards imposed by
Section 412 of the Code. Each Satellink Entity has furnished to the Cape Fear
Entities the most recent actuarial report with respect to each Benefit Plan that
is a defined benefit pension plan as defined by Section 3(35) of ERISA. The
information supplied to the actuary by each of Satellink Entity for use in
preparing those reports was complete and accurate and no Satellink Entity has
reason to believe that the conclusions expressed in those reports are incorrect.
(g) At no time for which any relevant statute of limitations remains
open have (a) any Satellink Entity, (b) any employer that is, together with any
Satellink Entity, treated as a "single employer" under Section 414(b), 414(c) or
414(m) of the Code, or (c) any employer that was at any time after September 2,
1984, an Affiliate of any Satellink Entity, incurred any liability which could
subject Satellink, or any Satellink Entity to liability under Section 4062, 4063
or 4064 of ERISA.
(h) At no time for which any relevant statute of limitations remains
open has any Satellink Entity or any Affiliate or Former Affiliate been required
to contribute to, or incurred any withdrawal liability within the meaning of
Section 4201 of ERISA, to any multiemployer pension plan, within the meaning of
Section 3(37) of ERISA, which liability has not been fully paid as of the date
hereof.
(i) Each Satellink Entity has complied with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Benefit Plan that is, or was during
any taxable year of any Satellink Entity for which the statute of limitations on
the assessment of federal income taxes remains open, by consent or otherwise, a
group health plan within the meaning of Section 5000(b)(1) of the Code.
(j) No Satellink Entity has incurred or is reasonably likely to incur
any liability that is or could reasonably be expected to become a liability of
any Satellink Entity with respect to any plan or arrangement that would be
included within the definition of "Benefit Plan" hereunder but for the fact that
such plan or arrangement was terminated before the date of this Agreement.
(k) No payment which is or may be made by any Satellink Entity, or
from any Benefit Plan, to any employee, former employee, director or agent of
any
-34-
Satellink Entity under the terms of any Benefit Plan, either alone or in
conjunction with any other payment, will or could be characterized as an excess
parachute payment under Section 280G of the Code.
(l) No Satellink Entity has incurred any liability to provide death or
medical benefits with respect to any current or former employee of any Satellink
Entity beyond retirement or other termination of employment other than as
required by Section 4890B of the Code, benefit provisions under any employee
pension benefit plan, deferred compensation accrued on the Satellink Entities'
books, disability benefits which have been fully provided for by insurance or
otherwise, or a severance pay plan.
6.16 Compensation Arrangements; Officers and Directors.
-------------------------------------------------
(a) SCHEDULE 6.16 sets forth the name and current annual salary,
including any bonus, if applicable, of each of the present officers and
employees of each of Satellink Entity whose current annual salary, including any
promised or customary bonus, equals or exceeds $100,000, together with a
statement of the full amount of all cash remuneration paid by any Satellink
Entity to each such person and to any director of any Satellink Entity, during
the twelve-month period preceding the date hereof; and
(b) SCHEDULE 6.16 sets forth the name and title of each director and
officer of each Satellink Entity and of each trustee, fiduciary or plan
administrator of each Benefit Plan.
6.17 Transactions With Related Parties. Except as set forth on SCHEDULE
--------------------------------- --------
6.17, no Related Party:
----
(a) has borrowed money or loaned money to any Satellink Entity which
will not be repaid on or before Closing;
(b) has any contractual or other claim against any Satellink Entity;
or
(c) had, since January 1, 1993, any interest in any property or assets
used by any Satellink Entity in its business.
6.18 Labor Relations. (a) No employee of any Satellink Entity is
---------------
represented by any union or other labor organization; (b) there is no material
unfair labor practice complaint against any Satellink Entity pending or overtly
threatened before the National Labor Relations Board; and (c) there is no labor
strike, dispute, slow down or stoppage actually pending or threatened against or
involving any Satellink Entity.
-35-
6.19 Brokerage. Except for amounts to The Breckenridge Group, Inc., which
---------
amounts are the sole responsibility of Satellink, no Satellink Entity has made
any agreement or taken any other action which might cause anyone to become
entitled to a broker's fee or commission as a result of the transactions
contemplated hereby.
6.20 Year 2000. Each Satellink Entity's hardware and software systems
---------
include design, performance and functionality so that no Satellink Entity
reasonably expects to experience invalid or incorrect results or abnormal
hardware or software operation related to calendar year 2000. Each Satellink
Entity's hardware and software systems include calendar year 2000 date
conversion and compatibility capabilities, including, but not limited to, date
data century recognition, same century and multiple century formula and date
value calculations, and user interface date data values that reflect the
century.
6.21 Environmental Matters.
---------------------
(a) To the Knowledge of each Satellink Entity, each Satellink Entity,
its Participation Facilities, and its Operating Properties are, and have been,
in compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Satellink Entities.
(b) To the Knowledge of each Satellink Entity, there is no litigation
pending or threatened before any court, Governmental Authority, or authority or
other forum in which any Satellink Entity or any of its Operating Properties or
Participation Facilities (or any Satellink Entity in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
litigation, may be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by any Satellink Entity
or any of its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Satellink
Entities, nor is there any reasonable basis for any litigation of a type
described in this sentence, except such as is not reasonably likely to have,
individually or in the aggregate, a Satellink Material Adverse Effect on the
Satellink Entities.
(c) During the period of (i) any Satellink Entity's ownership or
operation of any of their respective current properties, (ii) any Satellink
Entity's participation in the management of any Participation Facility, or (iii)
any Satellink Entity's holding of a security interest in a Operating Property,
there have been no releases, discharges, spillages, or disposals of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely
-36-
to have, individually or in the aggregate, a Material Adverse Effect on the
Satellink Entities. Prior to the period of (i) any Satellink Entity's ownership
or operation of any of their respective current properties, (ii) any Satellink
Entity's participation in the management of any Participation Facility, or (iii)
any Satellink Entity's holding of a security interest in a Operating Property,
to the Knowledge of any Satellink Entity, there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, or affecting any
such property, Participation Facility or Operating Property, except such as are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Satellink Entities.
6.22 Statements True and Correct. No statement, certificate, instrument, or
---------------------------
other writing furnished or to be furnished by any Satellink Entity or any
Affiliate thereof to any Cape Fear Entity pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. All documents that any Satellink
Entity or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable Law.
6.23 Accounting, Tax and Regulatory Matters. No Satellink Entity or any
--------------------------------------
Affiliate thereof has taken or agreed to take any action or has any Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the Mergers
from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(c) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
7.01 Operation of Business Pending Closing.
-------------------------------------
Prior to the Closing Date, except as necessary to effect the
transactions contemplated by this Agreement, or except with the prior consent of
Satellink, each Cape Fear Entity shall conduct its business in the usual and
ordinary course as currently being conducted, and without limiting the
generality of the foregoing clause, no Cape Fear Entity shall do any of the
following:
(i) amend its articles of incorporation or bylaws, or merge,
consolidate, liquidate or dissolve;
-37-
(ii) issue any capital stock, any securities convertible or
exchangeable into capital stock, or any options, warrants or rights with respect
to capital stock, or split, subdivide or reclassify its capital stock;
(iii) declare or pay any dividend or make any other distribution on
its capital stock;
(iv) increase the compensation or benefits of officers or employees of
any Cape Fear Entity or pay any bonuses except for normal and customary
increases made or bonuses paid or accrued in accordance with past practices;
(v) create or incur any lien, encumbrance, mortgage, pledge, charge or
security interest whatsoever on any of its properties; or, except for the
issuance of insurance contracts or policies and the settlement of insurance
claims in the ordinary course of business, incur or assume any guaranty or other
liability to discharge an obligation of another, or incur or assume any
obligations for money borrowed, or cancel or discount any material debt owed to
it;
(vi) enter into or terminate any Material Contract;
(vii) make any expenditure for fixed assets in excess of $75,000 for
any single item or $300,000 in the aggregate;
(viii) do or fail to do anything that will cause a breach of, or
default under, any Material Contract; or
(ix) make any change (whether or not material) in its accounting
procedures, methods, policies or practices or the manner in which any Cape Fear
Entity maintains its records.
7.02 Access to Information.
---------------------
(a) Subject to the terms of the Letter of Intent and the
confidentiality agreement contemplated thereby, the Cape Fear Entities and
Shareholders shall give to Satellink and their authorized representatives,
during normal business hours, reasonable access to all of the Cape Fear
Entities' contracts, books and records, and the Cape Fear Entities shall furnish
to Satellink and its authorized representatives such additional financial, legal
and other information with respect to the Cape Fear Entities that Satellink may
reasonably request. Except as and to the extent required by law, Satellink
shall not disclose or use any Confidential Information with respect to the Cape
Fear Entities furnished, or to be furnished, by its representatives to Satellink
or its representatives in
-38-
connection herewith at any time or in any manner other than in connection with
its evaluation and/or consummation of the transactions contemplated by this
Agreement.
(b) Subject to the terms of the Letter of Intent and the
confidentiality agreement contemplated thereby, Satellink shall give to the Cape
Fear Entities and their authorized representatives, during normal business
hours, reasonable access to all of each Satellink Entity's contracts, books and
records, and each Satellink Entity shall furnish to the Cape Fear Entities and
their authorized representatives such additional financial, legal and other
information with respect to each Satellink Entity that any Cape Fear Entity may
reasonably request. Except as and to the extent required by law, no Cape Fear
Entity shall not disclose or use any Confidential Information with respect to
any Satellink Entity furnished, or to be furnished, by its representatives to
any Cape Fear Entity or its representatives in connection herewith at any time
or in any manner other than in connection with its evaluation and/or
consummation of the transactions contemplated by this Agreement.
7.03 Schedules. At any time and from time to time between the date
---------
hereof and the Closing Date, the Cape Fear Entities and the Satellink Entities
shall have the right and the continuing obligation to supplement any of the
Schedules contained in any Article hereof, respectively, with respect to any
matter arising or coming to the Knowledge of any Cape Fear Entity or any
Satellink Entity, respectively, after the date hereof that, if existing,
occurring or known at such date, would have been required to be set forth or
described in such Schedules.
7.04 Best Efforts. Each of the parties hereto agrees to use its best
------------
efforts to take, or to cause to be taken, all reasonable actions and to do, or
to cause to be done, all reasonable things necessary, proper or advisable under
Applicable Laws to perform their respective agreements, undertakings and
obligations hereunder and to consummate the transactions contemplated by this
Agreement. None of the parties hereto will intentionally take or intentionally
permit to be taken any action that would be in breach of the terms or provisions
of this Agreement or that would cause any of the representations contained
herein to be or become untrue.
7.05 Exclusive Dealings. Unless and until this Agreement is terminated
------------------
prior to Closing pursuant to Article 9, no Cape Fear Entity, Shareholder nor any
of their respective Affiliates, officers, directors, agents, advisers or
shareholders shall (i) solicit submissions of proposals of offers from any
Person other than Satellink relating to any acquisition or purchase of all or
any material part of the capital stock, assets or properties of any Cape Fear
Entity, the sale or issuance of any capital stock of any Cape Fear Entity or of
any corporation formed by any Cape Fear Entity or any Affiliate to which any of
the capital stock, assets or properties of any Cape Fear Entity may be
contributed, or any merger or consolidation of any Cape Fear Entity or of any
corporation formed by any Cape Fear
-39-
Entity or any Affiliate to which any assets or properties of any Cape Fear
entity may be contributed (each an "ACQUISITION PROPOSAL"); (ii) participate in
--------------------
any discussions or negotiations regarding, or furnish any information to any
Person other than Satellink, or otherwise cooperate in any way or assist,
facilitate or encourage any Acquisition Proposal by any Person other than
Satellink; or (iii) enter into any agreement or understanding, whether oral or
written, that would prevent the consummation of the transaction proposed hereby.
7.06 Expenses. If Closing does not occur as set forth in this Agreement,
--------
the expenses of the parties hereto shall be paid as provided in SECTION 9.03.
7.07 Assignment of FCC Licenses. Promptly upon execution and delivery of
--------------------------
this Agreement, each Cape Fear Entity agrees to file or cause to be filed all
applications and any amendments thereto or additional applications, that may be
necessary to obtain the FCC's consent to the assignment of the FCC Licenses to
Satellink. Satellink agrees to cooperate with the Cape Fear Entities discharging
this responsibility. Satellink, on the one hand, and the Cape Fear Entities, on
the other hand, agree to share equally all costs associated with obtaining the
FCC's consent to the assignment of the FCC Licenses.
7.08 Irrevocable Appointment of Shareholder Representative. By the
-----------------------------------------------------
execution and delivery of this Agreement, including counterparts hereof, each
Shareholder hereby irrevocably constitutes and appoints X. Xxxxxx Xxxxxx,
Jr. as the true and lawful agent and attorney-in-fact (the "REPRESENTATIVE") of
--------------
such Shareholder with full powers of substitution to act in the name, place and
stead of such Shareholder with respect to the matters contained in this
Agreement, as the same may be from time to time amended, and to do or refrain
from doing all such further acts and things, and to execute all such documents,
as the Representative shall deem necessary or appropriate in connection with any
of the transactions contemplated under this Agreement, including the power:
(a) to execute and deliver all ancillary agreements, certificates, and
documents which the Representative deems necessary or appropriate in connection
with the consummation of the transactions contemplated by the terms and
provisions of this Agreement;
(b) to act for Shareholders with respect to all matters referred to in
this Agreement, including the right to settle, compromise, litigate or arbitrate
any claim on behalf of Shareholders arising under this Agreement or out of the
transactions provided for herein;
(c) to terminate, amend, or waive any provision of this Agreement;
provided that any such action, shall be taken in the same manner with respect to
all
-40-
Shareholders, unless otherwise agreed by each Shareholder who is subject to
any disparate treatment of a potentially adverse nature;
(d) to employ and obtain the advice of legal counsel, accountants and
other professional advisors as the Representative, in his sole discretion, deems
necessary or advisable in the performance of its duties as Representative and to
rely on their advice and counsel;
(e) to incur expenses, including fees of attorneys and accountants, in
connection with the consummation of the transactions contemplated by this
Agreement, and any other fees and expenses allocable or in any way relating to
such transactions; and
(f) to do or refrain from doing any further act or deed on behalf of
Shareholders which the Representative deems necessary or appropriate in his sole
discretion relating to the subject matter of this Agreement as fully and
completely as any of the Sellers could do if personally present and acting.
The appointment of the Representative shall be deemed coupled with an
interest and shall be irrevocable, and Satellink and any other person may
conclusively and absolutely rely, without inquiry, upon any action of the
Representative as the act of Shareholders in all matters referred to in this
Agreement. Each of Shareholders hereby ratifies and confirms all that the
Representative shall do or cause to be done by virtue of his appointment as
Representative of such Shareholder. The Representative shall act for
Shareholders on all of the matters set forth in this Agreement in the manner the
Representative believes to be in the best interest of Shareholders and
consistent with his obligations under this Agreement, but the Representative
shall not be responsible to any Shareholder for any loss or damage any
Shareholder may suffer by reason of the performance by the Representative of his
duties under this Agreement, other than loss or damage arising from willful
violation of law or gross negligence in the performance of his duties under this
Agreement.
Each of the Shareholders hereby expressly acknowledges and agrees that the
Representative is authorized to act on behalf of such Shareholder
notwithstanding any dispute or disagreement among the Shareholders, and that
Satellink shall be entitled to rely on any and all action taken by the
Representative under this Agreement without liability to, or obligation to
inquire of, any of the Shareholders. Satellink is hereby expressly authorized to
rely on the genuineness of the signature of the Representative. Upon receipt of
any writing which reasonably appears to have been signed by the Representative,
Satellink may act upon the same without any further duty of inquiry as to the
genuineness of the writing. If the Representative resigns or ceases to function
in his capacity as such for any reason whatsoever, then a majority in number of
the Shareholders shall appoint a successor; provided, however, that if for any
reason no successor has been appointed
-41-
within thirty (30) days, then any Shareholder shall have the right to petition a
court of competent jurisdiction for appointment of a successor. Each Shareholder
hereby jointly and severally agree to indemnify and hold the Representative
harmless, pro rata in accordance with the number of Shares sold by such
Shareholder hereunder, from and against any and all liability, loss, cost,
damage or expense (including without limitation attorneys' fees) reasonably
incurred or suffered as a result of the performance of its duties under this
Agreement, except for willful violation of law or gross negligence.
7.09 Applications. Satellink and Parent shall prepare and file, and each
------------
Cape Fear Entity and the Shareholders shall cooperate in the preparation and,
where appropriate, filing of, applications with all Regulatory Authorities
having jurisdiction over the transactions contemplated by this Agreement seeking
the requisite Consents necessary to consummate the transactions contemplated by
this Agreement. The parties hereto shall deliver to each other copies of all
filings, correspondence and orders to and from all Regulatory Authorities in
connection with the transactions contemplated hereby.
7.10 Filings with State Offices. Upon the terms and subject to the
--------------------------
conditions of this Agreement, Satellink shall execute and file the Articles of
Merger with the Secretary of State of the States of Georgia, North Carolina and
Tennessee in connection with the Closing.
7.11 Accounting and Tax Treatment. Each of the parties hereto undertakes
----------------------------
and agrees to use its reasonable efforts to cause the Mergers, and to take no
action which would cause the Mergers not, to qualify for treatment as a pooling
of interests for accounting purposes or as a "reorganization" within the meaning
of Section 368(c) of the Internal Revenue Code for federal income tax purposes.
7.12 Agreement of Affiliates. Each Cape Fear Entity has disclosed on
-----------------------
SCHEDULE 7.12 all Persons whom it reasonably believes is an "affiliate" of Cape
-------------
Fear for purposes of Rule 145 under the 1933 Act. Each Cape Fear Entity shall
use its reasonable efforts to cause each such Person to deliver to Satellink not
later than 30 days after the date of this Agreement, a written agreement,
substantially in the form of EXHIBIT B, providing that such Person will not
---------
sell, pledge, transfer, or otherwise dispose of the Shares held by such Person
except as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Satellink Common Stock
to be received by such Person upon consummation of the Mergers except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder and, if the Mergers are accounted for by the pooling-of-
interests method of accounting, until such time as financial results covering at
least 30 days of combined operations of Parent and the Cape Fear Entities have
been published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies. If the Mergers are accounted for using the
pooling-of-interests method of accounting, shares of Satellink Common Stock
issued to
-42-
such affiliates of the Cape Fear Entities in exchange for Shares shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Parent and the Cape Fear Entities have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this SECTION 7.12 (and Parent shall be entitled
to place restrictive legends upon certificates for shares of Satellink Common
Stock issued to affiliates of the Cape Fear Entities pursuant to this Agreement
to enforce the provisions of this SECTION 7.12).
ARTICLE 8
CONDITIONS TO CLOSING
8.01 Conditions to Obligations of Satellink. The obligations of Satellink
--------------------------------------
to proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by Satellink at Satellink's option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of the Cape Fear Entities and Shareholders contained in this
Agreement shall be true and correct on and as of the time of Closing, with the
same force and effect as though such representations and warranties had been
made on, as of and with reference to such time and Satellink shall have received
certificates to such effect signed by each of Shareholders and an authorized
officer of each Cape Fear Entity.
(b) Performance and Compliance. Each Cape Fear Entity shall have
--------------------------
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by it on or before the
Closing, and Satellink shall have received a certificate to such effect signed
by an authorized officer of each Cape Fear Entity
(c) Opinion of Counsel. Satellink shall have received from Xxxxx,
------------------
Tarrant & Xxxxx, counsel for the Cape Fear Entities, an opinion dated the
Closing Date substantially in the form of EXHIBIT C.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on the Cape Fear Entities' and Shareholders' part to effectuate and consummate
the transactions contemplated hereby shall be delivered to Satellink and shall
be in form and substance reasonably satisfactory to Satellink and its counsel.
(e) Audited Financial Statements. Satellink shall have received from
----------------------------
the Cape Fear Entities the audited consolidated balance sheet of the Cape Fear
Entities as of September 30, 1998, and the related consolidated statement of
income, stockholders'
-43-
equity and statement of cash flows of the Cape Fear Entities for the fiscal year
ended September 30, 1998, which balance sheet and statements of income,
stockholders' equity and cash flows shall (i) have been prepared in accordance
with GAAP consistently applied (except as may be indicated therein or in the
notes thereto), (ii) present fairly the financial position of each of the Cape
Fear Entities as of the dates indicated and present fairly the results of the
Cape Fear Entities' operations for the periods then ended, (iii) be in
accordance with the books and records of the Cape Fear Entities, which have been
properly maintained and are complete and correct in all material respects, and
(iv) not be materially different from the unaudited consolidated balance sheet
and related consolidated statements of income, stockholders' equity and cash
flows of the Cape Fear Entities for the fiscal year ended September 30, 1998
delivered as part of Schedule 4.05 to this Agreement.
(f) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby or
which would limit or materially adversely affect Cape Fear ownership or control
of any Cape Fear Entity or the business of any Entity, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Governmental Authority (i) challenging any of the transactions
contemplated by this Agreement or seeking monetary relief by reason of the
consummation of such transactions or (ii) which might have a Material Adverse
Effect on the future conduct of the business of any Cape Fear Entity.
(g) No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect with respect to any Cape Fear Entity or any Satellink
Entity, or any condition or event which is reasonably likely to result in a
Material Adverse Effect, subsequent to September 30, 1998.
(h) Incumbency Certificate. Each Cape Fear Entity shall have delivered
----------------------
to Satellink an incumbency certificate dated the Closing Date certifying the
incumbency of all officers of each Cape Fear Entity who have executed this
Agreement or any of the other agreements, documents or instruments required to
be delivered hereunder. These certificates shall contain specimens of the
signatures of each of such officers and shall be executed by officers of each
Cape Fear Entity other than an officer whose incumbency or authority is
certified.
(i) Certificate of Existence. Each Cape Fear Entity shall have
------------------------
delivered to Satellink, with respect to each Cape Fear Entity, a certificate of
the Secretary of the state of its incorporation, dated not more than 10 days
before the Closing Date, stating that each Cape Fear Entity is a corporation in
existence under the laws of the such state and has paid all applicable Taxes due
to such state.
-44-
(j) Certified Copies of Resolutions. Each Cape Fear Entity shall have
-------------------------------
delivered to Satellink copies, certified by the duly qualified and acting
Secretary or Assistant Secretary of each Cape Fear Entity, of resolutions
adopted by the Board of Directors of each such cape Fear Entity, and of
resolutions adopted by the shareholders of each cape Fear Entity, approving this
Agreement and the consummation of the transaction contemplated hereby.
(k) Delivery of Original Records. Each Cape Fear Entity shall have
----------------------------
delivered to Satellink the original corporate minute books for each Cape Fear
Entity, along with the certificates representing the issued and outstanding
shares of capital stock of each Cape Fear Entity.
(l) Consents. The Cape Fear Entities shall have obtained the consents
--------
of all third parties to the contracts and leases set forth on SCHEDULES 4.04(B)
-----------------
AND 4.14 and shall deliver written evidence of such consents at the Closing.
----
(m) Non-Compete. The Shareholders listed on SCHEDULE 8.01(L) shall
----------- ----------------
have entered into, executed and delivered the Non-Compete Agreement
substantially in the form of EXHIBIT D hereto.
---------
(n) Repayment of Debt. All debts and other amounts owed by any
-----------------
Shareholder to any Cape Fear Entity shall be repaid in full. Each of Cape Fear
Entity shall deliver satisfactory evidence of such repayment to Satellink at
Closing. Upon the repayment of all Bank Debt by Satellink in accordance with
SECTION 3.02, the Cape Fear Entities shall deliver or cause to be delivered to
Satellink satisfactory evidence of the termination of such Bank Debt and the
release of all security interests or other encumbrances of the Cape Fear
Entities Assets, including but not limited to, UCC termination statements.
(o) Pooling Letters. Satellink shall have received a letter, dated as
---------------
of the Effective Time, addressed to Satellink, in form and substance reasonably
acceptable to Satellink, from Xxxxxx Xxxxxxxx LLP to the effect that the Mergers
will qualify for pooling-of-interests accounting treatment. Satellink also
shall have received letters, dated as of the Effective Time, addressed to
Satellink, in form and substance reasonably acceptable to Satellink, from the
Cape Fear Entities' independent auditors to the effect that such firm is not
aware of any matters relating to any Cape Fear Entity which would preclude the
Mergers from qualifying for pooling-of-interests accounting treatment.
(p) Escrow Agreement. Each Shareholder and the Escrow Agent shall
----------------
have entered into, executed and delivered the Escrow Agreement.
-45-
(q) Tax Clearance Certificates. The Satellink Entities shall have
--------------------------
received from the Cape Fear Entities all applicable certificates, or similar tax
clearance documentation, from the Tennessee, Kentucky and North Carolina taxing
authorities and any other applicable taxing authority stating that no sales,
use, withholding or other Taxes for which successor liability attaches are due
relating to the Cape Fear Entities' Assets or business operations.
8.02 Conditions to Obligations of the Cape Fear Entities. The obligations
---------------------------------------------------
of the Cape Fear Entities and Shareholders to proceed with the Closing under
this Agreement are subject to the fulfillment prior to or at Closing of the
following conditions (any one or more of which may be waived in whole or in part
by the Cape Fear Entities or Shareholders at the Cape Fear Entities' or
Shareholders' option):
(a) Bringdown of Representations and Warranties. The representations
-------------------------------------------
and warranties of Satellink and Parent contained in this Agreement shall be true
and correct on and as of the time of Closing, with the same force and effect as
though such representations and warranties had been made on, as of and with
reference to such time, and the Cape Fear Entities shall have received a
certificate to such effect signed by authorized officers of Satellink.
(b) Performance and Compliance. Each of Satellink and Parent shall
--------------------------
have performed all of the covenants and complied with all of the provisions
required by this Agreement to be performed or complied with by it on or before
the Closing, and the Cape Fear Entities shall have received a certificate to
such effect signed by authorized officers of Satellink.
(c) Opinion of Counsel. The Cape Fear Entities shall have received
------------------
from Xxxxxx & Bird llp, counsel for Satellink and Parent, an opinion dated the
Closing Date substantially in the form of EXHIBIT E.
---------
(d) Satisfactory Instruments. All instruments and documents required
------------------------
on Satellink's or Parent's part to effectuate and consummate the transactions
contemplated hereby shall be delivered to the Cape Fear Entities and shall be in
form and substance reasonably satisfactory to the Cape Fear Entities and their
counsel.
(e) Audited Financial Statements. The Cape Fear Entities shall have
----------------------------
received from Parent the audited consolidated balance sheet of Parent as of July
31, 1998, and the related consolidated statements of income, stockholders'
equity and statement of cash flows of Parent for the fiscal year ended July 31,
1998, which audited consolidated balance sheet and related consolidated
statements of income, stockholders' equity and cash flows (i) have been prepared
in accordance with GAAP consistently applied (except as may be indicated therein
or in the notes thereto), (ii) present fairly the financial position
-46-
of Satellink as of the dates indicated and present fairly the results of
Satellink's operations for the periods then ended, (iii) are in accordance with
the books and records of Satellink, which have been properly maintained and are
complete and correct in all material respects, (iv) the aggregate reserve
reflected therein was determined in accordance with generally accepted actuarial
standards consistently applied (except as otherwise noted therein), is fairly
stated in accordance with sound actuarial principles and is in conformance with
GAAP, and (v) are not materially different from the unaudited consolidated
balance sheet and the related consolidated statements of income, stockholders'
equity and cash flows of Parent for the fiscal year ended July 31, 1998
delivered as part of Schedule 6.05 to this Agreement.
(f) Litigation. No order of any court or administrative agency shall
----------
be in effect which enjoins or prohibits the transactions contemplated hereby or
which would limit or materially adversely affect Satellink's ownership or
control of any Cape Fear Entity or the business of any Satellink Entity, and
there shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any Governmental Authority (i) challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions or (ii) which might have a Material
Adverse Effect on the future conduct of the business of any Satellink Entity.
(g) No Material Adverse Effect. There shall not have occurred any
--------------------------
Material Adverse Effect with respect to any Cape Fear Entity or any Satellink
Entity, or any condition or event which is reasonably likely to result in a
Material Adverse Effect, subsequent to September 30, 1998.
(h) Incumbency Certificate. Each of Satellink and Parent shall have
----------------------
delivered to the Cape Fear Entities an incumbency certificate dated the Closing
Date certifying the incumbency of all officers of Satellink and Parent who have
executed this Agreement or any of the other agreements, documents or instruments
required to be delivered hereunder. These certificates shall contain specimens
of the signatures of each of such officers and shall be executed by officers of
the Manager of Satellink other than an officer whose incumbency or authority is
certified.
(i) Certificate of Existence. Each of Satellink and Parent shall have
------------------------
delivered to the Cape Fear Entities a certificate of the Secretary of State of
Georgia, dated not more than 10 days before the Closing Date, stating that
Satellink is a limited liability company in existence under the laws of the
State of Georgia and that Parent is a corporation in existence under the laws of
the State of Georgia.
(j) Certified Copies of Resolutions. Each of Satellink and Parent
-------------------------------
shall have delivered to the Cape Fear Entities copies, certified by the duly
qualified and acting Secretary or Assistant Secretary of Satellink and Parent,
of resolutions adopted by the
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Manager of Satellink approving this Agreement and the consummation of the
transactions contemplated hereby.
(k) Non-Compete. Each of Satellink and Parent shall have entered
-----------
into, executed and delivered the Non-Compete Agreement substantially in the form
of EXHIBIT D hereto.
---------
(l) Payment of Debt. At Closing, Satellink shall replay all Bank Debt
---------------
in accordance with SECTION 3.02.
(m) Escrow Agreement. Each of Satellink and the Escrow Agent shall
----------------
have entered into, executed and delivered the Escrow Agreement.
ARTICLE 9
TERMINATION
9.01 When Agreement May be Terminated. This Agreement may be
--------------------------------
terminated at any time prior to Closing:
(a) By Satellink (i) at any time if any representation and warranty of
any Cape Fear Entity or any Shareholder contained in Article 4 or Article 5 was
incorrect in any material respect when made or becomes incorrect in any material
respect at any time after the date hereof and prior to the Effective Time, (ii)
at any time if any Cape Fear Entity fails to comply in any material respect with
any provision of Article 7 binding upon it, or (iii) upon written notice to the
Cape Fear Entities given on or at any time after December 31, 1998 if all the
conditions precedent set forth in SECTION 8.01 to be performed by the Cape Fear
Entities have not been performed by that date; or
(b) By the Cape Fear Entities (i) at any time if any representation
and warranty of Satellink contained in Article 6 was incorrect in any material
respect when made or becomes incorrect in any material respect at any time after
the date hereof and prior to the Effective Time, (ii) at any time if any
Satellink Entity fails to comply in any material respect with any provision of
Article 7 binding upon it, or (iii) upon written notice to Satellink given on or
at any time after December 31, 1998 if all the conditions precedent set forth in
SECTION 8.02 to be performed by the Satellink Entities have not been performed
by that date.
9.02 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Satellink on the one hand, or the Cape Fear Entities, on the
other, as provided above, this Agreement shall forthwith terminate and there
shall be no liability on the part of any party or any party's officers or
directors, except for liabilities arising from a breach
-48-
of this Agreement prior to such termination, liabilities set forth in SECTION
9.03 below and liabilities and obligations under the confidentiality agreements
referred to in the Letter of Intent. The provisions of SECTION 9.03, together
with each of the confidentiality agreements referred to in the Letter of Intent,
shall survive for a period of one year following the termination of this
Agreement and shall not be extinguished thereby.
9.03 Payment of Expenses on Termination. If this Agreement is
----------------------------------
terminated by Satellink or the Cape Fear Entities pursuant to SECTION 9.01, each
party shall bear its own expenses incurred in connection with the preparation of
this Agreement and the consummation of the transactions contemplated hereby.
ARTICLE 10
INDEMNIFICATION
10.01 Definitions
-----------
For the purposes of this Article:
(a) "CAPE FEAR INDEMNITEES" shall mean Shareholders.
---------------------
(b) "CAPE FEAR INDEMNITORS" shall mean Shareholders, jointly
---------------------
and severally.
(c) "INDEMNIFICATION CLAIM" shall mean a claim for
---------------------
indemnification hereunder.
(d) "INDEMNITEES" shall mean a Cape Fear Indemnitee or a
-----------
Satellink Indemnitee, as the context may require.
(e) "INDEMNITORS" shall mean a Cape Fear Indemnitor or a
-----------
Satellink Indemnitor, as the context may require.
(f) "LOSSES" shall mean any and all demands, claims, actions or
------
causes of action, assessments, losses, diminution in value, damages (including
special and consequential damages), liabilities, costs, and expenses, including
without limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(g) "SATELLINK INDEMNITEES" shall mean Parent and its agents,
---------------------
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
-49-
(h) "SATELLINK INDEMNITOR" shall mean Parent.
--------------------
(i) "THIRD PARTY CLAIM" shall mean any claim, suit or proceeding
-----------------
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
10.02 Agreement of Cape Fear Indemnitors to Indemnify
-----------------------------------------------
Subject to the terms and conditions of this Article, Cape Fear
Indemnitors agree, jointly and severally, to indemnify, defend, and hold
harmless Satellink Indemnitees, and each of them, from, against, for, and in
respect of any and all Losses asserted against, or paid, suffered or incurred
by, a Satellink Indemnitee and resulting from, based upon, or arising out of:
(a) the inaccuracy, untruth, or incompleteness of any representations
or warranties of any Shareholder or Cape Fear Entity set forth in SECTIONS 4.01,
4.02, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11(A), 4.12, 4.15, 5.01, 5.02, 5.03
AND 5.04 or in any certificate, Schedule, or Exhibit furnished by any
Shareholder or Cape Fear Entity in connection herewith, provided however, that
for purposes of this Article 10 any qualification of such representations and
warranties by reference to the materiality of matters stated therein or as to
matters having or not having a Material Adverse Effect, and any limitation of
such representations and warranties as being "to the knowledge of," "known to"
or words of similar effect, shall be disregarded in determining the inaccuracy,
untruth, incompleteness or breach thereof;
(b) a breach of or failure to perform any material covenant or
agreement of any Shareholder or Cape Fear Entity made in this Agreement; and
(c) any obligation of any Cape Fear Entity arising out of any ad
valorem or other personal property tax owed by any Cape Fear Entity to the State
of Tennessee or any city, county or municipal government in the State of
Tennessee.
10.03 Agreement of Satellink Indemnitor to Indemnify
----------------------------------------------
Subject to the terms and conditions of this Article, Satellink
Indemnitor agrees to indemnify, defend, and hold harmless Cape Fear Indemnitees,
and each of them, from, against, for, and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, a Cape Fear Indemnitee and
resulting from, based upon, or arising out of:
-50-
(a) the inaccuracy, untruth, or incompleteness of any representation
or warranty of Satellink Indemnitor representations or warranties of any
Satellink Entity set forth in SECTIONS 6.01, 6.02, 6.04, 6.06, 6.07, 6.08, 6.09,
6.10, 6.11(A), 6.12 AND 6.15 contained in or made pursuant to this Agreement or
in any certificate, Schedule, or Exhibit furnished by Satellink Indemnitor in
connection herewith, provided however, that for purposes of this Article 10 any
qualification of such representations and warranties by reference to the
materiality of matters stated therein or as to matters having or not having a
Material Adverse Effect, and any limitation of such representations and
warranties as being "to the knowledge of," "known to" or words of similar
effect, shall be disregarded in determining the inaccuracy, untruth,
incompleteness or breach thereof; and
(b) a breach of or failure to perform any material covenant or
agreement of Satellink Indemnitor made in this Agreement.
10.04 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 10.05 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in SECTION
11.13 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or by any other final adjudication, Indemnitor shall pay the amount of
such Indemnification Claim within ten (10) days of the date such amount is
determined.
-51-
(e) Any Indemnification Claim to be paid by Satellink Indemnitor to
the Cape Fear Indemnitees shall be paid through the issuance to the Cape Fear
Indemnitees of shares of Satellink Common Stock. The number of shares of
Satellink Common Stock to be issued in respect of an Indemnification Claim shall
be determined by: (i) subtracting from $22,805,064 the amount of Losses suffered
by the Cape Fear Indemnitees as a result of the Indemnification Claim (the
"Reduced Value"); (ii) dividing the Reduced Value by the number of Shares issued
in respect of the Mergers with the result of such division being referred to as
the "Reduced Share Price"; and (iii) dividing the amount of Losses by the
Reduced Share Price with the number of shares resulting from such division being
the number of additional shares of Satellink Common Stock issuable in respect of
such Indemnification Claim (the "Additional Shares"). Any Additional Shares
shall be issued to the Cape Fear Indemnitees pursuant to the formulas set forth
in SECTION 3.01 and cash will be paid in lieu of issuance of fractional
Additional Shares pursuant to the formula set forth in SECTION 3.03, provided
however, that for purposes of determining the amount of such cash payment, the
market value of one share of Satellink Common Stock shall be the Reduced Share
Price.
(f) Any Indemnification Claim to be paid by the Cape Fear Indemnitors
to the Satellink Indemnitees shall be paid through the return to Parent of
shares of Satellink Common Stock. The number of shares of Satellink Common
Stock to be returned to Parent in respect of an Indemnification Claim shall be
determined by dividing the amount of Losses suffered in respect of such
Indemnification Claim by $9.00 with the result of such division being the number
of shares of Satellink Common Stock to be so returned (the "Returned Shares").
The Returned Shares shall first be deducted from the Escrow Shares and, to the
extent the Escrow Shares are not sufficient to satisfy the amount of Returned
Shares, by delivery to Parent of a portion of the shares of Satellink Common
Stock issued to the Cape Fear Indemnitors in respect of the Mergers. The number
of Returned Shares to be delivered to Parent by each Cape Fear Indemnitor shall
be determined in accordance with the formulas set forth in SECTION 3.01. To the
extent that the number of Returned Shares to be delivered by one or more Cape
Fear Indemnitors is not a round number, such Cape Fear Indemnitor shall deliver
to Parent a number of Returned Shares equal to the next highest round number of
Returned Shares and Parent shall return to such Cape Fear Indemnitor a cash
payment determined in accordance with the formula set forth in SECTION 3.03 in
respect of such fractional Returned Share. All Returned Shares shall be
delivered to Parent duly endorsed in blank or accompanied by a duly executed
assignment, free and clear of all liens and encumbrances of any nature
whatsoever.
10.05 Third Party Claims. The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
-52-
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in SECTION 10.04 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party Claim
or the litigation or resolution thereof involves an issue or matter which could
have a material adverse effect on the business, operations, assets, properties
or prospects of Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of Indemnitee),
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by Indemnitor, and the costs and
expenses of Indemnitee in connection therewith shall be included as part of the
indemnification obligations of Indemnitor hereunder. If Indemnitee shall elect
to exercise such right, Indemnitors shall have the right to participate in, but
not control, the defense, compromise and settlement of such Third Party Claim at
its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitor under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $50,000.00 or less where Indemnitor has not responded within five
(5) business days of notice of a proposed settlement. If Indemnitor assumes the
defense of such a Third Party Claim, (a) no compromise or settlement thereof may
be effected by Indemnitor without Indemnitee's consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any person and no effect on any other claim that may be made against Indemnitee
(ii) the sole relief provided is monetary damages that are paid in full by
-53-
Indemnitor and (iii) the compromise or settlement includes, as an unconditional
term thereof, the giving by the claimant or the plaintiff to Indemnitee of a
release, in form and substance satisfactory to Indemnitee, from all liability in
respect of such Third Party Claim, and (b) Indemnitee shall have no liability
with respect to any compromise or settlement thereof effected without its
consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
10.06 Other Rights and Remedies Not Affected. The rights of the
--------------------------------------
Indemnitees under this Article 10 are independent of and in addition to such
rights and remedies as the Indemnitees may have at law or in equity or otherwise
based upon any inaccuracy, untruth, incompleteness or breach of any
representation or warranty of any Indemnitor contained herein or in any
certificate, schedule or exhibit furnished by such party in connection herewith,
or based upon the failure of an Indemnitor to perform any covenant, agreement or
undertaking required by the terms hereof to be performed by such Indemnitor,
including without limitation the right to seek specific performance, recession
or restriction, none of which rights or remedies shall be affected or diminished
hereby.
10.07 Time Limitations. Indemnitors shall have no liability under
----------------
this Article 10 with respect to the breach of any representation or warranty or
a breach of or failure to perform any material covenant or agreement unless on
or before the last day of the ninth full month following the month in which the
Closing Date occurs Indemnitors are given notice asserting an Indemnification
Claim with respect thereto.
10.08 Limitations as to Amount. No Cape Fear Indemnitor shall have
-------------------------
any liability with respect to the matters described in SECTION 10.02(A) OR (B)
and no Satellink Indemnitor shall have any liability with respect to matters
described in SECTION 10.03 until the total of all Losses with respect to the
relevant Section exceeds two million dollars ($2,000,000) (the "Threshold
Amount"), in which event the Cape Fear Indemnitors with respect to Losses
described in SECTION 10.02(A) OR (B) and the Satellink Indemnitors with respect
to Losses described in SECTION 10.03 shall be obligated to indemnify the
Indemnitees as provided in this Article for all such Losses without regard to
such Threshold Amount, provided however, that in no event shall the Cape Fear
Indemnitors with respect to Losses described in SECTION 10.02(A) OR (B) or the
Satellink Indemnitors
-54-
with respect to Losses described in SECTION 10.03 be obligated to indemnify the
Indemnitees for Losses in excess of five million dollars ($5,000,000). The
limitations set forth in this Section shall not apply to any Losses described in
SECTION 10.02(C) or to any intentional misrepresentation or breach of warranty
of any party hereto or any intentional failure to perform or comply with any
covenant or agreement of any party hereto, and the Indemnitors shall be liable
for all Losses with respect thereto.
10.09 Subrogation. Upon payment in full of any Indemnification
-----------
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, Indemnitor
shall be subrogated to the extent of such payment to the rights of Indemnitee
against any person or entity with respect to the subject matter of such
Indemnification Claim or Third Party Claim.
10.10 Tax Effect and Insurance. The liability of Indemnitors with
------------------------
respect to any Indemnification Claim shall be reduced by the tax benefit
actually realized and any insurance proceeds received by the Indemnitees as a
result of any Losses upon which such Indemnification Claim is based, and shall
include any tax detriment actually suffered by the Indemnitees as a result of
such Losses. The amount of any such tax benefit or detriment shall be
determined by taking into account the effect of the acceleration or deferral of
items of gain or loss resulting from such Losses and shall otherwise be
determined so that payment by the Indemnitors of the Indemnification Claim, as
adjusted to give effect to any such tax benefit or detriment, will make the
Indemnitee as economically whole as is reasonably practicable with respect to
the Losses upon which the Indemnification Claim is based.
ARTICLE 11
MISCELLANEOUS
11.01 Nature and Survival of Representations. The representations
--------------------------------------
and warranties set forth in SECTIONS 4.01, 4.02, 4.04, 4.06, 4.07, 4.08, 4.09,
4.10, 4.11(A), 4.12, 4.15, 5.01, 5.02, 5.03, 5.04, 6.01, 6.02, 6.04, 6.06, 6.07,
6.08, 6.09, 6.10, 6.11(A), 6.12 AND 6.15 and the covenants and agreements
contained in this Agreement shall survive the Closing until the last day of the
ninth full month following the month in which the Closing Date occurs.
Satellink acknowledges that it has been afforded the opportunity to perform such
investigation of the Cape Fear Entities as it deems necessary or appropriate;
however, no investigation by Satellink will diminish or obviate any of the
representations, warranties, covenants or agreements or Satellink's right to
rely upon such representations, warranties, covenants and agreements.
11.02 Amendment. This Agreement may not be amended or modified
---------
without the prior written consent of all parties.
-55-
11.03 Waiver. Failure to insist upon strict compliance with any of
------
the terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
11.04 Governing Law. Notwithstanding the place where this Agreement
-------------
may be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia without regard for its conflict of laws
doctrine.
11.05 Notices. Any notice or other communication to be given
-------
hereunder shall be in writing and shall be deemed sufficient when (i) mailed by
United States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
If to Satellink:
Satellink Paging, LLC
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird llp
One Atlantic Center
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Cape Fear Entities or the Shareholders:
Cape Fear Paging Company of North Carolina
-56-
0000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xx. X. Xxxxxx Xxxxxx, Jr.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx, Tarrant & Xxxxx
0000 Xxxxxxxxx Xxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: C. Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
11.06 Invalid Provision. If any provision of this Agreement shall
-----------------
be determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
11.07 Assignment. This Agreement may not be assigned or delegated
----------
by any party without the prior written consent of all other parties, which
consent shall not be unreasonably withheld or delayed. In the event of
assignment of this Agreement the original parties shall remain bound to the
obligations, terms, conditions and provisions of this Agreement.
11.08 Binding Effect. This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
11.09 Further Assurances. Each party agrees to execute and deliver
------------------
all such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
11.10 Headings. Headings and captions contained in this Agreement
--------
are inserted only as a matter of convenience and for reference and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.
11.11 Person and Gender. The masculine gender shall include the
-----------------
feminine and neuter genders and the singular shall include the plural.
11.12 Entire Agreement. This Agreement, together with its Schedules
----------------
and Exhibits, and the Letter of Intent and confidentiality agreement referenced
therein,
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constitute the entire agreement of the parties with respect to matters
set forth in this Agreement and the Letter of Intent, and supersede any prior
understanding or agreement, oral or written, with respect to such matters. To
the extent that the provisions of this Agreement and the Letter of Intent may be
inconsistent, the provisions of this Agreement shall control.
11.13 Arbitration.
-----------
(a) The parties agree that any dispute between or among them arising
out of or based upon this Agreement, or the consummation of the transactions
provided for herein shall be submitted to and resolved by arbitration in
Atlanta, Georgia in accordance with the rules and procedures of the American
Arbitration Association, and the decision of a single arbitrator in such dispute
shall be final and binding on the parties to such arbitration proceeding.
Except as the arbitrator may otherwise award or assess the expenses of any such
proceeding, each party shall bear its own costs and expenses, including the
expense of its counsel, in any such arbitration proceeding. The arbitrator
shall be appointed by agreement of the parties. If there is no agreement upon a
single arbitrator within fifteen (15) days after the submission of the dispute
for arbitration, the arbitrator shall be selected by the following procedure:
Satellink shall appoint one (1) arbitrator and Shareholders shall appoint one
(1) arbitrator and the two appointed arbitrators shall select a mutually
agreeable third arbitrator, which arbitrator shall arbitrate the dispute in
accordance with this SECTION 11.13. If either of the two arbitrators is not so
appointed or if the two arbitrators refuse or fail to appoint the third
arbitrator within 30 days after the expiration of the aforementioned 15 day
period, either party may request the American Arbitration Association to make
the appointment in default in accordance with its rules then obtaining and the
parties shall abide by any appointment so made.
(b) Prior to filing for Arbitration hereunder, either party seeking
arbitration shall provide the other party with written notice of its intention
to file for arbitration. That notice shall state with particularity the basis
for such intent and the remedy sought. The recipient party shall have five (5)
calendar days to provide a written reply. In the event that such reply does not
resolve the matter, the parties agree to meet in person at least one time for
the purpose of resolving the matter. That meeting shall occur within ten (10)
days of the date the written notice of intent to arbitrate was received. The
location for such meeting shall be selected by the party receiving the notice of
intent to arbitrate, provided, however, that the selected location shall be
within the states of North Carolina or Georgia. If the matter is not resolved
by the parties within twenty (20) days of the receipt of the notice of intent to
arbitrate, then arbitration may be immediately commenced.
11.14 Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts, each of which shall be an original, and all such
counterparts shall
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constitute one and the same Agreement, binding on all the parties
notwithstanding that all the parties are not signatories to the same
counterpart.
SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
SATELLINK COMMUNICATIONS, INC.
By:
------------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
SATELLINK PAGING, LLC
By: SATELLINK COMMUNICATIONS, INC.,
its Manager
By:
------------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
CAPE FEAR PAGING COMPANY OF
NORTH CAROLINA
By:
------------------------------------------
X. Xxxxxx Xxxxxx, Jr.
President
CAPE FEAR PAGING COMPANY
By:
------------------------------------------
X. Xxxxxx Xxxxxx, Jr.
President
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CF PAGING CORPORATION
By:
------------------------------------------
X. Xxxxxx Xxxxxx, Jr.
President
SHAREHOLDERS
---------------------------------
Xxxxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx, III
---------------------------------
Xxxxx X. Xxxxxx
---------------------------------
X. Xxxxxx Xxxxxx, Jr.
---------------------------------
Xxxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxx
---------------------------------
Xxx X. Xxxxxx
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CUE PAGING CORPORATION
By:
---------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
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